Taxing the Rich, Class Warfare, and the Quest To Be in the Top 1%

With $3,000 extra after my recurring bills are taken care of per month, I know I have a chance, albeit a tiny one, to ride the tailwind of the rich to my own wealth. As I dream of prosperity, I also acknowledge the class war that is brewing throughout the world, and in America.

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.

For the white collar workers of the world, and even those with mid-level government jobs like teaching at the nation’s public schools, wealth — as in ascent to the top 1% — is not even fathomable. The only goal regarding finances is to be able to pay the mortgage and children’s doctor bills.

Then there are those in my bucket… the 20 somethings with a dream of one day being in that top 1%, knowing it’s unlikely, but in the least working in an industry where odds are better than playing the lottery in becoming a millionaire, in the least.

My way of playing the lottery is to work for startups until perhaps one hits it out of the ballpark, all while keeping my monthly cost of living relatively low, and giving me enough money to play the market. It’s not roulette, it’s better, yet at the end of the long night at the table all my chips may be gone. I spread my money out, diversify, invest in stocks and ETFs like XLF because if the government is going to bail out Wall Street, if they’re too big to fail, then that’s an investment I believe in. I don’t really think I’ll get anywhere near rich off my stock options, instead, I’m hoping compounding interest will work its magic and/or I’ll pick a winner in the stock market and amass a small fortune.

The reality is, though, I am, and will likely always be, whatever “middle class” is, and whatever “middle class” will become. As many put it, the middle class is dying, so if you either have to figure out how to ride into the upper class, or get sucked down the economic ladder. Either way isn’t ideal… even now, I feel guilty about my income knowing I am in the top 25% of Americans, and yet I still can’t afford a house where I live, and I’m afraid to start a family knowing the cost of doing so.

On my journey towards wealth, I will continue to work with and amongst the upper echelons of American society, to shake hands with Venture Capitalists and be hired by entrepreneurs who already have a few million or billion in the bank. I’m not so far removed from the upper 1%, although my bank account of just $100k in networth may attest otherwise. The upper 1% lives in my backyard (or perhaps I live in theirs) and with that closeness comes the ever-elusive American Dream that offers fame, wealth, or at least wealth.

Over the past few months, I’ve read a slew of articles describing the ascent of the top tier upper class, floating away from the rest of us in terms of income. Some say the upper class should be taxed more — much more — and others say they should be taxed less (their earnings are fickle, and governments tend to spend too high based on budgets expecting certain levels of income from the upper class, which fall short in an economic event like a recession.)

In Vanity Fair, an article titled “Of the 1%, by the 1%, for the 1%” tries to uncover the reason for the widening divide between the haves and the have nots.

It’s the same old story…

“…one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.”

Capital gains tax rates, which seem to be the enemy of those seeking to tax the rich higher, seem to be one of my best potentials ticket from middle class to upper class. Instead of spending money today… instead of having children in my 20s… I’m focusing on building a sustainable career and obtaining excess income that I can invest now, before I start a family — because if I lose my job now I can recover.

Granted, I’m very fortunate, I was able to complete college with $0 in loans because my upper middle class parents were able to afford my tuition. However as tuition rates continue to skyrocket (the topic of another post I should write) even upper middle class households will struggle to put their kids through school without loans from Wall Street.

And so, it really does seem that unless you want to be an investment banker, you’re absolutely screwed. With that, I’m not surprised some taste the early brewing of a revolution in the air. Not in Egypt or Libya or elsewhere in Africa, but here, on our American soil. Some day it’s at least a generation out… our teenagers are too dumb, too complacent, and our baby boomers too powerful for the revolution to come yet.

But if the middle class lose their hope of ascending the class ladder, and are pushed further down as the rich get richer, I imagine revolution is a likely outcome.

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2 comments

  1. Perfect Dad says:

    You can't get to the top with a job, as you have recognized … but sounds like you are hanging with the right people. Eventually someone will pass you an opportunity, you'll jump on it, and hopefully ride it up to millions.

    1. Joy ( User Karma: 0 ) says:

      That's very true. Hopefully one of these days I'll get lucky. I already worked for one startup that was sold, but my stock options ended up being worth less than they could have due to an accredited investor issue, which was a bummer, but what can you do? I'm really hoping that this startup I am working for now can be successful, and that my stock options work in my favor. But who knows. We can sell for a billion dollars and for some random reason I could still end up with $0. It's a crapshoot.

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