The Faces of the Forgotten 33%

Last month a post entitled “America’s Forgotten 33% ” described those Americans who are not members of the elite 1% super-rich, nor part of the privileged 20% who work for the government, nor among the nearly 50% of America’s population who are, apparently, poor enough to avoid taxes altogether.

Who are these forgotten 33%? Who is this one-third of America, people who, compared to the other two-thirds, pay far more in taxes than they receive in return? Who are the faces of the forgotten 33%?

  • They are small business owners who can’t compete with the crony capitalist captains of big business, who use their financial influence with legislators to enact regulations that small businesses can’t possibly afford to comply with.
  • They are independent contractors who work multiple jobs to earn a mid-five-figure annual gross income, yet pay nearly 50% in taxes on every extra dollar they make (25% federal, 9% state, 13% social security and medicare).
  • They are small investors whose retirement savings lose value at the same time as government employee pension funds beat the market using high-frequency trading and other manipulative tactics that individual value investors can’t hope to emulate (and hold taxpayers accountable to cover the difference when they don’t beat the market).
  • They are parents who can’t get a decent education for their children in public schools, because the teacher’s union makes it impossible to fire bad teachers, and creates a self-serving bureaucracy where administrators outnumber teachers. Parents who have no chance to influence local or state education policy because the teacher’s union will spend literally millions to elect their puppets on school boards.
  • They are elected public officials at the state and local level – especially in the large urban centers – city councilmen and county supervisors – who have to close parks and libraries, and defer maintenance of roads and other infrastructure, because they are bound to pay local government employees wages and benefits that are often more than twice what people might earn for similar work in the private sector.

And the forgotten 33% have friends among the rest of the American people.

  • There are the millions of government workers who deliver an honest day’s work and do their jobs well, yet watch people who merely show up get the same compensation and enjoy the same job security as they do, thanks to union work rules and collective bargaining. And there are additional millions of government workers who are tired of seeing their union dues used to promote politicians and causes they don’t support.
  • There are activists, entrepreneurs, educators, and many others within the disadvantaged communities who have seen for themselves the destructive impacts of government welfare and other social programs.
  • There are members of the elite 1%, the super rich, who want to invest in America but face record high taxes, and industry after industry controlled by special interests who have created regulations designed to protect their turf and deter genuine competition.

How long can the alliance of the big – big government, big finance, big labor, and big business – continue to render more and more citizens dependent on entitlements, buy off the unionized government workers with pay and benefits that greatly exceed market norms, and pursue fiscal and monetary policies that channel more and more wealth to the elite 1% (ref. “The Extremists of the Status Quo“)?

How long can the alliance of the big continue to rely on taxing the forgotten 33% to fund the entitlements, the pensions, and the Wall Street bailouts?

What combination of the forgotten 33% along with their friends among the other two-thirds of America’s electorate might form a new alliance – the alliance of the accountable? How might such an alliance strike an optimal balance between preserving individual incentives and providing ALL workers a reasonable taxpayer-funded safety net for health and retirement security (ref. “Merge Social Security and Public Pensions”)? A critical first step towards forming a political coalition powerful enough to take on the alliance of the big is for voters to recognize that public sector unions are just as much of a barrier to achieving those goals as the monopolistic corporate and financial interests.

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