Are the rich getting richer? Do you care?
You read it all the time : The rich are getting richer in America... and they're doing it a whole lot faster than the rest of us. In other words, income inequality is growing.
A recent Wall Street Journal op-ed by the libertarian Cato Institute's Alan Reynolds claimed to debunk this prevailing wisdom. (A vastly more detailed--but also easier to follow--version of his argument was published on the Cato site the other day.) This set off a blogsphere brouhaha, as you can see here and here and here and here for just a sampling. And now economists Emmanuel Saez and Thomas Piketty, whose data Reynolds questioned, have responded to him. I've waited to post on this until I could decide who seemed to be right. Well, I've read all the relevant material pretty closely now, and here's my verdict: I... don't really know. Not for sure. Most of the argument turns on one cloudy factual question (the exact impact of tax reform on reported incomes) and one knotty theoretical question (whether to count "transfer payments," such as Social Security checks, as part of income.) Sometimes reporters need to admit it when a discussion is above their pay grade. Even when they are wearing their "blogger" hat.
But I can also report that Reynolds is an outlier--even many free-market conservatives regard increased inequality a given--and that serious economists have plausible responses to most of the questions he raises. Reynolds' Cato paper presents as uncontroversial and black-and-white several points that are in fact quite arguable. The hyperbolic blogger Donald Luskin calls Reynolds a modern Galileo; that just tells you that some people want very, very badly to believe this stuff.
My opinion is that the balance of evidence shows that inequality is something worth worrying about, even if the details are hard to pin down. Yes, inequality looks less bad if you count government transfer payments to the middle and lower classes. But doesn't that just mean government has been helpful in softening underlying inequality trends--in part by doing things conservatives like Reynolds surely object to?
Obviously, serious money is at stake in this debate. If you think inequality is a problem, and that it's growing, you'll probably want to scrap the Bush tax cuts.
But of course lots of conservatives don't think inequality is a problem, even if it is growing. Back in 2004, I spent some time with the radio talk show host Neal Boortz. He was on tour promoting his FairTax Book, an apologia for a radical tax reform bill sponsored by Georgia Republican John Linder. The FairTax would replace the progressive (i.e., rich pay relatively more) income tax with a national sales tax. While the FairTax has some progressive features, it's undeniably a great deal for the very rich. At the time, The FairTax Book was a bestseller and this idea actually seemed like it had an outside chance of getting a serious hearing. (Hurricane Katrina hit as I was putting the last touches on the story, and, well... things changed.) In our conversations, Boortz made it pretty clear he didn't give rodent's hindquarters about whether the rich paid less, as a proportion of their income, than the not-so-rich. "I learned a long time ago , I don't look in other people's pockets. I look in my own," he said.
Now, the very next quote in my notes is "Isn't this a sweet ride?" We were having this conversation in a small chartered plane flying over the Gulf Coast, on the way to the next stop in Boortz's book tour. (I'm not sure who paid for the plane, Boortz or his publisher, but the point is that regular folks don't get to do this.) Then again, I also met lots of people in Boortz's fan base on that trip--teachers, small businesspeople, retirees, all folks who presumably fly commercial--who said pretty much the same thing. Many liberals will probably write this off as a sort of false consciousness. That's a mistake. Economic jealousy really is undignified, as well as counterproductive. And I suspect people in the middle trying to get ahead are even more sensitive to this than are the already-well-off.
But that's a diversion. You don't need to be green with envy to think inequality is a problem. Big differences in standards of living can have real, concrete costs to the relative losers. As Cornell economist Robert Frank has argued, the rich help set the standard for the rest of us, and unless you are St. Francis of Assisi you will find this difficult to blithely ignore. Want your kid to get a competitive education? You'll probably want to move to a suburb with excellent schools--and those places don't have a vast stock modest, affordable two-bedroom Cape Cods these days. Instead, Frank argues, you may find yourself stretching to move into a McMansion. At some point, too much inequality may also make for bad or even corrupt politics. Harvard economist Edward Glaeser discusses this here.
