This Noble Land (5 page)

My own prediction based on the Michigan data is that year by year the discrepancy between rich and poor will grow wider until finally it will become intolerable. If my extrapolations are correct, I would expect that some time in the next century something will snap and there will be a violent upheaval. The grossly unequal distribution of wealth is felt most brutally in the family incomes of the very poor. The government’s 1993 definition of the poverty level for a family of three is a family income of less than $11,522 a year; in the United States in that year 15.1 percent of the nation’s population fell below the official government poverty level. Only government intervention in the form of food stamps, rental allowances and aid for the children of deprived families enabled these very poor to continue to function even at a very low level.

The plight of our poor today is similar to what the dispossessed suffered in medieval Europe or what they experienced in Dickensian Britain a century and a half ago. We have made some progress in caring for our poor, but not nearly what a great industrial nation should have achieved.

Forbes
magazine, in its issue of November 21, 1994, revealed a nasty secret about how some of the very rich handle their wealth. The magazine listed six American multibillionaires by name and business affiliation who had discovered a clever trick for avoiding taxes on the yearly income from their investments. A billion dollars prudently invested can yield many millions of income every year without invading the principal. According to
Forbes
, these six billionaires, who were named and photographed by
Forbes
, simply left the United States, legally renouncing their American citizenship, and enjoyed millions of dollars of tax-free income. The story was also picked up by
The New York Times
and
The Wall Street Journal.

Most conspicuous among the expatriates identified by
Forbes
was young John T. Dorrance III, scion of the Campbell Soup Company,
who resides in Ireland. The Campbell heir’s fortune is similar to that of the Ford family’s in that both fortunes were acquired by providing the nation with a much-sought-after commodity—in Ford’s case a reasonably priced automobile, in Campbell’s a good canned soup that quickly established itself as a best buy in the marketplace. But there the similarity ends because Ford’s family used much of its fortune to endow a major foundation that has sponsored many worthwhile charities and studies of American life, whereas, although Campbell Soup also has a foundation, a Campbell heir has opted, according to Forbes, to leave the country that sustained him to take advantage of tax alternatives available out of the country. (A Campbell spokesperson didn’t have an official confirmation of Mr. Dorrance’s citizenship, but did say in June 1996 that Mr. Dorrance’s ‘official residence is outside the United States, in Ireland.’)

Self-expatriation to avoid U.S. taxes on fortunes earned in the United States widens the gap between rich and poor, and sends a dangerous message to the less affluent, who often feel heavily burdened by the taxes they conscientiously pay. Such an action is so offensive that I find it difficult to express the full extent of my condemnation.

Once the tax-avoidance loophole became apparent, our government proposed a new tax that would eliminate the advantages enjoyed by the expatriates, but powerful lobbyists rushed in to protect the billionaires. They claimed that the proposed tax might disrupt ordinary trade relations between nations, it might discourage foreign persons from investing in American businesses, it might involve double taxation, and so on. But the underlying thread of all this was the assumption that it would be unfair to the billionaires who had worked hard to amass their wealth. Action on the proposed new law was delayed; a year later, a couple of versions are still pending, and the largess to the
already rich continues. No comparable concessions have been made to the middle or lower classes.

Everyone has an opinion about taxes, and mine is based on long and bewildering experience. When I filed my last yearly report the paperwork required forty-eight pages of computations—I had a modest income from numerous foreign countries, all with different rules—and of this blizzard of figures I could understand only about the first three pages. It is preposterous that a national tax program should be so complicated that even an individual with an advanced college degree has no chance whatever of filing his own tax return and therefore has to hire an accountant.

I have often daydreamed about an easier system in which I could list at the end of the year every penny I’d earned and then pay a clearly defined and understandable tax—no deductions, no tax-evasion gambits, no chicanery, no accountants. I supposed that would never happen, because it was too sensible, too easy, and allowed no room for Congress to tuck into tax law little goodies for their constituents. But now I find that leaders in Congress are seriously considering what has been termed a flat tax, which is almost the same as what I had dreamed of. Proponents make intelligent defenses of such a tax, and others refine it a bit by introducing three or four levels of taxation, each level of income being taxed more than the level below. Thus the poor might pay nothing, the next level a minimum, and each step upward a little more. The top level would not be confiscatory. I decided that I preferred the simple flat tax, no gradations.

