To All the Rich People Out There

Last week, reality TV star and multi-millionaire, Kim Kardashian posted a Twitter thread of her 40th birthday party:

   

"After 2 weeks of multiple health screens and asking everyone to quarantine, I surprised my closest inner circle with a trip to a private island where we could pretend things were normal just for a brief moment in time. pic.twitter.com/cIFP7Nv5bV

— Kim Kardashian West (@KimKardashian) October 27, 2020"

 

Being the Kardashian she is, the party was nothing less than extravagant. It was at a private island, where all guests were flown in private jets and went through multiple screenings. Due to her pictures, she has received tons of backlash from people all around. There is nothing wrong with celebrating a birthday, but celebrating a birthday on a private island while a pandemic is taking place just screams “rich privilege.” To put things into perspective, here is some data:

  • More than 9 million have died from COVID-19 in the United States, according to Worldmeters.

  • More than 20 million Americans are at risk of eviction through the end of 2020, according to the Aspen Institute.

  • The cost of treatment for COVID-19, with employer insurance (and without complications), is $9,763. And for people without insurance and with complications, it is a whopping $20,292, cites TIME Magazine.

 

Who is getting richer?

It is clearly evident while wealthy people like Kim K can take a trip to a private island to “pretend things were normal just for a brief moment in time,” most Americans don’t have that privilege. They are struggling to get a job, put a meal on their table, send kids to school, and pay bills and insurance due to the pandemic. And it is not just Kim K and her family flaunting their wealth. According to the Institute for Policy Studies and Americans for Tax Fairness, Jezz Bezos had a 64.8% growth in wealth (in billions of dollars) from March 18, 2020, to September 15, 2020. This is a much higher growth rate than the 42.7% that was recorded from February to September 2020. Even when the unemployment was highest during quarantine, people like Jeff Bezos did not lose any money. Rather their wealth exponentially increased. Bezos now has a net worth of $186.2 billion.

 

Economic inequality in the U.S.

Bezos is not the only billionaire who profited off of the pandemic. Bill Gates, Mark Zuckerberg, Elon Musk, Warren Buffet and many more saw a growth in their wealth by more than 25%. Economic inequality is at an all-time high in the U.S.A. right now. Compared to other G7 nations, the GINI coefficient of the US is 0.434, which is the closest to 1 that represents complete inequality, says the Organization of Economic Cooperation and Development. In a survey conducted by the Pew Research Center, 61% of Americans say there is too much inequality in the country today. But those views differ by political parties and household income level. 

 

In reality, the wealth gap between America’s richest and poorer families has more than doubled from 1989 to 2016. According to the recent analysis by the Pew Research Center, the richest 5% in 1989 had 114 times as much wealth as the median. However, in 2016, the top 5% held 248 times as much wealth as the median. And this should also not come off as a surprise that the middle-class income has grown at a slower rate than upper tiers’ incomes over the past five decades. Data analyzed by University of California Berkeley economist Emmanuel Saez shows that America’s top 10% now average more than nine times as much income as the bottom 90%. The top 1% is even higher and towers at 39 times more income than the bottom 90%. Saez’s analysis also shows that over the past five decades the top 1% of American earners have nearly doubled that share of national income. Meanwhile, according to the U.S. Census Bureau, an estimated 40% of Americans or 140 million people are either poor or low-income. All these data support that the top 1% of America is getting richer whereas the poor people are getting poorer and being neglected. 

 

Why are they getting rich?

So what is the reason behind this? Why are the rich getting even richer? Well, it all comes down to taxes. Despite inequality increasing in the US, the tax system has not been reformed. Even with the recent tax changes, they failed to counteract the growing inequality, says Kimberly Clausing, economics professor from Reed College. Professor of economics at the Paris School of Economics, Thomas Piketty insists that taxing the rich is an important step to battle inequality. In his last 10 years of empirical work, Piketty argues that progressives taxes are a necessary weapon that will allow changing the structure of inequality. Therefore, it is imperative that we tax the rich properly to stop the increasing inequality in our society. 

 

Taxing the rich

Various politicians have come up with different plans on how to tax the rich. Out of them, this article will focus on tax policies proposed by Senator Bernie Sanders, Senator Elizabeth Warren, and President-elect and former Vice President Joe Biden. 

  • Bernie Sanders - Sander’s platform has made the following proposals on his campaign website in hopes of taxing the rich:

    • Establish an annual tax on the extreme wealth of the top 0.1 percent of US households.

    • Only apply to net worth of over $32 million and anyone who has a net worth of less than $32 million, would not see their taxes go up at all under this plan.

    • Will raise an estimated $4.35 trillion over the next decade and cut the wealth of billionaires in half over 15 years, which would substantially break up the concentration of wealth and power of this small privileged class.

    • Ensure the wealthy are not able to evade the tax by implementing strong enforcement policies.

  • Elizabeth Warren - Professor Warren proposed the following rates and revenues in her 2020 platform for tax plans:

    • Zero additional tax on any household with a net worth of less than $50 million (99.9% American households).

    • 2% annual tax on household net worth between $50 million and $1 billion.

    • 4% annual Billionaire Surtax (6% tax overall) on household net worth over $1 billion.

    • 10-year revenue total of $3.75 trillion.

  • Joe Biden - 2020 President-elect, Joe Biden released his tax policies that he would enact if he came into office:

    • Raise taxes on individuals with income above $400,000 including raising individual income, capital gains, and payroll taxes.

    • Raise corporate income taxes to 28%.

    • Establish a corporate minimum tax on book income.

    • Impose 12.4% Social Security payroll tax for wages above $400,000.

    • 10-year revenue total of $3.3 trillion.

 

How would taxing the rich help?

As we can see from the above proposed policies, taxing the rich would bring in revenues starting from $3 trillion. That $3 trillion would not only make all public college free, but also make massive new investment in infrastructure. Also, a wealth tax that took about 1% of the extreme wealthy would bring about $4 trillion. To put that into perspective, $4 trillion would be more than enough for the government to fund foster care, school lunch, school breakfast, the Children Health’s Insurance Program, food stamps, unemployment compensation, supplemental security income for the elderly, blind people, and those with disabilities, and all the tax credits for working families combined says Michael Linden from The Guardian. Not limited to just domestic improvement, those revenues can also be used in making green decisions which would improve the environment and give Mother Earth more years to thrive. 

 

There are a lot of benefits in taxing the rich. With those hefty revenues, we could have a thriving middle class with economic security and not just a privileged upper class that hoards most of the national wealth. A society where the rich pay their fair share would be the society fit for our next generation.