Yesterday I wrote a post on the President's State of the Union address and touched on the redistributive aspects of his proposals (which will never go anywhere anyway). What I should have mentioned is that while many "rich" people think they'll be taxed to pay for Obama's middle class programs (free community college, etc.), it's important to define the difference between the truly rich -- the top one percent -- and the "merely" rich.
I knew I had read about this before but wasn't able to get to it yesterday. Here's some useful information from Vox.com (all emphasis mine). In regards to wealth:
Ever wonder how much money (and stock, assets, etc.) you needed to make the cutoff for the wealthiest 1 percent? Or even for the wealthiest 20 percent?
A report from the Pew Research Center, working off of data from the Census Bureau, lays it out. In 2011, America's wealthiest 1 percent had at least $2,385,306 to their names.
And in regards to income:
In 2011, you needed to bring home $388,905 in adjusted gross income to qualify for the top 1 percent.
(You would need to make over $400,000 to be in the top one percent in Minnesota or Illinois, however.)
So, do you feel rich? Do you make that kind of money, and have you accumulated that kind of wealth? If so, congratulations! You're a member of a very exclusive club.
But wait; it's actually more complicated than that. According to a piece in Demos, you miss a lot of the story if you focus only on the top one percent:
Not only is that five percent a historical high, it’s much higher than it was during the 1920s, when that same top .01% made a peak of two million dollars and 3.7 percent of the national income. They make 30 percent more today.
That group of 16,000 Americans, the top .01 percent of income earners, is where the most power lies and who have seen the most remarkable rise. They make an increasing share of the national income and control an increasing amount of political power.
And here's where I'd like to make a couple of points:
1. Many middle- and upper-middle class Americans think they're being taxed heavily (and unfairly) to support
2. Forget for a minute whether or not the tax code is "fair" or even economically "efficient." Think about this instead: the system we have -- and any system, for that matter -- doesn't exist because of laws or the Constitution, even though we may tell ourselves that. As my son would say, "It's all made up." And it survives only so long as the majority says it does. In other words, this economic/political system of ours is here until the majority decides to overthrow it. This idea of private ownership and the laws to protect it only exist as long as those on the "outs" say so. And if the bottom 99 percent gets larger and larger in absolute numbers and fails to participate in the benefits that the economy provides, how long will they go along with the system?
I hate to be an alarmist, I really do. And I've tried to avoid hyperbole in this blog as much as possible (it damages your credibility). While I certainly don't see a French- or Russian-style Revolution in our future, it's worth noting that the system only exists so long as it works. Let's not kid ourselves about that. And the day it ceases to work for the majority is the day it gets overthrown.
Am I overstating all this? Perhaps. But just look at dramatically unequal societies, like those of Latin America in the 1970s, for instance. The richest lived behind walls with bodyguards in fear of being kidnapped. You wouldn't want to live like that. Or look back at America in the 1930s, after the last spike in inequality. Many Americans -- more than most people realize, I think -- were driven to the far left or the far right. (And there was quite a bit more violence than most people think, too.) I really don't think it's too much of an exaggeration to say that FDR saved capitalism and democracy in this country. (I'm hardly the first person to suggest that.) You'd be foolish to think it couldn't happen again. Don't believe me? Just look at the excesses of the tea party. And then multiply it.