The more obvious problem with growing inequality is that it makes it harder for people to feel as though they are getting ahead and sharing in prosperity. This is especially true in periods when the typical person really isn't seeing much wage growth--which has been the case for the much of the past five years, despite the recovery and the market rebound. The success of American capitalism has been driven in part by our optimism, which makes us willing to accept the risks I write about in this blog. What happens if that risk/reward calculation stops looking so good?
A major problem with the very rich is that they set their own wages using other proples money.
If you are broke and always spend your money down to Zero, by definition, you will never be able to keep up with the people who have better financial behavior. Zero doesn't grow. A person with Zero is just as poor now as 1000 years ago.
the illusion of the rich growing richer is they can afford what they buy and people who can't finance it. Its a hard hole to dig out of in the rat race of trying to keep up.
People need to determine what is important to them, stuff or financial freedom. The more you buy the less you save, without saving and investing how does one acquire wealth?
The rich hire people, the more they are taxed the less they will hire.
a flat tax and or consumption tax is a great idea, eliminate exemptions and simplify it to gross income, flate percentage and amount due.
I'm not concered with the rich making more than I, afterall, they are rich and so be it, good for them. I'm concerned about my prospects and those of my friends and family. They may not be making the gains of the "rich" but they are making gains. Many are not working in traditional corporate or manufacturing jobs as was the case twenty years ago, they are 1099's (especially in the past 5-8 years as computers became afordable workhorses) in all sorts of businesses, some they never thought of before. The risk reward is up to you.
Do we want a society like Argintina, with a few very very well off and the rest.....or how about a system of lords and serfs...what about life span, should the rich live longer, healthier lives and have good dental care and the rest can rot in hell?
This whole discussion flys in the face of the so-called conservative Christians who rant and rave about abortion, etc. etc., but don't want to do anything about the population that's created by our society today.
There are societies that try to practice Socialism, like Cuba.
The Cuban government does its best to try and make sure no one has more money than anyone else. Therefore, buying new cars and things are tightly controlled. Wouldn't want anyone being better than anyone else, right?
But some people in a socialist society are better than everyone else... The socialist rulers and family members! Talk about an aristocracy.
So that must explain why people are still willing to SWIM from Cuba, where everything is "fair" and come to such an unfair place like America and wash dishes in the hope of making it. Freedom from socialists.
Setting aside which viewpoint is most accurate, I would say it is not up for serious debate the fact that you have to include transfer payments. To say that some people don't earn enough, pass laws to transfer wealth, and then ignore the impact of those transfers is the height of intellectual dishonesty.
"But doesn't that just mean government has been helpful in softening underlying inequality trends--in part by doing things conservatives like Reynolds surely object to?"
The problem with that line of thought is that no one is proposing decreasing current government expenses, merely reducing future increases.
I also find it interesting the author went from saying it was difficult to determine if the entire premise of income inequality exists directly to saying there is a problem. In reality, no person's income is impacted by whatever amount of money the truly super rich make(provided they make it legally) . However, whenever politicians propose "solutions" to solve the "problem", many people's incomes are directly impacted. And for most people, the direction isn't favorable
My wife is Brazilian and in Brazil they have a major problem with squatters building "tent cities" on other (very rich) people's land. Being from the U.S., it was hard for me to understand their mindset. Didn't they respect private property rights? I think this American perspective that we have is why we don't revolt and try to upend the rich. We aspire TO BE one of the rich. Why would we want to overthrow the very class that we want to one day become a part of?
