The facts speak for themselves. The top 1% of American households hold 32.3% of the total wealth in America; the bottom 50% have 2.6% of the wealth.
The gap between the rich and the poor began with Reaganomics and the “trickledown” theory. Give tax breaks to the rich, the reasoning ran, and all Americans will benefit. In fact, that policy worked very well for the rich, but not so well for the average American, let alone for the nation’s poorest citizens.
Donald Trump’s biggest “achievement,” in my view, was pushing through tax cuts for the wealthy and for corporations. Shortly after the bill passed, Trump said to his moneyed supporters at an event at Mara Lago, “You all just got a lot richer.” So true. A third of the tax plan’s benefits went to the wealthiest 1% in 2018.
British Prime Minister Liz Truss took a page from Trump’s cut-taxes-for-the-rich playbook, only to be forced to reverse course after triggering a rout in the bond market and raising the ire of millions of Britons. And she later resigned. (Note to Republicans: Cutting taxes for the wealthy isn’t the winning strategy you think it might be.)
How do things stand at the other end of the economic spectrum? Well, it is estimated that over 500,000 Americans are homeless. Moreover, 34 million Americans are food insecure. In Maine, 295,034 residents are considered food insecure, including one in five children.
Two articles in a recent issue of the New York Times epitomize the two different financial worlds of today’s America. A UPS employee in Reno, Nevada who’s married to the foreman of an HVAC company, said, “We make six figures, and we’re still stuck in this struggling pattern.”
On the other hand, according to a second article, some well-to-do parents in New York City are spending tens of thousands of dollars to purchase fencing lessons and equipment and fund trips to fencing tournaments around the world, thereby enhancing their child’s chances of gaining admission to the Ivies and other elite institutions, which offer fencing. A previous article in the Times noted that, “For prices up to $1.5 million, parents can buy a five-year, full-service package of college consulting services from a company in New York called Ivy Coach.”
Speaking of colleges. The total cost of attending Bowdoin College today is about $80,000, which includes books and incidental expenses. That’s $80,000 per year in after-tax income. Here’s the heartening news: About half the students in each entering class receive a grant to attend, and the average grant is $56,360. That’s all grant, no loan. Here’s the sobering news: the families of half the student body can afford Bowdoin without receiving any financial aid. In other words, they come from families in the top 5% income bracket. Now that’s a wealth gap.
Other examples of the wealth gap abound. We recently had dinner at a local restaurant, which was reported to have a good new chef. We tried it out, only to discover that this restaurant charges $35 for the hamburger entree. A few days later, we learned from a friend who’s on the board of Tedford Housing that Tedford has had to turn away over 300 people already this year who need affordable housing. Something’s wrong with that picture.
Getting tired of the round-the-clock television and online political ads? Did you know that an estimated $9.3 billion will have been spent on the mid-term elections before they’re over?
How many hungry people could be fed with $9.3 billion? How many homeless people could be housed with that staggering amount?
There’s no one solution to reducing the wealth gap, but the following steps would represent a good start.
1. Raise the minimum wage.
2. Make the income tax much more progressive, by raising the tax rates for the nation’s wealthiest citizens. (Would ballplayers or hedge fund managers or tv talk show hosts making over $10 million a year really be disincentivized if they had to pay more income tax?)
3. Significantly increase the maximum amount of income (currently at $147,000) at which people must pay the Social Security tax. As it stands now, that tax is effectively regressive, as low wage earners pay a higher percent of their income to the Social Security tax than high wage earners.
4. Enact a national health insurance plan.
5. Pass a tax on higher value luxury goods.
6. Close offshore tax havens.
7. Overturn Citizen’s United to eliminate outrageous spending on political campaigns.
8. Create more incentives for cities and towns to build affordable housing.
9. Finally, and most important, elect people to national office who really do believe that easing the wealth gap is a problem. And, oh yes, pass term limit legislation.
Some readers will no doubt scream “socialist,” while reading the above suggestions. I gladly take that risk. It’s high time to close the wealth gap in America. We can’t continue along on the current path.
David Treadwell, a Brunswick writer, welcomes commentary and suggestions for future “Just a Little Old” columns. dtreadw575@aol.com.
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