You may or may not like Paul Krugman, but he has a must-read rant in the NY Times called “The Angry Rich“. Here are a few quotes, but the whole (fairly short) thing is worth a read:
Anger is sweeping America. … No, I’m not talking about the Tea Partiers. I’m talking about the rich.
The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. Thus when New York magazine published an article titled “The Wail Of the 1%,” it was talking about financial wheeler-dealers whose firms had been bailed out with taxpayer funds, but were furious at suggestions that the price of these bailouts should include temporary limits on bonuses. When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him.
At the same time, self-pity among the privileged has become acceptable, even fashionable. Tax-cut advocates used to pretend that they were mainly concerned about helping typical American families. Even tax breaks for the rich were justified in terms of trickle-down economics, the claim that lower taxes at the top would make the economy stronger for everyone. These days, however, tax-cutters are hardly even trying to make the trickle-down case. And among the undeniably rich, a belligerent sense of entitlement has taken hold: it’s their money, and they have the right to keep it.
And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices. But when they say “we,” they mean “you.” Sacrifice is for the little people.
13 Comments
I like almost all of what I’ve read by Krugman. I also enjoyed the piece he linked to in his article.
I had a conversation with a close family member recently and it smacks of this same nonsense. They think the solution for our economy is to end unemployment benefits and eliminate the capital gains tax (again, “we” have to make sacrifices, and we mean you). No amount of statistics…the number of unemployed Americans for each job opening, the wealth distribution in America, the percentage of capital investment by wealth distribution in America…none of it made a dent. They have no fundamental understanding of economics, only talking points. They claimed that if the capital gains tax was eliminated today, tomorrow the stock market would jump 1000 points. When I asked what that mattered, and why people would put money in based on the elimination of a tax that goes into effect when you take profits out, I just get unintelligible rambling.
Not surprisingly, they are very well off. Yet they made the absurd comment, as we were sitting in their paid off house in front of their big screen TV, that “I’m hurting too!” This was after saying that they had $750,000 waiting to invest in the stock market whenever things looked better. My mouth just gaped open.
There is no reasoning with this idiocy. I hear about the percentage of income tax for high income folks being out of hand, (I don’t think I saw this link here, if I did, forgive me), but check out http://economix.blogs.nytimes.com/2009/04/13/just-how-progressive-is-the-tax-system/ .
I pose the simple question, would you rather make $50,000 a year and pay $2500 in taxes (5%) or $1,000,000 a year and pay $500,000 in taxes (50%). I have yet to find an honest person tell me they’d rather the $50,000 scenario. So if it is unfair and outrageous and etc. etc. that the tax rate on people making so much money is “so high”, then why do people prefer the 50% tax rate instead of the 5%?
Just had a review meeting with my Financial Advisor this morning. Near the end of the meeting, I asked him what he thought the long term effects would be of the concentration of our wealth into a smaller and smaller number of people. He said “Oh you mean the disappearance of the middle class…” and then went on to imply that yes there was a divergence as if 50% of the middle class will eventually be rich and 50% will eventually join the poor (wow, I hope he really doesn’t believe that). Then he went on to gripe that after a 100 years of entitlements that we have developed a class of people that didn’t want to work. We went back forth a little on that but I’ve pretty much made up my mind to look for another advisor in a few months when I’m no longer under rule 72T constraints.
Every person in every tax bracket should be taxed the same percentage. For example, the person who brings in $25K per year will be taxed 20% of their income, and the person who brings in $250K per year will be taxed 20% of their income. Even though the $25K-income will pay only $5000 and the $250K-income will pay $50000, the PERCENTAGES are equal across the board and taxing is much more fair.
That’s fair? How so? What’s your definition of fair?
Percentage-wise, lower income people pay a larger percentage of their income for sales taxes than high income people do. And payroll taxes actually have a maximum cap, so the percentage paid by rich people actually goes down. So you want to take the one tax we have that is actually progressive (increases in percentage with wealth) and make it a flat tax? Even though rich people are better able to pay more? What’s fair about that?
Becky, unfortunately it isn’t that cut and dry, especially when you consider things like deductions. Even the question, what exactly is income? 90% of the stocks, bonds and mutual funds are controlled by ~10% of the population, and a portion (probably considerable) of that 10% REALLY cleans up. Yet that is not considered income for tax purposes.
In other words, is it fair to tax a person making $25,000 a year through their job 20%, and a person who makes $300,000,000 a year through the stock market 10% or less? If not, then we would need broad tax reform to bring these things in line. Fair becomes a muddled term.
I also find it somewhat ironic that (back to the article) a lot of people I see whining are people who make a lot of money but live to the limits of their means or beyond. Like, “I make $450,000 a year but it barely covers my house, car, school, etc. payments, have pity on me!” And when they see poor people in the same situation, what is their reaction? Typically, “you screwed up, you should have saved more, you should have lived within your means more, etc.”
Nothing forces a person making 6 figures a year to buy more expensive things.
More often than not, the people who think that there is a way that things should be have no conception of why things are the way that they are.
Let’s go back to Adam Smith:
“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”
Tax cuts for the rich have helped employment. Look at the jobs in India and China.
Bert, you hit the ironic nail on the head. I was reading an interview with Carly Fiorina two days ago, and the interviewer was asking her about her turbulent tenure as CEO of HP, the layoffs, etc. Her response was that by the time she left HP (she didn’t mention she was fired) that total employment at HP had gone up.
BUT (and this is a very big but) what she didn’t mention that she was counting world-wide employment at HP. So while total number of employees had gone (very slightly) up, US employment had gone (dramatically) down.
Read this on Reuters:
“This week, more than 40 House Democrats sent a letter to House leaders calling for extension of the Bush-era tax rates of 15 percent on capital gains and dividends. Obama’s plan is to raise them to 20 percent for high-end earners.”
Are you kidding me? The top 1% are crying out over a 5% increase in their minuscule earnings tax? Where I live the top earners tax is more than double the current US level. I figured that Obama was actually planning on a decent hike.
The most ironic thing about the constant battle between the American left and right is that the two parties are so remarkably similar economically. Where I live, both parties would be seen as occupying the far, far right of the spectrum. I don’t think Obama could get elected here on his economic policies, they’re no where near egalitarian enough. Yet the narrow minded, adversarial political (and media) system you have in the states constructs these wild divisions where Obama is some how a socialist. A socialist who taxes only 20% of the income of multimillionaires, before they start dodging tax through any loopholes they can find? Ridiculous.
@Steve, That must be nice. Where is that?
My cynical view of our country is that Madison Avenue has been spending billions learning how to manipulate us. Now business can put that to use since they’ve been declared “people”.
New Zealand, Bert/Ernie.
I lived in NZ for a while. I loved it!