Income Inequality matters as it is currently materializing matters. The American Dream is about getting ahead if you work harder. If working harder doesn't translate to improving your life and income, it matters. The current tax system penalizes people who WORK period. The workers pay isn't increasing, the deductible on the medical insurance goes up, social security taxes keep on going up, and for the upper middle class their tax "cuts" are eaten up by AMT. In the meantime households making on average $1.25 million a year are saving $58,000 on their capital gains (you don't make this much money working unless you are a football palyer or rock star). The people who benefited the most from the Bush tax cuts were the top 1% of all households. Once people feel that they can't get ahead using the system, they start working outside the system. This leads to social unrest and crime (and not jsut the kind where you get hit over the head, more Enron-style crime). It leads to losing your edge in the market place. Because if the the smart people who work are not motivated to do so because there is not enough benefit, businesses who need to have things happen to make a profit, enter a downward spiral. Lastly the top 1% of American households don't purchase enough goods to keep the economy rolling and growing. When the middle classes have to cut back on spending and start saving like the Chinese masses do, the global economy will enter a downward spiral, because we will need a lot less goods to be made.
Chris from Hamilton, TX where was the word Christian mentioned in the post? I wish just once a liberal would realize social and fisacl conservatism are two separate things. Sounds to me like you are the typical failure economically who expects the government (ie me) to bail you out.
Jealousy is undignified? What garbage. Those on the losing end of the spectrum (i.e. everyone who has to work for a living) should not only be jealous - why should some people live it up while the rest of us slave - they should be pissed. The obvious cost of inequality is rebellion and theft. If your being screwed by the system, you lie, cheat, and steal from it whenever you can. Or at least you should, if you have a brain.
I am a young person. Not a child, but a young person. I suppose I would need to look at much more data to get a feel for this issue, finding out exactly how high of an income makes someone "rich", the difference between that and the poverty line, etc. But there is one thing that I do know. No "rich" person has ever directly affected my life, nor have they ever told me that I couldn't do anything I set my mind to.
More often than not, it's adults who do not see themselves as "rich" that affect the way that younger people feel about this, not the wealthy themselves. Of course it would be wonderful to have money, and to be able to do whatever I please, but I know the difference between dreams and reality, and I'll take a happy middle class over millionaire dreams any day.
Perhaps this was not what you were looking for, Mr. Regnier, in commets, but it is my two cents.
Inequality - which of course is widely acknowledged as an increasing social pehnomenon by even conservatives - would be less of a moral problem if the acquisition of wealth was meaningfully correlated with meritorious behavior and poverty with irresponsible behavior. Unfortunately, neither supposed connection really holds up to scrutiny. Doug from Tuscon did a nice job of puncturing the first myth. As for the second, folky-sounding platitudes about how the rich "can afford what they buy and people who can't finance it" ignore the well documented fact that factors such as one's socio-economic background, the risk of devastating health calamities (which are increasingly difficult and expensive to insure) and disruptions in family stability such as divorces, etc. often seriously and permanently damage the economic status of even the most meritorious. Not to mention the fact that workers can get "downsized" regardless of the dilligence with which they perform their duties or the profitability of their employers. Ideologically inspired incantations about "choice" and "merit" are simply out o touch with economic reality.
Mr. Boortz may not look in other people's pockets, but most of the rest of us do, and we do not like what we see. The plausible sources indicate that the gap is indeed widening. Granted, virtually all of us are increasing our standard of living, but the wealthy are doing so at a vastly greater rate. As a percentage, too few of the boats are sitting atop or near the crest of the wave, as opposed to floundering below in the trough. If such were the case solely because the wealthy (the truly wealthy) were considerably smarter and harder working, there would be less reason for concern. Although there are of course more than merely one or two reasons for the increasing gap, one of them surely has to be that so long as you get to write the rules, you will advance in relation to the guy who lacks such an advantage. Why else pay the lobbyists? Think, too, of who sets the pay for the corporate executives - - the board of directors. And who generally controls the board? Please do not answer "the stockholders." The corporate executives decide who sits on the board. And we can not have board members saying no to the executives. As a much greater concern than the increasing gap itself, however, as the gap grows people in general feel that the game is rigged, and the more people feel the game is rigged, the more likely people will try to engage in some of same on their own. In short, if people feel the rules are fair, they are more likely to play fair; otherwise, they are likely to do what they feel many at the top do, which is either cheat or pay someone to write the rules for you. I am not saying that most of the wealthy cheat, but as the gap widens, how else do most people explain the gap? The idea that we have a free market is laughable. Additionally, if the game appears to be staged by the wealthy, others are less likely to work hard. After all, if harder work and more work are likely to earn such a tiny reward relative to what the wealthy earn, many people won't make the extra effort. And if people don't make the extra effort, everyone loses.
