MITT ROMNEY is not the first multi-millionaire to seek the presidency, nor the richest. Ross Perot, the record-holder, spent some of his billions earned from computer data on losing bids in 1992 and 1996. Since then men who owe their or their family’s fortunes to oil, sport, publishing, trial law, ketchup, beer and bestselling autobiographies have followed.

But Mr Romney, who earned his $200m or so as a private-equity executive buying and selling companies, is the first candidate from the world of high-octane finance. As such, he illustrates the changing complexion of America’s rich. The wealthiest 1% of Americans not only get more of the pie (see chart); they are increasingly creatures of finance.

The average household income of the 1% was $1.2m in 2008, according to federal tax data. The ultra-rich skew that average upwards: admission to the 1% began at $380,000 in 2008. The Congressional Budget Office puts the cut-off lower, at $347,000 in 2007, or $252,000 after subtracting federal taxes and adding back transfers. Measured by net worth, rather than income, the top 1% started at $6.9m in 2009, according to the Federal Reserve, down 23% from 2007.

The richest 1% earn roughly half their income from wages and salaries, a quarter from self-employment and business income, and the remainder from interest, dividends, capital gains and rent. According to an analysis of tax returns by Jon Bakija of Williams College and two others, 16% of the top 1% were in medical professions and 8% were lawyers: shares that have changed little between 1979 and 2005, the latest year the authors examined (see chart). The most striking shift has been the growth of financial occupations, from just under 8% of the wealthy in 1979 to 13.9% in 2005. Their representation within the top 0.1% is even more pronounced: 18%, up from 11% in 1979.

Steve Kaplan of the University of Chicago thinks finance explains much of the rise in inequality. Updating a series developed by Thomas Piketty and Emmanuel Saez, Mr Kaplan notes that the share of income going to the 1% reached an 80-year high of 23.5% in 2007, only to sink to 17.6% in 2009 as the financial markets deflated (see chart). The trend is even more pronounced for the top 0.1%, whose share of total income rose to 12.3% in 2007 but sank to a still disproportionate 8.1% in 2009.

Mr Kaplan and Joshua Rauh of Northwestern University note that investment bankers, corporate lawyers, hedge-fund and private-equity managers have displaced corporate executives at the top of the income ladder. In 2009 the richest 25 hedge-fund investors earned more than $25 billion, roughly six times as much as all the chief executives of companies in the S&P 500 stock index combined.

Although the 1% have been gaining share in most countries, a recent OECD report shows that the trend began sooner, and has gone further, in America. Some scholars, noting that inequality has risen more in English-speaking countries, think social and political values may play a role: in mainland Europe and Japan, corporate governance, tax laws and unionisation have tended to lessen income disparities. But the relatively large role of the financial sector in English-speaking countries could also be a factor: even more of the top 1% work in finance in Britain than in America.

Membership in America’s 1% is relatively stable; three-quarters of the households in the percentile one year will still be there the next. Although the proportion shrinks over time, one study found that the vast majority of the top 1% were still in the richest 10% a decade later. Kinship plays a big part: rich parents tend to produce rich kids. High levels of educational attainment and stable families help in this. According to Gallup, 72% of the 1% have a college degree, and half have a postgraduate degree; those are two to three times the proportion of the other 99%. The 1% are more likely to be married and to have children.

The rich also increasingly marry people like themselves. Mr Bakija and his co-authors found that between 1979 and 2005, the share of spouses of the 1% who had blue-collar or “miscellaneous” service-sector backgrounds declined slightly, from 7.9% to 6.4%. The share of spouses who worked in finance, property and law rose from 3.5% to 8.8%.

