With the Presidential nomination sweepstakes and popularity contest already opening up, we’re all going to be treated to another year of claims and counterclaims, and, if the President’s recent remarks and the Republican candidates’ counter-claims are any indication, a good proportion of the rhetoric is likely to center around taxes.

As I understand the respective positions, the Democrats feel that, because wealth has become more and more concentrated, particularly in the last decade, the “wealthy” [however they’re defined] should pay a greater share in taxes, and that would be determined by closing various “loopholes” and creating a higher tax rate for the top income categories, roughly above $250,000.  The Republicans counter by saying that higher rates are counterproductive economically and that those who are above the “middle class” already pay a disproportionate amount of federal income tax.

While statistics need to be viewed with care, and I know, having spent many years as an economist, I decided to take yet another look at the IRS statistics in light of the present and likely the coming campaign charges, even though I know that few are likely to change their minds based on mere statistics.

According to IRS statistics, during the period from 1951 to 1980, the percentage of Americans who paid no federal income taxes essentially remained stable at between 21-22%.  Beginning in the 1980s, the percentage of taxpayers who paid no federal income tax began to rise, hitting 32% in 2004, 47% in 2009, and an estimated 53% in 2010.

At the same time, the percentage of tax revenues paid by the “middle class” also declined, with the percentage of total income taxes paid by the “middle class’ [defined as those taxpayers comprising those making more than the median wage, but less than the top 10%] declining from almost 40% of all income tax revenues to about one quarter of all tax revenues.  At the same time, the top ten percent of taxpayers went from paying roughly 45% of all income taxes to paying 70% of all income taxes.

Put another way, 53% of all taxpayers, largely those in the bottom fifty percent of taxpayers in income terms, paid no taxes.  The next third [37%, if we’re being more precise] paid 30% of all income tax revenue, and the top 10% [those with taxable incomes above $115,000] paid 70% of all federal income tax revenues.

At present, the current federal deficit is running close to one and a half trillion dollars annually, and federal income tax revenues are bringing in around $850 billon. The most obvious, and most bandied about, solution is to increase taxes on the rich, but there are a number of problems with this solution.

First, the reformers on the left confuse is “wealth” with “income,” and unless the Congress changes the tax law, the IRS and the Congress can only tax income, not wealth.  According to the latest IRS statistics, the eight thousand wealthiest Americans earned a combined total of $239 billion in 2009.  Assuming that Congress sees fit [which they won’t] to increase the marginal tax rate on millionaires and billionaires to 90%, and also assuming that they’re smart enough to get rid of all the deductions for these individuals, the total federal income tax revenues would total a little over $215 billion.  Given that this year’s federal deficit will be roughly $1.4 trillion, taxing those less wealthy would also be necessary to get rid of the deficit by taxing the “rich.” The 14,000 odd taxpayers who earned between five and ten million dollars a year had a total income of $95 billion, and a 90% cut of their income would raise $85 billion.  But since these taxpayers already pay close to $100 billion, the additional tax revenues would only be $200 billion. That’s still not enough.  In fact, if a 90% rate were applied to all taxpayers with an income above 1 million dollars, the total additional revenue raised would amount to $300 billion.  That leaves a short-fall of well over a trillion dollars… and the only people left to tax are those who are complaining the most about being overtaxed.  For the 81 million people who aren’t millionaires, to cover the remaining deficit through income taxes would require an average tax increase of over $12,000 a tax return.

Again, if one only wishes to tax the remaining “rich,” i.e., those making over $200,000 a year, that won’t work either, because taking all their taxable income would just barely cover that remaining trillion dollar deficit.

So… in essence, even a 90% tax rate on everyone earning over $200,000 won’t cover the current federal deficit. And, of course that would raise other problems, because, since most state income taxes run around 6% for those making over $200,000, a 90% federal income tax would bankrupt all but those millionaires making more than $5 million annually.

Given a $1.4 trillion annual deficit, and the lowest tax rates in more than 70 years, the Republican alternative of continuing lower taxes and slashing federal programs doesn’t seem terribly workable, either, since to balance the federal budget would require cutting roughly 30% of all federal programs…which would translate into cutting more than a million jobs at a time of high unemployment… and given the fact that many of those programs can’t be cut without a massive overhaul in government, either way, neither side makes much sense.

The other day I engaged in an activity that my wife deplores – I read another review of one my books, of Arms-Commander – and came across yet another common mistake made by both professional and amateur reviewers all too often.  The reviewer in question made the statement that, because of her abilities, Saryn was never in any real danger.  Outside of the fact that she gets rather banged up and almost dies upon several occasions, this reviewer and others – and not just in reviewing my books, by the way – fail to understand that great ability does not guarantee surviving inherently dangerous combat and occupational situations.

Since I do happen to know a bit about flying, I’ll begin with an example from that field.

