Charles Kenny's weekly Foreign Policy column on income levels and taxes.
From the Article
Every spring, the Tax Foundation, a Washington-based advocacy group, announces Tax Freedom Day: the date by which the average employed American will have earned enough income to pay off his or her taxes for the year. This year, that day will be April 12. The Adam Smith Institute, a London-based, free-market think tank that makes a similar calculation for Britain, suggests that British taxpayers will have to work until around May 30 to pay off their own dues.
Tax Freedom Day is a clever-enough gimmick if your aim is to stir up ire over the government stealing income that rightfully belongs to the good people who have earned it through the toil of their labors. In an environment where Joe "the Plumber" Wurzelbacher is considered an expert on fiscal policy, it might even work. But it is worth remembering that, from a global perspective, how much we earn is actually 95 percent luck and maybe 5 percent toil. And it isn't heavy-taxing big government that affects your income -- it's bad government.
The idea that anyone who works hard enough can become rich is a powerful one; for Americans, it's not just appealing but central to national identity. The problem is that this vision of social mobility doesn't hold true within the United States -- and on a global scale, it's just plain silly. The reason you earned as much as you did last year has far less to do with how hard you worked than with where and to whom you were born. In the United States, of those children born to parents in the bottom 10 percent of incomes, around one-third remain at the bottom as adults, and over half remain in the bottom 20 percent. Only one out of 77 children born into the bottom 10 percent of incomes reaches the top 10 percent as an adult, according to Samuel Bowles and Herbert Gintis writing in the Journal of Economic Perspectives.