Politically, Gallup polls find that the 1% are more likely than the 99% to identify themselves as Republicans (33% to 28%) and less likely to be Democrats (26% to 33%). A survey of 104 wealthy families in the Chicago area, led by Benjamin Page of Northwestern University, found the budget deficit was their leading worry, followed by unemployment; for the broader population, the reverse is true. Still the rich, like most voters, have eclectic views, often supporting liberal and conservative positions simultaneously. For example, Keith Whitaker, who advises wealthy families on behalf of Wells Fargo, says many of them sympathise with the Occupy Wall Street movement. A lot of them became rich by building businesses and consider Wall Street “the place where businesses are taken apart and run by someone else”.

Bob Perkowitz embodies these contradictions. A rich entrepreneur, he now devotes much of his time to a non-profit environmental outfit. He is a lifelong Republican who objects to George Bush junior’s tax cuts for the wealthy, and backed Barack Obama in 2008. Having restructured companies himself, he has no trouble with Mr Romney’s private-equity work but agrees with Occupy Wall Street that corporations have too much power.

Until recently he split his time between conservative Charlotte, North Carolina, and liberal Washington, DC. His wife, Lisa Renstrom, used to manage hotels inherited from her father, a prosperous Republican businessman. Now she campaigns on climate change and backs Wealth for the Common Good, a group of rich people who back Occupy Wall Street. Her father used to give his occupation as “capitalist”. “I grew up believing that [capitalists] were making the world a better place,” she says. “The capitalism we have has left us with degraded infrastructure, threats to our health, and global warming.”

Most of the 1% prefer not to talk about their good fortune. As the New York Timesrecently observed in an article on the 1%, “Some envisioned waking up to protesters on the lawn; others feared audits by the IRS or other punitive government action.”

But Mr Perkowitz and Ms Renstrom are utterly typical of the 1% in that they are far more politically engaged than the average 99-percenters. Nearly all the rich people surveyed by Northwestern vote, 68% make campaign contributions, nearly half had contacted a member of Congress and a fifth had solicited contributions on behalf of a candidate. A good chunk of those calls were meant to help their businesses. But many were motivated by the common good, defined in as many different ways as the sources of their wealth.

From all of us at Wealth for Common Good, thanks for all that you do, and for your commitment to tax fairness!

Chuck Collins, Alison Goldberg and Ann Manning

Download the WCFG 2011 Year In Review (PDF)

You can make a donation here.

Over the past year, Resource Generation and Wealth for the Common Good have been developing a campaign to amplify the voices of young wealthy people for tax justice.

During the same weekend in September when our organizing team came together to shape strategies, the Occupy Wall Street protest was gathering steam. The team realized that this could be a powerful moment to identify publicly as people with wealth standing for a more just distribution of resources and fairer taxes.

To test out this theory, Resource Generation staff members Elspeth Gilmore, Jessie Spector and other New York RG members made signs, similar to those being carried by OWS protestors, identifying themselves as members of the 1% who stand with the 99%, and took to the streets.  The signs provoked lots of reaction and discussion on the street, and a picture of Elspeth holding her sign went viral on facebook.

To keep in line with the messaging the Occupy movement was using, the team came up with the slogan: I am the 1 percent, I stand with the 99 percent. And so we decided to make the blog to mirror the site We are the 99 percent, and create a place where people with wealth and privilege people could voice their solidarity with the Occupy Movement.

What we’ve accomplished so far:

* There are now over 150 posts on the blog. The stories have been reposted, retweeted and reprinted thousands of times.

* Many of us have been on the streets at Occupy protests in cities all over the country, identifying as members of the 1% standing with the 99%.  Some have even published their thoughts about what it’s like to hold up those 1% signs.

* We have been fielding tons of media requests, including Los Angeles Times, BBC World Service, Christian Science Monitor, CBS News, Marketplace, and Al Jazeera.   Thanks to so many who have been willing to talk to the media, we’ve been able to share the story of our support of the Occupy Movement with national and international outlets, conducting over 50 interviews and generating over 100 media impressions.

