Many in the rich or wealthy class continue to complain about being overtaxed. They do so even as they receive preferential tax treatment. They do not pay social security tax (12.4%) on any of their income above $17,000.
The rich make most of their income from capital gains. The working middle class makes most of their income from wages. Capital gains are taxed at 20%. Wages are taxed at up to 39.6%. In other words, the working man’s tax rates could be near 100% higher than the rich shareholder drinking tea at his/her pool. Worse, the rich do not pay any Social Security tax on the gains.
Why do Americans accept this? Generally, they have not realized that they are being had by a government controlled by the rich. They have not yet accepted their real worth.
The rich are products of the government.
It is obscene that much of the wherewithal that made the rich is in effect government. We the people, the taxpayer paid for much of the innovation that made their success possible.
William Baumol found in the 1960s that 90 percent of the United States’ GDP today is due to innovations since 1870. Nobel Prize winner Herbert Simon estimates that a flat tax of 90% of income is justifiable because “social capital” accounts for 90% of income in developed countries. The Human Genome Project cost the government $3.8 billion but generated $796 billion in economic gains. The project is expected to bring about returns of 140 to 1 to the public. Research by Kenneth Flam finds that, “eighteen of the twenty five most important breakthroughs in computer technology between 1950 and 1962 were funded by the government, and in many cases the first buyer of the technology was also the government.” The Randian vision praises hedge fund managers, even though most hedge funds underperform the market. Social Darwinism praises the CEO even though the most highly-paid CEOs are often unsuccessful and many companies run fine without them. Society praises Zuckerberg, Brin and Dorsey, but it was DARPA that made their coding possible. Much of the research the government pursues isn’t profitable enough to merit the attention of private companies, or is simply too risky. Private space flight is only imaginable because the government went there first.
Americans are struggling because of an economic collapse caused by many in this rich class. Yet, the rich continue their attacks on the meager social safety net (Social Security, Medicare, Medicaid, Obamacare). Our system is a fraud and as George Carlin says, “the owners of this country know the truth is called the American dream because you have to be asleep to believe it.”