Conspicuous Consumption
I was actually just thinking about this before I saw the article.
In our nice little populist bubble we have going on right now, we can’t quite decide if it’s those evil “high earners” or the “rich heirs” that are the problem. When you hear a lot of populists talking, these two groups are pretty much the same. They are in fact very distinct: if you ever walk through an office and look at your mid-senior managers, many of them don’t look exactly like a Carnegie heir even though they are in the wide broom handle tax bracket.
In my opinion, that’s because the baseline assumption for this country, your Joe Sixpack, makes nothing and spends everything. Therefore, income and wealth become mutually exclusive ($1 more income would be spent rather than accumulated) while becoming conceptually identical in their similar lack of attainability.
This allows politicians to screw with “the rich” as a buzzword depending on the situation. “The rich” are the lazy inheritors when it’s time to reinforce the estate tax, while in most Obama-esque policy talks we are mostly concerned with those magic $200,000-type income brackets that include just about anybody who can afford a decent, well-located home in Chicago, San Francisco, or Manhattan.
This leads to a pretty jacked up tax system, since you are effectively putting Rambo on a lazy susan.
I think the best way to liberalize someone like me is to deal on the conceptual margin. “What’s another 0.5% tax rate hike if it’s for the children?” This type of thing. Because it really can, even looking forward to higher pay grades and the like, seem like comparatively small amounts of personal resources for a large public utility.
But then I think of somebody like a friend I met at a Shell event while an intern. I don’t remember the guy’s name and doubt he’s working for the company, but I remember his basic character sketch.
African American guy, super smart, with a great interpersonal talent. Sort of Clinton/Obama-esque in that way. Harvard political science, can’t hurt. Did not give me the feeling that he was a legacy admit to the university. Maybe he was, but I don’t think so. There was none of that air of entitlement that comes with feeling like you are supposed to be somewhere.
He seemed like he was doing everything right. He will waltz into whatever job he wants and do great because he will thrive anywhere he ends up. He will be successful and well paid no matter what.
He will be taxed throughout his life as a high earner. Once he’s earning significantly he won’t get the mortgage tax credit, or cash for his clunker, or pretty much anything else.
Everything the government does, the basic message it will send, will tell him that he is doing too well.
If he saves, his investment returns will be taxed at a higher rate than the sales tax for convertibles and fancy shirts.
If he saves and never spends a lot of it, he could even owe some inheritance tax, unless he wants to spend more to avoid it.
In my little scenario, he will grow old living as an example of everything this country is doing right, getting the living crap taxed out of him the whole way through.
If he gets the Mercedes and the third villa, he probably owes a higher rate of tax than he would pay under current conditions. Why should the mid- to upper-middle class effectively fund his conspicuous consumption?
If, on the other hand, he saves and does smart things with his resources, I feel he would be greatly wronged by the American system.
I don’t see how we can talk about building equity and wealth without doing something about this doubletalk and doublethink that’s going on right now.