I don't need to look at "expert" statistics to know that the rich are getting richer. I work full-time, spend far less than I earn, ride the bus to work, and don't have any earthly idea how I'll save enough to retire.
I can see from the endless upper end condos and restaurants that are being built downtown that some people are doing better and better. But that's not the case for almost every working stiff that I know.
these economic arguments - which usually balance out to undecidability - ignore the fact of property rights. if someone has made a lot of money, much more than the average person, by honest means then that money is theirs by right and no purported social benefit or cost cancels out their honest deserving of that money. property isn't held by permission, be it of government or "the community" (which amount in practice to the same thing).
leave people free to produce and achieve, and watch the amazing world that follows as a consequence.
Inequality is a problem and people should take notice. If the widening gap of the rich and poor continues at this pace the country could fall into the same trap that led to the great depression, when the rich were rich and the poor were, well, poor. I don't believe the rich should pay a higher rate of taxes. However I do believe that all tax paying citizens should pay the same tax rate with no excessive loop holes whether you make 10k or 20 million a year. This way the lower income earners cannot complain that they are paying more than the rich in regards to the rate of taxes. We all drive on the same roads and take advantage of many public institutions that are available to us. We should all pay our equal share whether rich or poor. We should all pay the same rate. If this was to happen, complaints against the rich might diminish or simply vanish. The recent tax cuts by the Bush administration only benefited the rich and not the poor. The tax system needs to be overhauled to ensure a fair and balanced taxing methodology.
Funny isn't it? And the most amusing part is that the rich are not necessarily working harder nor are they significantly smarter... If you think about it, everyone of us has the same 24 hours in a day. It depends how you organize your activities. If they are based around the TV and other timewasting amusement, you're guaranteed to simply lose out. Set your goals, plan your activities to support them and you will see dramatic changes. It works for me and a lot of others!
The fact is, we live in an age of corruption. Our leaders, be they civic, business or religious, seem to be be caught with their fingers in the cookie jar on a daily basis. Disturbingly, signs of ethical reform within society are no where to be found. Not surprisingly, those on the lower economic rung view those at the top with suspicion.
Those at the higher end of the prosperity scale who wield more power and influence in the business and economic policy realm choose to sit silent. This leaves the impression that the wealthy are either part of the corruption or don't care about economic injustice.
That's why websites like Socially Responsible Business Forum are popping up with increased frequency - to stem the tide of this indifference.
Re: The classic "property rights" argument -
The conservative/libertarian theory on this is either totally disingenuous or severely misguided. "Property rights" SIMPLY DO NOT EXIST outside the context of modern society as defined, modified, regulated, and enforced by the government and the legal system. Laws define (and the law enforcement apparatus upholds) what your property rights are, not some artifical and ideologically conjured up notion of a state of nature. So far as I know anthroplogists have yet to discover real estate deeds or futures contracts in the cave sketches of cavemen.
Among the laws that define one's property rights are the tax laws. So you simply have no "property right" in that part of your income that the tax laws dictate is due the government. And it always bears repeating that the owners of accumulated wealth only get to keep their wealth insofar as there exists an adequately funded government, legal system, and law enforcement apparatus to keep it that way.
Of course you may personally think that the government should define property rights in a more laissez-faire and individualistic manner. But the basic fact remains that ultimately it is the government and the legal system that decide what your property rights are, not some fanciful libertarian state of nature.
Now if you will all excuse me, I have to try to contact Ed from Las Vegas to see if he'll be kind enough to bail me out with is fat craps winnings...
