Are the rich too rich?

A recent editorial in Fortune magazine (“How to Run a Budget Like An Idiot”, by Matt Miller, 6-25-07) summed up my beliefs on the current situation in the US in regards to income distribution. While I am far from a socialist or communist and am not a fan of income redistribution, I do think the system needs to be tweaked to make it more fair.

According to the article, new census data shows that the top 1% of US wage earners now take home a greater share of national income than at any time since the 1920s, and Republicans seem to be trying to match the inequity hit by Louis XVI, which led to a little thing called the French Revolution (which, unlike the American one, was a real revolution).

Will it change with new leadership? It doesn’t appear so. GOP presidential candidates not only want to keep the status quo, they have discussed more tax breaks. All of this while our deficit spirals out of control and spending continues with no relationship to income coming in (one of the biggest myths of politics is that Republicans are about small government and fiscal responsibility; maybe in Barry Goldwater’s time, but Ronald Reagan put an end to that, and Bush has taken it to new heights).

Ben Stein, in another interesting article in this same issue of Fortune, said if we managed our budget like the government, we would be broke and probably in jail. “They (conservatives) try and try to say we can do it (balance the budget) by cutting spending, and they never do.”

In the article, Miller points out that we’ve borrowed nearly $2 trillion in the past six years under Bush to cut taxes for the wealthiest in a time of war where spending has increased, meaning “we’ve slipped the bill for our war and our tax cuts to our kids.”

He also points out that while the top 5% of earners do pay about 58% in federal income taxes, Republicans who quote this number forget that income tax is only 47% of federal revenue today. So, when you throw other federal taxes into the mix, which tend to hit lower wage earners harder, you find that the top 5% make about 30% of the income and pay 40% of the overall federal taxes.

So, while the rich do pay more than their share and the US does have a progressive tax system, it clearly isn’t enough if we are headed towards an environment that historically leads to revolutions, and I don’t mean that figuratively.

It would be prudent for those in power in the US, regardless of political affiliation, to recognize this trend, acknowledge it is a bad one, and fix it, before it is fixed for them. And it would be good if Republicans would begin practicing what they preach. I may not like the fact that Democrats want a huge government and corresponding huge budget, but at least you get what you voted for.

How the Republicans continue to get votes from mid-to-lower income people in the Midwest and South is beyond me. I need to read the book that described this phenomenon that came out a few years ago… I think it was called “What is wrong with the people in Kansas?”