* Some of us went to DC to lobby Congress directly as part of the Patriotic Millionaires lobby day to ask policymakers to increase millionaire tax rates. Many others called our lawmakers on our call-in day on November 16th with the message “Tax me! I support proposals to raise taxes for wealthy households like my own. No budget cuts until we raise revenue from those of us who have benefited the most and have the greatest capacity to pay.” And, we have now generated almost 100 signatures on the petition “Letter to the future: a plea for fair taxes from the next generation.”

* Inspired Legacies and Responsible Wealth have signed on as co-sponsors of the blog (along with RG and WFCG).  And we’ve heard from many other organizations that work with folks in the 1%, who have declared their support and shared the link with their networks.

* Our tax team led an amazing workshop at Resource Generation’s annual retreat, Making Money Make Change, and introduced over a hundred young wealthy attendees to the campaign.  The curriculum they developed will be used for future workshops and teach-ins.

* We are hearing from new volunteers who are interested in keeping the momentum going.

What’s next, and how 1 percenters can get involved:

We want to build on this momentum by organizing hundreds of other 1 percenters who can be a part of this movement and mobilize our community for action. We are working on tax justice workshops and educational materials and planning a mobilization around Tax Day in April.

Here are some ways 1 percenters can plug in:

1. Join our conference call on Tuesday, February 21st, 8 pm EST to learn more about tax justice and how the 1 percent can stand with the 99 percent. Sign up for the call here or contact us at westandwiththe99percent@resourcegeneration.org for details.

2. Join April 2012 Tax Day actions. Sign up to stay connected to our organizing at westandwiththe99percent@resourcegeneration.org.

3. Organize a tax justice workshop.

Take a look at the materials from our tax justice workshop.  Contact us if you are interested in organizing a workshop or teach-in, and we can support you through the process.  Or, just use these materials to start conversations about how our current tax system widens the wealth gap every year, and what we can do to create a progressive tax system.

4. Provide financial support for organizing.

One of the critical roles we can play in the Occupy Movement and its related organizations is through financial support. If you are looking for ideas, check out this extensive resource list. Resource Generation and Wealth for Common Good are also fundraising to continue this campaign. Contact us if you would like more information.

You can also…

5. Write a blog post or opinion piece.

We are recruiting writers for a tax justice blog series and can work with you to draft, edit, and place a piece.

6. If you haven’t already, post your sign on the tumblr blog!  Please encourage others to do the same.

7. Talk to friends and family members about wealth and taxes.

8. Support tax reform policies in Congress now – visit www.wealthforcommongood.org to learn about our campaigns.

9. If you’re under 35, join Resource Generation!

Originally posted on The Huffington Post, 12/4/11

The movement to raise taxes on the wealthiest Americans has gained an ally at the top of one of the United States’ largest banks. Ruth Porat, executive vice president and chief financial officer at Morgan Stanley, said on Saturday at the Economist’s World in 2012 summit that the government needs to raise taxes on the rich to address its budget deficit.

“The wealthiest can afford to pay more in taxes. That’s a part of the deal. That makes sense. I don’t know anyone that doesn’t agree with that,” Porat said. “The wealth disparity between the lowest and the highest continues to expand, and that’s inappropriate.”

“We cannot cut our way to greatness,” she added.

President Obama has said he would like to raise taxes on millionaires, but many Republicans oppose such a tax. Most millionaires, on the other hand, say that they would like to pay more in taxes.

Porat said that the global markets are more stressed now than they have been since the financial crisis in 2008. She said bank debt is now less trusted than other corporate debt, borrowing costs for European countries such as Italy have reached record highs, and banks have become less confident lending to one another. Since banks around the world now are focused on paying down their debt, they are less likely to lend to businesses and consumers, she said.

Porat said she expects global economic confidence to hit bottom next year and that the eurozone ultimately will avert a breakup by becoming more fiscally integrated.

“The optimistic scenario is low growth, and we only have that if in fact we see this conscientious move toward greater fiscal integration,” she said.

