Greed Tax

Before the tax on greed was removed Americans saved more than 10% of what they made; now we save less than 2%. Although we complained about keeping up with the Joneses, “keeping up” pre-tax cut was very different than post-tax cut. Back then, people put themselves out occasionally when they got a bigger, better, faster car, or perhaps a larger, fancier home.

Today, however, in our post-tax cut world, keeping up has turned into an all-consuming compulsion for Americans of all ages that encourages the taking on of more and more debt in an unending pursuit of relative status that is totally and completely money driven. In this competitive process, the price of high ticket prestige purchases from McMansions to winter vacations to Ivy League tuitions have been bid out of sight. Those that get there through ever more clever bending of rules are the smart ones to be emulated. Those who expect that virtue and probity will be honored or respected are seen to be fools. This is the world we have wrought by the changes in our tax code.

If America’s political leaders had an ounce of courage they would call for a resumption of the Greed Tax and once more put a cap on American income, but, alas, all are much too busy trying to inflate their own incomes so that they too can keep up. As an economist, I fear it will all end very badly and fairly soon, given the rate at which we are borrowing around the world to appear rich and stay ahead. If anyone wants to stop this orgy of greed, demand that we tax it.