Spreading the Wealth - What Does it Mean and Why is it Important?
Spreading the wealth in the simplistic form is the redistribution of wealth; either by voluntary transfer such as charity or by force in the form of taxes, government policies inflation and nationalization. The concept is to take from those who have it and give it to those who do not. We already have many forms of this practice in motion today; welfare, taxes, medicare and public housing, to name a few.
Spreading the wealth in the simplistic form is the redistribution of wealth; either by voluntary transfer such as charity or by force in the form of taxes, government policies inflation and nationalization. The concept is to take from those who have it and give it to those who do not. We already have many forms of this practice in motion today; welfare, taxes, medicare and public housing, to name a few. So why is everyone so surprised to hear that a politician believes in spreading the wealth around?
Its the added concept of socialism that has sparked the debate. Socialists have a broad set of economic theories that advocate state or collective ownership.One of the most famous socialists and founder of communism, Karl marx, said that socialism would be achieved via class struggle and communism. He believed that capitalism unfairly creates power among a few and creates an unequal society. Capitalism is an economic system that encourages means of production that are open to competition in the free economic market and are open to any individual or business.
The Trickle Up Effect Socialistic spreading the wealth is a belief that if you give more money to the lower income levels, it will benefit the wealthier class because people who have less tend to buy more. This would bring an increase in sales relative to the amount of benefits given to the poor. If the low and middle class are given tax cuts and higher subsidies, they will spend it as the higher and upper classes would not. They argue the upper and middle classes are the ones who would benefit by the additional spending as they are most likely to be the business owners and retailers.
The Trickle Down effect In trickle down economics the belief is that if you give tax breaks to business owners and wealthy individuals it will benefit everyone. It will create more jobs for the lower and middle class and create more goods at lower prices. During Ronald Reagans term, this effect grew the median family income by $4000. After his term ended, the median family income shrunk by $1500. The belief is that the trickle up effect policies that were put in place after his term, affected employment and pricing to such a degree that it has never recovered.
If we raise taxes on the upper class, the business owners, where do they get the additional monies to pay those taxes? Let's look at a company that employs 100 people. Their gross revenue is $6 Million. Revenue minus expenses = profit 5% tax increase = $300,000
They have two options. 1. Raise revenue which means higher prices. 2. Cut expenses. Expenses include; Rent or mortgage, business loans, utilities, supplies and of course the largest expense; employees.
This concept will raise unemployment to enormous levels. Prices will rise and our welfare and government assistance programs will be severely underfunded for the capacity of needs. The higher classes also fund most of the charitable organizations that the lower classes use. There is no evidence that giving more money to the lower classes has increased their donations to charity.
The United States of America was founded on the principles of opportunity for all. The trickle up effect does not encourage or support those principles. It is an enabler for poverty and entitlement. There are so many encouraging examples of people who rose from poverty and became successful and wealthy. This didn't happen because they were given handouts by the government. It happened because they were given hope and opportunity in a capitalistic society. People who do not earn what they receive will never appreciate its value. Spreading the wealth will only promote greed and laziness in a society that already feels entitled and not responsible.
We all need to take responsibility for the economic conditions in our own households. We need to stop expecting handouts and bailouts. We need to learn how to budget and take control of our own finances. We need to encourage opportunity and growth. We need to stop blaming the government for the situations we put ourselves into. We need to stop trying to find a leader who will speak for us and learn how to speak up for ourselves. The crusade needs to start with you and your family.
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ABOUT THE AUTHOR
Pamela A Trone is a professionally licensed financial coach. She helps families become properly protected, debt-free and financially independent through education, counseling and fundamental training. She previously owned and operated a large, successful dancing school for 20 years. As a business owner, coach, teacher, mom and licensed professional, she has many insights and solutions to situations and challenges facing many families today. Pam's favorite topics are personal finance, economy, womens issues, self-empowerment and children. You can find out more about Pam and her work 10 STEPS TO A BETTER YOU at: http://pamelatrone.com/.