Porat said that there is potential for an economic recovery in the U.S. to gain momentum next year, once companies become confident enough in the economic climate to make more investments.

“Where there’s any sort of sense that we’re turning the corner, you’ll see a lot of cash coming in,” she said. “There is this cash on the sidelines waiting to be put to work.”

But Porat said that with the extreme level of political polarization in Congress, “right now there doesn’t seem to be a path forward,” suggesting more “slow growth” in the future.

By Betsy Malcolm

Distributed by Other Words, November 14, 2011

In their unbending opposition to raising a penny more in taxes from even the wealthiest Americans — even in the midst of a government debt crisis and shrinking public budgets — extremist politicians paint all rich people as self-made, entrepreneurial “job creators.” If we ask any more in taxes from such paragons of industry, they argue, we’ll not only crimp the economy, but perversely “punish success.”

I was born into an affluent family and lived in a good neighborhood, and so received a top-notch public education. I went to one of America’s great public universities, the University of California, Berkeley, emerging debt-free. Later, I inherited money and married a man with a high-paying profession.

It’s true that I’ve appreciated the opportunities afforded me and made responsible choices. But personal effort, choice, and virtue played no role in creating the opportunities. They were just handed to me, by good luck.

That’s why I support higher taxes for me and for people like me. Taxes are a way of evening out the blind fortune that plays such a central role in all our lives. Because luck runs both ways — as has become especially clear during this Great Recession.

Wealthy people like me should pay our fair share because, like everyone else, we depend on the public services that taxes fund. I benefit everyday from living in a safe neighborhood protected by great police and fire departments. I travel on public transit, use public libraries, and rely on public utilities. These are services that we collectively, as a society, provide efficiently, democratically, and on a scale that individuals — even rich ones — could never afford on their own.

I want a fairer tax system because I would rather have adequately funded housing services than pass by homeless people languishing in the streets. I’d rather have an aggressive response to the unemployment crisis than worry about my friends losing their jobs and wondering how they’ll make ends meet. None of us, even those lucky enough to be well off, live apart from the world around us. I want the America that I am part of to be a better, fairer place.

I have been to Mexico City, where the rich live behind barbed wire and only go out with armed guards, while desperate people without clean drinking water or adequate sewage systems live in squalor. Is this who we want to be? I’m afraid we’re getting close. I don’t want to live in this divided world, and I can well afford to give up some of my luxuries so that others can have the necessities.

Yes, some rich people started with nothing, worked long hours, sacrificed, saved, and well deserve their good fortune. However, they are wrong if they believe they made it entirely on their own. Education, health, safety, and opportunity always play a role. None of us creates these things for ourselves.

They are gifts that each American child receives because all Americans contribute their fair share to the common good. And while hard-earned, dazzling success is to be congratulated and admired, it should also be recognized as rare. Many talented people with good ideas work hard their whole lives without ever accumulating wealth.

And many rich people, like me, owe their money to factors entirely beyond our control. That’s why an equitable tax system — paying for public services we all use, as well as offering support and a hand-up to those who’ve lost out in life’s lottery — should demand more of us.

A good start would be to end the Bush-era tax cuts for high-income households like my own. We can certainly handle it. And if we’re truly honest with ourselves, we know it’s only fair.

Because luck matters.

Originally posted on Daily Finance, December 1, 2011. Please visit the original article to see the video.

Occupy Wall Street is slowing down a bit as winter sets in, but the conversation it inspired is still gaining momentum. Millions of Americans who once viewed themselves in general terms like “middle class,” “struggling” or “comfortable” now see the world more sharply divided into two groups: the 99% and the 1%.

But even in the middle of the protests, the division isn’t as stark as one might think. From the beginning, some of Occupy Wall Street’s strongest supporters have come from America’s richest families. Who are these wealthy few who have crossed the boundary, and what are they doing to help the other 99%?

