Transcript: Thom Hartmann vs. Wayne Root: "I Am the 1%". December 13, 2011
Thom Hartmann: Welcome back, Thom Hartmann here with you. There’s some folks out there defending the 1% and taking on this class war of I am the 99, no I am the 1% and proud of it. And one of them is the former libertarian vice presidential nominee, currently chairman of the Libertarian National Congressional Committee, author of “Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gold and Tax Cuts," Wayne Root. And his website of course, RootForAmerica.com. Wayne, welcome back to the program.
Wayne Root: Hey Thom, always an honor to be on with you.
Thom Hartmann: So, I am looking at two tables here, from the federal government. I have the Fed tables on wealth, average wealth by wealth class, from 1962 to 2009, in thousands of, adjusted for thousands of 2009 dollars. And I’m looking at the IRS tables for income over the last 25 years. From the IRS Bureau of Statistics and Income Division, July 2011. And it says, these two things tell me that to be in the top 1%, with regard to income, you have to make, in 2008 you would have had to make $380,354 dollars a year. This, in 2009, it would have been $343,000, that was a big of a bump because of the recession. $343,928 a year, $28,670 a month. And to be in the top 1%, according to the Fed, you would have to have wealth equal to or in excess of $13,976,000. So that would be assets including like your house and other things. But you know if you owe any money on your house you can’t count that in. So, you have assets of roughly 14 million dollars and greater and you have an income of $380,000 and greater, or $343,000 and greater?
Wayne Root: Right. And in 2009 it was 340. My guess is because of the recession or depression as I call it, because I think this is the Great Depression 2. I would say that by 2010 that probably went down to about 300, and by 2011 you could very well be in the top 1% with an income between 250 and $300,000 a year. My income has always been certainly in the gross income between $500 and, somewhere in that rate, $400, $600 a year, somewhere in that rage. Assets, no, not that high, although ten years ago I was getting there but of course I got knocked right down low with everyone else. But income-wise, yes, I am in the 1%.
Thom Hartmann: Well to be in the top 5% you have, to be at the bottom of the top 5%, in terms of wealth you’d have to have $2,743,000 of net wealth. That would put you at the bottom of the top 5%. To be at the bottom of the top 10%, you’d have to have $904,000 worth of wealth. And to be at the bottom of the top 20% you’d have to have $664,000 in wealth.
Wayne Root: And I think my argument Thom is that we shouldn’t be worrying about anybody’s income. We shouldn’t be jealous, we shouldn’t be envious. We should all be thrilled that there are people who make money and create jobs and we should all want to be just like them. My dad was a butcher, I’m a son of a butcher, and my dad would see a Rolls Royce drive by and he never said, “Do they deserve their money? How did they earn their money? We should tax them! Do they need their car?" No. he said, “Son, someday that’s going to be you." And guess what, today it is me. I own an Aston Martin, a $250,000 car. I live in a beautiful mansion. I started with nothing. My dad was a butcher, I didn’t inherit anything. I earned it myself. I took great financial risk and I worked 16 hour days and I should be celebrating as should all the other millions of small business owners who make good money, 250, 500, 600 thousand a year and are doing only good things for society, not bad things.
Thom Hartmann: Well you know for people who are making a couple hundred thousand dollars a year I am inclined to agree with you, Wayne. My concern is not so much the top 1% as the top 1/10 of 1% that gets 50% of all the capital gains income in the United States which is taxed at a maximum of 15%. I’m guessing you’re paying more than 15% income tax?
Wayne Root: Yes. Well again the averages show that people who make a million a year and more pay only about 22% I’d say or so, people who make much less pay much less. The average person in this country, Thom, it doesn’t matter if the top rate is 35%. By the time you take your home deduction, your charitable deductions, your business reductions, the earned income tax credit, the deduction for having kids, the reality is most rich people pay about 15 to 20% and most poor people pay zero in income tax or maybe up to 5%. Most people pay …
Thom Hartmann: And the people in the middle, the people at the high end of the middle making 100 to 3 or 400 thousand, they’re the ones who are paying the 25, 30%.
Wayne Root: Well they’re the ones I’m defending. See, the fact that it’s a misnomer. You and I are kind of saying the same thing. We’re actually in agreement here. But if you’re going to go after people who are “rich" go after Warren Buffet, and Donald Trump and Bill Gates. But don’t go after people who make 250 to 500 if you aren’t going after Warren Buffet.
Thom Hartmann: Right because the average, yeah I’m not disagreeing with you Wayne. I would say in fact, and I’ll say for the record, I am not part of the 1% by either of the criteria. But the, the bottom line here is that the top 1%, or the top 1/10 of 1% earning all of the income, or half of all the income in the United States that is taxed at a maximum rate of 15% is probably the reason why the Fortune 400 wealthiest individuals have an average tax rate of 17%. It has nothing to do with deductions. Because at that level those deductions are pretty meaningless. It has to do with the fact that...
