Then there is the entire structure of elderly entitlements. They mainly take from people who have less and give to people who have more. Social Security, for example, is funded by a regressive tax on wages and is distributed to the population group that has the lowest poverty rate of all. It's not just Warren Buffett who is on the receiving end. In general, the greater your lifetime income, the larger your monthly benefit. Medicare is also funded by a regressive tax on wages. Although the benefits are supposed to be uniform, in reality the zip codes where the largest Social Security checks are cashed are the places that spend the most on health care for the elderly.
Think about that last finding for a moment. Throughout the country, families who are struggling to get by and who cannot afford to buy their own health insurance are paying 15% of their income to fund hip and knee replacements for our true leisure class, so they can get back out on the golf course.
I suspect you could put a 50% tax on all the professional athlete income above $1 million and it wouldn't change the outcome of a single football game. Similarly, I think you could really sock it to Hollywood and even the idle rich without too much economic harm.
But when Paul Krugman writes about the top 1%, this is not who he has in mind. He is complaining about the incomes of people who run large companies. He wants their tax rate to be 91%!
I think Ayn Rand may have been right. The left is populated by people who are not especially bothered by those who become wealthy by virtue of birth or luck or good fortune. They do not even seem to be bothered by the winner-take-all feature of professional sports that confers millions of dollars on some athletes while those who were almost as good languish in near poverty. No, who they obsess about are the creators, the builders, the entrepreneurs.
They don't hate the wealthy who don't deserve their wealth. They hate the wealthy who do deserve it.
Postscript: an exception to what I have just written is Joe Nocera, an economics writer for The New York Times. Last Saturday, he wrote:
[L]otteries may well be the single most insidious way that state governments raise money. Many of the people who buy lottery tickets are poor; lotteries are essentially a form of regressive taxation. The odds against winning a big jackpot are astronomical — far worse than the odds at an Atlantic City slot machine. The get-rich-quick marketing — by government, let's not forget — is offensive.
Nocera writes about
[A] recent e-book written by Don McNay entitled, "Life Lessons From the Lottery." McNay is a financial adviser and newspaper columnist, based in Kentucky, whom I've gotten to know over the years. He specializes in helping people who have come into sudden money. He is convinced that the vast majority of people who win big-money lotteries, like the recent Powerball prize, wind up broke within five years. "The money just overwhelms them," he told me the other day. "It just causes them to lose their sense of values."
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