Business / Economy

COMMENTARY: Wealth transfer won’t save the middle class

Typical programs do not change the fundamentals

Wealth transfer won’t save the middle class; it certainly has not saved the poor. The problem is that the typical politically-driven programs, such as “giving the middleclass a raise,” do not alter the vital fundamentals; education, training, and appropriate job creation. My feeling is that the majority of Americans know it and that’s why the proposal has received only lukewarm support.

The middle class may be able to take in a few more movies or afford a better car – this will reduce their stress – but it’s a far cry from the professional development required to compete in a worldwide market. For America to move ahead we must change those fundamentals to form a highly educated and trained workforce and unleash the private sector to use that force for the benefit of all.

Arguments about minimum wage for burger-flippers are merely noise; if burgers get too expensive the corporations will just put in automatic burger flipping machines. The designers and programmers will be well paid and the manufacturers will make 10,000 exact copies; end of argument and end of the jobs. The best jobs are no longer production workers, they belong to those behind the scenes.

On the tax end:

First, forget about the term “fair share” there is no such thing; tax avoidance is a time-honored American tradition. Every individual’s situation is different and while the government wallows in its perceived ability to fine tune social and economic engineering by the implementation of a monstrously complex tax code; the code’s complexity also sows the seeds of its own destruction.

The wealthy and big players like mega-corporations can always hire the professional expertise necessary to unearth the doors leading to the innumerable escape hatches imbedded in the tax code, some intentionally, some not. You have to understand the concept of scale; I’m not going to pay a CPA $200 to save $50 on my joint return, but a big earner can afford to pay hundreds of thousands to save millions.

Change the code and people, especially financially shrewd people, change their earnings and investment strategies in response; it’s a water balloon – poke it here and it comes out there.

There are so many average Joes that it is not surprising the largest cumulative total of tax breaks, such as deductible mortgage interest and untaxed healthcare insurance premiums, go to that group; the figures don’t lie but no one wants to hear it.

The point is that on the revenue side the government rarely, if ever, gets the predicted income from those with choices.  Those without choices get steamrolled (see Alternative Minimum Tax for a perfect example).  Theoretical rates, and that’s all they are, are political fodder and have little to do with reforming the code; it’s the trapdoors that need to be eliminated at all levels.

Only simplifying the tax code, which means eliminating political influence, can change that; everyone loves their personal tax breaks so good luck.

On the distribution end:

This could be one area where the government knows best.  It makes no sense to just give larger tax refunds for the recipients to spend as they wish.  We have seen decades of shortsighted and poor financial decisions by the middleclass.  Nationwide they too often measure their lifestyle by what’s going on right now, and pay too little attention to their future. 

Tax credits to individuals and businesses that can be used for certified education and training would be a better investment for the middleclass and their employers than individual refunds.  The nation has a record number of workforce dropouts who no longer show up in the unemployment statistics because they have stopped looking for work; many of them need additional skills and/or complete retraining to fit today’s technological job market.

No do-able amount of wealth transfer can keep this army of unemployed from slipping out of the middleclass to a lower economic level, only jobs can do that; therefore, job creation has to be the number one priority – it’s so critical that there is no number two.  The availability of a well-trained and productive workforce is a key element of job creation.

Almost everyone is familiar with the proverb, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”  At no time in our history is understanding and implementing that concept more important than today.

Time for a game changer, not just a rehash of the same failed policies.   


Marty Richman

Born and raised in Brooklyn, NY, Marty (Martin G.) spent his teen years in northern New Jersey. He served more than 22 years on active military duty, mostly in Europe, and is a retired U.S. Army Chief Warrant Officer 4, Nuclear Weapons Technical Officer. Marty then worked 25 years in various engineering and management positions in the electronics and energetic materials industries supporting the communications, computer, aerospace, defense and automotive sectors. He is a graduate, summa cum laude, from The College of Hard Knocks, among his numerous awards and accomplishments. He was a regular weekly Op/Ed columnist and feature writer for The Hollister Free Lance for seven years and a member of its editorial board for five years. Marty is a frequent commentator and contributor to BenitoLink on a wide variety of local, state, national and international subjects.   Marty was elected to represent the City of Hollister District 4 on the City Council in November, 2018. Marty and his wife, Joyce, have been residents of Hollister since 1996.