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My New Book!
My New Book!

Wednesday, July 20, 2011

July 20, 2011: That’s Rich

Just to follow up on one particular aspect of yesterday’s Eisenhower post: I read an article about the capital gains tax which included the delightful fact that hedge fund manager John Paulson made $4.9 billion in income last year. Even more delightful (and relevant to yesterday’s points about Eisenhower and tax rates) is that a substantial portion of those earnings were deemed capital gains and thus taxed at only 15%; even the parts considered “income” were taxed only at 35%, a far cry from the Eisenhower era’s over-90% rate, but at least that’s proportional to other rates in our contemporary moment. The 15%, on the other hand, means that much of this richest American’s income from last year was taxed at about half the rate of mine.
Class and wealth are as complicated as any of the other issues I’ve considered in this space, and as with any of them the easiest and least productive way to over-simplify is to focus on extreme and maddening examples. So I’ll resist singling out Paulson too fully, wondering for example what on earth any individual can do with billions of dollars in annual income, hoping against hope that he has plans to donate substantial percentages of it to worthy causes, etc. Asking him not to take the money would be as silly as those pundits (such as Gregg Easterbrook) who have argued that if Obama believes the top tax rate should be higher, he should just voluntarily pay more in taxes himself; such issues are not and should not be left up to individuals to decide, but have to be determined on a communal level, not least so that there’s fairness across the board in how they’re applied and how they affect families and futures. Moreover, as the Gilded Age’s Gospel of Wealth proves, the question of philanthropy—its value and effects, its social meanings, its legitimacy—is itself a complicated one, and deserves its own extended AmericanStudies analysis to be sure.
Besides, the real problems here go well beyond the individual, whether he’s Ebenezer Scrooge or, y’know, Ebenezer Scrooge at the end of the story. First, there’s the problem of a society in which an individual can make $5 billion in income while millions live below the poverty line; inequality might be a necessary side effect of capitalism, but we are quickly reaching levels of inequality that are, in a word, obscene. And second, and most relevantly to these two posts of mine, there’s the problem of our continued insistence on protecting this wealth with government policies (including but certainly not limited to very low tax rates); if Mr. Paulson is able to make that kind of money while living in our society, it seems to me that the least our government can do is see to it that the society as a whole benefits as much from Paulson as he clearly has from it. At the end of that road, I know, lies socialism; but a higher tax rate is not the end of the road, nor should it be such anathema that we’re willing to further destroy the lives of millions at the other end of the spectrum (such as by cutting profoundly important and relatively inexpensive social programs) rather than achieve such a rate.
Am I saying that Paulson’s income goes against core American ideals and identities? No. But our willingness to protect that income above and beyond our communal health and well being most definitely does—and is, as Eisenhower’s era reminds us, a relatively new and distinctly unhappy turn in our national conversation. More tomorrow,
PS. Three links to start with:
2)      A piece on wealth inequality in the very thorough and important Who Rules America? project:
3)      OPEN: What do you think?

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