Do the rich really need the breaks?
Here's something I've heared a hundred times... "...Yeah, but the rich pay way more taxes than anyone else..."
Words dispensed as indisputable evidence that the rich deserve the tax breaks being delivered by the Bush administration. Of course they're talking about income tax and it's true, the rich have
been paying more income tax, but is that unfair? Maybe we need to look at the bigger picture.
Here's another quote...
"Ultimately, we are interested in the question of relative standards of living and economic well-being. We need to examine trends in the distribution of wealth, which, more fundamentally than earnings or income, represents a measure of the ability of households to consume."
- Alan Greenspan.
Ah, so now we start to see two different measurements, income and wealth. A little more research and I discovered that compared to income, wealth is hardly taxed at all.
This reveals a huge blindspot in the "rich need breaks" perception. But it's not until you start looking at the difference between the distribution of income and the distribution of wealth that you really start to see the magnitude of the injustice.
These statistics were taken from the Survey of Consumer Finances sponsered by the Federal Reserve Board and ranks Americans by total wealth showing their share of national income and non-income wealth (investments etc...)
|Highest 20% ||47.2% ||84.3%|
|4th 20% ||23.0% ||10.8%|
|3rd 20% ||15.7% ||4.4% |
|2nd 20% ||9.9% ||1.0% |
|Lowest 20% ||4.2% ||-.5% |
Looking at these numbers, it's easy to see that even if the rich do pay more taxes on income, which they do simply by virtue of having more income to tax, it still doesn't have nearly the same impact on their relative standard of living and economic well-being as it does for the bottom 50% who can't offset the discount on their income with accumulated wealth. In fact the bottom 20% are actually in debt, so not only do they have no money to offset the deductions on their income, but the taxes impede their ability to pay off their debt.
If Alan Greenspan is right and the more representative measure of our ability to consume is wealth not income, then it seems to me that wealth should be taxed more and income taxed less, that is, as long as we are insisting that we live in a society where everyone pulls their own weight.