05 October 2010

Who's Rich?

Nobody wants to pay taxes, with the possible exception of Warren Buffett and Oliver Wendell Holmes. The latter, a solid New England Republican, famously opined, "I like paying taxes. With them I buy civilization."

Because no one likes them, the question of who should pay how much is always loaded. Hence the furor over the misnamed Bush Tax Cuts. (They are misnamed because presidents do not make laws. For the same reason there is no such thing as Obamacare either. And they are not tax cuts but tax rates. But politicians like to talk about cutting taxes not setting them, and the incentive to rehabilitate the former president is another motivation.) Ought we continue with these rates, or should they be raised? The furor is not over whether average Americans (usually called middle class by politicians) should pay more, but whether above average Americans ought to pay more. You know the argument so I am not repeating it here.

What makes me think about it is something I read in the September 30 NY Times. It was a fascinating article because it considered something I have long thought about - Who's Rich? Go ahead and read it, but my interest is in settling this matter.

We know who is poor; namely, those who do not have enough to be secure in the basic needs of life like food and clothing and shelter (a short list). That can be calculated by looking at the costs for such things. But when do we go from enough to more than enough?

Peter Singer, the ethicist at Princeton and David Platt, a young evangelical preacher, both believe enough is around $50,000. More than that is more than you need. Recent polling tells us that happiness maxes out around $75,000. Not only does that make some sense because it deals with contentment not just survival, it allows for a little more cushion. The fight in Congress is over whether $250,000 is more than enough, considerably more than is rationally and religiously and emotionally necessary, according to Singer and Platt and Gallup.

My interest is moral. I say being rich is a moral state, a status relative to other people in society. As a cleric, I know that being rich is morally suspect. Just read a holy book or two and the opinion is always against wealth. One of the few things the world's religions tend to agree on, it turns out.

But one need not be religious to recognize the moral danger of wealth. As I mentioned in a previous post, money=power. When one person has much more than another, that person has more power than another. In a democracy, great inequities of power are dangerous to society. If the well being of society is a moral matter (and morality is by definition primarily about social relations) and democracy and equality are important elements in a good society, then wealth is a deeply moral matter.

But for precisely that reason it cannot be set by a number like poverty because wealth is always measured by how much one has compared to how little others do. If everyone had $1,000,000,000 no one would be rich at all. Being rich means have more than most people.

But how much more makes one rich? Twice the poverty rate? Thrice $50,000? Four times $75,000? About 73% of American households earn $75,000 or less. (No wonder we're such a cranky country!) That means one in four Americans have more than enough to make them happy.

But, you say, it takes more to live in New York than in New Buffalo. Rightly so. But not all people who make more than $75,000 are in New York or San Francisco or in Beverly Hills (90210!) or the other pricey enclaves of the rich.

But, you say again, they have larger bills to pay. Maybe so, but those bills came from choices made because the money was available, not the other way around. Morally, neither factor is mitigating.

But as one who lives above the happiness threshold financially, I know I do not feel rich when compared to the wealthy on TV and in the news. The income curve gets steeper and steeper. You may have heard that something less than 6% of the population owns or controls 25% of the wealth in the nation. In fact, almost everyone who is rich compared to average Americans is poor compared to the upper echelons of income and wealth. As the Wikipedia article on wealth distribution puts it: "While households in the top 1.5% of households had incomes exceeding $250,000, 443% above the national median, their incomes were still 2200% lower than those of the top .01% of households."

This leads me to believe that my initial analysis years ago still holds water, morally. That is, if you make more in a year than the average worker earns in a lifetime you are rich, in the morally suspect sense of the term. You have not just more than enough. You have too much - too much money and power for the well being of a free and democratic and therefore egalitarian society. It may be fine in a monarchy or an aristocracy, but in a democracy it is too much.

At the moment, that moral cusp is about 2 million. $45,000 times 45 years. I think tax rates ought to exceed 60% by the time you cross that line. It may seem wrong to you, if you have that money, and maybe it is in some personal sense. But the greater evil is that so much power and money reside in one mere fallible mortal.

Great wealth is a danger to a free society. But we don't hear our leaders saying it? Why?

Because they only get elected using money from those who far more than enough. You might say that today the rich do not buy civilization; they buy politicians. But that's another post. This one is already too long.

Discuss amongst yourselves.


DairyStateDad said...

Debt complicates matters, regardless of its source or reason. I'm fine w/ Singer's & Platt's $50k threshold, but I think it's fairer to make an additional allowance for debt service. (On the other hand, of course, to take that too far would seem to endorse ever-higher debt burdens, which would ultimately be unsustainable.)

Dan Harper said...

Um, I like paying taxes. I like having roads and schools and regulators. I like participating in a democracy, and part of living in a democracy is taking on responsibilities like paying taxes. And yes, we should be taxing the rich (however defined) at a much higher rate, but I also think my own taxes should go up, even though my income is well below $75,000. Despite what politicians have been drumming into our ears for the pat thirty years, paying taxes is not a bad thing at all.

My $.02 worth. Obviously your mileage may vary.