The rich truly are different from you and me, for they are treated differently.
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I’m not talking about the merely affluent, but about the ultra-rich – those Wall Street elites who annually pocket tens of millions of dollars each through such financial entities as hedge funds and private equity firms. While you and I earn the bulk of our money from wages (or “ordinary income,” as economists so snobbishly call it), the richy-rich don’t receive anything as pedestrian as income. No, no, they have “gains.”
Aside from the snoot factor, what’s the difference? The tax code. Our ordinary income is taxed by the feds at a rate of up to 35 percent. The very rich, however, who haul in most of their money from capital gains and stock gains, pay only 15 percent on this income.
What’s at work here is another big difference between us and them. They have lobbyists and are able to make impressive levels of campaign contributions to key politicians – so, the tax code has been deliberately perverted to benefit them. Oh, tut-tut, sniff these swell ones, we take big investment risks with our money and we fuel America’s entrepreneurial spirit. So we are, in fact, special and deserve preferential tax treatment.
Good grief, Daddy Warbucks, spare us your bloated sense of entitlement. Mostly, you’re risking other people’s money, and mostly you’re buying up existing companies, which you then cannibalize by firing workers and selling off corporate parts to fatten your take. Nothing noble about it.
Income is income, and the superrich deserve no special break just because they make their money from money. As Warren Buffett has asked, why should billionaire investors like him pay a lower tax rate “than our receptionists do or our cleaning ladies?” It’s a question of fundamental fairness.
“Putting A Bull’s-Eye On a Tax Loophole,” The New York Times, March 10, 2009.
“Two Americas, Two Tax Codes,” The New York Times, March 9, 2009.