Among the first 1% rebels was Robert S. Halper, a former vice chairman of the New York Mercantile Exchange — and an early enabler of Occupy Wall Street. A friend of OWS mastermind Kalle Lasn, Halper was one of the first to hear about the decision to take over Zuccotti Park. When Lasn unveiled his plans, Halper gave him $20,000 to set things in motion. But while Halper was quick to pull out his checkbook, he chose to remain mostly on the outside of the occupation, only visiting occasionally to see what his money had helped ignite. By comparison, some 1% rebels have dived in to work more closely with the 99%.

Afraid and Isolated

Critics of the 1% tend to paint the wealthy as arrogant and self-centered, convinced that they deserve their wealth, and blind to their own good luck and the societal support that allowed them to prosper. But Chuck Collins, director of the Institute for Policy Studies’ Program on Inequality and the Common Good, suggests that the relationship between rich people and their money isn’t quite so clear-cut.

“Sure, some buy into the idea of wealth creation and claim that they are completely responsible for their money,” says Collins, “but most realize that their wealth has to do with the society that we live in.” Once they reach that conclusion, he argues, it often informs their decisions. “Many people in the 1% for one reason or another have realized that the economy should not be organized to keep funneling wealth to the top.”

For Collins, the relationship between the 1% and the rest of the country isn’t theoretical. A great-grandson of Oscar Meyer, he is an heir to the family’s extensive meatpacking fortune. He argues, however, that his wealth doesn’t shield him from economic inequity. “As a parent, do I want my child to grow up in an apartheid society? Do I want to live in Brazil, where I have to surround my family with bodyguards as we take armored cars from one rich enclave to another? That’s kind of where we’ve been heading for the last 30 years. Do this for another 20 years and you’ve got another Sao Paolo.”

Karen Pittelman (pictured above, and right, with Elspeth Gilmore), a philanthropist and author ofClassified: How to Stop Hiding Your Privilege and Work for Social Change, echoes this sense of exclusion: “Class privilege often comes with a lot of isolation and fear, and that can be passed down through the generations along with an inheritance.” Part of the problem, she argues, lies in upper-class discomfort about the benefits they enjoy. “Being open and honest about how so much is rigged in our favor is a threat to the way things run. That stuff is supposed to stay quiet, behind the scenes. That’s the real reason why people who grow up with class privilege are taught never to talk about money.”

The Broader Community

Part of the solution, Collins claims, is for rich people to recognize that wealth cannot shelter them indefinitely. “We don’t live on islands. Well–some of us do,” he says with a laugh. “But most of us live in communities where we can see the results of 30 to 40 years of public policy that have increased inequality.”

Jessie Spector (right), the program director atResource Generation, a organizing group for young philanthropists, argues that the best tool for developing a more equitable society is tax reform. “I am focused on taxation as one key tactic for creating economic justice. It’s the best system we have on a scale large enough to create a more equitable society.” The burden, she notes, rests on the rich: “We need to pay our fair share. The wealthy need to pay much more if we hope to maintain opportunities for everyone in our society.”

Collins echoes the idea that higher tax rates broadly benefit society. “In the 1950s and 1960s, we taxed ourselves at a high level and used the money to pay for public investments that made our generation’s prosperity possible. Now, however, we’re stripping those investments in order to benefit a very small portion of the populace. Are we leaving anything for the next generation?” In addition to hollowing out the middle class and crucifying the lower class, Collins argues, this sort of thinking is devastating for the upper classes. “We also need to think about the health of the economy. Too much inequality undermines the basis of prosperity.”

Helping Others Find a Voice

Lobbying for tax reform isn’t the only way that wealthy people can help their communities. Spector has worked with Occupy Wall Street, and has used a large part of her inheritance to help fund small grass-roots organizations: “My priorities have been to give money to work led by the people who are most directly affected by injustice. I work withPoor Magazine, a media group that is organized around economic injustice.”

