OH my God, i don't even know how to rap my mind around this, i would like to think the tied is turning, the truth is winning out, reality is rearing her head and can not be ignored any longer. but if there is one thing i know about america is its ability to see the truth and think it is a lie and see a lie and think it is the truth so long as the lie makes us comfortable and the truth uneasy.

One problem with the numbers regarding how many millionaires there are is that our mental image of a million dollars is way out of line with the reality. For example, $1,000,000 in 2006 is equivalent to roughly $150,000 in 1970 dollars. Put another way, anyone with a net worth of less than $6,000,000 today would not have been a millionaire in 1970. Put yet another way, a million dollars ain't what it used to be.

A better indicator, IMO, would be a comparison of the number of millionaires, in constant dollars, as a percentage of the population. Remember that the U.S. population in 1970 was roughly 180 million; today it is roughly 300 million. I've not seen this comparison, but I would be willing to bet some serious money (for me, anyway) that the number of millionaires has actually declined over the past 36 years.

Yep, Ben, you've seen the light.

But there's a lot more people besides the woefully underpaid military and the decently-paid police and fire making life easy for rich people.

Every one of those fancy restaurants has a platoon of line cooks, waiters, busers, and dishwashers making sure your dining is satisfactory.

The food and drink has to get to the restaurant. The gas and electricity has to get there, and the cooking and refrigeration/freezing facilities have to work. The entire staff has to get to work, and i doubt most people in New York City drive everywhere, so it means public transit has to take them there, which means bus drivers, subway conductors, and the associated changepeople, maintenance people, transit police, and administrators (many of whom were killed or evacuated from the WTC),

The wealthy young hedge fund traders would be helpless without the computer techs at their brokerage, who get a fraction of the pay of the bigshots.

So, Ben....the wealthy should pay more in income taxes. I'm glad you recognize it. The people who enable the wealthy to work hard and play hard don't want anything extravagant.

We want a universal health care system that will enable us to get good health care at a reasonable price. We want good schools that will prepare our children for whatever they want to do in life. We want our veterans to be treated with respect, and believe you owe them care for life, whether for an injury on duty, PTSD from being in combat, or the infirmities of age besetting WW II and Korean War veterans.

We want a government that will respond to domestic emergencies like Hurricane Katrina competently and compassionately. We want government to help and protect all people, not just campaign contributors or the Washington inner circle.

It's been hard for me to understand how anyone can believe that we are in a recovering economy. This piece shed some light on that. People in the top few percentile of the "ownership" society hang out together. Even 1% of 300 million is 3 million people. You can live your life in that little bubble of a world and never know what's really going on in the rest of the country. I guess Ben got a little peek. But he still thinks that terrorism is the country's biggest threat, even though this administration has done so much more harm to our country and people than the terrorists have.

I wonder how many of those commenting on this thread aspire to become "non-wealthy"? The motivational influence of aspirational wealth should not be underestimated: ambition is a precursor to achievement, unless you inherit wealth.

The overwhelming majority of millionaires in the United States came from humble beginnings. I don't know if the same can be said for most billionaires, but Ted Turner, Bill Gates, Sam Walton, Warren Buffett and Oprah Winfrey all stand out as people who "boot strapped" themselves up.

Of course they pay a much larger proportion of their earned income in taxes: we have a "progressive" income tax which requires the wealthy to pay more on an absolute AND relative basis. Investment income is taxed at a lower rate, which is something that BlueOregonians will decry: but locking capital up because the investor is unwilling to pay HIGHER capital gains taxes DOES NOT lead to economic growth, but to stagnation.

The underlying question is whether or not you believe in private property rights (including the right to keep one's "own" money); or whether or not all wealth is subject to government taking. If you will allow that some private wealth should be left in the hands of those who own it, it does not become a debate on HOW MUCH you will LET THEM retain. Rather, it should lead to a discussion of the necessary size and scope of government, and how much private wealth the government should be entitled to take.

If you think the Feds should pay for your health insurance, understand the Feds aren't actually paying for it: the wealthy are paying for it because they pay the bulk of the taxes. If they pay for your health insurance, why not ask them to cover your food bills, and your rent? Maybe a "free" tank of gas every month too, while you're at it?

Why stop there?

It's important to distinguish between tax rates and tax revenues. Yes, federal income tax rates have been lowered, but federal revenues have been increasing dramatically. In fiscal 2005, federal tax receipts increased by $274 billion, a 14.6% increase. For the first seven months of fiscal 2006, federal tax receipts are up an additional 11.2%.

