Often the country is classified as
having three classes, the middle class, the poor, and the rich. The rich are usually vilified as not paying
their fair share even though they pay 80% of all taxes. Everyone wants to give the middle class a tax
break and help the most vulnerable (the poor).
As usual, things change over time and there are really six classes of
people with as many as 13 sub groups.
Removed from this description is terms such as good and bad. There are both in all the categories. Even criminals have some good people who will
go on to reform their lives and change society.
Following is a description devoid of ethical judgement.
Let’s start
at the top. The Elites consist of all
the countries leaders, the president, the senators, representatives and
governors. All the CEO’s of major companies
make up the elites. This group is often
referred to the top 1%. They control the majority of the wealth of the country
and make virtually all the decisions that affect our lives. Within this group is a sub group, an even smaller
group, possibly the .01% who are the titans.
The titans are the mega billionaires who work behind the scenes to
affect policy at the highest levels.
This would be the Buffet’s and the Koch’s who make it seem like they’re
nice people trying to help but really their serving their own business
interests. Some are captains of industry
who change our lives like Bill Gates or Steve Jobs. Others were placed in positions of power who
run a large company into the ground and leave with a golden parachute. The latter ought to be vilified and the
former lauded. Another aspect of the
titans is that they have no problem with higher taxes because their money is
not taxable. Warren Buffet for example
earns 60 million a year and is worth 60 billion. If we did the math we would realize that he
did not work for a thousand years. He
has no problem paying ten percent more on 60 million while he pays nothing on
60 billion because it's his assets that make up his wealth not his income.
The next
group is the prosperous. These are the “rich”
who usually wind up paying the majority of the tax because they can’t hide
their money like the Elites. They are also a diverse group. Small business owners and entrepreneur are
the engine of growth for our economy. 60%
of all new jobs are created by small businesses. Very small businesses owners tend to not
have corporation and therefore fund their activities directly from their own
personal finances. A small change in tax
policy could wind up taking money from their businesses. It’s important to understand that taxing the
rich is such a blanket statement that doesn’t really address who should pay
more. Athletes and movies stars drive an
enormous amount of economic activity and therefore are well paid. I don’t know what hedge fund managers really
do but they also make a ton of money.
Hedge fund managers get paid in dividends which are taxed at a lower
rate (currently 20% as opposed to 39.6% for the top income levels).
Most of
us are in the working class formerly known as the middle class. As of 2016 there are 157 million Americans (just
under 50%) employed or seeking work. These
are adults who are in the public work force.
In this group there are two sub groups, though not distinctly
identified. There are those who work and
pay a positive tax rate and those who work and pay a negative tax rate. Everyone pays things like sales tax and state
tax but the working non tax payers either don’t pay federal taxes or get more
money back at tax time than the money they paid. For example, an individual with a family
might work and pay $1500 of federal tax.
They go to a tax preparer who applies all refundable tax credits and get
back often times as much as $6,000 back.
They also get food stamps, Medicaid, subsidies, free phones, ect. This is not to say they don’t struggle, many
do. Still, their work which is hard to measure
produces more economic activity than the what they receive from the government.
Next we
have the dependents, the non-working. The
non-working as of 2016 are 94 million strong (about 30%). The labor participation rate rose from 1960
to 1990, peaked for fifteen years and has been going down ever since. In the 1960’s many women were home makers,
stay at home mom’s, or caretakers as you would identify them. My mom also stayed home and raised us, she
only had a part time job as my sister and I became older. Their work is not to be undervalued, it is so
critical to take care of children. Children
now a days are taken care of either by a school or by a grandparents just as
much as by a parent. Women more and more
entered the work force from 1960 to the turn of the century which is why the
labor participation rate rose. Now because
of all the government subsidies more people can afford to stay home. People retire and live longer which is
another factor in the rising non-working class.
After a lifetime of working no one begrudges a senior from enjoying themselves
and today in a way that no older generation has ever been able to enjoy their
latter years. I do wonder at people who
retire from a union job at 55 and live to 95.
How can a system sustain this? The
last sub group is the idle. These are
the people who have given up looking for work.
Maybe they stay home with older kids who don’t need attention. Maybe they pan handle, maybe they squeak out
enough government benefits and enough non taxed income to squeeze by. Many have injuries that prevent them from
working in their chosen profession but they are all capable of doing
something. They just don’t.
The next
group definitely depends on society for survival. They are the helpless. For one reason or another they really are incapable
of working. The first sub group is the
incapable, these are the severely disabled.
So many tens of millions of people are labeled as handicapped which is
important to give them the help they need but they are capable of working. They can still be productive individually but
society must help them and we should.
Children of course are a drain on our resources but critical to our
future. The Amish have a saying: a child
under seven is a drain, between seven and fourteen they balance out and after
fourteen they are an asset. If only that
were true. It seems like children are a
drain till they get their first full time job in their twenties.
The last
group definitely drains from society with providing absolutely no tangible
benefits. A person doesn’t always walk
around being a criminal unless they’re a gang member. Maybe they’re a drug addict, maybe they’ve
robbed or stolen. I would say no one is irredeemable. Those in jail may seem like they’re not harming
society but society is paying at least 20,000 per year to house, clothe, feed
and secure them. There are 3 million in
jail in this country (1%). How many more
are freed criminals, I can only site the statistic of 1.4 million in
gangs.
I always
strive for maximum clarity when identifying how things are and how they could be
better. If we take the 47% of Working
Americans who pay taxes that leaves us with 73 million Americans who are financially
taking care of 318 million. This is a tall order when 23% of Americans are taking
care of the bills for the other 77%. If
this trend continues we will surely see economic troubles abound.
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