COLUMN: The financial elites of America can afford some tax hikes. Wall Street and big corporations could also do with a little more taxes and regulation.
The American financial elites have become obscenely rich, especially compared to their counterparts in the developed world, as seen in the first chart below.
The top 0.1 percent earners in America earn over 6 percent of the total US income; their counterparts in Japan, France, and the U.K. all earn below 4 percent.
Before the 1980s, the American financial elites earned a similar portion of their country's total income compared to their foreign developed country counterparts. After the 1980s, they were able to pull away for two reasons.
One, President Ronald Regan massively cut taxes, as seen in the second chart below. Before him, President Lyndon Johnson cut some taxes and after him, President George W. Bush cut it further.
Two, the across the board Reagan-supported deregulation in the 1980s allowed companies to rack up massive profits at the expense of workers (globalization helped, too). Moreover, it – along with loose monetary policy – allowed Wall Street to grow to unprecedented heights.
Big corporations and Wall Street are the two main sources that have spawned most of the modern day American 0.1 percent financial elites. While some politicians like to argue that these people can’t afford tax hikes, more sensible voices – including billionaire Warren Buffett – say they can and should.
As for Wall Street and big corporations, they, too, could do with a little more regulation and taxes.