A Wall Street Journal “Best Book of 2022” in the politics category, The Myth of American Inequality should be required reading for every incoming college freshman, if for no other reason than to provide perspective for the indoctrination that will almost inevitably follow. As the most recognizable name of the three authors, former U.S. Senator Phil Gramm leads the charge in a masterful exposé of the demagoguery behind the prevailing wisdom that America is a grossly unfair country with an ever-increasing gulf between rich and poor. The book’s premise is that if government misreporting of income distribution were not so significant and intentional, much of today’s social and political polarization might not exist.

Along with Gramm, eminent economist Robert Ekelund and mathematical economist and statistician John Early demonstrate how the government skews the overall economic wellbeing of Americans by failing to count two-thirds of “transfer payments” to the poor as income. “Excluded from the measurements of household income are some $1.9 trillion of government transfers,” the authors write, “programs like refundable tax credits, where beneficiaries get checks from the Treasury: food stamps, where beneficiaries buy food with government-issued debit cards, and numerous other programs such as Medicare and Medicaid, where government directly pays the bills of the beneficiaries.”

To further widen the income inequality gulf, the government does not deduct from household income the amount of taxes working Americans pay. Given these facts, even those with a very rudimentary knowledge of economics can see why the income gap between rich and poor may appear so disparate.

Low-income people don’t have to count many government handouts as income, so there is only a partial accounting of what they actually receive. Some may work only a few weeks or months of the year, and while such earnings count towards their annual income, two-thirds of their government benefits do not. At the same time, Americans who work full time must count their gross annual income before taxes, despite never seeing the tax money they pay, and their disposable annual income appears much higher than those who receive multiple government benefits. Some such wage earners may actually be at a lower income level than their supposed poorer counterparts.

The authors back up their eye-opening information by providing official government statistics and explaining how these data radically overstate income inequality. They don’t need to provide contentious arguments; the numbers speak for themselves and are included in easy-to-follow charts, tables, and graphs throughout the book. Although complex, the authors make the data understandable, and the government bias undeniable.

The book divides the “earned income” levels of American households into five quintiles, beginning with the lowest, or “bottom” quintile, and ending with the highest, or “top” quintile. In one shocking finding, the authors show that “among prime work-age persons in the bottom quintile in 2017, only 36 percent were actually working, compared with more than 90 percent for households in the middle and higher quintiles.”

While other factors do come into play, the startling finding in the above analysis is that “With the same proportion of prime work-age persons working the same number of hours as the top quintile, the average bottom-quintile household would have earned four times more” than it did, which would have reduced the income disparity between the top quintile and the bottom quintile by nearly 75 percent.

Perhaps the most interesting chapters in the book are seven and eight. Chapter seven describes the oft-maligned “super-rich,” of whom ordinary Americans are convinced pay no taxes at all. The authors acknowledge that the chapter’s title does refer to the wealthiest Americans, but add that “there is no obvious definition for the term. In the 96th to the 99th percentiles, just below the top 1.0 percent, these households earned almost 90 percent of their income from the wages and salaries they earned by working. They earned an average of almost $355,000 per year and, on average, kept less than $225,000 after taxes.”

Certainly, these people are well off, but as the authors write, “hardly super rich.” They show that even among those who earn very high incomes, such as corporate CEOs, doctors, lawyers, celebrities, and sports stars, some don’t remain at that level for very long. Finally, the authors make the case that the wealthy do shoulder their fair share of the tax burden, and that large charitable donations may lower their tax bills but benefit those served by the charities, often those in the lowest income quintile.

Chapter eight shows how “income mobility,” or the movement from one income bracket to another—typically higher—bracket changes the distribution of income for individuals and families over time. It offers an interesting bit of historical perspective from America’s founding to the civil war era and the abolition of slavery to the early 20th century and beyond. “Economic mobility is alive, powerful, and widespread in America today,” the authors write. “While an old saying tells us it is better to be born rich, beautiful, and brilliant than to be born poor, plain, and ordinary, people who are born poor, plain, and ordinary find success in America every day.”

Ultimately, as The Myth of American Inequality demonstrates, “America’s promise is centered on opportunity. When we as individuals lend a helping hand, we help others up. But if all our government does is provide subsidies to those who have fallen, it is letting them down and too often keeping them down.” From cover to cover, this book reveals this truth; let’s hope it gets into the hands of enough readers to make a difference.

To read the entire book, go here to order!

The Education Reporter Book Review is a project of America’s Future, Inc. To find out more about America’s Future, visit AmericasFuture.net.

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