The 99%: Did God create income inequality?

I wanted to talk this week about whether unequal wealth distribution is an issue from a Jewish perspective. To be clear, neither Romney nor Obama has explicitly come out in favor of wealth redistribution. But they differ on whether taxes should be weighted toward the rich: Obama has proposed a highest tax bracket of 39.6%, while Romney has proposed 28%. Obama would tax investments to 30% for high earners, while Romney would tax investments at 15% for high earners, and leave them tax free for people earning under $200,000. Obama would tax inheritances of estates worth over $3.5 million, Romney would not.
Similarly, Obama has defined income inequality as the “defining issue of our time,” while Romney refers to this as the “bitter politics of envy.”
The 99% movement is really about college grads who played by the rules, and can’t find jobs, while Wall street, bankers, and big business are getting bailedout and getting rich. It is not explicitly calling for redistribution either. But the fact is, over the past 10 years, America has become less equal, and the point being made is that normal college grads can no longer get a decent job, and share in our nation’s wealth.
Raising taxes on the wealthy is often seen as a means of redistribution. Obama is very careful that when he speaks about taxes, he speaks about the wealthy paying their “fair share,” not that they should pay more than everyone else. But the fact is, if taxes are kept high for the wealthy, and that money is used for welfare and education, in effect the rich are subsidizing the poor, ensuring a basic standard of living as well as access to opportunity.
I have seen a few orthodox rabbis present the case that inequality is created by God, and that it therefore doesn’t present an issue in and of itself. The argument is that God is in charge of everyone’s income, which is determined on Rosh Hashanah. It doesn’t matter how much or little you work, that’s what hashem will send you. [Quote #2, Rebbe Rayatz]
One figure in the Talmud, Yehuda haNasi, was so rich that the manure from his horses alone made his stable-master rich. Deuteronomy says lo yehdal evyon mikerev ha’aretz—there will always be poor among you.
On this line of argument, the task of the wealthy person is to be careful with his money, not to overindulge, and to maximalize the tzedakah he is able to do with it. God made rich and poor so there could be tzedakah, and the presence of God is manifested through the action of tzedakah. According to the Zohar, God’s 4 letter name is formed in that relationship: the yod is the coin, the heh is the hand of the giver, the vav is the gift, and the second heh is the hand of the receiver. The rich person needs the poor person to complete the mitzvah, just as much as vice versa. Tanhuma, Mishpatim 9, similarly says that David argued with God, saying to make the world fair, and God says, “If I did that, who would preserve kindness and truth?”
One of the challenges most rich people don’t live up to is that halachically, one is supposed to give 10-20% of one’s income to tzedakah, but if one is wasting money by spending it on luxuries, that percentage should be more. In our society, the percentage in fact doesn’t go up as income goes up—it remains stable. So a rich person is supposedto give a higher percentage to tzedakah.
Yehuda HaNasi, the rich rabbi I mentioned, swore on his deathbed that he used all ten fingers to study Torah, and never indulged with even his little finger. Another rabbi, Eleazar ben Harsom, who inherited a thousand cities and a thousand ships, wandered like a poor person, subsisting on bread and water, so he wouldn’t be distracted from studying Torah.
On this line of argument, taxes are a formalized way to organize the obligation of tzedakah, and make sure everyone contributes a fair share. Rich people should pay more, because their obligation to tzedakah is higher. Taxes, at least to the extent they fund education and social services, are thus a way to ensure that everyone gives the fair level of tzedakah. And gross abuses like Putin’s $75,000 toilet are completely against halacha.
Even on this line of argument, the level of social services funding should be far higher than it currently is, Deuteronomy 15:8 says we should give a poor person all he lacks, which the Midrash says means in accordance with his honor. We are obligated to support him at his usual standard of living. The current welfare, SSI, and SSD benefits do not do that. $100/month is not enough to pay for food for an adult, but this is what food stamps pays. I met a woman last weekend who tries to live on just over $700/month in benefits. This is not a comfortable standard of living. So even if God intended inequality, he also intended an equal amount of tzedakah in response to that inequality.
The problem with this argument that I have is that, first of all, the Torah does come out against inequality. The Torah legislates that every 7 years, debts should be forgiven—imagine, credit card debts, student loans, home loans, all forgiven. People would not be caught up in a spiral of debt, and not pressured to take out the massive amount of loans one needs now to pay for a house or college education. In addition, every 50 years, there is a Jubilee year and everyone returns to his ancestral holding—his family farm. The farm was the means of production. This means that capitalism should be limited so we never get to the point of an embedded worker class and landowner class. People can earn more or less money, but should not be stuck in a downward economic spiral.
The other problem I have is that God did not create economic inequality, we have. We have done it with overpaid CEO’s and underpaid workers. We have done it by not regulating companies, and allowing massive monopolies to destroy family business, something halachah prohibits. We have done it by granting huge tax breaks to the rich. We have done it by funding schools locally, and allowing money to be siphoned off to charter schools, leaving public schools underfunded, and low income families sending children to bad schools.
Very commonly, people have become rich through less than honest or upright means. When CEO’s control their own wages, and pay themselves exhorbitant wages claiming that’s what good talent costs, they are being self-serving and dishonest—you could find plenty of people who can run companies for a lot less. Outsourcing jobs, paying low wages, avoiding taxes, are all less than lofty ways today’s companies maintain the upper class. People have free will and do bad things which hurt other people.
The Rambam says that God created a world in which the things most necessary for human survival, such as air, water, and land, are plentiful and available to all, and this is a sign of his benevolence and fairness. We are the ones who have created inequality, and we are the ones who need to address it using our God-given wisdom. God didn’t do these things, humans did. God created a deeply equal world. Don’t blame inequality on God.
Halachically, what is the answer? Inequality is a real halachic issue. Funding job creation certainly needs to happen—the highest form of tzedakah is giving someone a job. Raising taxes on the wealthy to pay both for social services and education is also certainly in line with the Torah’s vision for a just society