Inequality Will Get Worse Until There's a Revolution
by Bob Lord
America's wealth concentration has increased tenfold since Bill Clinton first ran for president. Could it get worse? Yes, quite easily.
Imagine, after a deep sleep, you suffered the fate of Rip Van Winkle and woke in the spring of 2040. What might you find?
Among other things, maybe a presidential candidate railing against America’s concentration of wealth. Except this time, it’s not the 1 percent that owns as much wealth as the bottom 90 percent -- it’s the top hundredth of a percent.
Could it get that bad? Yes, quite easily. In fact, that nightmare is already on the way.
To see this better, take a step back in time. If you woke up 24 years ago, you could hear candidate Bill Clinton lamenting the fact that the top 1 percent owned as much wealth as the bottom 90 percent.
Today, as anyone who’s heard Bernie Sanders give his stump speech knows, it’s the top tenth of 1 percent who owns that much. That’s 10 times more concentrated -- and it’s happened over just six presidential cycles. If the trend continues, the scenario I presented at the outset will be a reality.
Here's another way to look at it: In 1992, when Bill Clinton first found America's wealth concentration unacceptable, the average person in the top hundredth of a percent was about 1,100 times wealthier than the average person in the bottom 90 percent. By 2012, the most recent year for which statistics are available, that ratio had quadrupled, to approximately 4,500 times.
If the numbers I predicted for 2040 hold, that figure will rise to 9,000 times. If the average net worth is around $30,000 then -- a sliver of equity in a modest home -- then the average household in the top hundredth of a percent will be worth over $250 million.
Can America avoid such a dismal future?
Yes, but only if the philosophy underlying our tax policy changes. We can’t just raise revenue and distribute the tax burden in a way our leaders deem fair. Preventing undue accumulations of wealth must become a cornerstone of American tax policy.
That would entail three fundamental changes.
First, lawmakers must abandon the policy of taxing investment income -- which flows almost exclusively to the wealthiest Americans -- far less heavily than income from labor, the income on which the rest of us depend.
Second, they should increase the top marginal income tax rate substantially for those with huge incomes. Ludicrously, current rates subject a billionaire with a nine-figure income to the same top marginal income tax rate as a doctor making $500,000. That’s a major factor in our worsening wealth inequality.
Third, the gigantic loopholes in the estate tax system, which allow even billion-dollar estates to escape taxation when they’re passed on to the next generation, must be closed and the top estate tax rate increased.
Possible? Yes, but it will take a revolution.
- The Global Economy in 2018
- The Missing Ingredients of Growth
- Why The Trade Balance (Still) Matters
- The Phillips Curve
- NAFTA's Jobs Myth
- Will Powell Be an Accidental Hawk?
- The States With The Most People In Debt
- The Limited Effects of Tax Cuts on the Economy
- The Global Pyramid Of Wealth
- Standard of Living Perceptions at 10 Year High
- Who Can We Trust To Measure Poverty?
- Minimum Wage Industries
- The iPhone Price Index
- Pros & Cons of the Gig Economy
- Calling Working People of All Colors
- Exploding Inequality is Killing Democracy
- Reducing Inequality in the Trump Era
- Obama's Legacy: Growth, Debt & Employment
- Only 5 Countries Have A Bigger GDP Than California
- Global Political Economy
- How The Global Millionaire Club Is Changing
- Plenty of Dough in Online Food Delivery
- The Most Expensive Metro Areas to Live In
- Cities With the Lowest Gas Prices
- The Cost of a Beer: Then and Now
- The Cost of a Cup of Coffee: Then and Now
- Cities Where Coffee Costs the Most
- America's Decreasing Fertility Rate Could Spell Economic Trouble
- The Least Affordable Places for Single Parents
- How the Cost of a Movie Ticket Has Changed Over Time
- The Cost of a Trip to the Emergency Room Since 1940
- Gagging on the Gig Economy
- How Falling Oil Prices Have Changed the Economy
- The Economics of Brexit
- Making China Great Again
- States with the Lowest Unemployment Rates
- Oil's Downfall Aided by Rise of Fracking
- Counties Where Medicare Spends the Most per Patient
- Inequality Will Get Worse Until There's a Revolution
- States with the Highest Unemployment Rates
- The Richest Banks
- Cost Of a Car Since 1967
- Cost of Car Insurance In Every State
- The Most Fuel Efficient Cars
- Zombie Ideas and the Death of Ethics in Economics
- What Really Caused the Eurozone Crisis?
- Is GDP Over?
- Pay Fair or Pay Up
- Global Capitalism's Latest Crisis
- Gross National Happiness Catches On
- The Cutting Edge of Waste
- Subsidizing the Idle Rich While Poor Kids Go Hungry
- Lending Dreams
- Venture Capitalists Rule the World
- Wal-Mart Does Something Right
- The Perils of America's Hard-Charging Capitalism