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Dean Kalahar, a 40-year Sarasota resident, is an economics teacher at Sarasota High School and author of "Practical Economics."
Sarasota Thursday, May. 3, 2012 5 years ago

My View: Class warfare: polarizing, immoral

by: Dean Kalahar

Class warfare and income redistribution rhetoric has always been fashionable among protesters and politicians who play the old game of divide and conquer, telling us the greedy “rich” need to “pay their fair share.”

This would be tedious if it did not have serious implications for tearing communities apart, including our own. Let’s take a look.

According to IRS data, there are 1.38 million Americans in the top 1% earning at least $343,927 a year. This is a generous living but hardly the cash flow to purchase a corporate jet and luxury yacht.

There are 138,000 Americans in the top 1% earning more than $2 million a year. They more truly represent the vision we have of “rich,” but only equal 0.04% of the population.

Going even further, we can say “rich” and attach images of Oprah Winfrey and Bill Gates, two of the 5,309 people who make more than $10 million a year. But comparing 0.004% of the population to the 330 million other Americans to define the economic fabric of our nation is statistically meaningless.

What do Americans earn?
• < $100,000 91.7%
• Up to $50,000 71%
• $50,000 to $100,000 20.7%
• > $100,000 8.3%
• > $200,000 1.8%

Focusing on the extreme ends of the earning scale to define “rich” versus “poor” is like comparing Warren Buffett to a homeless person. This is not statistical reality. In short, the vast swath of Americans earn between $25,000 and $75,000 a year. Instead of being a nation of “rich” and “poor,” we are a nation of income equity and mobility.

Sarasota County is no different. The average adjusted income per household is $55,157. So, why do we see opulence here in Sarasota? Because the so-called “rich” spent the better part of a lifetime working hard at building a business or career, saving and investing for a rainy day, paying off a home and planning for their future. They live off their investment income and Social Security, and along the way, they certainly have paid their “fair share.”

Many Sarasotans may live well now, but what is unseen are the years of scrimping and saving that went toward the ability for Sarasota seniors to live out their retirement years with some degree of comfort.

Indeed, if anyone is to analyze incomes, he must factor in experience, time and age. Young people have fewer skills and earn less; older people have more skills and earn more. Incomes increase over time.

The “haves” and “have-nots” are not different people, just people at different stages of their lives. The top 20% retire, while the bottom 20% increase their human capital and move up, while younger workers enter the work force and continue the cycle.

Truth is, the “poor” in America are far richer in real economic terms than the rich in many places around the globe. Defining poverty and affluence is difficult when the bottom 20% in America has a higher standard of living than the top 20% in many other countries.

Income and class mobility is also a dominant feature in America. An absolute majority of people in the bottom 20% move into the top 20% in fewer than 20 years. Treasury Department studies show incomes in the bottom 20% grow at a much faster rate than in the top 20%, while the top 1% actually move down in income and bracket over time.

The economy is not a zero-sum game in which the benefit of one comes at the cost to another. The class-warfare attack on the “rich” is really an argument against free markets, wealth creation and life-saving economic growth. Polarizing citizens based on highly subjective emotional terms such as “rich” and “poor” is counterproductive at best and immoral at worst.

Free-market entrepreneurial capitalism allowed for the success of Apple’s Steve Jobs. Attacking the “rich” to pay their “fair share” through forced income redistribution will mean fewer Apples, jobs and prosperity.

Dean Kalahar, a 40-year Sarasota resident, is an economics teacher at Sarasota High School and author of “Practical Economics.” 

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