‘We Are Not Taxing the Very Wealthy Enough’: Runaway Inequality About to Get Worse
The United States' astronomical levels of economic inequality are poised to become further entrenched in the coming years.
Americans haven’t heard much at all from Joe the Plumber this election cycle. A shame. Without his rants against sharing the wealth, no one’s bothering to debate how desperately America really needs to be sharing.
Four years ago, a plumber by the name of Joe Wurzelbacher injected a bit of a debate over inequality right into the heart of the 2008 Presidential race.
Just outside Toledo, in a chance campaign encounter, then-candidate Barack Obama explained to Wurzelbacher — soon to become the celebrated “Joe the Plumber” — that “when you spread the wealth around, it’s good for everybody.”
GOP Presidential candidate John McCain almost immediately jumped on Obama’s remark, as if his rival had committed some horrible gaffe, and wealth redistribution suddenly became one of the campaign’s hottest issues.
Now four years later Joe the Plumber has largely faded from view. He’s running a lackluster campaign for Congress, as a conservative Republican. And the issue that gave Joe the Plumber celebrity status — wealth redistribution — has more or less totally disappeared.
Last week, the second Presidential debate of 2012 came and went without a single mention of the word “inequality” or America’s incredibly top-heavy distribution of income and wealth.
President Obama, to be sure, did talk about hiking taxes on the rich, back to Clinton-era levels. But those Clinton rates didn’t do much at all to stop the concentrating of America’s wealth. Our super rich saw their fortunes continue to soar during the 1990s, just as they had soared during the 1980s, before Clinton’s presidency, and just as they’ve soared since Clinton left office.
And where do we stand right now with this concentration of income and wealth at America’s economic summit? An up-to-date answer came last week from the global research arm of Credit Suisse, the Swiss banking giant.
America’s rich aren’t just pulling away from the rest of America, the Credit Suisse Research Institute’s just-released third annual Global Wealth Report details. They’re pulling away from the rest of the world’s rich.[pullquote]America’s rich aren’t just pulling away from the rest of America and the rest of the world’s rich as well.[/pullquote]
Between the middle of 2011 and the middle of 2012, Credit Suisse calculates, overall global wealth dropped 5.2 percent, the first annual decline since the global financial meltdown in 2008. Over most of the globe, this dip even included million-dollar fortunes. In Europe, nearly 1.8 million affluents lost their millionaire status.
But American millionaires have actually expanded their ranks over the last 12 months, by 962,000. Americans now make up a stunning 39 percent of all the global households worth at least $1 million.
If you jump up a few wealth notches, to the level of “ultra high net worth individuals” worth at least $50 million, the U.S. global wealth dominance becomes even more pronounced. Of the 84,500 global super rich with over $50 million in net assets, 45 percent hail from the United States.
Joe the Plumber and other fans of great fortune don’t have much problem with this huge accumulation of wealth at America’s economic summit. What about the rest of us? Should we be concerned? Might our lives be more secure if we did more in the United States to share the wealth?
The researchers at Credit Suisse have helpfully crunched all the numbers we need to answer this most basic of questions. Three of today’s most important developed nations, the Credit Suisse data show, turn out to have almost identical quantities of wealth per adult.
If you add up the total household wealth in each of these three countries — the United States, France, and Japan — and then divide that overall wealth by adult population, you get virtually the same average wealth: $262,351 per adult in the United States, $265,463 in France, and $269,708 in Japan.[pullquote]The degree of inequality varies enormously by nation.[/pullquote]
In real life, of course, we don’t divide wealth equally by population. Some of us have more wealth than others, much more wealth. But the degree of inequality, the new Global Wealth Report from Credit Suisse reminds us, varies enormously by nation. In the United States, the bulk of our wealth rests near the top. In France and particularly Japan, much more of the wealth rests around the middle.
How much of a difference — to the typical person in the United States, France, and Japan — do these differences in inequality levels make? A great deal. To be more specific: over $100,000 worth of difference per person.
In the grossly unequal United States, our most typical — or median — adult now holds just $38,786 worth of wealth. Half of American adults have more than this $38,786, half have less.
Japan’s most typical adults have a net worth of $141,410. In France, a nation with wealth much more equally distributed than in the United States but not as equally distributed as Japan, that typical adult holds $81,274 in wealth.
In other words, a typical Japanese household today sports more than triple the wealth of a typical U.S. household, and typical French households have twice as much wealth as their American counterparts.
Average Japanese and average French don’t work any harder than average people in the United States. They just live in societies that do a much better job of sharing the wealth that work creates.
Maybe one day Americans will live in a society that shares. Maybe one day our Presidential candidates will even talk about sharing.
Veteran labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, will appear this fall.