Guest columnist R. Kent Kirkwood: The wealth gap and class warfare
French economist Thomas Piketty, in his 2013 book "Capital in the 21st Century," pointed out that the people who work for wages are fortunate if their net worth increases by 1% per year. However, people whose income is derived from investments have their net worth increase by 5% or more per year. The rich get richer. Surprise!
In his 2019 book, Capital and Ideology, Piketty pointed out that throughout all recorded history there has been class warfare. A small group, 1% to 3% of the population, have run the show for their own benefit. It can take a revolution to have a change in leadership.
Piketty also points out that throughout history the greatest leveling of wealth and income between the top and the bottom occurred as a result of the introduction of graduated income taxes in Western countries during the period of time from about 1945, at the end of World War II, until about 1980, when taxes were cut for the rich. Since that time the gap between the top and the bottom has been growing at a staggering pace.
The United States developed a huge national debt from fighting the depression and fighting World War II. From 1945 to 1980 the national debt increased annually by about 4%. However, throughout that period we consistently reduced the debt while enjoying the greatest growth in wealth and income of all time. Up until the Reagan administration, our yearly national debt had never exceeded $1 billion.
However, since the Reagan tax cuts, the national debt has compounded at greater than 9% per year. It was $31.12 trillion in October 2022. They greatly reduced the burden on the rich and vastly increased the burden on everyone else. That is class warfare.
In an October 2021 article in the New York Times, Benjamin Appelbaum stated that "Resistance to taxation is the rotten core of the modern Republican Party." Besides opening loopholes and cutting taxes on the rich and big companies, they aid and abet tax evasion by underfunding the IRS.
The United States is the wealthiest country that has ever existed. However, the vast majority of our citizens are unaware of the enormous wealth held by the top 1% of our citizens and, in particular, by the top one-tenth of 1% of our citizens. They could pay off our national debt with one half of their wealth and still be fabulously wealthy by most standards.
The "moral equation" of British philosopher Jeremy Bentham, was "the greatest good (happiness) for the greatest number." The greatest good that I can think of at the moment would be to try to wipe out poverty in the United States.
We could make a great start toward that goal if the rich would pay a fair share of income and estate taxes (along with eliminating grossly unfair tax loopholes). Countless things like the full funding of health, education and housing, to name a few, can be vastly improved and, in turn it would "raise all boats" toward being a great society for all citizens, not just a privileged few.
Piketty proposes a scale of graduated income and estate taxes that would grant relief to the average taxpayer, but asks progressively more of those most able to afford it. His proposal includes a tax on investment income (a wealth tax) which some countries already have. It only reaches its highest level (90 percent) for those earning 10,000 times an assumed median income of $70,000. The rich would still get richer, but at a slower pace.
Consistent with class warfare, the Republican Party constantly campaigns for balanced budgets based on reducing government benefits for the poor and middle class. Piketty shows that we can have balanced budgets and a thriving economy for all by asking for the rich to pay their fair share.
• R. Kent Kirkwood, of Arlington Heights, is a graduate of the University of Wisconsin, Madison, with a degree in political science and a minor in economics.