Madeline Cano conflated income inequality with poverty in her recent letter letter to the editor in the Des Moines Register. (Hunger is symptom of income inequality. 10/15/2015) Poverty is the problem, not income inequality. Rich people earning even more does not make poor people earn less. Cano did not actually advocate taking money from the wealthy and redistributing it to the poor. She simply repeated the erroneous meme that income inequality is the problem.
Cano correctly identified that, “…Iowans are not earning sufficient incomes to support themselves and their families.” Increasing the incomes of Iowans in a sustainable way to reduce hunger in Iowa should be a priority. The best way to do that is through education, work experience, and opportunity, not through an increase in the minimum wage.
Raising the minimum wage definitely hurts most those who have no job and those who have the fewest skills. It makes it more difficult for them to get a job and, at the same time, has a tendency to make things more expensive.
To the extent that we want taxpayers to subsidize low income earners, it is better done through the current Earned Income Tax Credit, which targets benefits to those with real need, and excludes those with higher incomes or who are claimed as a dependent by others.
The upper class is not working harder or longer to capture most of the economic gains of society. They capture the gains because of the tax and labor rules of society that were put in place mostly in Reagan’s presidency and have continued since then. The rules created a massive transfer of wealth from the lower to the upper classes. Riches at the top of any society, including pre-industrial, require skimming off bits of energy/work/labor/income from large numbers of people. There was greater equality during the post-war decades because FDR put helpful tax, banking, and labor rules in place. Reagan and others gutted those rules, thus giving us the increasing inequality we see today. More education affects only a small percentage. What we need are lawmakers who understand the problem, ignore their doners and the lobbyists, and enact the necessary laws.
The necessary laws mostly include removing special tax breaks given to favored businesses and industries. People who pay the full rates are taxed enough. We don’t need higher rates.