John C. Goodman

The topic de jour on the political left is inequality. From President Obama to the editorial pages of The New York Times the message is the same: low taxes (especially on the wealthy) and deregulation are making the rich richer and the poor poorer. Their solution: more big government.

Here's the problem: nothing about this message is true. The George W. Bush tax cuts made after-tax incomes in the United States more equal, not less equal. Furthermore, all over the world low taxes, less regulation and limited government are associated with more income equality, not less. In addition, the greatest beneficiaries of economic freedom tend to be those at the bottom of the income ladder, not those at the top.

Because a lot of the work debunking left-wing myths about income inequality has been done by my colleagues at the National Center for Policy Analysis (NCPA), I have had a special interest in these questions over the years. What I am about to summarize are the results of careful study and analysis by some of the nation's top economists. These are studies that are routinely ignored by those who parrot the standard liberal line about how unfair capitalism is.

Let's start with the Bush tax cuts. Stephen F. Austin State University economist Michael Stroup has analyzed their impact based on statistics gathered by the Congressional Budget Office (CBO). As reported in an NCPA study, here is what he found:


· The Bush tax cuts (so hated by almost every left-wing columnist) led to a more progressive tax system — with the top 1% of the income distribution now paying about one third of all income taxes, while those in the bottom half saw their share of the tax burden cut in half (falling from 6.3% of income taxes to 3.5%).

· Further, those in the top 1% now pay a greater share of their income in taxes, while those at the bottom are paying a smaller share.

· Over time, pre-tax income in the United States has become more unequal; but the share of taxes paid by the rich has increased by more than their share of national income.


John C. Goodman

John C. Goodman is Senior Fellow at The Independent Institute and author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts."