The Herald Bulletin

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January 8, 2013

Jim Bailey: What's the difference between rich, middle class?

Class envy takes center stage whenever politicians argue over taxes and spending — which is most of the time. And of course they usually take the easy way out: Never do today what you can put off till tomorrow.

So just what is the definition of a rich person? The simple answer to that one is someone who makes more money than you do. And what about middle class? That’s a guy who has a job that pays the bills but doesn’t leave much for luxuries. He usually makes a little more than you do too.

There’s another definition of a rich person: Someone who hires people to do what a middle-class person has to do for himself. Therein lies the rub, at least where taxes are concerned.

Politicians who claim to cater to the middle class always champion the cause of making sure the rich pay their fair share of taxes. It matters not that 10 percent of a million is more than 13 times what 15 percent of $50,000 is, the millionaire who’s using tax shelters to pay a mere 10 percent isn’t paying his fair share. The solution isn’t to tighten up the tax shelters but to tax more of his earnings, right?

When I was young, the high earners had 91 percent of everything they earned over $200,000 confiscated in taxes. In those days, of course, $200,000 would buy more than a million will today. The natural result was a dampening of enthusiasm among the super-rich to go out and make more money they wouldn’t be able to keep anyway.

The classic image of rich people is the picture in the old Uncle Scrooge comic books of a tycoon swimming and diving in his money bin among coins mixed with bills 100 feet deep. Reality naturally is much different, the wealth being mostly on paper and often varying according to buying and selling on Wall Street.

Even in colonial days it was similar. George Washington was said to be so land poor he had to borrow money to travel to his own inauguration when he was elected president. If you’ve chanced to visit Mount Vernon, you’ve seen the beautiful mansion, elegant even by today’s standards, among beautifully landscaped grounds amid ample farmland. The slave quarters are a different story, amounting to a row of sheds affording the servant class little more than a place to sleep. But I digress.

Were the wealth of America’s well-to-do to be seriously threatened, much of the country’s charitable largesse would suffer. Peyton Manning, for instance, endowed a children’s hospital in Indianapolis. And one of Madison County’s own has spent most of his life quietly giving back to the community in which he grew up.

Rich man, poor man. What’s the answer? If we knew that we’d all be rich. But then nobody would be rich, would they? And we’d all have to pay more taxes.

Jim Bailey’s column appears on Wednesday. He can be reached by email at jameshenrybailey@earthlink.net.

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