A Diogenic Quest for an Honest Conservative
The goal is straightforward: to find one sensible and factual reason why the richest 1% deserve to have TRIPLED their share of the U.S. income pie since 1980.
This amounts to an extra TRILLION dollars a year, OVER AND ABOVE the already sizable share they would have held if they had just maintained their 1980 share. A trillion dollars is seven times more than the budget deficits of all 50 states combined. If this massive redistribution had not occurred, every American family would be making approximately $12,500 more per year.
The usual defense is that the rich earn their money through hard work and innovation. But the top 1% includes a million families. While some of them are headed by great innovators and visionaries, most benefited from tax cuts, financial system de-regulation, ownership of 50% of the stock market, and a 15% capital gains tax on their stock market gains.
And what about the people who did invent and innovate? Every successful technology depends on the input of thousands of designers and engineers over many years to lay the groundwork for the infrastructure and protocols needed for success. Much of the work is already done when a well-positioned person (who deserves reasonable compensation for putting the pieces together) took a long-developing idea to the final step.
Another common argument is that the great wealth of the rich stimulates the economy. But low-income earners spend a greater percentage of their overall income on consumption. Corporate leaders are not investing in American workers. The top 500 non-financial companies are currently holding $2 trillion in cash that could be used to create jobs and stimulate new business. As reported by Fortune Magazine, the 500 largest U.S. companies cut a record 821,000 jobs in 2009 while their collective profits increased to a record $391 billion.
Others argue that the very rich pay it back through taxes. But the tripling of income since 1980 is based on after-tax figures. And the claim that the very rich pay "almost all" the taxes refers only to federal tax. If state and local taxes, social security tax, and excise taxes are included, the lowest-earning half of America pays 24% of their incomes in taxes, almost as much as the richest 1%. It's just as bad in the corporate world, where the contribution to federal revenue from income tax has decreased from 33% in the 1950s to 12% in 2005.
Still others cite the "income mobility" of rags-to-riches entrepreneurs, proving that the poor can get rich with motivation and hard work. Sure, it happens. A 2007 U.S. Treasury Department report about income mobility states "Among those with the very highest incomes in 1996 – the top 1/100 of 1 percent – only 25 percent remained in this group in 2005." But nearly 9 out of 10 of those in the top 1% remained in the top quintile of earners over those ten years. They may have dropped out of the most elite 1% group, but they remained close. The apple doesn't fall far from the tree.
Most patriotic is the argument that all of us have the opportunity to get rich in a free-market system. As stated by Virginia Governor Bob McDonnell at his January, 2010 inauguration: "Republicans know that government cannot guarantee individual outcomes, but we strongly believe that it must guarantee equality of opportunity for all. That opportunity exists best in a democracy which promotes free enterprise, economic growth, strong families, and individual achievement." But equality of opportunity has not existed over the past 30 years. The richest 10% of Americans own 90% of a stock market that has increased 7 times in value since 1980.
I can relate to the words of Diogenes: "I know nothing except the fact of my ignorance." The reason why the richest 1% deserve to have TRIPLED their share of U.S. income may be out there somewhere, lingering beyond the comprehension of people like me.
In search of an answer, this was sent to a number of conservative writers and publications. No one has yet responded.
The search goes on.