Don't hate me because I'm rich
Sunday, October 18, 2009
I wish that headline really did apply to me. Alas, I am not rich.
At least my solid middle-class status spares me the wrath of many of my fellow Americans.
But being mad at the wealthy, says New York Times reporter Paul Sullivan, might just backfire.
For his article All This Anger Against the Rich May Be Unhealthy, Sullivan talks with finance and psychological experts. Their assessment: Envy and hatred toward the rich has always been around, but it used to tempered by "a strong undercurrent of admiration that was holding these people up as a goal.”
But in these tough economic times, more folks are feeling like being rich is a closed club and that the wealthy have an unfair advantage.
Taxes and the rich: That perception is debatable. I'm one of those who believes that from a tax standpoint at least, wealthy folks have had a pretty good ride over the last eight or so years.
The top income tax rate of 35 percent is the lowest it's been since 1992. For a good chunk of the 20th century, the wealthiest U.S. taxpayers handed over much more (90-plus percent from 1950 to 1963) to Uncle Sam.
Capital gains rates also are at historic lows. And richer folks tend to take advantage of capital gains (and losses) more often than the general populace since wealthier individuals usually are more active investors.
Still, I don't think the wealthy deserve to bear the full brunt of animosity. As the saying goes, hate the game, not the player.
Congress makes the laws and the rich, who can afford good tax counsel, just take advantage of them (the laws, not Congress; wait ...).
Unhealthy attitude: Sullivan takes the anger analysis further. "This resentment was so palpable, I started to wonder if it was having any effect -- were the wealthy aware of it, and if they were, did they care?" he writes.
He looks at how the anti-wealth attitude could affect several economic areas, but of course I focused on the tax implications.
If the anger does translate to actual tax-the-rich policy -- and that seems to be the direction it's going, for example, with talk of health care funding options like surtaxes on the wealthy and taxation of Cadillac insurance policies and millionaire taxes at the state level -- it could end up hurting the rest of us, too.
Take charitable gifts, says Sullivan: "Increased taxes could cut into donations. While there is not a direct correlation between tax deductibility and personal donations, there is a correlation between increased taxes in a continued weak economy and charitable giving."
As for the wider impact, there is concern that obsession with money and the placing of blame for money woes could create a generation that distrusts investing and associates wealth with greed.
"People in their 20s have watched their parents lose their money and now they think, 'You can’t trust banks, you can’t trust anyone,'" said financial psychologist Brad Klontz. "We need to do work around that. That association between money and being bad can be extremely intense."
You can follow this conversation by subscribing to the comment feed for this post.