USA 2017 Vs. France 1789 – “The Third Estate Has Been 'Handled'”
Posted by Tyler Durden on April 19, 2017 12:10 am
Tags: Economic globalization, Economic inequality, Economic inequality in the United States, Economy, Estate tax in the United States, france, Income tax, Income tax in the United States, Lucky duckies, Medicare, Social inequality, tax, Tax Foundation, Tax incidence, Taxation in the United States
Categories: Economic globalization Economic inequality Economic inequality in the United States Economy Estate tax in the United States france Income tax Income tax in the United States Lucky duckies Medicare Social inequality tax Tax Foundation Tax incidence Taxation in the United States
Most people are familiar with the story of the French Revolution: When the poor revolted against the unfairness and wealth inequality imposed by the aristocrats, they overthrew the monarchy and beheaded more than 40,000 people, mostly clergy and noblemen, as punishment for their crimes and injustices.
The days of using a guillotine may be behind us – but the anger that led to that revolution is similar to the growing anger at economic inequality in the US today, and could lead to the same kind of unrest.
In France, there were three classes: The First Estate, made up of clergy; The Second Estate, made up of the nobility; and the Third Estate, made up of everyone else. Even though the first two Estates were made up of just 3% of the population, they owned 35% of the land, paid almost no taxes, and held virtually all the political power in the country.
Where are we in America today?
If they were around today, heads still attached, French aristocrats would be mightily impressed with the wealth accumulation of America’s rich. The top 1% of the country owns 35% of the wealth; the top 10% owns 77% of the wealth. The bottom 40% owns 0% (here).
Perhaps the best summary of where we are on wealth inequality can be found in the video below:
Certainly, the American rich are paying more in taxes than did their pre-revolutionary French Counterparts. But as a share of income, the American poor are carrying a much heavier burden.
When most people talk about taxes, they think of income taxes, and on that front the rich do pay quite a bit more: According to the Tax Foundation, in 2015, “The top 1 percent of taxpayers paid a higher effective income tax rate than any other group, at 27.1 percent, which is over 8 times higher than taxpayers in the bottom 50 percent (3.3 percent).”
But income taxes are just one of the dozens of kinds of taxes we’re subjected to. As A World of Possible Futures notes, we’re also paying:
- State & local income taxes
- Sales tax
- Social security & Medicare
- Property tax
- Fuel/gasoline tax
- Other taxes such as estate tax, fees, and licenses.
I have yet to find an authoritative analysis showing total tax burden on people by income level in the US. But I expect that, as a percentage of income, the poor are paying a far higher share of their income into tax coffers than are the rich
This was borne out in England at least, where The Independent found that the wealthy are paying more in direct taxes, but far less in indirect taxes, resulting in a situation where “the poorest fifth of households paid 38.2 per cent of their income to the taxman, with the richest fifth paid just 33.6 per cent.”
We’ve all known intuitively for some time that politicians listen to their donors, and not to their constituents. We’ve since had confirmation, both anecdotally through narratives like “The Confessions of Congressman X” and statistically through research performed by professors from Princeton and Northwestern Universities in a 2014 paper titled “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.” In this paper, the authors reviewed 1,800 Congressional votes in which the interests of the rich were different from those of the public, and as a rule the rich won out on a consistent basis.
So where’s my revolution?
If the rich are so exponentially better off than the poor in this country – why do the poor take it? Why do they passively grumble and let it continue?
I think today’s leaders have learned some lessons from the past, which explains the following:
- Welfare state – In the France of 1789, there was no welfare state. If you were sick, you would get no doctor; if you were hungry, you starved. Today, more than half of the US population receives some kind of government benefit, including 21.3% who receive direct assistance related to poverty. Why bite the hand that feeds you?
- Drugs – Our country is awash in drugs that keep us numb. In 2014, there were 245 million prescriptions filled for opioid pain relievers. In 2015, 17.9% of adults held a diagnosis for a mental disorder, while a 2010 study found that 46.3% of children ages 13-18 had a mental disorder at some point in their young lives, and the majority of those adults and children are given prescriptions. And don’t forget the legal and illegal drugs, ranging from alcohol to heroin, that we use to self-medicate.
- Distractions – In the 1980s, marketers Al Reis and Jack Trout identified America as the world’s first overcommunicated society; that was in the days of a handful of television channels and no internet. Today we are completely enveloped in media, and continue our fascination with other distractions like sports.
I think there will be a disruption in the future, but I can’t see it coming from a domestic mass movement. Today’s Third Estate has been handled; the rich have clearly learned their lessons from the past.