🔒Taxing wealthy won’t shrink CT’s wealth, income gap

The CT Mirror recently published a series about wealth inequality in Connecticut with the first story tited: “Already Deep in Debt, Connecticut Struggles with Extremes of Wealth and Income.”

The story asserts that Connecticut's policy debate will be shaped for years to come trying to figure out “[h]ow to address economic inequality and a crushing debt at the same time.”

The article relies on data from the Washington D.C.-based Economic Policy Institute (whose governing board includes the presidents of the AFL-CIO, SEIU and AFSCME), and interviews with Connecticut's public-sector employee unions, legislators from poor districts and social-service advocates, all of whom comprise an interest group that continues to advocate for “higher taxes on wealthy households” to combat the problem.

The problem is serious, but the argument that we need higher taxes on the wealthy to combat inequality is intellectually lazy, socially divisive and inconsistent with economic common sense. In fact, we would do better to delete the words “equality” and “inequality” from the discussion and replace them with the terms “poverty” and “social mobility.”

Let's start with the title of the first article and its correlation between inequality and the ability of the state to spend — suggesting we would have less inequality if Connecticut had more to spend on the problem. Inequality is not a substance (like water) that we can increase or decrease by turning the spending faucet one way or another; and, in any event, isn't the better question why we have so much poverty even after the state has spent its way to $80 billion of indebtedness — not including the private charitable spending on the social problems underlying the issue.

Next, equality and inequality are excessively vague and divisive terms. The vagueness starts early — are the advocates talking equality of opportunity or of outcomes, and who gets to decide what's equal enough? The advocates owe us clarity on this whenever they use these terms.

Another troubling aspect of the “equality” approach is its inherent social divisiveness. It is based on comparisons of what some have that others don't have, pitting one group against the other and suggesting that the use of government power is the solution — to tax more from one and give to another.

On the other hand, framing the issue as one of poverty and social mobility gives us goals around which we can unite. Poverty is a common enemy and social mobility a common friend, and everyone can agree upon the need to reduce the former and promote the latter.

The advocates also owe us a very precise statement of their mission. Is the goal to sustain a living standard for the poor that is not too distant from those at the top, or to enable people in poverty to move up the economic ladder closer to the top. Both are worthy goals in appropriate circumstances (and they are not mutually exclusive), but the difference is critical to the discussion if the goal is to ask taxpayers to provide more funding.

Finally, the article includes this sentence: “Countries that had dramatically reduced poverty enjoyed more economic growth than those that had produced extreme inequality.”

This proposition is profoundly backwards. It suggests that we need to solve inequality to enable economic growth, when what we need in the first instance is more economic growth to help reduce poverty and enable mobility up the economic ladder.

John M. Horak is the director of TANGO Nonprofit Education and Consulting. His opinions are his own.