Saturday, July 13, 2019

Wealth Inequality

Why should you care about how much money someone else has?

Isn't complaining about other people's wealth just a form of envy?

Why shouldn't someone who worked hard for a living enjoy the fruits of their labor?

If we start with the premise that as a regular citizen you are concerned with regular things - food, shelter, medical care, education, a living wage job - and then consider what impact wealth inequality has on your ability to obtain those things we will get an answer.

The main problem with wealth inequality is that it allows multi-billionaires to avoid contributing to the general welfare in the form of taxes. One could argue, and many do, that the government doesn't contribute to the general welfare and should be starved. No one would openly promote the government wasting money. So why do we see so much waste in government? Why does someone like our current prez end up paying nothing in taxes for 8 out of 10 years? The answer leads us to a chicken or egg sort of debate.

What came first -

A government that forces high taxes on it's citizens and then wastes those tax dollars to subsidize the defense, pharmaceutical, fossil fuel, medical, insurance, finance and banking industries?


A government that was captured by the defense, pharmaceutical, fossil fuel, medical, insurance, finance and banking industries and then forces  some of it's citizens to pay taxes and then wastes those tax dollars to subsidize those industries, their wealthy owners and shareholders?

I think the latter and once that capture was complete, free speech (money) was used to indoctrinate people into believing that lowering taxes on the plutocrats, increasing wealth redistribution from the lower/middle/working classes to the elite and eliminating or curtailing government programs that might aid those lower/middle/working classes was somehow in the best interest of regular citizens.


There are highly paid and highly ideological people exercising their free speech rights to convince regular citizens that the tax man is ripping them off. In a sense this is true - regular citizens generally pay their taxes while the uber-wealthy often don't. If you can afford to off-shore your wealth, or employ smart tax attorneys and accountants you can take full advantage of the many tax breaks and loopholes that have been put in the tax code to benefit the rich. Because of this disparity in the way the tax laws were written and are enforced middle and working class people pay a disproportionate share of their income in taxes....while a stable genius does the "smart thing" and pays no income tax for years.

It's not a complete rebuttal to the "woe is me the tax man taking all my money" point of view, but a look at historical top marginal tax rates is illustrative of how disingenuous or ill-informed the arguments can be.

Throughout our history the top marginal tax rate has been higher (much higher) that it is today. The top marginal tax rate from 1954 to 1963 was 91% - today it's 37%. From 1932 to 1980 the top marginal tax rate varied between 63% and 94%.

Since 1980, when the "Reagan Revolution" began, the top marginal tax rates have declined as well as the ability of our government to serve the  majority of it's citizens. Declining tax revenues explain part of government's dysfunction but competition for government resources between those with money and power and those without led us to a corporate welfare state where according to one study in 1990 the federal government gave away 170 billion dollars in corporate welfare while spending 8.4 billion on primary and secondary education.


Marginal tax rates are not totally, but fairly close to being, meaningless unless we can "look under the hood" and see what the tax laws actually are. What loopholes, special conditions, deductions, depreciation schemes reside in the tax code? Who knows?

Years ago I was looking at the tax codes for some reason and was amazed at what a lucrative enterprise (from a tax standpoint) owning race or show horses can be. Something didn't smell right about that given the connection between the horsey set and extreme wealth. If you own a race or show horse this article from The Horse may be useful in figuring out your tax strategy.

Having even a simple understanding of how and why changes to tax laws are made is "challenging" by design. Congressional discussions that led to the tax changes Congress made in 2017 were done in secret. This article compares what how tax laws were debated and discussed by Congress in 1985/1986 compared to the secret process used in 2017 -
"Unlike in 1985-1986, when bi-partisan tax bill drafters held 89 hearings with more than 2,600 witnesses, the House Ways and Means Committee in 2017 held no hearings on the specifics of the bill it was drafting."

So lets return to the original questions...

Why should a regular citizen care about how much money someone else has? Well they shouldn't unless that persons accumulation of wealth impinges on the rights of other citizens. As citizens of the US we have the right to a representative democracy and to live according to the rule of law applied equally to all. Extreme (often inherited) wealth undermines both those rights by corrupting the political and legal processes.