It is well known that the rich in the U.S. are getting richer. However, there is a reverse of this, the poor are getting poorer. That is the number of people BELOW the median income are growing. This is very dangerous as the number of people who control or have 90% of the wealth in this country is fast approaching the 'flash point', or the point where a possible overthrow of the current form of government may or may not occur. Taxation is a method of payment for current and PAST expenditures of any form of goverment (except true anarchy). When the U.S. Income Tax was passed, only the RICH were taxed and only once per year when they filed their taxes. Given the large amount of debt owed by our present government, this is highly unlikely to happen in the near future. However, the RICH should rightfully pay, with a smile on their faces, any new and improved taxes. Also, those of us that buy and use what is considered a luxury in most countries on this globe, should likewise gladly pay for that privilege. I would like to see the following:
1. Taxes on both corporations and wage earners increased at the highest levels while those who are 'poor' have their taxes reduced.
2. End the EIC. It is just a handout.
3. End rebate of taxes to corporations that have negative income. You either raise prices or go out of business. That is a fact of business life.
4 Excise taxes on automobiles. The lower the gas mileage, the more you pay. And you are taxed, each year, for owning it. This will encourage the reduction of the use of fossil fuels.
5. Increase the fuels tax for everyone to the rate paid by long-haul truckers. They pay an additional 42 cents, on average, per gallon of fuel consumed. Why should they be the one's to pay for someone else's transportation.
6. Improve mass transportation. Not just airlines, but buses and trains too. Not everyone wants, needs, desires to fly.
7. Reinstate the Estate Tax, now. This keeps monies flowing in our economy.
8. Eliminate the mortgage deduction. It may sound good, but many homeowners cannot take this deduction.
9. Eliminate Social Security for those under 25. Why? You can save into an IRA and if your employer offers it, a 401k type savings vehicle. This would free up more and more monies. Social Security is a 6.5% tax burden where the money is not being spent and artifically makes our Federal debt look better than it is.
10. Create a balanced budget program that also includes paying off the Federal debt. The best years for growth in America since the end of WWII were 1997, 1998 and 1999. These are the years that our government has a positive cash flow, the 30 year bond was eliminated and we seen billions of dollars in investment. The worst? 2002, 2003, and 2004 (2005 and 2006 data are not available). The return to deficit spending has slowed the amount of money for capital expenditures to a trickle.)
I can't stand listening to this argument anymore! What are you all thinking? I'm sure everyone of you is living a perfectly nice life..you each obviously have internet access and a computer..which probably means you probably are driving multiple cars in your family and living in your own homes...see where I'm going with this. Everyone acts as if this is the days of old where the King is using the Serfs as his personal wealth builders and taking everything from them to create his wealth...WAKE UP! You paint every business owner as a Right wing, lying theiving cheat. Why is it no one mentions the fact that a business owner puts his own assets on the line when financing his company, has to put his employees pay in front of his own, In fact most business owners put employees, vendors and of course the tax man well in front of himself. And for all of this he gets to work a minimum 50 hour week with no paid vacation. If any of you commenting work for a private owner this is what He /She is dealing with on a daily basis. Now for ALL this, once we finally do make a profit everyone wants to take a larger share of our money.
I am in this situation and I resent it.
I donate to charity, I pay good wages and I supply good benefits. I pay my bank and my vendors, and I pay the tax man in full. I pay more in taxes than most people make in a year, yet I get nothing more from our government than any of you. I get the great satisfaction of watching a bunch of lying politicians piss my money away. And all I hear is that the "rich should gladly pay more" well why is that? If I create a business that in turn creates jobs which in turn supports multiple families (who all pay taxes)why is it that I am perceived as the bad guy that needs to pay more?
15 years ago I was divorced and $200k in debit. Now, with hard work and by taking a risk, I am back in the game and starting to make some money again..and oh buy the way, without lying, cheating, stealing etc...
As a succesful business owner, I can't stand watching these morons waste all of our money!! And many of you want guys like me to pay More!! Your idiots.
