The wealth gap
December 11, 2013 —
The fraudsters behind a pyramid scheme go to great lengths to make the program look like a legitimate multi-level marketing program. Pyramid schemes don’t work unless somebody loses. Those at the bottom of the pyramid are essentially defrauded by those on top.” (www.sec.gov/answers/pyramid.htm)
On the eve of the 2010 midterm elections, Leslie Stahl on “Sixty Minutes” reported that in the U.S. the wealthiest 5% control $45 trillion worth of assets. In other words, those people could pay our entire national debt—at that time $15 trillion—and barely notice it. To help eliminate the debt, people like Mike Bloomberg, who is worth around $30 billion (enough to endow 30,000 lifetimes at a million dollars per, without touching the principle), could surrender $10 trillion and scrape by with what remains (enough for only 20,000 lifetimes). Bloomberg is not one of our wealthiest people, some of whom have enough to permanently endow hundreds of thousands of lifetimes.
Such people used to support federal spending. After WWII, when our highest income tax rates were in the 90% range, we rebuilt Europe and Japan, paid for the GI Bill, financed a massive Cold War arms buildup and created our Interstate Highway System. Doing all that resulted in our war debt actually decreasing (see chart, below or at www.nytimes.com/interactive/2011/07/28/us/charting-the-american-debt-cri... ), then leveling off as tax rates were cut. Before tax rates were reduced, post-war America was experiencing the greatest growth spurt in its history. Even Republicans were happy.
But then a strange thing happened. Starting in the 1980s under Reagan-Bush, our debt took off at the same time that tax rates began a downward spiral. A coincidence? When our economy was growing at its fastest historical rate, the corporate contribution to federal revenue was 47%; now it is 7%. Data show that there is a highly correlated, inverse relationship between our national debt and average tax rates. The less revenue the government receives, the more it borrows for its necessities, in other words.