For all those that are perplexed about the tremendous wealth disparity, between those that are the superrich as compared to those that are not, the answer to such a tremendous wealth gap, really comes down to the fact that most people that get superrich don’t actually accomplish that through their actual wages, as in working a given job, or through the salary so paid at that job, but rather they are able to make mountain loads of money most typically through actualized stock options, equities in general, equity investments, or by basically having or having been gifted a lot of capital, which nowadays when invested grows a heck of a lot faster than income from wages, with also that capital being taxed at a very reasonable rate, when it is so taxed, along with capital gains not being subject to either social security or Medicare taxes.
For instance, from the years 1979 to 2016, the Standard and Poor stock index, had a compound annual growth rate of a very impressive 11.75%; whereas we read that from that same period, as reported by epi.org, the average growth in wages was an anemic 0.9% yearly. It doesn’t take a genius, to recognize that a growth rate of 11.75% absolutely dominates a growth rate of 0.9%, of which, even if two people were to start at the exact same wealth in 1979, the person making 11.75% in wealth growth would over the ensuring years to 2016, absolutely leave the other person, in the proverbial dust.
Of course, there are plenty of people, that don’t really understand what the fuss is all about, as in the sense, that in a capitalistic society, if some people are able to increase their wealth, at a greater rate, then others, so be it. The problem, though, is that oftentimes those people that have capital, have a strong tendency to passively invest it as compared to investing it actively in a business or as part of a community service -- rather they prefer to buy equities, or real estate, or annuities, in which, their participation in that investment, really comes down to monitoring it, and nothing much more. On the other hand, all those that labor for their money, by working, in one form or another, and are compensated with a wage for their labor, are for a certainty, expending both personal time as well as energy in order to make that wage, of which the growth rate of that wage is often disappointingly small.
The only conceivable way to reduce therefore the huge wealth disparity in America, which increases year by year, is for this government, of, for, and by the people, to make it their point, to do more to increase the growth of labor wages, and if appropriate to reduce the taxation so of for those wages so made; and to correspondingly do more to tax passive capital income at a higher progressive rate as well as also taxing large accumulations of wealth on a yearly basis, so as to thereby redistribute into the hands of those that need a helping hand, the aid that they so need.
It is important to recognize, that to a very large extent, oversized returns on capital invested, has come at the direct expense of wage growth for laborers, and until such a time as this gets reapportioned, the superrich will get ever more at the expense of the general population.