The super-rich 1 percent
(Socialist Worker) -- by Eric Ruder --
The wealth of the super-rich has grown astronomically for the last three decades. But that doesn't mean the rich are without their own troubles, writes Eric Ruder.
THROUGHOUT HISTORY, the persecution of minorities has haunted the "world's greatest democracy." But today, while many forms of discrimination have been put behind us in the U.S., fear and anxiety stalks one of America's last despised minorities--the top 1 percent.
The conditions of their torment are poorly understood by the rest of us, especially the 60 percent of workers who report that they scrape by paycheck to paycheck. As a consequence, the 1 percenters endure their suffering in private, further increasing their sense of social isolation and feelings of self-pity.
But thanks to the work of researchers at Boston College's Center on Wealth and Philanthropy, we have been afforded a peek into the psyche of this fragile group--Americans with fortunes worth at least $25 million.
"Sometimes I think that the only people in this country who worry more about money than the poor are the very wealthy," explains Robert Kenny, a psychologist who helped devise the survey. "They worry about losing it, they worry about how it's invested, they worry about the effect it's going to have. And as the zeroes increase, the dilemmas get bigger."
Those dilemmas are often painful--can we really afford that $3 million yacht? How is the housing crisis affecting the property value of our vacation home in Aspen, Colo.? And how does that compare to the mansion in Palm Springs or the villa in St. Tropez?
In fact, the survey reveals that almost all the respondents are preoccupied with the inadequacy of their vast fortunes. "Most of them still do not consider themselves financially secure," writes the Atlantic's Graeme Wood in "Secret Fears of the Super-Rich." "For that, they say, they would require on average one-quarter more wealth than they currently possess."
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WELCOME TO the delusional world of the super-rich--where too much is never enough, and enough is more wealth than any individual in the history of the world has ever possessed.
Roughly 115,000 households in the U.S. contend with the psychological strain of possessing a $25 million treasure chest. The challenges are obviously daunting, but few realize that the super-rich can't even enjoy the simple pleasures that the rest of us occasionally take comfort in. As Wood explains:
A vast body of psychological evidence shows that the pleasures of consumption wear off through time and depend heavily on one's frame of reference. Most of us, for instance, occasionally spoil ourselves with outbursts of deliberate and perhaps excessive consumption: a fancy spa treatment, dinner at an expensive restaurant, a shopping spree. In the case of the very wealthy, such forms of consumption can become so commonplace as to lose all psychological benefit: constant luxury is, in a sense, no luxury at all....The idea that the super-rich should pay more taxes infuriates the wealthy and their apologists. An April 18 editorial in the Wall Street Journal ridiculed the idea that taxing the rich would make a dent in the nation's troubled finances, asserting the "fiscal futility of raising rates on the top 2 percent, or even the top 5 percent or 10 percent, of taxpayers to close the deficit"--even if the tax rate were 100 percent.
The next day, Columbia University economics professor Jeffrey Sachs ripped the editorial apart:
The top 10 percent reported $3,856 billion in [adjusted gross income], equal to 46 percent of total reported income in the United States, almost 27 percent of GDP. On that, they paid $721 billion in personal federal income taxes, or an average of 18.7 percent of income. If the remaining 81 percent of income were paid in federal income taxes, the increment in tax revenues would be more than $3.1 trillion, or roughly 21 percent of GDP. The budget deficit would obviously be closed many times over.The real point is obvious. The money received by the richest households is vast, and higher taxes on the rich will make a major contribution to closing the deficit.
Taxing the rich not only makes financial sense, it's also what the majority of people living in the "world's greatest democracy" want to do. Nearly three-quarters of Americans support raising taxes on those with incomes of more than $250,000 a year, according to a Washington Post-ABC News Poll from mid-April.
So what's the hold up? In the May 2011 issue of Vanity Fair, Nobel Prize-winning economist Joseph Stiglitz provides a simple and compelling explanation: The top 1 percent themselves:
Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent...
It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.Nevertheless, politicians across the political spectrum perpetrate the myth that the rich pay a disproportionate share of taxes in the U.S.
According to tax expert David Cay Johnston, "It's true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government." Once payroll taxes and other federal taxes are taken into account, the burden shifts disproportionately to workers and the poor...MORE...LINK