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The Rich Are Different From You and Me

| November 26, 2011

Gliding through 1 percent air. (Andrea)

By Donald Kaul

In response to my now famous “the-class-war-is-over-the-rich-guys-won” column, a gentleman from Kentucky writes a rather snarky letter posing several piercing questions that I will now answer:

Q: How much do we have to make to be “rich?”

A: There’s no set number for richness. Generally, 250-grand a year is a good wage, but if you have four kids who expect to go to a good college, you are a long way from rich. If you’re single making the same wage, you at least have no trouble seeing rich from where you stand.

If, on the other hand, your kids have escaped college and you live in a nice house and have a nice second house (and a boat) at a vacation retreat, and you belong to one of the better country clubs in town, and head waiters at the best restaurants know your name, you’re probably rich.

If politicians want to have their picture taken with you, rather than the other way round, you are definitely rich.

Q: What percentage of the nation’s revenue should the “rich” pay: 50 percent, 60, 95?

A: That too is an impossible figure to quantify. Where do corporations fit in your tax world? Should they be taxed too or should they, like GE last year, get off scot-free?

If you filtered out all the tax breaks, unwarranted deductions, and subsidies available to the rich and corporate (the courts tell us that corporations are people too, you know), you’d have some idea of what aggregate income is in this country and could start allocating taxes justly. Right now we’re flying blind.

Q: At what income level should people begin to contribute through taxation?

Donald Kaul

The Live Commentary

A: This question assumes that poor people who don’t pay income taxes are untaxed. They aren’t. They pay Social Security taxes, gas taxes, property taxes (either directly or indirectly), and sales taxes.

They are exempted from income taxes because they have so little income. That’s why they call them “poor.” I’ll give you this, though: they don’t pay many luxury taxes.

Q: How many “poor” people have ever hired someone or given someone a job?

A: All of them. Every time they buy a bottle of milk, or purchase a lottery ticket for that matter, they contribute to the economy. When enough of them do it, somebody gets hired.

(I’d be grateful if the Kentucky gentleman could point out a corporation that is “giving” people jobs. I thought people earned jobs.)

Q: Name a corporation/business that doesn’t factor taxes into the cost of doing business and therefore into what the public (including the poor) pays for their product or service.

A: They all try to, but it’s harder than you think. Pricing is as much art as science; failure to master it is one of the chief factors that send young, promising firms into bankruptcy.

Generally speaking, corporations charge as much as they think they can get away with. There’s some play in that number of course, and when taxes or labor costs or the costs of materials rise, they try to raise prices accordingly. Sometimes it works, sometimes it doesn’t.

But believe this, if a corporation can make a widget for $10 and sell it for $20, it will. And if it finds that it can sell that same widget for $100, it will do that too, regardless of taxes. It’s called capitalism.

The issue that underlies these questions is the fairness of progressive taxation: making richer people pay more of their income in taxes than poorer people do.

I think it fair, particularly in difficult waters, to ask the strongest in the boat to dip their oars a little deeper, to do more than their share in the interest of group survival.

It’s not fair to ask sacrifices only from those least able to afford it simply because they have the least political power.

Oh, and if you have any more questions, please send them to George Will. You’ll like his answers better.

Donald Kaul worked some 30 years as a syndicated Washington columnist for the Des Moines Register before retiring at the dawn of the new century. He is a columnist for Other Words. He lives in Ann Arbor, Michigan. Reach him by email.

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28 Responses for “The Rich Are Different From You and Me”

  1. i am more rich than any amount of money could possibly compare to

  2. Angela Smith via Facebook says:

    Well said, Mr. Kaul.

  3. Jim N says:

    Nice article ~ Good Points!