Wayne Root: Well it's a fallacy that ? people pay taxes. One, Buffet always says he pays less than his secretary.
Thom Hartmann: He pays 17%.
Wayne Root: That’s because Warren Buffet chooses to take everything in capital gains. You know what’s funny about Buffet. Here’s the criticism where I’m going to sound like a liberal. Here’s a guy that’s worth billions of dollars, one of the two or three richest men in the world and he actually takes a salary of 100,000 a year and all the rest is capital gains.
Thom Hartmann: Right.
Wayne Root: Well we all know that FICA, social security taxes are aimed at up to 106 thousand a year. So this cheap SOB, and I don’t mean son of a butcher, actually tries to cheat us out of the FICA taxes on $6,000 a year. He doesn’t take $106,000 salary, he takes 100.
Thom Hartmann: So Wayne will you join with me in saying that income that is earned by money, as opposed, you know those people who earn their money, who earn their income by investing, smart or dumb however it may be, some people lose their money in investing. Those people who earn their money by investing, should be paying the same tax rate as those people who earn their living as an entrepreneur as you’ve done, through the intelligence of your mind, or as you know the plumber that you hire to fix your mansion who work by the sweat of their brow.
Wayne Root: Well unfortunately I say I don’t agree with you because I have earned a lot of money on capital gains and I’m worth, let’s say I make 500,000 this year Thom. And let’s say at the end of the year I’m lucky enough to have 50 of it left, which is kind of a rare year when you pay a mortgage and you pay for your kids to go to college and my daughter is at Harvard. There’s no money left at the end of the year, I don’t care what you make. Call rich people, working rich.
Thom Hartmann: Wayne my heart is bleeding for you.
Wayne Root: But let’s just say there’s 50,000 left at the end of year. I choose instead of putting it in my mattress to invest it in stocks or to open another business or buy a home as a rental property. I’m doing good for the world or I’m creating jobs. Of course it’s already been taxed. I don’t think I should be paying the top rate on the money I invest. That should be a 15% capital gains.
Thom Hartmann: So you think for that 1/10 of 1% of Americans who earn 50% of all the capital gains in America, and you’re aspiring to that although you’re in the 1% not the 1/10…
Wayne Root: I’m not jealous, I bless them, I hope they create lots of jobs. I hope they leave their kids a great legacy.
Thom Hartmann: You think it’s fine that those people have an opportunity to earn a living by way of a means that is only taxed at a maximum of 15%. But plumbers can never earn their living by a means that is only taxed at 15% or teachers or janitors or cops.
Wayne Root: I think you’re looking at two different ways of making money. One, you’re paid a pay check and the rich guy has to pay the same tax as the plumber on that. Two, you take what’s left over that’s already been taxed and you invest it. Two completely different things. Really.
Thom Hartmann: So rich people who have money to invest should be able to make money with those investments at a lower tax rate. That’s what you’re saying?
Wayne Root: Well here’s the thing. You’re looking at the rich and you’re getting mad and envious. And I’m looking at the poor and…
Thom Hartmann: I’m not envious, I think it’s unfair.
Wayne Root: But I’m saying, Thom, if the poor reached out and…
Thom Hartmann: I think this is a matter of, very simply, Wayne, I think this is a matter of fairness, I think that’s unfair. I think it’s a matter of loyalty to our country, I think it’s disloyal to say that I’m going to pay a different rate than everybody else has to pay. I think it’s a matter of sanctity. I think that the notion that, I don’t want to be a rich man in a poor country. And I’m surprised that you would want to be. That seems the opposite of the sacredness of the middle class.
Wayne Root: Thom, I’m just trying to lift people up. Let me tell you something, I came from that lower middle class. Not even middle class. Lower middle class.
Thom Hartmann: How do you lift people up by paying a 15% tax on the work that you do?
Wayne Root: Thom, my dad thought that making it in America meant getting a new Oldsmobile every 4 years, and…
Thom Hartmann: Your dad was looking at a 36% tax rate.
Wayne Root: Obviously there’s a big difference. How did I rise up? Low capital gains and low taxes are what allowed me to save money. If the poor ever want to be rich, you’ve got to have low taxes on everyone. I want to lower everyone’s taxes. Not just rich people, everyone.
Thom Hartmann: Well that’s a nice change of topics, but okay we’re out of time. We’ll leave it at that. Wayne Root. RootForAmerica.com the website. Wayne, thanks for dropping by.
Wayne Root: Thanks for inviting me on Thom I really appreciate it.
Thom Hartmann: You’re welcome, good talking with you.
Transcribed by Suzanne Roberts, Portland Psychology Clinic.