I will appreciate it if anyone has thoughtful criticisms of the following. Ideologues unconcerned with actual events need not waste their (and my) time.
We have seen that Wall Street has both helped itself to enormously disproportionate incomes due to their capacity to game the system and that they have made themselves so essential to us that we are taxed to bail them out. This is hardly the first time. Under Ronald Reagan the Savings and Loan industry was bailed out for incompetently losing billions.
As then so now, the middle class and poor are paying so the ultra rich can game the system to socialize the risks they take while privatizing the gains. The Bush family is an excellent example, Neil Bush being as incompetent a businessman as his presidential brother, losing billions, and being bailed out so he can continue living in unarned luxury.
There has never been a stronger argument for a highly graduated income tax. I think a person can get by in comfort on a disposable annual income of, say, $1 million. Does anyone really need more? There should be generous allowances for charitable giving because individuals can often do better than the government – and such allowances enable them to help others they otherwise might not. But for the take-it-all-home types, nail them.
Libertarians and conservatives will scream this is unfair – taking away people’s rewards for taking risks and succeeding.
In a perfect world where the rich do not consistently game the system in their favor their point could still be contested for reasons too complex for a blog discussion, but it would be stronger than it is. In the world we actually have their argument is naïve at best, willfully blind at worst.
I will focus on reasons rooted in the world we actually have
First – simple justice. The corporate and financial rich in particular have gamed the legal and economic system for a long time, using the power of government to take from others for their personal benefit. In self-defense we need to reduce their incentives to rob us. If they can keep less wealth they have fewer incentives to use the government to give them more.
Second – the bankers and their kind tell us their industries are too important to the economy to fail. They demand special privileges as a result. If they are too important, and so need the privileges, those running them should not be allowed to use their positions to enrich themselves disproportionately. The price of being protected is not being able to take advantage of your privileged position.
Alternatively, we should break up any and all such businesses because a free society cannot allow any business to become that important.
I have real sympathy for the most creative entrepreneurs and creative geniuses. They should be able to make a very good living. But for them money is not the only pay off, unlike many of those in the financial industry. But even after the New Deal, when our tax system was at its most progressive, there was no shortage of wealthy people in the country. But we were not in the predicament we are in now that the so-called free market people have been in charge for several decades.
My point is NOT to equalize everyone. But it is to reduce the incentives of the most financially successful to create dynasties of privilege over everyone else by reducing both their means to game the system and their payoffs for doing so. Maybe a very steep income tax at the highest income levels is not the way to go. There might be better ways. But if we want to remain a free society we need to defend ourselves against the ruthless oligarchs who have come ever more brazenly to dominate our country.