Thursday, March 19, 2009

Americans View the Rich With Rising Skepticism

F. Scott Fitzgerald once wrote, "Let me tell you about the very rich. They are different from you and me."

That segue leads me to an article I read in the LA Times about Americans attitudes toward the wealthy. For decades they've been held up as examples of what we can achieve through hard work and determination, but recent events have people looking at them in a different light, and the belief that the wealthy are worthy is waning.

Thanks in part to AIG, BOA and men like Bernie Madoff, Americans are beginning to realize that the rich have added little value to our economy, and in the case of corporate executives, their huge salaries weren't even based on performance. They made millions even when they failed at their jobs.

And they made millions even when they didn't work. Dumb luck explains their wealth in many cases.
By my count, roughly one-quarter of the names on the Forbes list of the 400 richest Americans got there by inheritance (and by no means have all of them enhanced the family fortune with their own toil or brainpower). A few years ago, it was common to think of the rich as a special breed. We may soon come around to George Orwell's view that the only difference between rich and poor is income -- "The average millionaire," as he put it, "is only the average dishwasher dressed in a new suit."
Except, the average millionaire can still afford health care, a roof over his head and the cost of a college education, while the rest of us struggle to keep our homes, fund retirement accounts, etc. Meanwhile, inequality is now at levels not seen since the Great Depression.

It's no surprise that a recent CNN poll shows that Americans are losing confidence in their ability to keep their current standard of living. People need jobs, good paying jobs, and that means we'll probably need a second stimulus plan, along with progressive tax increases on the wealthy.

But, but, higher taxes make it harder for the wealthy to invest and create jobs, right? Wrong.
It's proper to note that years of study have unearthed no consistent evidence that taxation causes the rich to alter their investing behavior much, at least not until their tax burden reaches a point vastly higher than what Obama contemplates.

"The real rich -- the top 1% -- work very hard for reasons other than money," Reuven S. Avi-Yonah, a tax historian at the University of Michigan, told me this week. The quest for prestige, political power and self-esteem, the ability to control things and people, are all factors in their behavior.
Actually, the original case for a progressive income tax was directed at the real wealthy. Our Founding Fathers sought to break up concentrations of wealth, inherited or otherwise, because they considered these to be undemocratic -- markers of "an aristocratic society, not a free and virtuous republic."

IMHO, it all boils down to two things. Morality: Taxing the wealthy at higher rates than the poor is a moral issue. And it's also a religious issue: If God provides abundantly it is only for the purpose of you in turn giving to those in need.


Lew Scannon said...

You would think that a successful businessperson, who made their wealth through hard work, and not through financial manipulation, or fortunate birth, would want to share s some of that as thanks for being lucky enough to live in a country where hard work can be rewarded.

Kathy said...

Lew, I agree. In fact, my parents raised me to do exactly that. They had a low tolerance for selfish, greedy behavior. Maybe it boils down to the way people are raised.