It’s All About Upward Mobility; Keyword Being Mobility

The wonderful part of the American system of capitalism is the opportunity it provides for its people to reach a higher station in life. Fortunes have been made and lost based on choices. Some of the best stories of success have come from the most ordinary people. Likewise, some of the best stories of success have come only after failure.

Nothing is set in stone, nothing is inevitable. Everyday in America millionaires are made. Everyday people achieve the American dream, even if that dream is to simply provide a better living for their families than they had growing up. That above all else is what fairness means.

Washington Post | Angry about inequality? Don’t blame the rich.

Mobility is not limited to the top-earning households. A study by economists at the Federal Reserve Bank of Minneapolis found that nearly half of the families in the lowest fifth of income earners in 2001 had moved up within six years. Over the same period, more than a third of those in the highest fifth of income-earners had moved down. Certainly, there are people such as Warren Buffett and Bill Gates who are ensconced in the top tier, but far more common are people who are rich for short periods.

And who are the rich? Affluent people, compared with poor ones, tend to have greater education and spouses who work full time. The past three decades have seen significant increases in real earnings for people with advanced degrees. The Bureau of Labor Statistics found that between 1979 and 2010, hourly wages for men and women with at least a college degree rose by 33 percent and 20 percent, respectively, while they fell for all people with less than a high school diploma — by 9 percent for women and 31 percent for men.

To put this into practice

Major news papers and media outlets discussed the Bush tax cuts during 2007 and 2008 when it became highly debated during the campaign season. One figure by the New York Times if you recall reported that a family earning $10 million or more received a half-million-dollar tax cut, while the middle class received less than $100 for their work. On the surface it does look dishonest and unfair for a such a system to be devised. But, life isn’t static. Events happen usually out of a reaction from another. How did the economy, the business world, personal savings and investments react? How did it effect life in general? Was it good or was it a bad effect?

It should be pretty obvious that Americans across the economic spectrum reacted positively to the tax cuts. There was more investment, more hiring by businesses, and a stronger stock market before its decline. Yet, to really debunk the rich getting richer from special handouts and inside baseball from the Republicans mythology something needs to pointed out: the rich are actually paying more income taxes under the Bush tax cuts. IRS data proves this by the increase in more than $100 billion in tax payments from wealthier citizens by 2005 alone. In that same year, the number of people who earned $1 million increased from 180,000 in 2003 to over 300,000. The total taxes paid by new millionaires rose from $132 billion to $236 billion.