Isn't complaining about other people's wealth just a form of envy? Maybe. If you buy into the lifestyles of the rich and famous as something to aspire to, then yes. If you can't afford to take your kid to the doctor then no, it's a request to be treated as a human being. My own experience has been that some of the most dysfunctional people I've known were "beneficiaries" of inherited wealth.

Our current President demonstrates what can happen to a person's character when they are given their fortune. Contrary to the lie that he started with a million dollar loan from his father Donald Trump inherited at least 413 million dollars. Billionaires like Bill Gates and Warren Buffett have said they will not pass their fortunes to their children. Each of Warren Buffett's three kids will have a 2 billion dollar trust fund which still leaves about 60 billion of his fortune to go to charity.

Why shouldn't someone who worked hard for a living enjoy the fruits of their labor? Exactly! If you worked hard for a living by all means enjoy what you earned. Perhaps we could debate whether enjoying the fruits of your labor means having five luxury homes instead of six like Mitt?

If you are a recipient of massive inherited wealth purely by accident of birth how much of that wealth you are "entitled" to is a different question. Most people don't understand the inheritance tax given the success of the uber-wealthy funded indoctrination campaign to define the estate tax as a death tax which negatively impacts many people. Here's some facts from the Washington Post article I linked to -

  • The estate tax impacts less than .1% of estates. 
  • The estate tax effects those with an estate worth more than 5 million dollars (see below for update). 
  • Most of the wealth (about 60%) in the US is not earned, but inherited. 
  • In 2010 the bottom 60 percent of people in the U.S. controlled 1 percent of the countries wealth.

Those figures are out of date if we consider what the GOP did in the dead of night with the Tax Act of 2017 which increased the cut in point for the estate tax from 5 million to a whopping 22.4 million dollars.


Finally to wrap up - if we start with the premise that as a regular citizen you are concerned with regular things - food, shelter, medical care, education and a job that allows you to support yourself and your family. If we then consider what impact wealth inequality has on your ability to obtain those items we will get an answer.

So what is the answer? Whether you believe it or not government has significant influence on how society meets those basic human needs - food, shelter, medical care, education and living wage work. How do I know this? the folks who want to make America great again I think things used to be better in our country for working class people. I ask myself what changed in our country to allow for the proliferation of unhealthy food and subsequent health problems, unaffordable housing, unaffordable medical care and expensive and declining educational opportunites?

Did the American people change?

Did government policy change?

I think people were just as caring, honest, and hard working 40 years ago as they are today. People wanted the same things - a job that allowed them to support their family, a better life for their children and a country they could be proud of. The government pulled the rug out from under those people with policies like NAFTA . lax monopoly laws that allowed Walmart to decimate so many small business owners, immigration laws allowing for a low wage easily oppressed supply of labor, refusal to enforce then gutting the Consumer Finance Protection Bureau, etc. etc. etc.

Wealth inequality has consolidated money (power, speech) into the hands of a few who are then able to buy our government and much of our media. This wealth was used to capture the government and enact policies that hurt those caring, honest and hard working people while helping the entitled .1% That same consolidated wealth controls a large share of the media so we see disinformation, useless information, and cherry picked facts - while topics outside the Overton window are not covered at all. Thankfully that window is adjustable as Bernie Sanders, Elizabeth Warren and Alexandria Ocasio-Cortez are showing us.


Religious doctrine is not of much help when false prophets rip off their followers and help enrich themselves and their cronies by preaching a gospel of greed not grace. The more successful televangelists can rip off poor people and buy a private jet so they don't have to fly commercial in a tube filled with demons.

Talking about televangelists reminds me of a guy I knew about 45 years ago when I was working, taking some college classes and going to cooking school in Billings Montana. His name was Steve Brown and he happened to be black which was quite unusual for Billings. Anyway I liked him and thought he was pretty funny. One day he told me he'd had a dream the night before and Jim Baker (a corrupt televangelist) had appeared. Then he took a long pause and know what he told me Jack?

Send money.

It is and always has been a fight between greed and compassion.