A hedge fund manager who makes $5 billion in a year is making enough money to pay the starting salaries of 100,000 firefighters. On a one-year monetary basis, a financial expert is worth 100,000 times more than the man or woman racing to the scene of a medical emergency.
This is an extreme case, but there are a million other examples of Americans who, on the average, have tripled their share of the American income pie in just 30 years (after taxes). The richest 1% didn't work three times harder than the other 99 million American families. They benefited from the social and capitalist structures to which they often object paying taxes.
The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health, and the National Science Foundation. They benefit disproportionately from national security and a business-enhancing infrastructure. They have taken advantage of tax cuts, de-regulation, and a financial system fine-tuned for the making of money at diminishing risk. The richest 10%, with 80% of the stock market and a 15% capital gains tax, have settled back to watch their assets grow. According to a study by the University of California, in 2008 only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.
The standard argument against this is that everyone has an equal opportunity to benefit from past accomplishments. But it isn't true. An American born in 1970 in the bottom economic quintile had only a 17% chance of making it into the top two quintiles. Reports from Brookings, Pew, and the OECD show that much of Europe has more economic mobility than the United States.
Even for those who headed up the newest computer-based technologies, their successes have depended on the input of thousands of physicists and chemists and chip designers and software engineers and market analysts over many years to lay the groundwork for the infrastructure and protocols needed for success.
At the time of the American Revolution Thomas Paine noted that everything "beyond what a man's own hands produce" came to him from society, and therefore "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."
But instead we face a destructive form of class warfare in which a small percentage of people are taking almost all the new income. The middle class has been under siege for 30 years. Based on Internal Revenue Service figures, if the average middle-income family had just maintained its share of America's productivity held in 1980, it would be making $10,000 more per year ($45,000 instead of $35,000). An astounding 90% of American workers have seen their inflation-adjusted incomes go down since 1999.
Everyone who contributed to American productivity deserves to benefit from it. Extreme disparities in the system need to be fixed. That means taxed.
Paul Buchheit