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Charts Depict Depressing Reality

March 30, 2014

How bad is the inequality problem in our country? A look at the charts in this Demos post, “America’s Class System Across the Life Cycle” answers that question… and the answer isn’t heartening. Matt Breunig, the blogger who posted the charts, offers no solution to the problem, but several commenters note that an improved education system and improved social services would be an essential first step. And where would the funding for this come from? A look at Chart 10 (see the bottom of this post) provides an answer: establish an estate tax that limits inheritance to, say, $1,000,000. As Bruenig notes, “…rich adults get some extra help, usually mid-life, in the form of inheritance and other wealth transfers from their rich parents. The wealthiest 1 percent (in the SCF survey, which is less wealthy than the real 1 percent no doubt) have inherited an average of $2.7 million, 447 times more than the least wealthy group of adults.”

Is a small group of individuals receiving an average of $2,700,000 in lightly taxed inheritance placing them at a distinct advantage? Did these inheritors earn this? Couldn’t much of this money be used to help provide social services and educational support for those children in the least wealthy households? This was the premise Bill deBlasio just tested and sadly— but predictably– the legislators in NYS blocked. Is this thinking out of the mainstream and un-American? Paul Krugman’s column in Friday’s NYTimes quoted from a speech given by Teddy Roosevelt in 1910:

“The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” and (he) followed that statement with a call for “a graduated inheritance tax on big fortunes … increasing rapidly in amount with the size of the estate.”

At the conclusion of the article Krugman writes:

We don’t know how much of that wealth is inherited. But it’s interesting to look at the Forbes list of the wealthiest Americans. By my rough count, about a third of the top 50 inherited large fortunes. Another third are 65 or older, so they will probably be leaving large fortunes to their heirs. We aren’t yet a society with a hereditary aristocracy of wealth, but, if nothing changes, we’ll become that kind of society over the next couple of decades.

The chart below suggests that we might already BE “That kind of society” now… and if we aren’t yet, the 12 charts in the posting by Bruenig will convince you of the urgency to do something like deBlasio advocated and to do it quickly!


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