Image: imago images / ZUMA Press
Bernie Sanders is right: the richest are getting richer thanks to lower taxes
US presidential candidate Bernie Sanders believes that there should be no billionaires in the world. The growing income and asset gap is a thorn in his side.
Again and again Sanders brings the example of the three richest Americans: Amazon CEO Jeff Bezos, Microsoft founder Bill Gates and Berkshire Hathaway CEO Warren Buffett. They have more assets than the bottom 50 percent of the American population combined. That's 160 million Americans. For this reason, Sanders wants to tax the richest higher.
The Washington Post released new data on Monday showing that it is mainly the richest percent of Americans who have benefited from economic growth since the 1970s. The bottom 50 percent of it feel virtually nothing.
This growth has allowed the rapidly increasing annual income of the rich in combination with degressive taxation. Since the 1970s, the upper percent of the population has been able to triple its total assets. In short, the richest are getting richer and richer.
The bottom 50 percent are home to just $ 8,000 more home than they were 50 years ago – 100 times less than the income growth of the top percent, which earns $ 800,000 more annually than it did in the 1970s. In the upper 0.1 and 0.01 percent, the figures are even grander: They earn five or seven times more than five decades ago.
The data are from Gabriel Zucman, an economist at Stanford University in the state of California. Zucman also points out that the middle class has very weak income growth.
Compared to the Washington Post, the economist says that the middle 40 percent look better than the bottom 50 percent"but their income growth is still very low."
To understand the massive income gap, account must be taken of the rapid growth in income and the effective taxation of different income classes. While income inequality has been growing over the years, taxation has become increasingly declining. A very unhealthy development, as the two factors reinforce each other – and thus makes the rich richer.
Bernie Sanders wants to tax the rich in the event he becomes US President, His idea may not be well-received by the wealthy, but previous governmental redistribution mechanisms do not seem strong enough. It could be a first approach to reducing the income gap.