The biggest reason this is all happening is that no one can stand that fact that there IS a class structure in EVERY society. Don't think there are rich people in your socialist countries..think again. Those societies are even more stratified than we are. This is all a by product of actually trying to equalize the scales, you have made it worse. Combine this with greedy labor unions and you have basically wiped out the middle class. When I started working as a young man in my 20's I drove a used car, lived in a crappy apt, finally bought a used house etc.. now days young couples are living a better life than folks that have worked their whole lives....there is a major standard of living jump that never gets mentioned....a different subject I guess.
Anyway 90% of the tax burden of this country is already being paid by the businesses, business owners, and high income wage earners. We are the over acheivers that help to create and grow the economy. If you want us to continue to willinginly pay more in taxes, quit pissing away what we give you and quit treating us like we are evil. Most of you live a nice life because of us.
To comment on Chris from Texas on conservative Christians, it seems to me that Christianity is becoming the religion of the well-off and the rich. Before I stopped going to church, I was routinely watching preachers tell me to vote republican and get rich, other God will put you in hell. This is very common and normal among southern Baptists. Now to each his own regarding religion, but it just seems to me based on my experience with organized and tax-free religion, God hates the poor and working class.
I'm gradually working my way into the "Rich", but the hard way. I still feel that anybody can make it, with enough hard work - 43 years in the work force, most of it as a mid-level government employee. I did get lucky - when the stock market was slumping from 1999-2003 I was buying properties. Part of this came because I had to move with my job, but I benefitted, none the less. Hard work and my gamble on the real estate market have made me comfortable.
The article's author attempts to analyze the problems inequality brings. For some reason, he forgets to mention any problems equality might cause. As one who happened to live almost half of my life in one of the Communist bloc countries, I can say that equality brings MUCH MORE problems than it solves. And if you think that in a Communist country every one could receive the same kind of education, think again.
Don't delude yourself by thinking that you can establish a better system here that would still promote equality. It's a way of no return. Once you begin to redistribute the public wealth according to needs, not merits (and free market is the best tool to measure individual's merits!), you corrupt people. The more of them you corrupt, the more significant block of voters they represent. Once they become the majority, you should begin thinking of emigration.
As far as the Fair Tax is concerned, while it may be a "great deal" for the very rich, it is an even better deal for the poor (those below the poverty level defined by the Government)!! They wouldn't pay ANY tax at all!! Everyone I hear talk about the Fair Tax plan always seems to "conveniently" leave that little fact out of the discussion...
I've seen my salary increase by 4% in the last 5 years. During that period, I've seen the FICA tax rise so that now my entire pay is taxable. My bonus has been reduced to a maximum that is about 25% of my maximum 5 years ago. About the only up-side I've had in the last 5 years are the tax cuts. What I've received in federal tax cuts has been somewhat reduced by my increased property tax as I've watched the value of my townhouse double. So, when the tax cuts expire, I'm going to see my total take home pay decrease by about $20,000.00 from what I was taking home in 2002. I ask you, how much are those of us at the lower end of the top 10% expected to contribute. How about the fact that during the period 2000-2004, the number of tax returns with no liability increased from 30 million to 42 million. What is a fair share of my income that I should gladly pay the government? 100%?
There is no such thing as a "free market". That's a marketing slogan. All markets have a structure of some sort. Whether that market is structured to fairly reward economic effort and production is the issue; and the U.S. market has been legally restructured in a way that does not. The result? A growing wealth gap.
Economic inequality isn't a problem?
From the beginning of the 20th century until the 1970s, the French Revolution was most commonly described as the result of the growing economic and social importance of the bourgeoisie, or middle class. The bourgeoisie, it was believed, overthrew the Old Regime because that regime had given power and privilege to other classes�the nobility and the clergy�who prevented the bourgeoisie from advancing socially and politically. Economic recession in the 1770s may have frustrated some bourgeois in their rise to power and wealth, and rising bread prices just before the Revolution certainly increased discontent among workers and peasants. (from www.encarta.com, although the recent scholars have added that the overthrow of the French monarchy was politically and not economically motivated. As for them, let them eat cake.)
