Inequality is Weakening Social Security. Here’s How We Fix That.
When Congress set the cap on Social Security contributions in 1983, they didn’t anticipate forty years of rising inequality. And it’s cost us — a lot.
Investor Warren Buffett last week made an insightful case for higher taxes on America’s rich. The reaction to that case, from our wealthy’s most ardent defenders, offers insights, too — on our plutocracy.
In the United States today, phenomenally rich people pay a smaller share of their income in federal taxes than average Americans.
Billionaire Warren Buffett, the CEO of the Berkshire Hathaway investing empire, has been noting this simple fact for years now, in a series of speeches and interviews..
In one 2007 NBC interview with Tom Brokaw, Buffett even bet $1 million — against any of “his fellow rich guys” who might choose to challenge him — that all the billionaires on the annual Forbes 400 list were paying, on average, less of their incomes in federal taxes than their receptionists.[pullquote]No political philosophy — outside the law of the jungle — justifies taxing receptionists more burdensomely than billionaires.[/pullquote]
No billionaire in the Forbes 400 ever took Buffett up on that bet.
But Buffett, until last week, had never stopped to spell out, in a prominently placed written commentary, his overall perspective on rich people and taxes. Now he has, and his newly published op-ed in the New York Times — Stop Coddling the Super-Rich — is giving apologists for those rich a major case of heartburn.
Warren Buffett poses a major problem for these apologists. They can’t challenge his accuracy. Receptionists for billionaires do pay federal taxes at higher rates than their bosses. And apologists can’t, of course, rationally defend this state of affairs either. No political philosophy — outside the law of the jungle — justifies taxing receptionists more burdensomely than billionaires.
Apologists for the awesomely affluent have learned, over the years, not to waste their energy trying to defend the indefensible. They go on the attack instead — against the credibility of anyone who dares object to our current taxing realities.
The attacks typically follow a predictable pattern.
“You’ve never met a payroll,” the apologists shriek at progressive lawmakers who call for high taxes on high incomes. “You’ve never worked in the real world” goes the retort to tax-the-rich academics. “You’ve never had to risk capital” runs the response to labor advocates for ending tax breaks for wheeler-dealers.
None of these put-downs work against Warren Buffett. He has “risked” capital and met payroll. He has “succeeded” — to the tune of a personal fortune worth almost $50 billion — in the “real world.”[pullquote]No normal right-wing put-down works against Warren Buffett.[/pullquote]
So how did America’s rationalizers for grand private fortunes respond last week to Warren Buffett’s widely publicized class heresy? They assaulted Buffett’s character — and our intelligence.
The character smears began almost as soon as Buffett’s New York Times column started bouncing through America’s media echo chamber. Grover Norquist, the nation’s most feared champion of “no new taxes” orthodoxy, set the tone.
“Warren Buffett says he ‘wants’ to pay higher taxes,” Norquist sneered in a Twitter blast. “Okay, Warren, just write the check. What are you waiting for? Hypocrite.”
Politicos who carry the water for America’s wealthy immediately picked up on the Norquist theme. If Warren Buffett “wants to pay more taxes and send more of his money to Washington,” sniped Brad Dayspring, a spokesman for House majority leader Eric Cantor, “why doesn’t he just do it?”
“For tax-raising advocates like Warren Buffett,” sarcastically added the National Republican Senatorial Committee chairman, Senator John Cornyn from Texas, “I am sure Treasury would take a voluntary payment for deficit reduction.”
“Write a big check today,” echoed GOP Presidential candidate Michele Bachmann Tuesday at a South Carolina rally. “There’s nothing you have to wait for.”
“Why doesn’t he set an example and send a check for $5 billion to the federal government?”former Presidential candidate Pat Buchanan would go on to demand on MSNBC’s Morning Joe. “You get all this noise from these big rich folks. Let them send checks and set an example instead of writing op-eds.”
All this piling on serves to obscure, quite intentionally, Buffett’s main point. Buffett never once says in his Times op-ed that he “wants” to pay more in taxes. His op-ed’s actual takeaway: Especially today, with so many Americans “truly suffering,” America’s mega rich should do their part to “deal with our country’s fiscal problems” by paying federal taxes at a significantly higher rate.
America’s mega rich, if Buffett or any other single billionaire “mailed in” a check, would still not be doing their part. They would still be dodging their responsibility — and sacrificing, at tax time, nothing significant. By not sacrificing, they would be continuing to exploit those Americans who do.
Other affluent Americans, besides Warren Buffett, do understand this reality, as two co-founders of Wealth for the Common Good, Chuck Collins and Alison Goldberg, noted last week. But the nation, the two add, needs many more of these wealthy to step up and speak out. And America needs, even more, the “bottom 98 percent” actively engaged, as never before, in the nation’s tax fight.
The alternative? Collins and Goldberg put that starkly: “Austerity for everyone but the rich — and a growing economic apartheid.”
Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.