“The Poor You Will Always Have with You”…and What You Can Do About It

Jesus said it, and many of us believed it long before studies confirmed it. So, really, we didn’t need the recent Rice University research conducted by economists John Diamond and George Zodrow to understand the consequences of certain tax policy changes. Their study clearly showed that raising the marginal tax rate, increasing the capital gains tax rate, repealing the 20% pass-through deduction, and rolling back key expensing provisions—along with treating capital gains as ordinary income for those earning over $1 million annually—would have serious economic repercussions.

Specifically, these changes are projected to eliminate around a million jobs, shrink the nation’s GDP by at least $117 billion within the first two years, and cause an additional $80 billion in investment losses. It’s a stark reminder of the government’s long-standing reality that “we will always have the poor with us,” yet how policy decisions can either alleviate or worsen that condition.

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This is why it remains mere fantasy to keep believing that taxing the productive to distribute to the unproductive will make the unproductive better off.  The unproductive are unproductive for explicit reasons:

1. They are lazy
2. They lack motivation
3. They lack skills
4. They are greedy
5. They are disabled

Except for number five, all of these reasons can be overcome by anyone living in America. And remarkably, there are many who suffer challenging disabilities who are more productive than those without any disabilities at all. Furthermore, every person who has allowed one of the top four reasons to become their excuse for lack of production becomes more unproductive when they allow government to attempt to remedy these problems.

In 1964 President Johnson declared an “…unconditional war over poverty in America.”  Nearly 60 years later we have an even bigger poverty problem in America than we did in 1964 despite taxpayers having spent $22 trillion on anti-poverty programs, Social Security and Medicare not included.  Adjusted for inflation $22 trillion is three times more money than what has been spent on all wars fought in U.S. history including our Revolutionary War with England.

Today, taxpayers spend sixteen times more money on anti-poverty programs than when the War on Poverty first began. Yet despite this massive increase in spending, a meaningful decline in poverty has not materialized — instead, poverty rates have largely stalled. This suggests that as more money is poured into these programs, their effectiveness in actually reducing poverty diminishes, raising serious questions about how these funds are being allocated and used.

Data from the U.S. Department of Labor reveals that statistically, poor families report spending $2.40 for every $1.00 of their reported income. This discrepancy strongly indicates that many poor families are underreporting or even falsifying their true income levels. These inaccuracies are not accidental but appear to be deliberate, motivated by the desire to continue receiving taxpayer-funded subsidies and benefits.

Surveys show that 96% of poor families report their children are never hungry, and 82% of parents report the same for themselves. The U.S. Department of Agriculture confirms that, as a group, poor Americans are far from being undernourished — in fact, they consume more protein on average than many higher-income families. To put this in perspective, 18- and 19-year-olds from low-income families today are, on average, one inch taller than the soldiers who stormed the beaches of Normandy during World War II, highlighting significant improvements in nutrition and health despite economic challenges.

Medical care and housing for the poor in America is better than in Sweden, France, Germany or Great Britain and by their own report, the average person who take government assistance, states they have sufficient funds to meet all their essential needs including medical care.

So why do progressives continue to push for more taxpayer funds to hand out to the unproductive in society?  There can be only one reason and one reason alone…to lower the standard of living of productive people so government can retain a greater control over their lives.

The only problem with this confiscation and redistribution game is that productive people are just as selfish as nonproductive people.  Productive people want to enjoy the fruits of their labors and don’t take kindly to not being able to do so.  Therefore, when productivity is confiscated at a rate unacceptable to those who are producing, production will halt, and everyone will suffer.  A leech is only able to live as long as the host is able to produce.  Once the host stops producing the leech dies, as does the host.  Rome’s wealth was originally in the form of land confiscated by war.  But their wealth was soon generated by taxation when their conquering has subsided.  Amassing a fortune of over $1.7 Billion in gold and silver by 14 A.D., Rome fell due to taxation and government spending.  By 800 A.D Rome had $165 thousand worth of gold and silver in its coffers.  Many landowners, unable to afford to pay the taxes levied against them by the Roman government, sold themselves as slaves to the state so they would be “free” from owing any taxes.

This is exactly where unproductive people find themselves today. Thinking themselves to be free, they avoid taxes because they have become enslaved to the government for their standard of living.  But just like Rome, any government that taxes the productive, while exempting and subsidizing the unproductive, will collapse. It only takes time.

Productive people continue to be productive because they enjoy the benefits of being productive.  Unproductive people, when they are rewarded for being unproductive, will remain unproductive. We are all creatures of habit.  Unproductive people must change their habits to become productive and regain their freedom.  Productive people must be diligent to keep more of what they make to avoid becoming enslaved to the government.

At McFie Insurance, we believe in empowering people to be more productive by applying sound financial principles because we deeply value the freedom that comes from self-reliance. Productivity is built on a foundation of hard work, mutual respect for others, continuous education, and faith. These core values help individuals become and remain productive, enabling them to live freely and on their own terms. Don’t let yourself become a slave to government control or bureaucracy. Instead, learn how to keep more of what you earn so that you can build sustainable, lasting wealth for yourself and your family.

It’s often said, “The poor you will always have with you.” But it’s equally true that “The best thing you can do for the poor is not to become one of them.” There is absolutely nothing wrong with enjoying the fruits of your labor. Don’t allow anyone — not the government or anyone else — to make you feel guilty for your success. Remember, “The hard worker should be the first to partake in the rewards of his labors.” At McFie Insurance, we’re here to help you protect those rewards and ensure your financial freedom for years to come.

Tomas P. McFie DC PhD

Tom McFie is the founder of McFie Insurance and co-host of the WealthTalks podcast which helps people keep more of the money they make, so they can have financial peace of mind. He has reviewed 1000s of whole life insurance policies and has practiced the Infinite Banking Concept for nearly 20 years, making him one of the foremost experts on achieving financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.