But as soon as I elected that system, financial counselors put forth a score of reasons why it either would not work or would be unfair to many levels if it did work. I was left bewildered, but either version of a flat or near-flat tax would be preferable to what I live with today.

However, the flat tax does nothing to alleviate the differences between rich and poor; indeed, the versions I’ve heard about leave the poor where they were but award the already rich with substantial benefits and, in many cases, lower taxes. Unless the proposed systems rectify this imbalance I would not be able to support them.

L
ooking carefully at the distress of the very poor and the severe financial discomfort of many in the middle class, I regretfully conclude that these imbalances in income will continue in American life indefinitely. But we shall have to alleviate the problem one way or another.

The United States can feed itself and much of the rest of the world using much less than 60 percent of our present farm workforce. And our manufacturing genius can, with no more than 60 percent of our present factory workers, provide all the consumer goods we need. This means that we will have a permanently unemployed mass of working men and women—a situation we’re facing right now.

The strategic problem becomes: How can we pump into the lowest 15 percent or 20 percent of our idle population enough spending money so that they can function as economic units in our complicated system? I want to place money into their hands not only to help them but also to aid the rest of us. It is imperative that the very poor remain part of our economic system, spending what money they have in our stores, but for them to play this essential role they must somehow acquire money.

For many years I have pondered this almost insoluble problem, and no reasonable solution seems practical. I lived in Great Britain in the 1930s when much of that nation was on the dole, a solution that gave the unemployed poor a cash allowance. While
the dole was effective in achieving what I deem a major good—the spreading around of money that could enter the economic bloodstream in an orderly fashion—I deplored the demoralizing effect the solution had on its recipients. I knew there must be a better way, but I was unable to define it then, and even now, sixty years later, I cannot think of a better way to support the unemployed, and neither can our nation’s leaders. I would certainly regret seeing a gratis dole—that is, the indiscriminate distribution of unearned money-established in our country. But I need not worry—the general public would not allow it.

In the United States I witnessed the operation of the Works Progress Administration, under President Franklin Roosevelt, which contained too many negative aspects to be effective. A major cause of its failure was that our labor unions would not allow the government to institute serious or effective work programs lest jobs be taken away from union workers.

I was more favorably impressed by the Civilian Conservation Corps, which had, so far as I could see, a faultless program in which young people could do constructive work for their communities while earning a modest salary. I would have hopes for such a program, were one to be reinstituted now.

I was enthusiastic about the National Youth Administration, which encouraged young people to go to college or to remain there if already enrolled. Helping to supervise its program in Colorado, I was authorized to help as fine a group of young people as I would ever know: each receiving the munificent sum of $35 a month, they assisted our college by working in the library, policing the campus, helping the local public schools as assistant teachers or performing a wealth of other useful tasks.

It was an admirable gesture for our federal government to make, but it exacted a personal penalty. Professors at the college complained that three of my recipients were not performing
well at their assigned tasks or in their studies. When I looked into the matter I found the complaints to be justified. The cause was simple. These three young scholars were sending to their impoverished parents out on the Colorado dry lands, where the Depression was cruel, half the money I gave them for their own upkeep. These admirable young people were living on $17.50 a month and were starving themselves. In some cases I made up the difference from my own pocket, for I knew that we were all in this together.

My knowledge of history warns me that if, like the medieval church, we allow great wealth to accumulate in a few hands, and if we continue to allow the rich to become richer while greater numbers of the middle class slide into near poverty and the poor grow ever more desperate, revolution of some kind will become inevitable. In the United States it may be long deferred, for we are still a rich and powerful land that can absorb some errors, but the potential for violence cannot be ignored. I am deeply worried about our unwillingness to face up to this crucial problem of how to get spending money into the hands of the lower third of our population.

N
o aspect of our society causes me greater apprehension than the lamentable state of our race relations. I sorrowfully predict that racial tensions in our nation will erupt into violent racial strife in the near future. We have failed miserably to address these tensions, and now appear to be planning to continue the downward trend by cutting back on the already all too meager resources needed to ameliorate the conditions that have led to interracial stress.