  4. Kip Durocher says:

    The uber rich actually see their wealth, even if inherited, as their right. They also believe that the rest of society are not capable of handling a goodly pile of money and therefore they are assisting and ministering for those who are not capable. Once this was called being patronizing ~ but now it has a network of clubs ~ à la Tea Party, and has morphed into the Christian duty of the uber to help the lowly masses who can not help themselves

  5. palmcoaster says:

    A painful reality very well described!
    This Thanksgiving was not and incoming Holidays will not be the same as the past ones to celebrate…The thoughts of our new homeless families, our brave one’s in those war fronts their lives cut young and their families left to mourn, our soldiers that come back to stand in the unemployment lines and homelessness as well, the millions without health care and many more without jobs. Meanwhile our mostly useless Congress and House members will retreat to celebrate in big style on the safety and abundance forcibly provided by the same ones they lobby against and that elected the to be patheticaly (Un)-represented.;cbsCarouseld.

  6. One thing that is not being discussed is the absolute feeling of self-righteousness by the wealthy, as if they are on on a religious quest, with no sense of guilt or pangs of conscience when they from on high look down on those who are poor. They actually are angry at those who try to lift themselves out of poverty. I suggest the rich feel and actually think they are superior human beings, and are therefore entitled, and that those souls who are hovering on empty stomachs are inferior. There are a great many ways to demonize those who are not rich. They are poorly educated, f (becuase they are genetically stupid, from the wrong “type” of family, are not willing to work hard, look for handouts, like to be on welfare, are immoral, like to have lots of illegitimate kids, etc. During WWII Hitler and his friends claimed all Jews were inferior, and should be put to death. No wonder it is called class warfare. There is a lot in common with War.

  7. Bob E. says:

    I think he hit the nail on some points and on others missed the points completely. His ambiguities on some of the questions leave his points unmade. I would rather have read an article with specifics, not dodging the questions with the slight of hand and missing a good opportunity to make his point validly. I am not a proponent of the rich avoiding their fair share of taxes and I believe an increase in the income tax rates should be adjusted but, I do not buy into the premise that the poor paying sales taxes, social security taxes and the others he mentions, are the same taxes that the President is talking about raising, he is talking about income taxes. But the rich do pay more in the taxes mentioned because they do buy products, usually pricier than I do so they pay more sales tax on it than I pay on mine, an example I buy used cars and pay taxes on that value, the rich buy new luxury cars and pay taxes on that amount which is higher. They pay 6.2% on the first $106,800 of income, which increases to $110,100 in 2012. He further goes to mention. His premise that people earn jobs is off base. Suppose you are an excellent carpenter and go to a boat building company and apply. They are not hiring, so you do not earn a job. Later there is an opening and they call you to interview for the job. You receive the job is that because the boat builder has allocated a job opening and is looking to fill it. The most qualified employee, or one who knows somebody, will get it. Is the job given by the employer? If there is no job all of the qualifications you have will not get you a pay check.
    He then gets into taxes being a part of pricing calculations, of course they are. Anyone does not decide, I think I will start sewing shirts and charge $40 each for them without knowing what his costs will be for labor, materials, taxes, rent or ownership, etc. If these costs are not compensatory for the $40 then you raise your prices, that is called business decision making and profitability to pay the investors a return on the $ investment they have made.
    Some good points he made, but he came up considerably short of making his case to me.

  8. some guy says:

    In todays world wealth is not the same thing as it was 100 years ago. then people did control the wealth as money was in the form of gold and silver coin paper money was only a promis to recive “real”money”. So yes then the bad bad rich did control the wealth BUt today the world does not work the same way. If you are rich it does not mean that a person who is not can not make their own wealth. The only question he seemed to answer to me was the first all the rest as another put it “slight of hand”.

  9. some guy says:

    Phil Chanfrau says:
    They actually are angry at those who try to lift themselves out of poverty. I suggest the rich feel and actually think they are superior human beings

    WOW just where did ya get that from??

    During WWII Hitler and his friends claimed all Jews were inferior, and should be put to death.

    Hitler one of those socialists ,progressivs, leftists ya know one of those who look to the state to make life = for all

    Kip Durocher says:
    November 26, 2011 at 11:42 am
    The uber rich actually see their wealth, even if inherited, as their right

    But its your right to TAKE the wealth of others by force by having Government do your dirty work because want it. Now who is greedy??

