Under quizzing by the press, Mr. Romney has admitted that he pays an effective tax rate of about 15 percent. (His tax returns show that it’s closer to 14.5 – below average even for millionaires.) This is in large part because the vast majority of his income comes from “investments” (much of them a form of ongoing compensation from his work at private equity firm Bain Capital), which are taxed at the capital gains rate of 15 percent. That’s a rate far less than what many middle-income Americans pay in taxes.
When Republican candidates warn that highlighting the issue of rising income-and-wealth disparity could stir up “class warfare,” they are absolutely right. So far, thankfully, the issue has not prompted any serious violence. The Occupy Wall Street movement has been basically peaceful, aiming successfully to bring to public attention the accumulation of wealth by the top 1 percent of Americans versus the remaining 99 percent. But history suggests a huge rich-poor gap can be a factor leading to political discontent and worse.
One old history textbook, referring to the 1789 French Revolution and its Reign of Terror that cost many of the royal family and nobility their heads at the guillotine, notes “mob violence was the natural outcome of centuries of oppression of the poor by the rich.” The French Revolution had enormous influence across Europe, eventually bringing political, social, educational, and economic betterment for the bottom 99 percent and weakening the aristocracy.