And who do you think are paying the bulk of this increase? Ohmygod -- the rich! Thanks to our progressive income tax structure, which became more progressive after the Bush tax cuts, the top 3% of individual income taxpayers pay almost more income tax than the remaining 97% combined!

As to the much maligned gap between the rich and the poor, I ask the following question: In a free society, where hard work, creativity, and thrift are rewarded, what should the gap be between the rich and the poor?

What should the gap be? This question may be a good one, but it seems to defend the current situation. Apparently the answer Bill and LMAO like is just short of armed rebellion, you know, right up against the edge of rich people's stuff going up in flames. Now this is actually an answer, I just don't think it's a very good one. If the calculation slips just a little, everybody's lives become unmanagable.

It also is a little mind-boggling to see that the rich need help being rich and that their tax burden is so great. These folks would have you ignore the total tax burden vs total income percentage paid at the top and bottom. Some of the things they'd like you to ignore are FICA at 15.4% up to $60K income where it stops, sales taxes (where applicable) at 5-7%, dividend tax rates of 15%, capital gains, income sheltering, business expenses that have more to do with lifestyle than business, etc, etc. Any idjit can read the tax tables on a 1040, real good accountants and tax lawyers read the tax code and know how to make it work. These guys know this, but...

They'd also have you ignore the loss of purchasing power and wage stagnation. I've got mine, screw you, is what it amounts to. Chuck

Chuck:

the Marxist tenet of class struggle is getting a bit long in the tooth. Armed rebellion doesn't offer the broad based appeal of the past (despite the NRA's valiant attempts to defend the right to keep and bear arms). The Econistas from ELF had the "courage" to burn a few McMansions down, and now they're facing 30+ year prison terms if convicted. I'm guessing that ELF's marshmellow getting smaller and smaller.

France and Germany have been reducing tax rates and anti-capitalist legislation to help their citizens compete in the global economy. I assume you are aware of the economic path taken by the former U.S.S.R., Eastern Europe, and China. Socialism has a weak pulse in Latin America and North Korea, but it's flatlined in the rest of the World.

Socialism by U.S. Tax Code is unlikely to succeed. I relish the day that Portland or MultCo levies a large income or capital gains tax: it will be fun watching how the quality of life for "us" is diminished without "them"...It really is a circular relationship: we may not like Paul Allen, but his economic impact on the NW is significant.

Changing gears slightly: any idea what a dozen eggs costs on the Cuban black market? I'll give you a hint: if you're Cuban, you can't afford to buy them by the dozen. Sure, everybody's equal: equally poor. Keep in mind the primary cost of producing eggs is chicken feed: Castro can't blame the chicken feed shortage on the U.S. Embargo, can he?

LMAO's claim that most millionaires come from "humble" backgrounds is not supported by the facts. A recent study of the Forbes Magazine list of the 400 wealthiest Americans, for example, shows that 42 percent inherited wealth in excess of $100 million. Of the remaining half, many inherited at least $1 million or received substantial startup capital from a wealthy family member.

And the idea that Bill Gates pulled himself up by his "boot straps" is ridiculous. Gates grew up in a wealthy family -- his father was a prominent attorney at one of Seattle's leading firms -- and went on to attend the exclusive Lakeside School and Harvard University. To pretend that such a background didn't provide Gates with a decisive advantage over his peers is ludicrous.

I'm not suggesting that everybody can become a billionaire: to focus on the Forbes 400 wealthiest Americans belies the underlying truth. I am hopeful you will acknowledge the role of the individual (not to mention personal accountability) in career and financial success.

For every child of a millionaire that achieves financial success, there are several more who failed to do so. Just look around Oregon: Tom Moyer, Les Schwab, Ken and Joan Austin, Mark Wattles, Phil Knight, Gert Boyle...they didn't inherit their wealth, they created it.

How many Harvard dropouts became billionaires? How often do the children of wealth become drug addicts or simply follow the path of least resistance, achieving far less than they are capable of achieving?

I think we all envy the wealthy, even those who ostensibly despise them. I certainly know that I have not achieved the level of success that I aspire to: but that has nothing to do with any advantages my parents did or didn't provide to me.

Darrelplant,

You quote as follows:

"In addition to New York, the states with the largest increase in inequality over the last two decades were Oregon, Massachusetts, California, Ohio, Connecticut, Kentucky, North Carolina, West Virginia and Arizona."

I ask: How do you know if that is good or bad?

