Rich people get income from "investment". Poor people get income by working. When you invest, you take the accumulated surplus work and use it to accumulate a larger surplus. You also retain more surplus. When you work, you directly contribute labor that is needed to sustain life and civilization and give away a "fair" portion of the surplus to your bosses.
We have a sliding tax scale. Everyone gets taxed 15.625% (social security and medicare) on labor. Except if your labor is valued about 2x to 3x above average. After $120k per year, you pay minimal additional SSI/Medicare.
Then there's income. Income tax is mostly paid by fools and people who earn about 2x to 4x the average wage. If you're in the lower class, you probably pay nothing or get a small stipend from the government. If you earn average to about 2x average wage, you most likely pay 8 to 15% of your labor in income tax.
Then there's sales tax. That averages around 9.5%. It's effectively regressive because those of us who spend almost all of our income on things we need end up paying 6 to 10% of our income in sales taxes. Rich people spend very little of their total income in sales tax. They "spend" a lot of their income on generating more income instead of on taxable purchases. The sales tax rate is more like 1 to 2% of rich peoples income.
Then there's capital gains. Rich people earn most of their income from capital gains. They nominally pay 15 to 20% of capital gains in taxes. In reality, the richest people pay almost no capital gains because it's much cheaper to just buy tax loopholes and hire attorneys and accountants.
Lets say you work hard and manage to get yourself into the "upper middle class". Your family makes about $160k per year. Probably 7% of that goes to sales tax. Another 15% to SSI/Medicare. Another 10% to income taxes. Another 4% to various state and local taxes. You're paying about 36% of income in taxes. It could easily be more like 40%. The millionaire a few neighborhoods over? He pays about 3% in sales taxes because he only spends about 500k of his annual income. 20% in income taxes because most of it is capital gains. 5% in state taxes and 4% in SSI/Medicare because he doesn't have to pay much after around $120k. That's right: 32%. Also, his company may be getting tax breaks for "staying in the area" or investing in solar or whatever else he can finagle out of the local and state governments. So that's it for taxes.
Now, lets also look at how income is distributed. We already know that basically, right now, the rich get richer and the poor tread water or get poorer. How come? It pretty much flows naturally. Capitalism is mostly about competition. In nature, competition produces winners and losers. The alpha male lion does most of the mating (hence the "lion's share"). The most well adapted species survive and take over. The rest go extinct. There's a direct parallel between our economic system of unequal gains and the fact that we, as a species, are winning the competition for survival so thoroughly against every other species that we're presently causing the greatest mass extinction event in the history of the world.
Nature is really just an extension of physics whereby biology governs a set of complex chemical interactions that collect, store and expend energy in endlessly varying eddies, pools and swales. Life surfs on the energy gradient that exists between the sun and the vast cold emptiness of space. We are fractal perturbations of the otherwise straight forward march of entropy in the universe. Evolution is the process whereby life develops ever-more efficient and complex means of subsisting on smaller portions and more exotic locales in the energy landscape. This demands that the least efficient competitors die off to make room for more advanced ones.
We are transitioning out of the existing system, riding the phase-change whereby evolution is no longer being playing out exclusively in the biome, but also in memes manifested as technology. Just as the earliest life forms were massively inefficient relative to today's species, they are orders of magnitude more complex and effective at catching energy and complicating the process of entropy than non-living processes. Our technological processes are quite inefficient at harnessing energy but make up for it by having access to immense pools of energy that are unavailable to biological organisms (fossil, nuclear fuels and soon extra-terrestrial solar). Thus the scale of technological processes completely dwarfs that of biology so it can, at present, afford to be inefficient.
Let me pose this question: which ecology has more potential for evolutionary advancement? One where many competitors exist with a gaussian distribution of resources, all with the strong desire to work their way up into the safety and security of the upper class? How about one where a handful of competitors safely control a vast amounts of resources and the majority of competitors have subsistence resources? In the second scenario, most competitors don't have the resources to evolve technologically (try new ventures). In the first scenario, the pace of technological evolution is much faster because so many more experiments (mutations) are being run in parallel. It's a fair analogy to the economic circumstances in the U.S. of the 1950s and 60s and the U.S. of today.
There's another factor to consider here. We are conscious, self-aware entities. At some point, we can look at the situation, do the analysis and conclude that:
1) There's enough resources for everyone. People don't have to starve or even just subsist. Not even some of us.
2) We don't have to kill off or marginalize nature to further our expansion.
How?
We can modulate our the impulse to conquest and expand.
We can work together.
Those who can't or won't, don't really have a place at the table.
It's not inevitable, AND it's also the only future worth having.
It's only by contributing to a shared, peaceful future that each and any of us will find true fulfillment and satisfaction.