  10. some guy says:

    Kip Durocher says:
    November 26, 2011 at 11:42 am
    The uber rich actually see their wealth, even if inherited, as their right

    But its your right to TAKE the wealth of others by force by having Government do your dirty work because want it. Now who is greedy??

  11. Doug Chozianin says:

    This “tax the rich” distraction is a lot of baloney.

    The real issues are Jobs, Over Regulation, lack of Affordable Energy, huge government Deficit Spending, Hospital Death Panels, Junk Lawsuits, UN Agenda 21, Smart Meters and “Arugula with Steak”!

  12. Layla says:

    One thing the rich are NOT is lazy. The go to school, work hard, provide a living for us. They also give freeley to charity.

    These are the things I am thankful for.

    Stop blaming your problems on the rich and put it where it belongs, on the government that cost you these jobs and homes.

  13. William says:

    The term “rich”, as pertaining to personal wealth, is subjective. Someone earning 250k/yr is “rich” from the perspective of someone earning a fraction thereof; yet compared to the 1%, that same person would be considered a pauper.

    The problem in quantifying wealth is that most people do not grasp the quantities of money involved. I read somewhere (zerohedge I believe) that the entry threshold to the 1% club is $9.4 million per year. This club includes all CEO’s of the top fortune 400, Hedge Fund managers, etc. By way of example, the Koch bros. (net worth $25 Billion each) are tied at #4 of the richest people in America. Let’s compare this to a “rich” entrepreneur.

    Suppose you’ve hocked your socks and underwear to start a business. The business became successful, and you’ve retired with $5-10 million in the bank. Enjoy, you’ve earned it. Give to the needy as your circumstances and conscience requires. The worst that you can do is make unwise decisions and personally bankrupt yourself and/or family.

    Contrast this with the Koch bros. who inherited immense wealth, and make more each day. At this income level you have political clout and undue influence. At this level of wealth you have the ability to influence legislation (see: ALEC), get candidates elected which will advance your agenda (see: The Tea Party), and, ominously, with bad decisions you have the power to bring down an entire economy.

    This is what lies at the core of the income inequality argument If you have 3 minutes and 38 seconds to spare, here is an instructive video on the subject:

  14. Justice for All says:

    Hmm. Seems we conveniently forget our U.S. History lessons, especially during depressions/recessions. May I suggest rereading about the 1893-98 depression, the Pullman Railroad strike and the Federal government’s response. Hint – Pullman thought he built a model town in Pullman, Illinois.

  15. Layla says:

    While we are looking at gazillionaires who dabble in politics, I suggest all take a good hard look at a gentleman (?) named George Soros.

    Amazing isn’t it, that we just can’t seem to take the politics out of it?

  16. Will Allen says:

    Since the article is about money I’d like to throw my two cents in. At my age, 62, and since I’m thinking my life is going to continue without ever becoming wealthy for the rest of my duration, if fate doesn’t intervene drastically, then I’ll accept my place in the middle class. That’s in the middle of those who aren’t rich. That’s okay because money has always been a means to get along in life, and a reward for working, rather than an obsession at any risk or at another’s expense. Of course, I’d like to have enough money that a little frivolity wouldn’t lighten the war chest, or be able to hand out Benjamins to every needy hand, but with age and limited funds frugality becomes a necessity. So I’m in the camp of belt tightening when it comes to government and wouldn’t mind not having to think the troops are always missing the holidays when we can use a little nation building right here at home. As far as taxes, I know it may sound naive, but I actually feel a little proud when I sign a check to the IRS on the day The Great Emancipator gave his life. It’s my duty to do so and it’s the price to live in a free society, as long as I can keep the check small enough so I can still afford a motor vacation in the summer to see the kids out west.

