There is no mystery to Income Inequality

There is no mystery to Income Inequality
Every day I read at least one article by someone wondering about the mystery of income inequality. “Why has the income of the top 1% risen so much while that of the 99% has stagnated?”

I see no mystery here. I am puzzled only by the fact that otherwise seemingly intelligent commentators don’t consider the simplest explanation. The more you earn in the US, the more your income relies on government programs yet the less you pay in taxes.

When Warren Buffet can pay a lower tax rate then his secretary, when taxes on the wealthiest have dropped from the 90% or higher that they once were to the less than 10% effective rate paid by many of the wealthiest, one need not wonder long about why income flows to those at the top.

From those who receive the most, we should expect the most. But, in our country, we tax least those who benefit the most from the spending of tax dollars.

You don’t need a government or the support of society to help you be poor. You can and will be poor without any government at all. That government which governs least ensures poverty for the majority of men… But, you do need government and society to enable you to be rich. A poor man may claim to be “self-made,” but the wealthiest among us, while they may be competent and have many qualities, rely more on government programs and hand-outs then the most vilified welfare queen or slacker. 

The radical Republicans, the Confederates of our day, argue that wealth trickles down from the rich to the poor, like food dropped from the table to the dogs that wait below… They are wrong. Wealth bubbles up. Wealth for the few depends on an ability to accumulate “surplus” from the labor of the many without wealth. It is government, through road building, infrastructure development, court systems, the military, etc. that enables such accumulation.  We also know, without much debate, that those with great wealth simply don’t spend most of their income. They save and invest it. Rather than letting bits of food drop to the dogs, they save what they don’t spend and see it grow to more wealth.

Certainly, relative wealth is not a bad thing in itself and if in moderation. If nothing else, we know that it is necessary to allow the dream of relative wealth to motivate some in our society. But, great wealth is not a good thing. No man is worth $1 billion and no man needs $1 billion to be sufficiently motivated to work hard. 

There is no mystery to me in the question of income equality. We have forgotten the important rule that “From those who receive the most, the most is expected.”

My personal feeling is that the fix we need is to make a truly progressive tax system that attempts to match tax obligation to the value received. To me, this means that incomes over about $200,000/year, from any source, should be taxed at a progressively higher rate until we reach, in fact, the fair rate of 90% or higher for marginal income. The way to do this is to add dozens of new tax brackets on who earns $50 million should pay more than he who earns $10 million. etc.

No, I am not a socialist and I’m not a communist. I am both a lover of democracy and a fervent capitalist. I believe that Capitalism is the economic face of political Democracy. But, I also believe in fairness. I believe that those who receive the most from government should be expected to pay the most in taxes.