Paying One’s Part

Jeffrey Harding’s spirited defense of capitalism (Montecito Journal,May 14-21, 2026) by way of castigating “liberals-progressive-socialists” whom he alleges despise and wish to destroy billionaires, presents a familiar argument – capitalism good, socialism bad. 

Maybe an independent mind would consider capitalism and socialism as tools in a toolbox of ideas and approaches that can be used to best organize an economy to promote the general welfare – without “killing the golden goose” of entrepreneurialism. In fact, many advanced nations have healthy mixed economies, including, to some extent, the U.S. The critical factor is an efficacious balance. 

While there are probably folks who do hate billionaires and wish to destroy them, I’m skeptical that the politicians Harding singles out, let alone all those he might include as “liberals-progressives-socialists,” are intent on eradicating billionaires. Advocating for a 5% tax on wealth exceeding $5 billion is not proscription. 

Nor would such a tax disincentivize entrepreneurialism. Would enterprising folks not pursue their ideas, inventions, and dreams if the wealth realized from their success were taxed another 5% above $5 billion? Really? Would folks like Bill Gates, Elon Musk, Jeff Bezos, et al, think to themselves: “Gee whiz, I’m not going to risk getting rich if I can only amass $5 billion before I’m taxed an additional 5%. Guess I’ll keep taking a paycheck from my employer and hope for a raise.”

Harding duly notes that the vast majority of Americans are concerned about wealth concentration, but he dismisses their concern as the “deadly sin” of envy. That most Americans disfavor pronounced and growing wealth disparity derives more from personal financial agita than from envy. It’s not jealousy over a relatively small number of people having so much more than most Americans; it’s that more and more Americans find themselves increasingly struggling to maintain a foothold on the economic ladder, let alone make a step up to a higher rung. 

Greed and gluttony are also among the seven deadly sins, and corporate capitalism has made America an economic jungle in which rapacious cannibals see everyone as dinner. Millions of Americans are one medical emergency away from bankruptcy. Many Americans have little job security and many work multiple jobs to keep from falling down or off the economic ladder. An unconscionably large
number of Americans live on the streets. Meanwhile, corporate profits soar as prices are pushed ever higher to maximize shareholder value and guarantee lavish bonuses and stock options for management. 

A current example of rapacious greed is the record profit margins of oil companies that justify raising their prices based on world market conditions and not on actual increases in their cost of goods. Such gratuitous greed is found in other large segments of the economy, including healthcare, defense, banking, and
pharmaceuticals. 

Harding quotes statistical evidence that the economic elite already pay the lion’s share of taxes. The wealthiest 10% pay 72% of the taxes. Those highest on the economic ladder, 154,000 households, pay 25% of the taxes.

Of course they do, they have most of the nation’s wealth!

According to Federal Reserve data, the top 10% of American households hold 67% of the nation’s wealth. The top 1% hold a whopping 30% while the remaining 33% tenuously cling to an ever-shrinking remainder – while the bottom 50% of American households account for just 2.5% of the nation’s wealth. For most Americans, Trickle Down economics has proven to be Table Scraps economics.

The threat to America’s economic system isn’t taxing billionaires more, it’s wealth disparity and the ginormous federal debt. 

Consumer spending drives America’s economic engine. The more people who have discretionary income, the more robust the economy and the opportunities for eager entrepreneurs to get rich. When large segments of the population must spend all they have, and even borrow, for the basic necessities, an economy can stagnate. Opportunities become limited. Social cohesion becomes frayed. Most revolutions, including the American revolution, erupted over
skewed economics. 

Meanwhile, the federal debt looms over the economy like a gigantic Sword of Damocles. America’s federal government borrows so much because it habitually spends more than it takes in. The remedy is either severe cuts to spending, which would hurl millions of Americans down the economic ladder, or tax the wealthiest Americans and corporations more.

Harding is correct that governments do not, as a rule, create wealth, and that they are often profligate. However, governments do provide the conditions that foster and secure wealth creation – e.g., law, defense, and infrastructure. That requires taxes.

Taxes become destructive to an economy when they are unreasonably high. Current federal tax rates are not unreasonable. In fact, they are significantly lower than they were in the not-too-distant past – before multiple rounds of Trickle-Down tax cuts.

So, relax, this isn’t an Ayn Rand fantasy in which Elon Musk escapes to Mars and billionaires run off to Galt Gulch to defy looting socialists. The American economy isn’t going to implode if the ultra-wealthy have to pay a relatively small additional amount of tax.  

Randy Alcorn