When Karen Pittelman protested at Occupy Wall Street, she carried a sign that poked fun at her own wealth: “Another Trust Fund Baby for the Radical Redistribution of Wealth. She stresses that philanthropy isn’t just about giving away money; it’s also about giving away power. With part of her inheritance, she endowed the Chahara Foundation, which funded grass roots groups in Boston that were run by and for low-income women of color. She quickly learned, however, that the privilege that she was taught to take for granted could get in the way of her own philanthropy. “Part of the thing about being raised with class privilege is that you are always taught that you know best, that you have the solution to everything,” she says. “After the foundation’s first round of giving, it was so clear to me that, had I been making the decisions, I never would have even known about so many of these amazing, small, grassroots groups they were supporting because I wasn’t from those communities. The women making the grant decisions had been working as activists in their communities their whole lives, so they knew what was going on in a way I never would.”

Giving away power not only taught Pittelman about her own expectations, but also about her ability to change the world. Looking back, she says: “When you have a lot of resources and are willing to put them behind radical causes, it can make some people nervous.”

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at@bruce1971.

By William Rice,

Distributed by Other Words, December 5, 2011

Despite popular fascination with the rich and famous, most working people have little understanding of the finances of the wealthy. And the rich use that unfamiliarity to their advantage as they wield their outsized influence over public policy.

Take the competing tax proposals of the Republican presidential candidates. Going almost unremarked amid all the discussion of the 9-percent federal sales tax in Herman Cain’s “9-9-9″ plan, or the surviving deductions in Rick Perry’s 20-percent flat tax, is that under both plans capital gains wouldn’t be taxed at all. Perry would also not tax dividends, and the other GOP hopefuls would largely exempt from taxation both of these kinds of passive income as well.

Now, if you’re a middle-class wage earner for whom dividends and capital gains are, at most, modest entries on your annual mutual fund statement, their exemption from taxation is a minor consideration when examining the merits of a tax plan. But if you’re among the independently wealthy who live almost entirely on dividends and capital gains, such a provision holds great appeal. It means you would pay no federal income tax at all. Nothing. Nada. Zero.

Of course, all the candidates would also eliminate the estate tax, meaning that rich people would never be taxed on their inherited assets or income. As in pre-revolutionary France, taxes would be left entirely to the middle-class and poor.

I’m quite familiar with these permanent passive-income tax holidays promised by the GOP presidential hopefuls, because I’m one of those independently wealthy people who would benefit so handsomely. I’m no Bill Gates or Warren Buffet, but I do have enough money that it makes enough money for me to live on. I mostly volunteer my time to worthy causes, and though I occasionally pull down a paycheck or charge a client fee, the bulk of my income comes from interest, dividends, and capital gains.

Why should I pay no taxes while someone who gets up and goes to work every day does? The reason usually offered for taxing passive income at a lower rate than wages, salaries, and small-business income is that such preferential treatment encourages investment and job creation. And that may be true of entrepreneurs who start businesses, seek investors, and then sell off their creations and start all over again.

But I don’t do any of those things, and there are millions of rich people like me who don’t either. Like a lot of them, I inherited stock in big companies like IBM and General Electric. I support myself primarily by depositing dividend checks. Occasionally I sell some shares at a profit. And conservative tax reformers believe I should be rewarded for this great exertion by exempting me entirely from taxation.

This is neither fair nor logical at a time of rising federal debt and severe budget cuts. True “job creators” could be encouraged without benefiting those like me who don’t need any more economic breaks. The preferential treatment already accorded capital gains and dividends from startup companies could be increased. Those who make a majority of their money from working could be encouraged to save and invest by taxing their investment income at lower rates than those of the already independently wealthy.

To his credit, Mitt Romney would still tax the passive income of those making over $200,000 a year.

But to ensure such sensible approaches are adopted, those of us who live off inherited wealth and believe in tax equity must speak up.

We have to blow the whistle on the giveaways in the proposed tax overhauls that most working folks are too busy to notice.

