Does Today's Income Tax Coddle An Endangered Species?
The idea of a personal income tax is a modern invention. Throughout most of history, the record keeping of tracking individual income would been a logistical nightmare. During the Civil War, however, Congress passed the Revenue Act of 1861 which instituted an income tax for the first time. Today class warfare is more of a concern to American citizens versus whether or not you hail from the North or South. And Warren Buffett has assumed the role of a modern-day Robin Hood to help protect the poor and middle classes versus his mega-rich cohorts.
In a NY Times' Opinions Pages editorial, titled, "Stop Coddling the Super-Rich," Buffett was quoted as saying, ". . . blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species."
He further states, that "while the poor and middle class fight for us in Afghanistan . . . we mega-rich continue to get our extraordinary tax breaks."
It's true that the massive wealth of the U.S. resides in the hands of an elite few. Only 1% of Americans earn nearly a quarter of the nation's income. And while society's upper echelon has seen their personal wealth rise 18% over the past decade, those in the middle and lower classes have actually seen their's decline.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top levels had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
So while Buffett's analogy was used to highlight these inequalities, many others say the segment of society that's most endangered these days are those that are paying more taxes percentage-wise and reside at the lower end of the economic demographic.
I take this supposition one step further - and believe that endangered species is not a class of people, but the economic system itself. Joseph E. Stiglitz' insightful Vanity Fair article, "Of the 1%, by the 1%, for the 1%," points to how the widening gap between the high and low ends of the economic spectrum in America can lead to the demise of a functional financial state. He states, that "an economy in which most citizens are doing worse year after year - an economy like America's - is not likely to do well over the long haul."
Stiglitz believes that this growing inequality is the flip side of something else, namely, "shrinking opportunity," and "whenever we diminish equality of opportunity, it means that we are not using some or our most valuable assets - our people - in the most productive way possible."
As society's wealth distribution system becomes more and more lopsided, the more reluctant the wealthy become to spend money on common needs, namely infrastructure, health care and entitlements. Since they can take care of these needs for themselves, they shun idealists like Warren Buffett and ridicule him as being out of touch.
They see no need for a "shared sacrifice, and as Buffet concludes, his 'friends . . .have been coddled long enough by a billionaire-friendly Congress," who are the ones really out of touch. . .and yet continue to be treated like "spotted owls."
For related post, see also: Taking the Bull By The Horns, "Occupy Wall Street" Posters Motivate Campers