Robert Reich on Bill Maher’s Real Time spoke of the super rich and noted that the top 25 hedge fund managers each made a billion dollars in a single year, and then used that as a reason that the top 2% should pay more taxes. It is this lack of precision that taints the debate. To be in top 1% you need to make $410,000 using 2007 data. $160,000 in income puts you in the top 5%.
$2 million puts you in the top 1/10 of 1%. The extreme income quoted by Reich have little bearing on real policy decisions. But policy that assumes that the top 2% should be treated as if they earned like the top 1/100 of 1% is misguided as best, but is likely economically ruinous.
That top 2% is the entrepreneur and small business owner and makes up a significant portion of new jobs and charitable donations. If a few more percentage points of income tax was all he was being expected to absorb unemployment would already be dropping. But a series of 3,000 pages bills that are still not understood and more new regulations than anybody can count, during a period of credit contraction, has the small business man and the top 2% at a standstill.
While Reich and his fans cynically denounce ‘trickle down’ economics, which is a bastardized term showing no depth of understanding of supply side economics, we are seeing the damage inflicted on the producers of wealth “trickle down” onto the poorest in our economy.