Innovation Saves Lives
There was a testy Twitter exchange last week between Bernie Sanders, the socialist Democratic U.S. senator from Vermont, and eccentric billionaire entrepreneur Elon Musk.
Sanders started by tweeting that Musk and Amazon founder and CEO Jeff Bezos have more wealth than "the bottom 40% of people in this country," a fact Sanders chalked up to "greed" and characterized as "immoral."
Musk replied and referenced his efforts to push the frontiers of space travel (with his company SpaceX), tweeting, "I am accumulating resources to help make life multiplanetary & extend the light of consciousness to the stars."
Sanders' response was both condescending and ignorant. "Space travel is an exciting idea," he tweeted, "but right now we need to focus on earth and create a progressive tax system so that children don't go hungry, people are not homeless and all Americans have healthcare. The level of inequality in America is obscene and a threat to our democracy."
Where to start?
First, the federal tax system is already progressive. Federal individual and corporate income taxes are progressive, as are estate taxes. Even payroll taxes are largely progressive.
Second, the left's talking points about "income inequality" generally leave out important facts. As author and financial analyst Helen Raleigh wrote in an article for The Federalist in 2019, the lowest-income households in America were receiving government transfers (Medicare, Medicaid, food stamps, etc.) equal to nearly 10 times their annual income. These transfers -- totaling more than $2 trillion annually -- are possible precisely because of the progressive nature of the federal income tax.
In other words, the rich already pay more.
How much more? The top 1% of earners in the United States pay almost 40% of all income taxes. The top 10% pay 70% of all income tax. The wealthiest 50% of Americans pay fully 97% of all income taxes. And this does not take corporate income taxes, estate taxes or payroll taxes into account.
Third -- and most importantly -- Sanders never discusses how people like Musk and Bezos acquired the wealth they did; he condemns it as a function of greed. That is a falsehood of the worst sort. It is fashionable to hate on capitalism. But America has a culture of entrepreneurial capitalism unlike any other country on the planet. People here can start out poor as Job's turkey. But if they invent, innovate and produce goods and services that millions of people want -- and are willing to pay for -- those entrepreneurs can obtain wealth beyond their wildest dreams.