Are the Rich Socially Obligated to Support Those Who Aren’t?

This Post comes from Michael, chief editor of DoughRoller.net, which helps consumers find the best online banks available today.

Many Americans would contend that our current capitalist economic system is breeding ground for the rich to get richer and the poor to get poorer. Many would also contend that the rich could be doing more to help the poor. Of course, I understand that this is a “loaded” statement.

How Taxes Favor the Wealthy

On one hand, it could be argued that the progressive income tax system in the United States hits the wealthy with higher taxes, which are then used to in part fund the country’s vast welfare system. This system encompasses those government programs that provide benefits and economic assistance to no or low income Americans. As of late, there has also been an emergence of a new class of philanthropists such as Bill and Melinda Gates and Warren Buffet that are giving millions, if not billions of dollars away, to foundations and charities.

On the other hand, however, many would argue that the rich do not pay enough tax, taking advantage of tax loopholes and tax cuts for the wealthy that were instated under the Bush administration. In fact, two-thirds of US corporations contrive to pay no federal income tax at all. Additionally, even the philanthropists, who probably have the best of intentions, get tax breaks for their charitable donations and often find it difficult to effect real social change.

Can one really put all the responsibility on the rich for shouldering the poor? I emphatically believe no.

Government Has Power to Decrease Poverty

If guided to do so, individuals and corporations would likely do more, yet leadership must taken by government. Although the rich take advantage of the current tax system and the ability to create corporations that dominate the global landscape, thereby concentrating wealth, the government has not established enough regulations to prevent the wealthy from exploiting the current system. This has further exaggerated the disparity in wealth all over the world.

If the government refused to listen to lobbyists and overhauled the tax system making it more transparent, one might find that the poor would slowly become better off. Additionally, if the government addressed income inequality and tried to implement solutions rather than remedies to the problem of poverty, I believe we would see some substantive changes.

Necessary Changes to the Current System

This means encouraging and even financing education for all, encouraging the growth of community based organizations, passing regulations to help small businesses grow and gain access to financing and mandating higher wages and better working conditions for the working class. The key is to discourage the perpetuation of a welfare system, enact legislation and laws that prevent the wealthy from continuing to take advantage of this system and using increased tax revenues to fund programs that make a difference.

The government spent billions over the last several years bailing out Wall Street, and the higher ups still walked away with multi-million dollar bonuses. Driven, in part by special interests, the government makes it far too easy for the rich to get richer and the poor to lag behind.

How You Can Help

On a more uplifting note, there has been increased demand over the last several years for investments with a socially responsible focus such as microfinance, affordable housing, community development financial institutions and small businesses. Although investors knowingly sacrifice a financial return, there is an inherent social return built into Socially Responsible Investing (SRI), although difficult to quantify.

For example, the Calvert Foundation is a leader in the SRI field, having invested over $200 million on behalf of its investors. Increased demand for this investment class shows the wealthy are willing to give up return in order to make a substantive social impact.

There is no doubt that the government should play the lead role in implementing policies that raise tax revenues and divert funds to programs whose aim is to eradicate poverty. However, it is encouraging to know that a growing segment of the wealthy have taken the initiative and begun to make investments with a socially responsible focus. At the end of the day, we are all responsible for ourselves. The government should ultimately guide us and make poverty reduction a primary goal.

You can review the following sources for more information on this subject:

http://www.politico.com/blogs/bensmith/0510/Clinton_The_rich_are_not_paying_their_fair_share.html
http://www.calvertfoundation.org/index.php?option=com_content&view=article&id=61&Itemid=71
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article7055759.ece
http://www.guardian.co.uk/commentisfree/cifamerica/2010/aug/05/philanthropy-does-not-pay-taxes

  • Dirac

    One problem with this is describing the wealthy and then noting that corporations skip out on taxes…this is two entirely different issues.

    It is not that I feel that the wealthy have no obligation but the government is a hindrance, not a tool (well, they are tools). If I give directly to a food bank, the usual benefit on my donation is above 90%. I would be willing to bet that after taking into account all hands of government, committees, staffs, etc. that less than 50% that is supposed to be earmarked to help people, actually gets to people in some form of aid. This is why taxing the supposed rich is not the answer or at least, it is an answer but many many people will not view it as the correct answer.

    Also, why are the tax cuts of the early Bush years considered tax cuts for the rich? Everyone had their taxes reduced. The use of such descriptions is intellectually dishonest done with the specific intent to bring people to your side of the discussion by using a description which is wholly inaccurate.

