We have been conditioned to think that redistribution of wealth means moving money from top to bottom. Sadly it's really been moving money from bottom to the top. Over the past 40 years, tax policy has redistributed money from the masses to the rich.
Here is just a brief list of such policies which helped the richest 400 people own more wealth than the bottom 150 million people in the U.S.
1. Systematic tax cuts dropped the top marginal tax rate of 91% during Eisenhower's administration to 35% today -- taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213.
2. Long term capital gains went from 52% in 1968 to 15% today.
3. Dividends were taxed as regular income as recently as 2002. Bush tax cuts reduced it to 15% -- seekingalpha.com /article/189189-u-s-dividend-cap-gains-tax-rate-history-possible-relevance-to-future-taxation.
4. Hedge fund and private equity managers are allowed to declare a substantial portion of their compensation as capital gains thereby paying only 15% and not the 35% top marginal tax rate.
5. Hedge fund and private equity firm's private pools of capital are unregulated, or exempt from Securities and Exchange Commission (SEC) regulation, under both the Investment Advisors Act and the Investment Company Act. This means they pay taxes only on whatever they declare they earned and I'm sure they are completely honest about how much they earned. This allows them to pay even less than the 15% on capital gains -- epi.org/publication/pm120.
6. There used to be a once in a lifetime exemption on capital gains on the sale of your principle residence. Now you do it as frequently as you like.
7. We give huge subsidies to the largest most profitable corporations in the world but don't afford the same consideration for small business.
8. There are so many tax loopholes, two-thirds of corporations pay no federal taxes -- alternet.org/economy/150387/2_3rds_of_us_corporations_pay_zero_federal_taxes%3A_us_uncut_movement_builds_to_make_them_pay_up/.
This is just the tip of the iceberg on how policies redistribute wealth to the top. We haven't even touched on all the other polices which help concentrate wealth at the top ... Medicare drug bill written by pharmaceutical companies, banks borrowing money at 0% from government (taxpayers) then loaning it back to the taxpayer at a profit and bank bailouts with no conditions to lend.
Getting the rich to pay their fair share is not trying to redistribute wealth downward. It is about reclaiming the massive amounts redistributed upwards and using it to return prosperity to 'all' deserving Americans.
When you put more money in the pockets of the middle class and poor through funding jobs programs and other programs, it stimulates consumerism creating demand which is ultimately the driver of a healthy economy and makes everyone richer ... even the greedy rich. My God, how much money do they want when there is so much suffering around?
So how did these policies which allow the rich to confiscate from those below them come to fruition?
They follow the golden rule. No not that one but the one that means he who has the gold makes the rule. Owners of the gold, whether they are individuals or corporations, use their war chest to install the politician of their choice who, in turn, make rules which have allowed the top 1% to own 42% of the national wealth while the bottom 80% owns 7%, as of 2007.
This is an inherently serious problem which most Americans are now acutely aware and are fed up with. They know it is money in politics which is causing the misery, suffering and discomfort of the 99%. When middle class America starts engaging in activism politics it's time to pay attention and get involved. Many are signing on to getting rid of the root cause of our problems -- Money in politics.
This will be the topic of my next column. If you have any doubt that money in politics is the root of all evil or what the definition of rich is, read "Who Rules America?" by Professor G. William Domhoff -- 2.ucsc.edu/whorulesamerica/power/wealth.html.