In last week's Liberty Update, we highlighted the Heritage Foundation's 2022 Index of Economic Freedom…
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Image of the Day: More Economic Freedom = Higher Standard of Living

In last week's Liberty Update, we highlighted the Heritage Foundation's 2022 Index of Economic Freedom, which shows that Joe Biden has dragged the U.S. down to 22nd, our lowest rank ever (we placed 4th in the first Index in 1995, and climbed back up from 18th to 12th under President Trump).  As we noted, among the Index's invaluable metrics is how it demonstrates the objective correlation between more economic freedom and higher citizen standards of living, which this graphic illustrates:

 …[more]

May 19, 2022 • 12:53 PM

Liberty Update

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Dear Liberals: Income Isn’t “Distributed,” It’s Earned Print
By Timothy H. Lee
Thursday, April 14 2011
In the real world, every dollar redistributed by government must first be removed from the private productive sector via taxes or borrowing.

Of all the canards nurtured by liberals, perhaps the most corrosive is their persistent reference to income as “distributed” or “taken.” 

What explains that bizarre mindset?  It’s as if liberals believe in some sort of mystical, heartless roulette wheel in the sky that arbitrarily “distributes” cash from a massive pile to various powerless dependents. 

But that isn’t how it works.  Wealth isn’t “distributed.”  It is earned.  And if someone wants more of it, then nobody is stopping them from going out and actually earning it instead of wailing that they want more “distributed” to them. 

Of course, the entire fallacy serves a dual role for liberals.  It simultaneously clouds their understanding of basic economic principles, while also serving as a tool to advance their grievance agenda.  Stated differently, it leads them to pursue counterproductive social policies, and it in turn constitutes a tool to mislead others into supporting those policies. 

For example, think of the “stimulus,” and the strangely resilient liberal notion that it somehow paved a path to economic recovery.  If one is under the illusion that some enormous stash of dollars sits idly in the sky simply waiting to be plucked, then it naturally follows that federal bureaucrats can simply reach up and benevolently “distribute” those dollars to a helpless populace.  You know, snag a few dollars floating around unused, build a bridge to nowhere or hire another census worker to double-count homeless people, and voila – you have economic “stimulus.” 

But that obviously isn’t how things work.  In the real world, every dollar redistributed by government must first be removed from the private productive sector via taxes or borrowing. 

That’s why it’s so astonishing to hear the Obama Administration and liberals stubbornly contend that the “stimulus” created jobs, as if dollars recycled by the inefficient machine that is the federal government didn’t mean fewer dollars for job creation in the private economy.  Give us a trillion dollars, they promised in a February 2009 White House memorandum, and we’ll cap unemployment at 8% in October 2009 and have it down to 6.5% by today.  Instead, unemployment rose above 10%, remained above 9% for a post-World War II record number of consecutive months and still stands at almost 9%. 

In comparison, Ronald Reagan’s agenda aimed to create wealth rather than recklessly “distribute” it.  The result?  In the same two-year period as Obama’s “stimulus,” unemployment plummeted from 10.4% to 7.2% following the effective date of Reagan’s tax cuts in January 1983.  Economic growth exploded, whereas today it plods along lethargically.  The real-world results speak volumes. 

The notion that income is “distributed” also allows liberals to wage a dishonest campaign of envy and class warfare.  As Obama unveiled his latest budget proposal this week – how many versions does that make, anyway? – he predictably played the class warfare card by demonizing “the wealthiest 2%.” 

But here’s what Obama didn’t say.  The so-called “rich” actually pay more in income taxes than their proportional income.  According to the most recent IRS data, the top 1% earned 20% of the nation’s income but paid 38% of all income taxes.  The top 5% earned 35% of the nation’s income but paid 59% of the nation’s income taxes, which means the top 5% pays more income taxes than the remaining 95% combined.  The top 10% earned 46% of the nation’s income, but paid 70% of American income taxes, and the top 25% earned 67% of income but paid 86% of income taxes.  The bottom 50% paid just 3% of income taxes, while earning 13% of income. 

Obama also didn’t mention that most small businesses, which create the majority of new jobs in America, are also taxed as “individuals” under our tax code.  Worse, most small business income would fall victim to Obama’s proposal to “tax the rich,” meaning fewer dollars for job creation. 

Unless and until we elect officials who understand that wealth is created rather than “distributed,” our current state of political acrimony and inferior economic growth will persist.  And the sooner American voters coalesce around that reality, the sooner we’ll return to maximal prosperity. 

Quiz Question   
How many days does it take the average U.S. household to consume as much electrical power as one single bitcoin transaction?
More Questions
Notable Quote   
 
"Lawmakers continued to raise concerns about the Internal Revenue Service at a Congressional hearing this week as the agency deals with billions in misspent dollars, hefty processing backlogs, and complaints over poor customer service.Lawmakers lobbed questions at the tax-collecting agency during the House Ways and Means Oversight Subcommittee hearing.'The program has an annual improper payment rate…[more]
 
 
—Casey Harper, The Center Square
— Casey Harper, The Center Square
 
Liberty Poll   

Should any U.S. government agency have a function called the "Disinformation Governance Board" (See Homeland Security, Department of)?