The Fight Against Inequality

Republicans talk about “inequality” more often than Democrats. Republicans’ talking point is that Democrats favor Equality of Outcomes while Republicans favor Equality of Opportunity and consequential Inequality of Outcomes. This is, of course, political posturing, as NO Democrat (not Robert Reich, not Bernie Sanders, not Elizabeth Warren, not even AOC) has ever suggested that he wishes for Equality of Outcomes; and when they have had the power, Republicans have never advanced any legislation to address Equality of Opportunity for disadvantaged persons.

Before we discuss the partisan issue of Inequality, we should grant that most Americans do crave some kinds of Equality: equality before the law, equality in the eyes of God, equality in the voting booth (one person one vote), and equal rights under the Constitution.

• Unhappily, equality before the law is often not realized in contemporary America, as many men are more equal than others, avoiding incarceration for treason and multiple felonies (usually white-collar) and even murder. The entire political class seems immune to punishment for their crimes.
• For some devout Americans, many Americans (e.g., Muslims, Jews, atheists) are NOT equal in the eyes of God.
• The reality of voter fraud (a Republican issue) and voter suppression (a Democratic issue) is a perpetual assault on one person one vote.
• As to who is entitled to Constitutional rights, every time we have ratified an amendment, we have tried to fix one more – legal – inequality under the Constitution (typical victims of legal inequality have been women, non-whites, non-Christians, immigrants, and the poor).

But when we talk about fighting Inequality, we are playing in the economic sphere. Income and wealth inequality. Capitalism will always default to economic inequality; but no Democrat has a problem with economic inequality per se. What makes inequality problematic is not inequality itself, but excesses of inequality. That we Americans have greater inequality than other nations (among OECD nations, the United States is the 5th most unequal out of 36 nations), that we have greater inequality than we had in the past and it is getting worse, that CEO-to-worker pay has exploded over time beyond comprehension, and that the wealthiest among us keep increasing their piece of the pie over time.  In addition, we must understand that excessive inequalities of wealth underlie and reinforce all the other factors that we agree should be equal.  But are not.

But what, in justice, should be done about it? The rules of the (Capitalist) road declare that government ought not interfere in the economics of any business, small or humongous. Businesses should duke it out in the free market, who wins who loses, and government should play as small a role in those contests as possible. But when some individual Americans are worth billions of dollars, some hundreds of billions, perhaps this is an area for consideration.

Tech giants like Jeff Bezos (Amazon), Elon Musk (Tesla), Mark Zuckerberg (Facebook), Bill Gates (Microsoft), Sergey Brin and Larry Page (Google) are all multi-billionaires. Indeed, each of them is worth over $100 billion. But none of them pay as much federal and state income tax as many of my readers. Their net worth resides in their stock holdings, and they declare little to no taxable income (most of these fellows declare $0 and $1 as their gross taxable income). Republicans excuse their lack of tax contributions on the grounds that they are “job creators.” In no sense is this true. When Amazon stock increases in value, Jeff Bezos’s net worth increases in value. But no jobs result because of Bezos’ growing wealth (Amazon creates jobs, not Bezos; Facebook creates jobs, not Mark Zuckerberg; but in general, new jobs are created because of an increase in demand for products and services). 

As a multi-billionaire, no increase in Bezos’s wealth will enable him to buy stuff that he cannot buy today. Indeed, Bezos will never spend on himself and his family and friends 95% of his wealth by the time he hits 100 years of age, no matter how recklessly he spends his wealth.

The fact is that the wealth of these tech giants does NOTHING for society at large, for the people, for the average American. The fact that these guys keep getting wealthier does no one any good, not even themselves (the only value of growing stock evaluations is bragging rights; none of them will ever spend 5% of their paper net worth). A boom in the stock market benefits only few Americans: the wealthiest 10% of Americans own a record 89% of all U.S. stocks.

I mentioned above, and I have written extensively, that these bozos pay little in income taxes, not only as a %age of their wealth but in comparison with middle-class Americans, or even poor Americans. There ought to be no objection by regular Americans that collecting taxes from these bozos is a decent idea. I have written before that applying a surtax on individual (or family) wealth above $10 million should not be burdensome to anyone. Applying a 1% tax on wealth above $10 million, who would complain? Graduating the tax up to 5% or 10% (determining the best graduated surtax schedule is the job of actuaries) for multi-billionaires (as of October 2020, there are 614 billionaires in the United States), who would complain? On the other hand, it could change annual deficits into annual surpluses thereby paying down the Debt, and relieving our grand-children of the burden of our profligate spending. The trillions that could be collected annually could keep all of us from poverty and homelessness. Redistributing some excess wealth among less fortunate Americans – directly and more importantly indirectly (better education, housing, infrastructure, jobs, etc.) – will go far to fixing many unhappy consequences of unfettered Capitalism.

Where is the problem?

The only problem is politics. Congress is afraid of taxing the uber-wealthy. Have any of these folks actually threatened any political retribution for taxing their excess wealth? No doubt a few. I suspect a very small few. If you have a problem with taxing our most fortunate few who pay little or no income taxes, you should not read Ben Paine.

For those who are not put off by this essay, please read my earlier piece on Income Inequality.

Salud to all!