Walter E. Williams bio photo

Walter E. Williams

Bradley Prize Winner 2017

Professor of Economics.
(703) 993-1148
D158 Buchanan Hall
Department of Economics
George Mason University

Related Sites:
The homepage of George Mason University.
Homepage of the Department of Economics at GMU.

Last week, President George Bush sent his $1.6 trillion tax cut proposal to Congress to have it welcomed by cries of “tax cuts for the rich”. Sen. Tom Daschle, D-S.D., said that tax cuts proposed for the rich would enable them to buy a Lexus, while the tax cuts for the poor would enable them to buy a muffler for a used car. Bush’s proposal might be deemed unfair if you share its opponent’s vision of the sources of income.

Here’s that vision. Somewhere in the country there is a pile of money. The reason some people are rich while others are not is because greedy rich people got to the pile of money first and took their unfair share.

A variant of that vision is there is a dealer of dollars. The reason some people have much more money than others is because the dollar dealer is either a racist, sexist or elitist. The dollars aren’t fairly dealt. It’s Congress’ job to re-deal (income redistribution) the dollars, taking the ill-gotten gains of the greedy and returning them to their rightful owners.

With either vision of the sources of income, what Bush is proposing is grossly unfair – giving the greedy rich tax breaks on gains that were ill-gotten in the first place.

Let’s first look at the “rich” and the taxes they pay. The top 1 percent of earners ($250,000 and above) paid 33 percent of all federal income taxes; the top 5 percent of earners (income over $108,000) paid 52 percent; the top 10 percent (income over $79,000) paid 63 percent; and the top 25 percent of income earners (income over $48,000) paid 82 percent, or $4 out of every $5 in income taxes.

How did these people really become rich? Were they “winners in the lottery of life,” as Rep. Richard Gephardt, D-Mo., says? Did they get to the pile of money first, or simply were beneficiaries of the unfair dollar dealing? In a free society, income is earned by pleasing our fellow man. The greater our capacity to please, the more willing our fellow man is to voluntarily give his money – and the higher our earnings will be, whether it’s in the form of wages, rent, interest or profit.

According to Fortune magazine, Gordon Earle Moore – founder of Intel – has a net worth of $8 billion. Is he one of Gephardt’s winners in life’s lottery to be held up to ridicule? Moore is a self-made man who in 1968 developed and marketed the integrated circuit, or microchip, that’s responsible for thousands of today’s innovations such as MRI’s, satellite technology and your desktop computer. Moore and many others like him are wealthy not because they took something from their fellow man but just the opposite: They served their fellow man.

While Moore has benefited immensely from his development and marketing of the microchip, his benefit pales in comparison to what our nation has benefited in terms of lives improved and saved, and the host of technological innovations made possible by the microchip.

Washington Post columnist E.J. Dione Jr. admits, “The wealthy pay the most taxes.” But he adds, “They have also made the greatest gains in the past decade.”

Does Dione mean they were the greatest producers, or they got to the pile of money first? I’m betting he means the latter. The only people who benefit from class warfare are politicians and the elite; they get our money and control our lives.

We just might ask ourselves: Where is a society headed that holds its most productive members up to ridicule and makes mascots out of its least productive and parasitic members?