NYT Chapter 12: Richest are leaving even the rich far behind

In this article, Johnston discusses the group of people who are at the pinnacle of the money pyramid in America, the hyper-rich. This group of people is not unfamiliar, as we have encounted some of their stories in Chapters 9, 10 and 11 of the same book. This chapter, however, provides less of their personal experiences individually and discusses them as a group in 3 important aspects:

1. Profile of the group

Some statistics about the hyper-rich that I thought were significant:

Top 0.1 percent of income earners

145 000 taxpayers, each with at least $1.6 million and more in income

Share of nation’s income: more than doubled since 1980 (vs other groups whose share have risen less, or even fallen)

2. Their relation to policies (eg. tax policies)

Johnson notes that “the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes”. Beyond their own attempts to avoid taxes, he also discusses how policies meted out by the government help them to retain more of their income and contribute less to the government. This thus allows the hyper-rich to get even richer, while the poor, who have to play a greater part in contributing to taxes, will be more burdened as they have to give away more of their (already comparably less) income.

Examples of policies that shield the hyper-rich from taxes:

At the time the article was being written, Bush had proposed tax cuts that would shift the burden away from them. With their large incomes “of more than $1 million or so”, they would enjoy the “biggest share of the breaks”.

Also, the there is an “alternative minimum tax” which was devised to tax the rich so they could not get away, yet in reality it does not really affect the hyper-rich as “dividends and investment gains, which go mostly to the richest, are not subject to tax”.

3. Their relation to other groups

Johnson presents 2 arguments on how the hyper-rich impact the other class groups in society. The first is that the hyper-rich should not be seen as threats (as they often are), because other groups do not really care how rich the hyper-rich are, as long as they have a chance of getting to the top themselves. In fact, there is a high probability of mobility with the “explosion of wealth” that rewards the rich, as well as the poor who “work hard and save”.

The second argument looks at the realities in society, that (economic) mobility has stopped rising and even declined in the US, thus arguing that the hyper-rich do affect other class groups in society as the concentration of wealth around them, thus preventing the other groups from accessing resources that will aid advancement. To Johnson, such a concentration of wealth is detrimental as it may even “turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation’s capital in the hands of inheritors rather than strivers and innovators”.