In response to Dan in Chandler AZ, those people in Brazil that don't respect property rights are so far behind the rich or "middle class" that they have decided they have no chance "to be one of the rich" and the rules don't apply to them. The overall murder rate in Brazil is something like 5 times that of NY City. If you look up something called the "gini coefficient", you will see that Brazil has high inequality, which globally seems to correlate to some extent with areas that have lots of violence. The gini coefficient of the US is edging towards that of some of the countries where people who are able spend a lot more on bullet proof glass and personal body guards than we do here. I for one would like to stay out of that club.
At some point, the "losers" will begin to believe that the current economic game is rigged against them. When that happens, alternative "games" such as crime or even revolution look attractive. We smugly believe that revolution can't happen in America but events such as the LA riots show that when a mass of people decide to attack the system, we do not have sufficient police and military resources to control them and that assumes these elements continue to show loyalty to the establishment rather than identify with the "losers".
You get screwed in our country if you don't already come from parents who have set up a trust fund.
I am pretty successful, considering my background, but it is near impossible to keep up with my peers epsecially when education is not subsidized in our country, as it is in Europe.
I'm 27, make 100k, and with student loans, have a net worth of about 10k. Compare that with many 22 years olds who make half and have a 100k+ inherited net worth. I'll never be able to catch up.
So much for every man being equal in this country. Only applies to families, and only if you've been here for generations.
If you don't think a National Retail Sales Tax, regardless of what Boortz or anyone else terms it, will boost wealth for all Americans, you should check into an Asylum. There is no hope for you and frankly I hate the thought of people like you driving the streets, much less voting.
The problem with financial inequality has less to do with money than with democracy, which is based on shared values and a modicum of social equality. Very wealthy people do not share many values with very poor people and, in fact, inhabit a markedly superior position in society through the exercise of their wealth. Therefore, a society with a disproportionately wealthy class risks creating an aristocracy. With the lack of an inheritance tax, their progeny then becomes an inherited aristocracy. Lord Gates� and Baron Waltons are only a couple generations away (but apparently not Viscount Buffets).
Inequality in income is a serious problem and is getting worse year by year. We are now in the closing hours of a global monopoly game with a foreseeable return to feudalism under a new royalty where the ultra-wealthy will get to appoint the new dukes and barons as they will control the vast majority of global assets and economy. If Bill and Warren were to spend 10 million on buying a new house in each of the fifty states that would be only 1 billion between them leaving approximately 90 billion left to collect revenue from, not that the investment in real estate would be a bad move either. The problem lays in the trickle down ideology one group of individuals can only buy or are willing to buy so much. The rest is stored up in personal wealth building and doing little or no good for the masses that are waiting to see something trickle down their way. A sales tax would give the wealthy another major break from taxes. They could all live as frugally as Warren Buffet and even better live in modest means like the rest of us there by keeping even more wealth for themselves. Sales taxes hit the poor and middle classes the hardest as they spend virtually all their income to live on, investing, at best modestly. The real problem is how and when to declare games over and reset the board so that the playing field is again equal for everyone.
This is still a free society based on supply and demand. Want to know why the rich get richer? The middle class spend, spend, spend on professional sports so that professional football and baseball players make more in one year than the average middle class family will make in a lifetime; spend, spend, spend on entertainment so that Tom Cruise and Brittany Spears make millions making the masses feel good; invest blindly in the stock market through 401Ks so that money managers and CEOs make ridiculous amounts of money while the masses make little, if any.
The reason that the rich get richer is because the middle class - Larry Lawnmower, and his wife, sally Spendthrift, and Sal Sixpack, and his wife Ellen Extravagant - make them richer every day.
The answer is not socialism, like the Democrats want you to believe. The answer is for the middle class to use the power of supply and demand. But that is not going to happen.
CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com makes reasonable efforts to review all comments prior to posting and CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.