Giving to narrow the income gap
In the United States, the top 1 percent of richest Americans have one third of the wealth. They have more than the lower 90 percent have combined. The United States has the largest income disparity among members of the Organization of Economic Cooperation and Development.The 1990s marked the watershed, when companies began offering high salaries and stock options. In the 1980, the CEOs of major American corporations received 42 times of the average salary of the employees.
In 2007, the CEOs were paid 344 times the average employee. The average payout for CEOs in the United States is $13.3 million, twice more than European CEOs and nine times more than Japanese counterparts.
As the financial crisis widened the gap between the rich and the poor, the astonishing compensation became a target of fury rather than an object of desire. Even the tabloid newspaper the New York Post urged the greedy CEOs to restrain themselves.
Because of the nationwide resentment over the high payout for the CEOs, the Obama administration is trying to end the tax breaks for the rich that were introduced during the Bush administration and impose higher taxes. However, there is opposition as well. Critics say levying higher taxes would discourage investment, bringing even fewer economic benefits to the lower income earners. The end of the tax cuts has also been criticized as infringing on the rights of the rich to “spend what they have as they wish.”
The best solution would be for the rich to give back the excess before the government twists their arms. Social discord can be resolved not by taxes but through donations. Fortunately, many rich Americans are generous philanthropists as well. Two months ago, the two wealthiest Americans, Warren Buffett, co-founder and CEO of Berkshire Hathaway, and Bill Gates, the co-founder and former CEO of Microsoft, began a campaign to give away more than half their wealth, and 38 more billionaires have joined their campaign and signed the “Giving Pledge.” The total sum of their pledges amounts to at least $125 billion. Warren Buffett has already promised to donate more than 99 percent of his wealth. He said that spending more than 1 percent of his wealth would not make him and his family happier, but the other 99 percent would have a tremendous impact on the welfare of other people.
He said that he became rich thanks to his American citizenship, the luck of his genes and his diversified interests. He accumulated his wealth thanks to more than his own abilities, so it would be only fair to give back to society. Thanks to these generous philanthropists, the country with worst income gap in the world is still going strong. As the country with the second-largest income inequality, how can Korea overcome the challenge?
The writer is an editorial writer for the JoongAng Ilbo.
By Shin Ye-ri
with the Korea JoongAng Daily
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