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  • Judy

    DID THE AUTHOR EVER HEAR THE SAYING…NO MAN IS AN ISLAND? MOST PEOPLE IN AMERICA HAVE LIVED THE “DEMOCRATIC CONTRACT” TO BE EDUCATED, PROTECTED, AND HELPED TO RICHES BY THEIR WORKERS (CONTRACTORS, LAWYERS, POLICE, FIREMEN, TEACHERS, TECHNOGOGY, MILITARY, ETC.).

    WITHOUT OTHERS PAYING FOR INFRASTRUCTURE, ETC. PRODUCTS WOULD NOT GET TO MARKET. THAT IS WHAT MAKES US A DEVELOPED COUNTRY. TRY OPENING A STARBUCKS IN AFRICA, ETC. OR RUNNING A TECHNOLOGY COMPANY WITHOUT EDUCATED WORKERS.

    THE RICH OWE SOCIETY BACK FOR IT. IF WE HAVE ONLY A SOCIETY WITH A FEW RICH (LIKE THE OLD KINGS, QUEENS, AND DICTATORS) THEY WOULD NEVER RISE ABOVE THEIR RANKS TO BE RICH.

    DEMOCRACY AS CHURCHILL STATED ISN’T PERFECT BUT IT STILL THE BEST SYSTEM OF GOVERNMENT SO FAR.

  • Scott Alexander

    Are the middle class and poor socially obligated to pay their share of taxes while the rich complain and do their best to hide their money in overseas accounts?

    Are the rich socially obligated to complain about undocumented workers not paying taxes when they themselves are asking for permanent tax CUTS?

    If you’re witless enough to believe trickle-down economics actually works, you need to look back through the last 30 years. The rich have gotten richer and the poor have gotten poorer. Jobs are sent overseas while the rich still enjoy their tax cuts and being able to have tax shelters/havens. Only the biased or totally ignorant actually believe the econmics of America has gotten better in the last 30 years. And its not undocumented workers or illegal aliens causing the problem – its business leaders and their rich friends who don’t care enough about the U.S. to see it prosper. They only seem to care when they’re not making as much money with laws meant to curtail their lack of ethics and morality.

  • remember the French in 1789? The Russians in 1917? Watch the pot starting to boil over here; We have a history of violence, and feeding on ourselves (the civil war). Party on dudes!

  • Rose D

    Are the rich socially obligated? Well, yes: for one, where else could they have obtained this sort of wealth outside of oil fields, and for another, yes, cos otherwise we’ll eventually storm your gated communities and take what we want, you stupid stupid stupid stupid w*nkers.

  • cleptublican

    Yeah but this is a country of lazy fatties / doormats. Maybe 50 years ago (heck, maybe even 10 years ago) “the people” would rise up and do something.

    Why else would they go after schools / education cuts first? The dumber they are, the less likely they are to revolt and the more likely they are to just roll over and take it. A good example would be Texas with it’s less than 60% high school graduation rate. Even the ones that do “graduate” don’t really know much. Like you said, party on (or, more accurately, bend over and spread em).

  • jimmy

    The rich aren’t obligated to support anyone. They got their wealth through their hard work.

    Our problem is our tax code. Why should taxes be based on what is earned if it isn’t all spent? In other words, two people spending $50,0000 should pay the same tax, regardless what they spend it on, and no matter how much money they have or make.

  • the fair tax would make our system much more fair. It provides a monthly rebate check to everyone for basic necessites, so the poor would not be hurt, but absolutely no tax deductions. In encourages savings, and hits the wealthiest the most. It is also the simplist. In addition, it would be revenue neutral. If you don’t believe it would work, it is because you haven’t read Neal Boortz,s fair tax book and processed all the information. Drug dealers who don’t report their income? No problem, they pay taxes on the stuff they buy. Pan handler’s, domestic workers, illegal workers, prostitutes, pimps and thieves would all have an opportunity to pay their fair share without reporting their activities. No more need for loophole! No reason to be afraid about mortgage deductions and such for the middle class guy, because the fair tax percentage is designed so you would be in about the same spot. The truly rich would be the ones to really pay out, because of all the expensive toys they have bought in the past after paying a fortune to get out of paying their taxes. If they want to buy a new Leer Jet, no problem and thanks for the tax revenue. Want a new $30 million dollar mansion in the hills of California? Great, and we, the tax payers of America, appreciate your support! Consumption taxes hit those who can afford it most. Government would lose alot of power, however, and the rich would scream at the idea, so it will never happen, no matter how FAIR it would be.