Last Sunday, Greg Cavanagh had an opinion piece, "Why punish the rich for good choices?" in the Star Tribune. I was outraged at the way he ascribed all good attributes to the wealthy and all negative ones to the poor. I wrote the following piece in response, which was not published. It bears on the discussion of income vs. wealth, so I thought I would share it here:

Mr. Cavanagh's Counterpoint "Why punish the rich for good choices?" is a simplistic piece of writing that divides society into two categories: (1) wealthy, well-educated, generous, hard-working people, and (2) poor, lazy, uneducated people on welfare. It has some major errors.


Mr. Cavanagh says that wealthy people are less likely to take up the time of police officers, prosecutors, public defenders, judges and prison guards. Yet when wealthy people commit crimes or take advantage of the system, the magnitude and impact tends to be far greater than what the poor can accomplish. Think, for example, about Enron, WorldCom, Haliburton and others who have bilked citizens of billions of dollars in savings and retirement investments. The guy on the corner dealing drugs can't compare.

The wealthy can indeed accomplish great things with their wealth, and society often benefits. At the same time, they frequently take from the very poorest for their own gain. As reported in Business Week about the 365 largest companies in the U.S.: The ratio of CEO pay to factory worker pay was 44 to 1 in 1965. In 1997, it was 326 to 1. The magnitude of this is hard to see in percentages, so let's look at real numbers: In 1965, minimum wage was $1.25 per hour and average CEO pay at these companies averaged $55 an hour. In 1997, minimum wage was up to $5.15 per hour and CEO pay at these companies averaged $1,679 an hour. In other words, the worker at the low end of the pay scale today is making a little more than 4 times what he would have made in 1965 while the CEO is making more than 30 times the salary he would have made in 1965.

We have seen a huge increase in American jobs being sent overseas. We are told that it is because wage costs are lower overseas. Here's an interesting tidbit: If the pay proportion from 1965 had remained the same, today's CEO would be earning $227 an hour and the extra $1,452 per hour of CEO pay could have funded another 282 jobs at the low end of the scale. Multiply that by the 365 companies in the study, and that money would have kept almost 103,000 jobs here in the U.S. Yes, 103,000 jobs saved by just 365 CEOs getting no more than 44 times the increase in pay given to the lowest paid workers in their companies. In truth, the job savings would have been far larger because all of the jobs in between the lowest paid and the CEO have also gone up faster than the minimum wage increases.

When CEO salaries climb so disproportionately to what the average worker gets, then yes, I believe taxing the wealthy at a higher level is warranted. After all, their income is going up at a much faster rate; why shouldn't their taxes? Today, the wealthy pay a much smaller percentage of their income in taxes than those at the lower end of the economic scale. Paying 10% of a $50,000,000 income is far less painful than paying 10% of $20,000 for the person trying to hang on to a home and keep up with rising property taxes (8-24% rise per year), rising fuel costs (30-50% per year) and all the new "fees" that have been implemented in the past few years. But then, only those of us in the middle or low end of the scale actually pay 10% of their income in taxes. For the wealthy, it is substantially less.


Dottie Titus, Jordan

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