Tuesday, December 28, 2010

What Would We Do Without the Wealthy?

During the current debate over the Obama-GOP tax-cut compromise, the comments aimed towards the rich have been far from flattering.  

Sure, I'm the first one to admit I am not the number one fan of the super-wealthy.  From my own observations, wealthy people can be elitist, greedy, over-indulgent, out of touch with the needs around them and lack understanding of what it's like to struggle financially. But even my characterization of the wealthy is made up of generalizations and stereotypes. Among the rich, one can easily find generous individuals who give of their time, finances and business expertise to help those in monetary need.  

Critics of the rich like socialist Sen. Bernie Sanders of Vermont bullseyes the affluent in his complaint that "the rich are never rich enough."  Like heroin addiction, the senator claims they cannot stop seeking more wealth.  Sanders characterizes the greed demonstrated by the rich as a "sickness." 

In his must-read article Deroy Murdock, a writer for the Scripps Howard News Service, responds to Sanders' criticism that the top 1% of taxpayers (who earned more than $380,354) earned 20% of America's adjusted gross income in 2008.   Murdock wisely points out that the top wealthy 1% also paid 38% of all federal income taxes.  

Murdock continues, "The top 10 percent (with incomes above $113,799) earned 45.8 percent of AGI and paid 69.9 percent of federal income taxes."

Let me share some more clarification about the role of the rich in the U.S. from Murdock's article:

High-income taxpayers also cough up state and local levies and often taxes on sales, property, capital gains, dividends, partnerships and corporate income. Their wealth floods public coffers and flows into government programs, many targeted at low-income Americans.

Concerning the willingness of the rich to share their wealth, the results from the 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy should cause our wallets to shudder:

This survey included 801 respondents who made at least $200,000 and/or enjoyed at least $1 million in net worth, excluding housing. The average respondent was worth $10.7 million.
Among these multimillionaires, 98.2 percent contributed to charity, versus just 64.6 percent of the general population. The wealthy typically gave away about 8 percent of their incomes in 2009.
This figure has slipped as the economy has slid. In 2007’s survey, the rich donated between 9.3 percent and 16.1 percent of income.
In 2009, 26.8 percent of Americans volunteered with charitable organizations. However, 78.7 percent of wealthy people donated time. The average rich respondent volunteered 307 hours — the equivalent of 38 eight-hour shifts.
These stats don't erase the crimes of greedy crooks like Bernie Madoff.  Capitalism still needs major reform when it comes to bailouts and special favors towards the wealthy that come out of the taxes paid by the middle class.  Yet let us remember the Madoff's are the exception and not typical of the wealthy.  

The next time you're poised to condemn the wealthy for getting tax breaks, take a second look not at the greed of the rich, but at their charitable giving.