Should We Divide the Wealth? — Summary

Henry Hazlitt’s Should We Divide the Wealth? is a single-author economic polemic, first published in The Freeman in February 1972. It is a compact survey of redistributionist proposals: equal division, guaranteed income, the negative income tax, land reform, progressive taxation, and one-time wealth leveling. Its thesis is that egalitarian programs mistake wealth for a fixed surplus rather than a flow produced by work, saving, investment, prices, and private property.

The truth seems to be that personal income in this country is already distributed roughly in proportion to each person’s current contribution to output as measured by its market value.

Hazlitt opens by rejecting the socialist premise that capitalists take most of the product while labor receives only a remnant. Against Daniel De Leon’s 80/20 claim, he cites corporate and personal income data showing that employees receive the overwhelming share of corporate income available for division, and that wages and salaries dominate personal income. His arithmetic is meant to puncture the fantasy of a large idle surplus: confiscating all after-tax incomes above $50,000 in 1968 would yield only $120 per person, and could not be repeated because the targeted incomes would cease to be produced.

Any attempt to equalize wealth and income by forced redistribution must destroy wealth and income.

The central section, “A Destructive Process,” shifts the argument from shares to incentives. If every family were guaranteed the median income and none could keep more, Hazlitt argues, the motives to work, acquire skills, save, or produce above the guarantee would collapse; coercion and black markets would replace productive employment. A guaranteed annual income is less extreme, but still weakens the relation between effort and reward.

It is wrong in principle to force the workers and earners indefinitely to support the nonworkers and nonearners.

The negative income tax receives the most detailed criticism because Hazlitt notes that he once favored a version of it. He now treats it as a disguised guaranteed income: its taper creates a high implicit tax on low earnings, invites fraud if case-by-case inquiry is abandoned, and tends politically toward ever-wider subsidy. The core conceptual move is dynamic: policies must be judged by the incentives and pressures they unleash, not by their initial formulas.

The Negative Income Tax is merely a misleading euphemism for a tapered-off guaranteed minimum income.

The “Land Reform” section applies the same reasoning to property. Confiscating estates cannot be genuinely fair, because plots differ in fertility, location, improvements, and market value; nor can it be efficient, because threatened owners stop investing and small politically assigned farms often lack scale and capital.

“Land reform” of this type is an impoverishment measure.

In “Progressive Taxation,” Hazlitt turns to the main Western redistributive instrument. Near-confiscatory marginal rates, he argues, raise little revenue while sustaining the illusion that the rich bear the fiscal burden. More damagingly, they absorb funds that would otherwise become machines, plants, productivity gains, and ultimately higher wages.

In the long run, the high rates of personal and corporate income taxes hurt the poor more than the rich.

The final section, “Equality, Once for All,” rejects a single equal division of wealth. Following Irving Fisher, Hazlitt argues that inequality would quickly reappear through differences in ability, luck, and thrift: some would spend or borrow, others save and invest. The essay remains relevant because it frames welfare, wealth taxes, universal income, and land policy dynamically: the distributive question cannot be separated from the institutions that cause wealth to exist at all.