    Now I don’t lament not being rich, don’t envy those that are, either. Some say the rich have bigger problems just handling all that money. I suspect when you get a big stash of a million or more you’re concentrating harder on the next million, and the next. You may even get paranoid and fear losing all that dough and find ‘loopholes’ the best game in town. When I want to vision how the rich live I go to my bookshelf and pull down a Fitzgerald, then sleep a whole lot better knowing I don’t have rich man problems.

    My father gave me some advice years ago. “Once you realize money isn’t the most important thing in life you see clearly the things that are.” Nothing beats family and the bonds of generations that bring life into the world, watching children grow up, giving to them, seeing them bring their own kids into the world, and being able to sit at a table eating a special meal made of love.

  17. Layla says:

    Beautifully written, Will Allen. Thanks for sharing.

  18. Bob E. says:

    You make some good points and I was totally with you all the way, until the last paragraph. Then I see what this congress, both sides of it, are leaving for our kids, yes I have younger ones who will have to pick up the tab for mis management of the nations economy. You hear the expression, vote out all incumbents, but then you have to consider you will get new ones who don’t know up from down or you get more Weiner types who are self engrossed or a new President who starts campaigning for re-election the day after he is inaugurated into office. How do we know anymore who to believe, obviously if the current one gets re-elected we are in serious financial trouble because he hasn’t a clue where to start. That is the plight of those who elected a person without any experience into a job he has no clue of how to run. As a young man I wanted to make enough money to leave my children well enough off to establish a good retirement fund for themselves. Now I just hope we, as a society, don’t leave them so far in debt that they can establish a retirement fund for themselves.

  19. palmcoaster says:

    To Bob E. Are you going to tell us that the predecessor of the current President had any experience, except pretending, by calling himself The Decider? Sure, when he had no clues, he invented them to satisfy his and his buddies profiteering goals. Back then we just shut up and paid.

  20. Kip Durocher says:

    @some guy says
    Interesting name ~ is it Fijian?

    Your references to hitler are meaningless babble and make no sense.
    Your comment on my comment is even worse.

  21. palmcoaster says:

    Next some of the ways the super wealthy avoid paying taxes:
    We do not hate the rich. We dislike the loops they are given to avoid paying the taxes we all have to pay. We are getting tired and broke of carrying in our backs the full weight of our government budgets while this elite get away from their fiscal responsibility. We just want fairness.

  22. Layla says:

    Then more are going to have to vote.

  23. MSFB says:

    When will all of us wake up and learn from the past. Nothing has changed since the middle ages and before. There is a line in BraveHeart where Wallace is talking to the nobles as to what they think the commoners are for and what Wallace believes the nobles are for. Nothing has changed regardless of what type of government we have or have not. The 99% are there to serve the 1% just as it was long ago. We service, fight and die so that the 1% don’t have to. Wake up America!

  24. an ex democrat says:

    @MSFB. Things have changed since the middle ages but more like a pendulum swings back and fro. Today the pendulum has swung too far to the side of the rich and powerful. Remember that it was Eisenhower warned against the power of themilitary-industrial complex. William Wallace (Braveheart) could not probably have survived more than a few days under our current government. He would have been declared a terrorist agent by Obama and targeted for a CIA assassination by a drone, and who would care if a few innocent scottish kids were collateral damage.

  25. Layla says:

    @an ex democrat: I would politely disagree with the gentleman. I think it has swung too far towards the nanny state. We now have more drawing from than contributing. That’s not going to last much longer. Even rich people run out of money eventually.

  26. Kyle Russell says:

    Yes, a nanny state with 9% unemployment and 30 million uninsured (not to mention the underemployed, those with insurance with high deductibles, and the poor).

    That makes sense.

  27. Val Jaffee says:

    Kyle, it is a nanny state alright. Yep, a nanny state for those who engage in the privatization of profit and the socialization of risks and misconduct – corporate socialism. They’re the ones being taken care of.

  28. Layla says:

    My point is that the government is going to be taking care of us all, one way or the other, very soon…

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