The New York Times is running an unusually enlightening series, "Class Matters," on how America’s super-rich have built financial moats and legal fortresses to guarantee excessive wealth for themselves and their heirs.
It’s an issue true American liberals have to tackle. America is not supposed to be a land of guaranteed wealth for the wealthy. Royalty is positively not American. And yet, where is the liberal cry from the once-liberal Democratic Party?
This country is supposed to be a land of opportunity. With opportunity there is a chance of success and a risk of failure. Yes, we have to have economic safety nets for those who fail honestly, but aren’t safety nets supposed to be for the poor and helpless?
The estate tax. Why, when the super-rich are collecting astronomical salaries, bonuses and dividends, are they also demanding a permanent end to the federal estate tax? This tax on dead rich people doesn’t kick in until after the first $1.3 million. It affects no more than 2 percent of Americans. Yet the Democrats have been almost silent as the Republicans sell its repeal falsely as the salvation of the family farm.
The attack on the estate tax is only the most obvious sign of the problem. The effective end of progressive income tax rates is another sign. The problem: Certain Americans are locking themselves into advantage while others are locked into disadvantage.
As columnist Bob Herbert explains in the Times:
"For every additional dollar earned by the bottom 90 percent of the population between 1950 and 1970, those in the top 0.01 percent earned an additional $162. That gap has since skyrocketed.
"For every additional dollar earned by the bottom 90 percent between 1990 and 2002, Mr. [reporter David Clay] Johnston wrote, each taxpayer in that top bracket brought in an extra $18,000.
It’s like chasing a speedboat with a rowboat.
Note: That 0.01 percent of the population represents about 14,000 U.S. households, each with at least $5.5 million in income. Their tax rates are dropping, while the "merely rich," those households earning $75,000 to $1 million a year, are watching their tax rates increase. The top 400 U.S. taxpayers, who make $87 million or more, pay the same percent in income tax as people making $50,000 to $75,000.
Rising, falling. One great thing about America’s freedoms is how they have allowed each poor citizen to pull himself or herself up, through imagination, skill and hard work, to a higher standard of living. And just as important to America’s egalitarian ideal is the principle that the rich who grow too stupid or lazy can fall just as easily into the kind of hard times that might wake them up to reality.
For the last 20 years, however, our laws have been removing the risks of the rich. Congress, populated by the hyper-rich and those soon to be hyper-rich, has been busy erasing the tax code that keeps the rich on their toes, and slipping through legislation that shelters their kingdoms come what may.
Upward mobility has become more difficult because downward mobility is almost impossible. The rich can leverage their government-guaranteed assets to wipe out most competitors. The poor can tread water. Except for government workers, unions are dead. Wages for the poor are not rising, and there is no one organizing to demand better.
Change coming. This is not a story of a class warfare. The problem doesn’t even call for income redistribution. But the widening gap between haves and have-nots does call for a fairer tax system that gives the poor something to build on and the rich an incentive to avoid indolence.
History has its to and fro. America’s lower and middle classes – and even the nearly rich -- soon will notice the smug, sealed-off aristocracy, and they’ll ask how things got that way. Then comes history’s big pendulum, knocking things down.