Sunday, February 20, 2011

This great example from Robert Reich puts the whole issue of income concentration into such clear perspective.

Last year, America’s top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains – at 15 percent – due to a tax loophole that Republican members of Congress have steadfastly guarded.
If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society – thirteen hedge-fund managers or 300,000 teachers? Let’s make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?

We're in Year 21 of the Reagan Era, where we have steadily reduced taxes on the wealthy, and reduced the government services that those taxes used to pay for, in a determined effort to conjure up the magic, free market pixies who will make everything wonderful once they're not frightened away by nasty, scary democracy. But all we have to show for our efforts is an economy where the rich have gotten so much richer that merely by requiring 13 guys (and, yes, they're all guys) to pay the normal tax rates that the rest of us pay, you would get enough money to cover the salaries of 300,000 normal, middle-class people. And let me be real clear here: I'm not saying that 13 guys make as much money as 300,000 people, I'm saying that roughly 35% of the income of 13 guys equals the full income of 300,00 people. Clearly, the free market magic is working for some people...