In the fall of 2011 protesters were on the streets demonstrating against the top one percent that they felt had an unfair share of America’s wealth. They ‘occupied Wall Street’ and set up camps across the country calling themselves the '99 percenters.’ The movement has faded away, but the issue of income inequality is one that continues to invoke public discussion.
The top one percent vs. the 99 percent
Much of the anger stemmed from the recession of 2007-2009 that affected working and middle class Americans much more so than those who encouraged the excesses that led the unraveling of the financial house of cards that Wall Street had built. It stripped away the security blanket of home ownership that was part of the American dream, and made an entire generation suspect of the financial elite.
As the memory of devastation caused by the financial crises of 2007-2009 has eased, so has the stigma that was attached, at least for a while, to being rich.
Wealth is a reward for innovation and risk taking
People get rich for a variety of reasons but at its core, it is a reward for innovation and risk taking. In hindsight, we all think we could have invented the iPhone or come up with the idea behind Facebook but in reality, we didn’t. Creating a startup is not a license to get rich; rather it’s a risky business. Forbes reports that 90% of startups will fail. Those that succeed may create an outsized level of wealth for their creators as well as their investors and, in the process, create a trickle-down effect that helps many in the economy.
Sure, Jeff Bezos is worth some $67 billion dollars, but Amazon also employs more than 220,000 full-time people and another 100,000 seasonal workers. And, most of these jobs are in America. For a number of years, Amazon operated at a loss in order to build market share and the wealth that Mr. Bezos enjoys today, and it certainly did not come easily.
Income inequality is an issue in 2016
Income inequality has become a populist issue in the 2016 campaign. Sen. Bernie Sanders railed against the excesses of Wall Street, and Hillary Clinton has promised to raise trillions in new revenue by increasing taxes on the wealthy. According to a report by the Tax Policy Center nearly 80% of the new tax burden would fall on the richest one percent.
Top one percent pay 45.7 percent of income taxes
According to a report by CNBC, the top-earning one percent of Americans paid 45.7 percent of individual income taxes in 2014. Those in the bottom 60 percent paid less than 2 percent. To put dollar numbers to the Tax Center report, the three million or so Americans in the top 1 percent paid approximately $644 billion in tax revenue in 2014.
One can argue whether the rich pay their fair share or engage in shady tax practices, but the bottom line is that the top 1 percent pay nearly half of all federal taxes. Without the ‘rich’ the tax burden to the majority of Americans would increase dramatically if the country desired to maintain the current level of government services.