Originally posted by Bloomberg, 11/30/11

Nick Hanauer is a founder of Second Avenue Partners, a venture capital company in Seattle specializing in early state startups and emerging technology. He has helped launch more than 20 companies, including aQuantive Inc. and Amazon.com, and is the co-author of two books, “The True Patriot” and “The Gardens of Democracy.” The opinions expressed are his own.

It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.

Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.

I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)

Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.

Theory of Evolution

When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.

It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.

That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.

And that’s what has been happening in the U.S. for the last 30 years.

Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.

One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France by Dassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.

More Shoppers Needed

I can’t buy enough of anything to make up for the fact that millions of unemployed andunderemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.

It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.

Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.

Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush- era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.

We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s whytaxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.

So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.

To contact the writer of this article: Nick Hanauer at Nick@secondave.com.

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net.

ABC News, November 16, 2011

Producer and entrepreneur Charlie Fink and two dozen other members of the Patriotic Millionaires for Fiscal Strength lobbied members of the super committee to increase their tax rates. (PatrioticMillionaires.org)

Two dozen wealthy members of the group Patriotic Millionaires for Fiscal Strength are targeting members of the deficit “supercommittee” to increase their taxes.

Entrepreneur and producer Charlie Fink, said he and other Patriotic Millionaires testified in a congressional hearing and visited the offices of 13 members of Congress on Wednesday, seven of whom are members of the supercommittee, to express their concern for the country’s fiscal health.

Fink, who lives in Washington, D.C., said if the Bush tax cuts do not expire, the country “is digging itself a big hole by foregoing revenue.”

“Without revenue, we will never solve the problem by giving tax cuts to the wealthy while supporting two foreign wars,” Fink, a former AOL executive, said.

The group visited the offices of legislators in both parties, including Senators John Kyl, R-AZ, and Pat Toomey, R-Pa., and Reps. Nancy Pelosi, D-Calif., minority leader, Xavier Becerra, D-Calif., and Jim Clyburn, D-S.C., assistant democratic leader.

“It was a very refreshing conversation that restored my faith that there are people who, in spite of their financial successes, have not lost their compassion and sense of fair play,” Rep. Clyburn told ABC News after meeting the group.

The supercommittee has stalled on how to trim over $1 trillion from the budget.

Democratic members of the group met on Wednesday for more than two hours.

Patriotic Millionaire Robert Johnson, former chief economist of the U.S Senate banking committee, said that the current economic system is not broken, but it is “working on behalf of those who designed it in their favor.”

“America is no longer based on markets and capitalism, instead our economy is designed as ‘socialism for the rich’ – it is designed to ensure that the wealthiest people take all of the gains, while regular Americans cover any losses,” he said at a press conference this afternoon in Washington, D.C.

“It’s a Las Vegas economy where regular Americans put their money on the table and the richest 1 percent own the house,” he said. “And if the 1 percent happen to lose money, the 99 percent bails them out – covers their losses and then stands by watching while the house does it all over again.”

Last November, the Patriotic Millionaires launched with 45 signatories who sent a letter to President Obama asking him to allow the Bush-era tax cuts to expire at the end of last year. The petition was signed by the Grammy Award-nominated DJ, MOBY, as well as Jerry Cohen of Ben-and-Jerry’s-Ice-Cream fame.

The Patriotic Millionaires for Fiscal Strength wrote a 155-word letter saying they hope their taxes will increase. Its text is posted at FiscalStrength.com.

The message of the group has remained the same.

“For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you allow tax cuts on incomes over $1,000,000 to expire at the end of this year as scheduled,” the group’s website states. “We make this request as loyal citizens who now or in the past earned an income of $1,000,000 per year or more.”

Other Patriotic Millionaires who participated on Wednesday were Lawrence Benenson, executive vice president of Benenson Capital Co., David desJardins, former Google software engineer, Guy Saperstein, civil rights attorney, and Eric Schoenberg, former managing director of Broadview International.