It is a good question, a question that deserves an answer. “What are your solutions?” a reader asked last week, following a column under the headline “Inequity real risk to capitalism.”
The gist of the column was that young adults are not being well-served by American capitalism, and their growing enmity is a threat to a system that has worked pretty well for two-plus centuries: “ ‘Socialism’ long has been used as an excuse for opposing policies that actually help people, and the strategy long has been effective. But if politicians desire to preserve capitalism, they should work for the benefit of young people rather than the super-rich.”
The impetus was a report from ProPublica detailing that many of the wealthiest Americans have paid little or nothing in personal income taxes in recent years. When Jeff Bezos can pay no income taxes in 2007 and 2011 while accumulating a fortune that as of Friday was worth $202.3 billion, according to Forbes, something is wrong with the system.
The point is not that wealthy people are cheating the system; the point is that the system is working exactly as designed. And that is not beneficial for the majority of us. As a society, we could make different choices; or we could ignore growing inequality until it reaches the point where it makes American capitalism untenable — the inevitable result of 40 years of policies designed to help the rich.
Some solutions are obvious, such as increasing individual and corporate tax rates. In the mid-1950s, the highest marginal federal tax rate in the United States was 92 percent. That’s marginal — the tax on income above a certain amount. Now the highest rate is 37 percent. That decline has been driven by the most absurd canard ever foisted on the American people — that tax cuts pay for themselves. Hint: They don’t.