This morning Paul Krugman posted an article, The Stiffs and the Players. This is a reference to a speech by Gordon Gekko in Wall Street. In it, he explains to Bud what they are working for. He says that Bud doesn’t want to be some Well Street working stiff making $400,000 per year and flying first class. Bud should want to be rich enough to own his own jet—to be rich enough to not waste time.
Krugman mentions this in reference to the idea by Nate Silver and Josh Marshall that what the Republicans are trying to do in the budget negotiations is to protect the very wealthy at the expense of the “simply” wealthy. In other words: protect the jet owners at the expense of the first class travelers. And he presents a graph that demonstrates this.
On one level, I don’t particularly care: I’m not shedding any tears for any of these people. On another level, this is just wrong. But it is nothing new. For a long time, I’ve been talking about the fact that with our tax system we fuck the “simply” wealthy compared to the very wealthy. Someone who makes about a half million dollars per year probably pays around 30% in federal income taxes. But someone who makes $20 million pays only 15%.
You would think that this would create a class war between these two groups, but for whatever reason it doesn’t. I think a lot of it is that the rich are just as ignorant as anyone else. The caller to Sam Seder’s show is a good example. I suspect that this kind of guy votes reliably Republican, even while the party consistently puts his interests aside for the interests of the really wealthy.
As I’ve said before, I currently think it would be good to create two more marginal tax rates. For the rate above $250k up to $500k: 40%. For $500k up to $1m: 45%. And for income over $1 million: 50%. And as usual, bring the Social Security tax cap way up: $250k or higher. And finally, raise the capital gains rate up to the “work for a living” rate, or at least implement something like the Buffett Rule or a new AMT.
This is not only good for our economy and our society, it is much more fair to the “simply” rich. True: it does require that they pay more in taxes. But this is about shared sacrifice—what these kinds of people are always calling for. Well, this is what true shared sacrifice looks like. Shared sacrifice is not the rich (who’ve gained 93% of the economic gains of the recovery) paying for half of the budget shortfall. This is only shared sacrifice in the entitled minds of the wealthy. The poor and middle class who have seen almost no gains during the last 30 years of productivity gains have already paid enough. It is time for the rich to pay their fair share. And that necessarily means that the very wealthy much pay a lot more.