An Uber Gilded Age
A friend of mine has always said he never feels more patriotic than on the day he files his tax return and most years ships off a check to Uncle Sam.
Most Americans, I suspect, consider the tax obligation a necessary duty of citizenship. They may not like it much, but financing our government – yours and mine – is a fundamental obligation of citizens in a democracy. We band together to do for ourselves the things we can’t do alone – national defense, highways, airports, education and care for the poor and lame. That’s government and taking care to maintain it is patriotic no matter what the tax protests say.
Where the social compact starts to fray, however, is at the point where you and I pay and someone else doesn’t. The Washington-based Tax Policy Center says nearly 50% of Americans pay no income tax at all. They either have too little income to qualify or they qualify in our ridiculously complicated tax system for enough exemptions, credits and deductions to avoid any liability.
Little wonder that taxes and sending spark such political outrage. Half of the country, understandably including the poorest Americans, paying no federal tax with increasingly a tiny handful of the richest citizens controlling an ever expanding share of the wealth and also paying little or no taxes.
As Catherine Rampell pointed out recently in a New York Times piece, “the top 1 percent of earners receive about a fifth of all American income; on the other hand, the top 1 percent of Americans by net worth hold about a third of American wealth.” During the so called Gilded Age of the 1890’s, wealth distribution in the United States was not as out of whack as it is today.
Writing in the May issue of Vanity Fair, Nobel Prize economist Joseph Stiglitz says: “In terms of income inequality, America lags behind any country in old Europe. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.”
Couple those statistics with the almost daily news that top corporate CEO’s, even in firms still struggling with the recession, are raking in big bonuses and pulling down big pay raises.
The only thing that seems to impact behavior at this rarified level is sunlight. After the outcry over the news that GE, with U.S. profits of $5.1 billion in 2010, paid no taxes, but rather received a $3.2 billion refund, the company has been forced to place further restrictions on the compensation of CEO Jeffrey Immelt.
In the now classic Hollywood portrayal of the ruthless characters on Wall Street, Michael Douglas, playing that Godfather of Greed Gordon Gekko is asked, “how much is enough?”
His answer: “It’s not a question of enough, pal. It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another.”
I really didn’t mind sending in the tax return (and the check). I just hope Gordon Gekko sent one, too.
But, then again, greed knows no shame, or it seems, any limits.