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U.S. income gap keeps increasing. Are we headed for a plutocracy?

Written By | Jun 10, 2015

MONTGOMERY VILLAGE, Md., June 10, 2015 − We keep reading about all the income inequality in our country. Every day we see statistics massaged every which way to tell us that a minority keeps on getting richer as the poor are getting poorer. Meanwhile, the middle class keeps losing ground.

Are we heading for a society consisting of a few possessing the most and while the many make do with less? Some would say we are already there.

Republicans in Congress keep on harping at how our corporate taxes are too high, discouraging business investment and the creation of well-paying jobs. While the nominal corporate tax rate in the U.S. is one of the highest in the world at around 40 percent, that hasn’t prevented U.S. corporations from raking in higher and higher profits each year.

This, of course, doesn’t really reveal how much these corporations actually pay in taxes. Because of the complexity of our tax system laws, a well-paid group of tax experts can reduce that allegedly outlandish business tax to much less than 40 percent and as low as 0 percent. The fact is that record corporate profits haven’t created the jobs we need to raise everyone’s standard of living in the U.S. These profits have only served to create a much larger gap between the haves and the have-nots.

But what about the message we still hear, namely that everyone in our country can still become a success, translated into wealth?

Statistics tell us that there is some truth to this notion. They tell us that those that go to college have a better chance of getting into well-paying jobs. We have also read about and witnessed entrepreneurs who go from rags to riches in a short time. However, there also seems to be a clear connection between those that are successful and their level of education.

Unfortunately, the soaring cost of higher education keeps increasing relentlessly. Funding for public universities continues to be cut by fiscally conservative administrations. Those candidates that don’t get on the bandwagon of cutting taxes are not elected.

Even liberal states have elected fiscal conservatives to the governorships, à la Maryland and New Jersey. In the former, frequent references to the state’s “rain tax” by his opponent sealed the fate of Maryland’s progressive gubernatorial candidate.

As a result of these continuing budget cuts to higher education, higher education itself, probably the best weapon this country has to help close our income gap, is not made available to those that would use it. Without that access to education, those less fortunate students, whose ultimate employment could help close the income gap, don’t have the Ag (as in silver) to afford it.

Worse, those lucky enough to get a loan to go to school end up having to pay for many years for the privilege. Efforts to try to decrease or lift this load from their shoulders usually meet with opposition from the same fiscal conservatives claiming no one should get a free ride.

On the other hand, these same fiscal conservatives don’t bat an eye about spending trillions of dollars in a new “flight platform” (read fighter plane) that can’t be used if there is an electrical storm. Our legislature appears to equate military power, even when it doesn’t work, with a powerful economy.

During the decades of 1950 to the end of 1970, arguably the greatest economic boom for the middle class in the history of the U.S., labor unions were powerful. Strong labor laws by progressive governments kept wages high and labor strong. Workers were able to buy the products they made and those that the neighbors made.

Since the 1980s, there has been a concerted effort by conservatives to break the unions. Their efforts have been very effective. Labor unions today are nothing but an afterthought. With many states enacting “right to work laws,” labor unions are even less viable.

Only eight states tax inherited wealth in the U.S. There are no federal taxes on inheritance. The effect is clear. Once someone becomes wealthy, his or her descendants have a good chance of remaining wealthy. This is not the American self-made tale. Instead, it is the “born with a silver spoon” tale.

Could it be that the constant assault on corporate taxes, the prevalence of tax loopholes for the wealthy, the escalating costs of higher education, the demise of labor unions and those low or non-existing taxes on inherited wealth have contributed to the income gap in the U.S.? It appears to be a case of cause and effect.

So what?

Unfortunately, with the Supreme Court decision of “Citizens United,” which placed no real limit on how much corporations can contribute to political action groups, the threat of an American plutocracy appears very real today. Some would say that we already have one. To maintain the current trend, it might very well help if we keep more and more of our citizens from gaining access to higher education.

Mario Salazar, the 21st century pacifist, thinks that education should be universally free. He is in Twitter (@chibcharus), Google+, LinkedIn and Facebook (Mario Salazar).

Mario Salazar

Mario Salazar is a combat infantry Vietnam Vet, world traveler, renaissance reconnaissance man, pacifist, metal smith, glass artisan, computer programmer and he has a Master of Science in Civil/Environmental Engineering. Now retired from the Environmental Protection Agency and living in Montgomery County, Mario will share with you his life, his thoughts, his musing on living in yet another century of change. He will also try to convey his joy of being old.