The greatest combat pilot in the world is still partly at the mercy of mechanical failure, the elements, his/her own failures in judgment, unforeseen circumstances, and luck on the part of an opposing pilot.  As a matter of fact, in World War II, roughly half of all aircraft fatalities occurred in non-combat situations.  The same sets of factors occur anytime anyone of ability is involved in a dangerous situation.  Even the best mountain climbers get killed, and that’s without anyone shooting at them.  In a sword fight, blades can shatter, get caught on something for a moment at an inappropriate time, or the superior fighter can slip on sand or oil – or be distracted in some fashion or another.

Those who are best will also attempt to set up situations where their exposure to the unpredictable is minimized… as does Saryn, but that doesn’t mean that they’re not in danger every time they go into a battle or combat.  Then think about the fact that, as a matter of fact, even everyday life in the good old USA has a significant element of danger, when you consider that over 40,000 people die annually in auto-related accidents, and that there are something like 15,000 homicides a year.

In the case of someone like Saryn, whose forces are outnumbered, the best strategy is always to divide and conquer, to attack in ways and with methods that maximize her strengths and neutralize the enemy’s.  She does so… but that doesn’t mean she’s not in danger, as her various injuries and wounds prove… as do the deaths of hundreds of her supporters and allies also prove.

Well… perhaps the reviewer didn’t get the sense that she could be killed. If injuries, wounds, near-death, the deaths of those closer to her, and lots of close calls won’t convince a reader, then the only thing that will is her own death.  But that creates a bit of a problem, because most readers want the hero or heroine to prevail against great odds.  Like it or not, that means that most protagonists will survive, especially in, frankly, commercially successful books, and, as an author, I really can’t afford to write commercially unsuccessful books.  The only question is how badly the protagonists are injured and under what circumstances.  As one of my offspring once observed, “You need to abuse your characters a lot.”  But abuse doesn’t mean that an author has to slaughter 90% of the characters to prove danger.  Even 5-10% death rates suggest dangerous situations.

So… any reviewer who claims that a protagonist who survives trials and tribulations and almost dies along the way is never really in danger is not only an idiot, but hasn’t had much real world experience… because, for any character, death can be just around the corner, just as it is in real life.

Recently, in an ABC television interview with Christiane Amanpour, Eric Schmidt, the former CEO of Google and its current executive chairman, made the observation that the young people graduating from colleges and university today were brighter than their predecessors and noted that he’d worked with some of the brightest minds of his generation.  Given Schmidt’s background in electronics and communications technology, I have no doubts that he has indeed worked with some of the brightest minds in his field.

But what exactly have these brilliant minds, especially at organizations like Google and Facebook, given to society and civilization?  They’ve certainly perfected the technological aspects of introspection, fame-seeking, ego-satisfaction, and instant communications over subjects largely meaningless in the larger scope of the problems facing society. They created a massive search engine that’s most useful for finding the general and trivial… and possibly one of their endeavors, through the Google book settlement, may have undermined the entire literary copyright process. Oh…and they’ve created some jobs and a form of bubble wealth.

I don’t see that these brilliant [and exceedingly well compensated] minds have been terribly successful at stabilizing our financial system.  In fact, in the quest for wealth, their algorithms and quant models have been highly destabilizing and have likely destroyed more companies and wealth than they’ve created.  Nor have the younger generations of bright minds made significant contributions, from what I can tell, to environmental improvement [those were made largely by pre-baby-boomers and early baby-boomers].  And that brilliance has been incredibly successful in revolutionizing the political system, in that the application of technology, money, and data to campaigns has made the results of most elections a foregone conclusion – and resulted in the greatest polarization in American history and potentially the most disastrous political deadlock since the Civil War.

From these observations, I have to ask at just what are these younger college graduates so brilliant?  Developing technologies and systems that make billions of dollars out of the trivial?  Or improving the economic and political and technology infrastructure of the nation?  Or finding new approaches to our health care and energy problems?  Or… [fill in scores of different questions dealing with fundamental improvements to society and the world]?

To my way of thinking, antiquated as it may be, brilliant is as brilliant does, and brilliance in pursuit of the trivial, no matter how remunerative, is merely brilliance in pursuit of mediocrity… and yet, no one seems to point this out.

The other day one of the blog comments cited a preference for even a “fake rugged individualist over some ‘it takes a village’ idiot,” and while I initially appreciated the sentiment, the comment got me to thinking, and the more I thought, the more I decided that the choice represented by the two alternatives was a false representation… and another example of the “either/or” polarization that infects our society today.

Why? By way of a slight digression, I’ll explain.

The recent history and culture of the United States as a European outshoot, short as it is, is strongly colored by the myth of the rugged individualist, the pioneer, the superiority of the individual entrepreneur, and a number of other idealized depictions of individual superiority over the group or the masses or the village.

