Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 3, 1990 TAG: 9007030370
SECTION: EDITORIAL PAGE: A-9 EDITION: METRO
SOURCE: Bob Willis Associate Editor
DATELINE: LENGTH: Long
Among their spokesmen is the U.S. Chamber of Commerce, one of the most parochial organizations in this country. Look not to the chamber for social consciousness or enlightenment. It represents the bottom-line thinking of business.
Consistent with this, the chamber resists the idea of increasing income taxes. "This debate is not about rich and poor," says Richard Rahn, chief economist for the USCC. "It is about encouraging new opportunities, new business and new technology. It is about the U.S. competitive position in the world economy."
In other words, it is about protecting the position of those already the most favored.
Supporters of this line of argument say that in spite of the 1980s tax cuts, the rich are paying a bigger share of the federal income tax now. "The wealthiest 20 percent of American taxpayers today pay 58.1 percent of federal income taxes. In 1980 they paid 55.7 percent," says Rep. Richard Schulze, R-Pa.
If so, that's because the wealthiest 20 percent have a lot more of the nation's income now: 44 percent compared with 41.6 percent in 1980. The richest 1 percent have nearly 12 percent of national income; they had 9 percent in 1980.
This was a calculated result of Reagan administration policy, whose premise was that the poor had too much money and the rich not enough. So the administration cut taxes, crippled regulation and did whatever else it could to allow the rich to make themselves richer. In his new book "The Politics of Rich and Poor," Republican political analyst Kevin Phillips describes what happened:
"The 1980s were . . . tough on people whose weakness was a matter of education, family status, sex, age or race, though the strong, the well-educated, the well-married and the well-off within those groups made gains above the national average.
"Overall, a disproportionate number of women, young people, blacks and Hispanics were among the decade's casualties. Even as record numbers of female corporate directors, black millionaires and 26-year-old investment bankers and rock stars were entrenching themselves in Upper America, a much larger and growing underclass of high-school dropouts, unwed mothers, female heads of households, unemployable young black males and homeless persons . . . was beginning to provoke worried questions about the nation's future. The realignment of economic opportunity - the rich and well-educated grasped it, while the poor and uneducated could not - devastated the lives of many low-income Americans."
That is free enterprise at its most predatory and plutocratic.
The great majority of Americans did not fare much better. In a recent Los Angeles Times article, Phillips wrote that during the 1980s the middle class "wound up with marginal gains on federal income taxes, but higher state taxes, much-increased Social Security levies and a collateral squeeze on everything from health insurance to tuition."
While the poor and the middle class were struggling, the top 1 percent of the wealthy - about 1 million families - saw their share of the national income zoom from 8.1 percent in 1981 to 14.7 percent in 1986. That, notes Phillips, is a stunning gain of more than $100 billion a year, or more than $100,000 per year per family.
Another measure of the upward concentration of wealth is in a comparison of average annual pay of hourly-paid production workers and chief executives. Phillips tracked it back to 1968, when blue-collar workers averaged $6,370 a year, CEOs $157,000. In 1988 those groups were averaging, respectively, $21,735 and $773,000. The CEOs' compensation, nearly 25 times that of production workers in 1968, had risen to more than 35 times as much in 20 years.
Are the executives worth that much more? Doubtful. But note, too, how skilled they have become at protecting their compensation when their companies are threatened by hostile takeover. The blue collars take the hard landings. The CEOs have the "golden parachutes."
Several years ago, I attended a dinner party at the home of an affluent couple. The conversation revolved about taxes and how onerous they were. After a while a schoolteacher friend turned to me and asked: "Why is it I don't mind paying taxes on my little income, and they object so much to what they pay?"
Well put. I don't mind that the rich have riches; what I mind is that the more they have, the more they seem to want. And they object strenuously to giving up any of what they already have.
Phillips writes that "the United States has seen only two similar blow-outs: during the Gilded Age of the late 19th century . . . and during the `Roaring '20s.' " Those periods ended, he says, with stock-market crashes and popular demands for a redistribution of wealth. Maybe it's time for another New Deal for the American people.
by CNB