The Rich-Poor Gap
Keven Ann Willey of The Dallas Morning News thinks she has found a better measure of the rich-poor gap than income. It's consumption. The income gap is 15:1. The consumption gap is only 4:1. Her new favorite measure tends to rebut claims of a growing gap. That makes the rich feel better about their wealth. Change the statistic. Presto. Gap narrowed.
Willey doesn't consider the consequences of the income gap outpacing the consumption gap. For one, the rich have more wealth to put into savings, which in turn increases their future income, thus perpetuating the rich-poor gap. Further, that additional future income is unearned, thus increasing the future gap in perhaps a more insidious way. The more the poor's consumption is afforded by labor and the rich's consumption is afforded by cashing dividend checks, the greater the perception of social injustice.
What's most remarkable about Willey's analysis is her belief that this way of looking at the rich-poor gap is an argument in favor of replacing the income tax with a consumption tax. In fact, it's just the opposite. If the rich's income is skewing more towards savings than consumption, then shifting the tax burden to consumption will shift the tax burden towards the working poor. She thinks it's possible to craft a consumption tax so it isn't regressive. She fails to understand that its regressive nature is exactly what makes a tax on consumption appealing to the rich.
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