Even After Taxes, The Rich Fund Their ‘Fair Share’ of Progress

The ultra-rich overpay for luxuries before they become ordinary and affordable: their consumption fuels our collective future.

By Jason Hayes & Timothy G. Nash.

"“It’s about paying their fair share,” explained Vice President Kamala Harris in a September 25 interview with MSNBC. “I am not mad at anybody for achieving success, but everyone should pay their fair share.” 

“Pay their fair share” is a practiced mantra in Washington, DC. Politicians, from Vice President Harris to President Biden, Senator Bernie Sanders (I-Vermont), Rep. Alexandria Ocasio-Cortez (D-New York), and Senator Elizabeth Warren (D-Massachusetts), routinely claim that the rich are not doing their part and must pay their fair share. 

A quick look at the numbers shows politicians are posturing against an imaginary enemy. The rich pay their fair share and far more by any objective standard. They are often un-thanked providers of a great wealth transfer to America’s middle-and lower-income classes using their purchasing power to raise living standards for everyone. 

Kamala Harris’ proposed tax plan would increase taxes on corporations and the “ultra-rich” to achieve “equitable outcomes.”  She plans to increase the capital gains tax rate from 20 percent to 28 percent, the top income tax rate from 37 percent to 39.6 percent, the investment income tax from 3.8 percent to 5 percent, and the corporate tax rate from 15 percent to 28 percent. She also plans to add an unrealized capital gains tax, moving it from 0 to 25 percent. 

Harris also intends to allow the Trump tax cuts to expire in 2025. But, the average tax rate paid by every category of taxpayer was lower last year compared to before the Trump 2017 Tax Cuts and Jobs Act. Allowing the tax cut to expire will increase the tax burden for most American workers and businesses. Like Trump’s, Harris’s plan lacks significant government spending cuts to reduce our rapidly growing national debt. 

Kevin Munoz, a senior spokesperson for the Harris campaign, claims the plan will not add to the national debt. Munoz argues increased costs would be covered by making corporations and the ultra-rich pay their “fair share” via higher income tax rates.  

The most recent individual federal income tax information from the IRS indicates, in 2024, American taxpayers paid $2.43 trillion to the federal government, a 43 percent increase in revenues over 2020. 

That data also show the top one percent of taxpayers earned 26.3 percent of Adjusted Gross Income (AGI) but paid 45.8 percent of all personal federal income taxes. The top 0.1 percent of earners paid 24.7 percent and the top 5 percent paid 65.6 percent. 

In contrast, the bottom 50 percent of taxpayers earned 10.4 percent of income but paid only 2.3 percent of the total tax burden. Over the past forty years, the rate paid by the bottom 50 percent has declined from just over 7 percent to just over 2 percent, while the percentage paid by the top 1 percent increased from just over 17 percent to nearly 46 percent of all individual taxes. 

In 2021, the top one percent of taxpayers reported an average tax rate of 25.9 percent, while the bottom 90 percent averaged tax rates between 3.3 percent and 10.4 percent. 

By any definition of “fair,” the rich pay their share, and their habit of investing in new technologies further expands that impact. 

“Every innovation makes its appearance as a ‘luxury’ of the few well-to-do,” explained economist Ludwig von Mises. “After industry has become aware of it, the luxury then becomes a ‘necessity’ for all.” Historically, the rich pay high prices for early, lower-quality versions of new products. Once economies of scale and scope  set in, products become widely available, and all customers can purchase them at much lower prices and higher quality because the rich first invested in them. By this mechanism, “capitalism has its own built-in welfare transfer system from the rich to the poor,” explains Southern Methodist University economics professor Dr. Michael Cox. 

Since 1900, the average American’s life has improved dramatically due to various products for which the rich were willing to pay a far higher initial price. 

Home Electricity 

The first fully electrified World’s Fair was Chicago, in 1893. George Westinghouse provided electricity using Nikola Tesla’s alternating current technology. As electricity spread to homes and businesses, rich people paid exorbitant prices to electrify their homes. In 1881, a single light bulb cost as much as a dollar ($31 per bulb in today’s currency). It is unlikely today, any city would grant a certificate of occupancy if a building were not connected to the electrical grid. 

Air Conditioning 

The growing availability of electricity allowed Willis Carrier, inventor of modern air conditioning, to commercialize its use in 1902. Carrier first developed his “Apparatus for Treating Air” for industry, then wealthy homeowners. The first air conditioners took up an entire room and cost between $10,000 and $50,000 (equivalent to $315,000-$1.6 million in 2024). 

Economies of scale have reduced the price to between $5,000 and $10,000 (installed) for a central air conditioning unit. A small window A/C unit can be purchased for well under $200. Today, air conditioning is considered essential. A landlord must supply and maintain working air conditioners in any rental units in southwestern states. 

Automobiles 

The first Ford Model T rolled off a Detroit assembly line in 1908, at a price of $850. It was considered relatively affordable then, but it still cost almost two years wages. Adjusted for inflation, a 1908 Model T in today’s dollars would cost over $30,000 in 2024. Only eight years later, the price had dropped to $360, equivalent to just under $11,000 in 2024. 

Today, drivers can purchase a base model Ford Escape, with amenities like heat, air conditioning, windshield wipers, radio and anti-lock brakes for $27,995. The average American car buyer can now purchase a far superior product for about half a year’s wages.  

Cell Phones 

In 1946, drivers could install Motorola’s “radiotelephone” in their car and jockey with other subscribers for air time on the “massive party line.” The service cost $15 per month and $0.30 to $0.40 per call ($260 per month and $5-$7 per call in 2024). By 1980, technology progressed to the point where battery-powered mobile phones were hand-held. The Motorola DynaTAC resembled a brick with an antenna, had 30 minutes of talk time and six hours of total battery time, and could be had for $3,995 (just over $13,000 in 2024). 

Today, smartphones offer calls, text messaging, GPS mapping, calendars, email, camera, video, web surfing, games, music, banking, translation software, streaming video, and a host of other applications on high-speed, 5G networks. “Unlimited talk and text” monthly plans are available for as little as $15/month, and some new, lower-end smartphones can be purchased for under $200. 

Similar technology and efficiency improvements can be found in numerous other products and services, from medical technologies to computing to home appliances. Given many of the products we take for granted began their lives as expensive and low-quality options, only available to the uber-rich, we can and should recognize the role these early adopters play in improving all our lives. Instead of vilifying success and claiming the rich “don’t pay their fair share,” policymakers should recognize the vital role that wealth creation plays in society. Punitive tax policies aimed at the so-called “ultra-rich” will do more harm than good, stifling entrepreneurship and the very drivers of human progress that benefit all Americans."