IRS and income

We are constantly bombarded with economic statistics alleging that during the Reagan and both Bush administrations, the rich got richer and the poor got poorer. We are told this by Democrats and the mainstream media because it serves to build middle class antagonism against the wealthier class, without which Progressives have no justification to penalize success in an effort to eliminate economic disparity. The major premise is that all of the rich people in 1981 amassed a gargantuan fortune over the next 30 years, this in spite of the enlightened, virtuous respite the poor enjoyed during the Clinton reign. And conversely, the impoverished lost more ground and became destitute due to “trickle-down economics” and “tax cuts for the rich.”  The way liberals tell the story conjures up images of gaunt families plying Route 66 in their dilapidated model T’s, piled high with their meager possessions in search of a workers’ paradise.

How can these conditions exist in the era of “Cash for Clunkers”? That is simple. They don’t! Perhaps you can’t cheat an honest man, but Democrats have no problem lying to him.

Fortunately, an excellent article by Kevin D. Williamson published in National Review Online shares some interesting research data from the U S Treasury. It seems that the IRS has been keeping track of personal incomes and these statistics reveal a great deal of socio-economic mobility in American society. Of those who were in the wealthiest 0.01 percent in 1996, 75% were in a lower income group by 2005. The rich actually got poorer. Lower income families saw proportionally higher income gains during that time. But, according to the IRS numbers, it was during those bad old Reagan days that movement was greatest. As Mr. Williamson notes:

The average income growth for actual households in the lowest income bracket was 77 percent over the course of a decade; income growth for actual households in the top group was only 5 percent during those same years. Of those who were in the poorest fifth in 1979, 85.8 percent had moved to a higher bracket by 1988, and 14.7 percent of them moved to the top bracket — which is to say, the poor of 1979 were more likely to be the rich of 1988 than to be the poor of 1988. The poor got richer, and some of them got a lot richer. Reagan’s record has not been matched — Ronald Reagan was the champion of the poor, as it turns out — but economic mobility has been pretty stable for the past 20 years: About 50 percent of U.S. households move from one income group to a different one every decade, and actual households initially in the low-income groups see proportionally more income growth than do actual households initially in the high-income groups.

What all this means is that while the wealthiest in our society might see income gains over a decade or so, the richest families of 2011 are not likely to have been  the same rich people of 2001. Virtually everyone who participates in the market economy experiences improvement. The only losers are those who remain on the Progressive welfare plantation.

Now I know this does not conform to the nice convenient MSNBC and New York Times‘  portrayal of Reagan’s policies. But actual numbers, not misleading and meaningless “cherry-picked” statistics, do not lie.

Ken Fatula