I repeat: In a free society that rewards hard work, innovation, and thrift, what should be the gap between the rich and the poor?

Chuck took a shot at answering the question and Butchered it (pun intended). Maybe you can do better.

Labor economics includes a theory of "allocative efficiency" in which all labor in a nation (or firm) is employed in its most productive capacity. In a capitalist economy, individual contributors to the labor market do so based on a utilitarian decision. A person sells his physical capital based on an overall sense of reward--monetary, humanitarian, personal interest rewards, etc.

In communism or socialism, the State makes these decisions of allocative efficiency, at least in the upper heirarchies. A promising young gymnast in China will be recruited for training and testing to see if that child has the potential to be an Olympic champion, for example. The members of society, presumably, accept this selection as an honor. In Soviet Russia, final exams and tests of potential determined at a very young age who would ever go to college and who would be pegged for a life of manual labor. Individual choice with respect to labor market participation was subordinated.

The problem with irresponsible Capitalist-Mixed-Market governance, like we have in the U.S., is that the utilitarian analysis becomes distorted. An exceptionally intelligent person who wants to be a nurse, for example, must evaluate that decision in the context of the disproportionate benefits that the lesser income of that decision will bring, relative to your currency traders, PI attorneys, etc. Imbalances in the U.S. labor force are partially a product of this phenomenon. The overall effect to society becomes deleterious and, therefore, should demand corrective action by the government.

Do we really want the men and women who perform such essential services as healthcare, law enforcement, social services, road maintenance, etc., to suffer so disproportionately versus the rich? As the author correctly points out, much of the quality of life enjoyed by the rich is because there are good people pursuing more altruistic career paths. Why should they be forced to live at near-subsistance levels when, without their contributions to society, living in America would be much less of an experience. What would the rich in America think if paramedics, for example, adopted a treat-the-lower-classes-first policy?

NOTHING QUITE LIKE THE CLASSICS...

The Wealth of Nations, Book V Chapter II Part II Appendix to Articles I and II

IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the treasury of the state.

First, the levying of it may require a great number of officers... Secondly, it may obstruct the industry of the people, and discourage them from...business... Thirdly, by the forfeitures and other penalties which those unfortunate individ-uals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have received from the employment of their capitals... Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble...

ALSO FROM THE WEALTH OF NATIONS It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.

When the landlord, annuitant, or monied man, has a greater revenue than what he judges sufficient to maintain his own family, he employs either the whole or a part of the surplus in maintaining one or more menial servants. Increase this surplus, and he will naturally increase the number of those servants. When an independent workman, such as a weaver or shoemaker, has got more stock than what is sufficient to purchase the materials of his own work, and to maintain himself till he can dispose of it, he naturally employs one or more journeymen with the surplus, in order to make a profit by their work. Increase this surplus, and he will naturally increase the number of his journeymen. The demand for those who live by wages, therefore, necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it. The increase of revenue and stock is the increase of national wealth....

Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconvenience to the society? The answer seems at first sight abundantly plain. Servants, laborers, and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.

Darrelplant:

Thanks for taking a shot at my question. However, since this thread was originally about federal tax policy, I question looking to the rest of the industrial countries, and the EU in particular as examples to emulate. I'm certainly not an expert on European tax policy, but my understanding is that they are much more reliant on regressive value-added taxes, whereas the U.S. relies most heavily on the highly progressive income tax.

My guess is the tax bill of the super-rich would fall dramatically if we switched to a value-added tax system. Not to mention the fact that economic growth in Europe and Japan has been anemic over the last decade. Unemployment in the EU is averaging 8.6%, with Germany at 9.5% and France at 9.2%, as compared with 4.7% in the U.S. Are you sure that's the direction you want to head?

whereas the U.S. relies most heavily on the highly progressive inco me tax

The income tax may be progressive on paper, but it only applies to wage income (and possibly rents). It certainly does not apply to capital gains, which are taxed at a maximum of 15%. Sorry, but those who are at the top of our economic pyramid derive the vast majority of their income from capital gains and pay lower rates on their income than I do on my high-5-figures income. No reasonable person can possibly claim that the income tax is progressive in practice.

Fact: Individual income taxes account for approximately 45% of all federal tax receipts. Social security and medicare taxes account for approximately 36%. The top 4% of individual income tax payers, including all sources of income, pay more than the other 96% combined. When you add the highly progressive individual income taxes with the social security and medicare taxes which are only mildly progressive, you still have a progressive tax system. It is unreasonable to claim otherwise.