But let’s look at a few aspects of those myths.  First of which, the majority of the conquest of the “new world” wasn’t accomplished by Europeans and their culture and tools, but by disease.  Second, individuals didn’t create all those superior weapons and tools that led to an industrial and military power by themselves.  The frontiersman with his trusty rifle, his saddle, etc., all the equipment that allowed the “conquest” of the Americas was in fact the product of the village, if you will, and the crafts and skills of those villages.  And many of the great inventions attributed to single individuals, such as the steamboat to Fulton, the steam engine to Watt, the airplane to the Wright brothers, electricity to Edison, and so forth, all could have been – and were in fact – accomplished by others at close to the same time.

The fact is that such developments are an outgrowth of the existing culture, and while it may take a bright individualist to make an advance, first, there must always be more than one such individual for the advance to be successful [more about this in a moment], and the culture must need and/or accept that advance.  Progress and success, if you will, require both the individualists and the culture or village.

In Ptolemaic Egypt, Hero [Heron] built what appears to haven been the first steam engine, as well as employed magnetism in a technical way and built a jet-like pump for fighting fires.  Yet the steam engine vanished from history and did not reappear for more than 1600 years. Similar advances occurred in early China, and, effectively, the culture turned its back on them. Being a genius with proven products wasn’t enough, and it never has been.

The term “rugged individualist” conjures the idea of the man or woman living apart from and independent of society, yet human beings cannot survive above the most primitive level without the support of and the products of society.  Likewise societies tend to languish, stagnate, and eventually collapse if they crush individuality and creativity.

A vital culture needs to support both genius and individuality and cooperative effort.  Without both, it has no future… and yet, today, all too many on the left denigrate the contribution of the outstanding individuals and all too many on the right denigrate the role of a productive and cooperative society.

Early in August, the author Neal Gabler wrote an article in The New York Times, in which he observed that “we are living in an increasingly post-idea world – a world in which big, thought-provoking ideas that can’t be instantly monetized are of so little intrinsic value that fewer people are generating them and fewer outlets are disseminating them, the Internet notwithstanding.”  He contends that this is largely so because we are drowning in information and that the informational version of Gresham’s Law is at work, in that the mass of trivial information pushes out significant information, and because, within that mass of trivia, there is so much that confirms what we think is so that most people do not look or quest beyond their conformational biases, each of us is actually living in a smaller universe than did previous generations, even though the amount of information is infinitely larger.  He concludes by pointing out that society has historically been changed by “big ideas,” such as those of Einstein, Keynes, Freud, and Darwin, and that while there are currently thinkers who offer equally “large” and provocative ideas, those ideas are being lost in the ocean of trivia… and that society is already suffering and will continue to do so.

I don’t dispute any of Gabler’s points, and, in fact, find his observations and assessments, if anything, far too moderate, but I also believe that he minimizes two other aspects of the problem – the fact that the total mass of information acts as insulation to keep people from having to come to grips with ideas and facts at variance with their beliefs and the equation of “profitable ideas” with great ones.

Because the mass of information is so great, its very volume encompasses a range of correct data, generalizations, beliefs, anecdotes, examples, falsehoods, misrepresentations, and inaccuracies, the sum total of which creates the impression that all points of view and all ideas on a subject have equal value… or that the individual has every right to pick that information with which he or she is comfortable.  In the past, when information channels and sources were much narrower, there was a far higher percentage of “new” ideas and information that challenged existing beliefs reaching the average person.  While, in many cases, even “correct” new information or ideas were initially rejected, out of those challenges and questions emerged new perspectives and often new ways of looking and society and even the universe. Now… the new ideas are still out there… more often than not, adrift in a sea of trivia and indifference.

And… there is indeed one new “great” idea in American society, although it’s actually anything but new, but has rather undergone a re-birth, and that is the thought that no idea is of great worth unless it can be monetized profitably.  This is a central theme of the right wing of American politics today, that the profitability of government and business are paramount. Unhappily, it’s also an idea that is at the core of the left wing as well, even as the liberal left denies it.  But when the liberals make the argument that the wars in the Middle East should be stopped on monetary grounds, they’re essentially agreeing with the conservatives, in that they’re stating that social programs should be monetized, and that their worth lies in the amount of money applied to such programs.  In underlying principles, that’s no different from saying that no product is good unless it’s profitable.

Yet Galileo certainly wasn’t wealthy, nor Copernicus, nor Socrates, nor Freud, nor Einstein, nor Darwin… nor the majority of great thinkers in history.  Very, very few of the great artists were wealthy, either.  Few of the founding fathers of the United States died wealthy, either, for all their great ideas… So why do we spend so much time today idolizing the rich and famous?

Have we forgotten what greatness and great ideas are?  Or have we just reached the point where we as a society either fear them or can comfortably ignore them?