The Rich Get Much, Much Richer

By Douglas A. McIntyre Updated Apr 28, 7:25AM EDT · Published Jul 21, 4:58AM EDT

America’s rich are getting richer and they are getting richer at an astonishingly fast pace. A new study by The Wall Street Journal which looks at Social Security data found that “Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total U.S. pay in 2007.” The rich do not pay as much of their incomes out in social security taxes because the upper limit for deductions is capped at $106,800.

The news is bound to agitate an already agitated Administration which is faced with a Social Security fund that experts predict will run out of money in less that thirty years. It is almost certain that politicians and some economists will call for higher Social Security taxes on the rich which would help make up the growing deficit in the fund.

The Wall Street Journal figures do not include many executive incentives like stock options, so the numbers are actually “worse” than they seem.

The government has the alternative of passing legislation to impose a higher Social Security tax on the wealthy. That would be added to an excise tax for the affluent which is meant to help fund the healthcare initiative. It would also be added to higher tax rates to increase regular IRS receipts.

Most economists believe that at some point taxes become regressive and therefore undercut economic activity and consumer spending. Those limits are about to be tested and the results may be different from those that the proponents of the taxes assume.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.