Paul Krugman provided this fine pie chart that shows who exactly is paying taxes on long term capital gains. The reason it is important is because Marco Rubio wants to eliminate this tax. Up until now, this idea has been extreme even for Republicans. And you can see why: over half of benefits from Marco Rubio’s tax cut would go to the top 0.1% — the people in the top 1/1000th of the income distribution. And if you look at the whole of the top 1%, that’s almost 80% of where all the benefits go.
Still, I find the graph a tad bit deceptive, because people tend to assume that “everyone else” is somewhat equitable. I’m not suggesting that Krugman means to imply this. He’s making a different point anyway. I just know how non-mathematical people think about this kind of stuff. Something that Krugman has written about over the years is that inequality is kind of like a fractal. (Actually, I believe that’s my analogy, not his.) It doesn’t matter where you are in the income scale, the people above you are a lot more rich than you are. It’s such that people barely in the top 1% often think of themselves as poor because they are around people who are so much more wealthy. And so on until you get to Bill Gates, who when asked if he was rich said only, “Well, I’m certainly not middle class.” (Or something like that.)
The data for this graph comes from the Tax Policy Center. And if you look at the top 5%, you get 92.3%. The top 10%? 95.4%. And the top 20% — the upper class? 97.5%. So 97.5% of Marco Rubio’s tax cut on long term capital gains would go to the upper class and only the upper class. Pretty amazing, huh?
So let’s talk about what these high incomes mean. In order to just make it into the top 10%, you would be making over $115,000 per year. To just make it into the top 1%, you need to be making more than $400,000. I can’t find data on the top 0.1%, but we are talking millions per year. So these are not people who are struggling. They are not the people who need helping and they are not the “job creators” who will start hiring if only they had just a bit more money.
But it’s worse than even that. There’s 2.5% left over for the bottom 80%. Is it shared even somewhat equally? Of course not!
The upper middle class gets most of the remaining: 1.9%. The middle class gets almost all of the rest: 0.6%. The lower-middle class get the final 0.1%. The lower class — those in the bottom 20% — get nothing at all. Of course, you can depend upon the Republicans finding some middle class person who gets all their income from long-term capital gains and dividends, and making a commercial where they talk about how much better their lives will be. Meanwhile, millions more children will go to bed each night hungry. But that won’t be mentioned.
Income inequality is a virus that is killing our democracy. And it does those who have excessive money no good. As Henry George noted long ago, “Man is the only animal whose desires increase as they are fed; the only animal that is never satisfied.” I don’t think this is a natural state, but rather the result of a civilization that has no values beyond that of commerce. And people like Marco Rubio think this is just great. The next time he mentions God, remember what he really worships.