America, get realistic and tax the rich
Felix Salmon, blogger for Portfolio.com
TEXT OF COMMENTARY
Felix Salmon: In England, if you are born rich and privileged, you'll probably stay that way forever. And if you are born poor, you'll probably stay that way, too.
Tess Vigeland: Commentator and Reuters blogger Felix Salmon.
Salmon: Americans, by contrast, believe in the American Dream, the idea that anybody can become rich or become president. The two countries' income taxes reflect the differences: the U.K. has a progressive income tax which reaches 50 percent on incomes more than 150,000 pounds, which is roughly the same as $250,000. In the U.S., by contrast, the federal income tax is always less than 40 percent no matter how much money you make.
Part of the reason is tied up in American aspirations, which were tweaked in a recent New Yorker cartoon. Two guys are in a bar, the first says to the second: "As a potential lottery winner, I totally support tax cuts for the wealthy."
Potential wealth. That's why Americans don't like high taxes on the rich, and that's the difference between the U.S. and the U.K.
The U.S. is a fundamentally aspirational society, where financiers like Donald Trump have an enormous and genuine popular following, mostly just because they're rich. Yes, we have wealthy families and celebrities and entrepreneurs and real estate moguls in the U.K. But Brits tend to react to seven-figure incomes with disgust rather than with awe or respect. And they're not under any delusion that they will be wealthy one day.
And in that respect, the Brits are much more realistic than Americans. For all that the American Dream is woven into this country's culture, there's actually less social mobility here than in most of Europe. If you're born poor, you're much more likely to make it rich in a country like Sweden or even Canada than you are in the U.S.
Countries that provide good resources for poorer families and have cheap or free university education are much more likely than America to see people working their way up the ladder. Americans oppose tax cuts because they think that even if they're not rich today, they might be tomorrow. But they're wrong about that. The American Dream is just a dream -- it is not based on reality.