Inequality American Style

In the United States, the top 20 percent now pay 94 percent of all income taxes. This is success American style, albeit a very lopsided one. In other words, for every $100 of income tax collected by the government, the rich guys pay $94 and the overwhelming majority pays just $6. The majority has every reason to thank the rich for their business success. Furthermore, the rich should be proud for they are still rich (maybe richer) after shouldering almost the entire federal income tax revenue. This inequality breeds another one as described below.

President George W. Bush made an across-the-board tax cut soon after taking office in 2000. For simplicity sake, let’s say the cut was 10 percent. For every $100 of tax revenue, $9.40 ($94 x 10%) would be given back to the rich while $0.6 to the rest. A lopsided case happens again. This time it favors the rich, but they can say that they are entitled to every penny of the tax refund.

The US revenue from income taxes amounts to about $1.4 trillion per year. Assuming 10% across-the-board cut, the federal revenue would be reduced by $0.14 trillion, of which $0.13 trillion ($94 out of every $100) would go to the rich. Whom should the rich thank for this big windfall? Should they thank the politicians who voted for the bush tax cuts? Who should speak for the rest or the great majority?

The huge federal deficit for the last few years is a result of three factors: the Bush tax cuts reducing government income tax revenue, the recession since 2008 reducing other federal tax revenues, and the federal expenses due to foreign wars and domestic bail outs. Government expenditures have been cut at all levels already. It’s not government expenditures that cause the deficit. It’s reduced government revenues that caused the problem.

How should government money be spent? For the rich or for the poor? I think that government money should be spent more on the poor and the middle class who are the majority. If not, what do you think government is for? If you think that the current US government deficit is due to the majority soaking up the money, you are putting the carriage before the horse.

The current huge deficit is the result of the following: reduced revenues due to the Bush tax cuts (about $1 trillion), the wars in Iraq and Afghanistan (over $1 trillion so far), the Republican bailout of the big banks in 2008 ($0.7 trillion), and the Democratic stimulus package in 2009 ($0.7 trillion). Those big numbers really scare me if not you.

While the rich should rejoice because of their success and the Bush tax cuts, they should also understand the natural dynamics of being rich and poor. When you are rich, you have everything working for you such as surplus cash, low-interest loans, good connections, and your established name. When you are poor, you have none of those to start with. For the young generation, it has become increasingly difficult to build the American Dream.

If you are a rich person with some humility, you tend to consider your fortunes to be the grace of God or partly due to luck. If you don’t, you will walk around like a peacock, thinking that you are entitled to every penny and more, not to mention helping the unfortunate. It’s up to each person to discover the true meaning of being rich and successful. Being rich means you have more material things to worry and protect. It does not mean you have to live in a fortress mentality because that is the source of unhappiness.

August 2012

This entry was posted in Economics/Politics, Funny/Personal, Inspiration. Bookmark the permalink.

One Response to Inequality American Style

  1. Ive also been thinking the identical thing myself lately. Grateful to see another person on the same wavelength! Nice article.

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