Defenders of wealth inequality in the United States argue that it is preferable to what they think is the only alternative—socialism, which (in their view) would redistribute wealth from the so-called “makers” in society to the “takers.” However, it is a red herring to invoke the fear of socialism in defense of wealth inequality.
The persistence of wealth inequality across generations is ideologically inconsistent with the American dream. Reducing wealth inequality in the United States would help us live up to our cultural values of individualism, hard work, and meritocracy.
Rugged Individualism
As Americans, we are proud of our rugged individualism—the “pull-yourself-up-by-your-bootstraps” ideology that explains success in life as the result of talent, effort, and grit, not the unearned advantages or disadvantages handed down from previous generations. Leaving the aristocratic traditions of European societies behind, Americans boast about the land of opportunity in our new world. For those willing to abide by the law and put in an honest day’s work, the sky is the metaphoric limit. We believe in a system of “merit,” not privilege. We’ve come to call our open-class system based on individual achievement and social mobility a “meritocracy.”
While we have a tragic history of despicable race and gender-based structural obstacles that have interfered with the free operation of meritocracy, we still cling inspirationally to the cultural ideal of individual merit and hard work. It animates the stories we tell ourselves about who we think we are as a nation. It also affects the messages we send to young people about the importance of dreaming big and the value of studying and working hard.
Compared to most other countries, the United States scores extremely high on measures of individualism and the value of hard work to get ahead in life. Americans understand, and accept, that a certain amount of inequality will result from a system organized around these values.
When Americans talk about inequality, we are generally referring to income inequality—the unequal distribution of wages and salaries in exchange for work performed. Indeed, there is significant income inequality in the United States. The richest 40% of Americans earn almost 75% of all the income in the country. The poorest 40% of Americans earn just over 11% of all the income in the country. Americans largely view this class inequality as legitimate, provided educational opportunities are available to everyone, the law protects people from discrimination, and the unequal results are the consequence of a fair competition. Unfortunately, a rigorous body of research finds that the competition for educational and occupational success is not as fair and meritocratic as our ideological values imagine it to be. But that’s a story for another essay.
For now, let’s set aside the argument that the unequal distribution of income is the result of an unfair competition. Let’s assume for this essay that the game is not rigged in favor of those with more of what social scientists call social and cultural capital (the special knowledge, connections, and “inside information” that is passed from privileged parents to their children). For the purpose of this essay, let’s assume that we do live in a society that practices meritocracy and that those who receive the highest income deserve it because they are smart, talented, and hardworking individuals—not because they are lucky or because they have benefited from the advantages that unfairly favor some groups of people over others.
And yet, despite our cultural commitment to individual freedom, meritocracy, and hard work, Americans tolerate practices that directly undermine these core values. Even within a well-functioning meritocratic system that rewards individual achievement based on effort and ability, the growth and persistence of wealth inequality in the United States is at odds with the rugged individualism we claim to value as the bedrock of our economy and our culture.
Wealth Inequality
It is common for the American media to produce stories about “‘wealth inequality” only to report data about income inequality. People mix up “wealth” and “income” all the time, yet they are entirely different phenomena. Wealth measures the net worth of our possessions (cash savings, retirement funds, stock and bond investments, home equity, etc.) minus our debts (student loans, car loans, home loans, credit card debt, etc.). When we measure the distribution of wealth in this country, the degree of class inequality appears much more severe than it did when we used income as the measure.
For instance, the richest 10% of Americans own 67.2% of all the wealth in the U.S. while the “poorest” 50% of Americans own only 2.5% of all the wealth. Furthermore, this wealth inequality is growing. In 1992, the richest 1 percent of Americans owned 5.77 times more wealth than the entire bottom 50 percent of Americans. In 2024, the richest 1 percent of Americans owned 12.32 times more wealth than bottom 50 percent. (https://fred.stlouisfed.org/tags/series?t=wealth)
Wealth is its own creature: Operating with a different logic than income; growing for different reasons; buying different privileges; opening different opportunities; subject to different rules; immune to taxes; easier to conceal; transferable regardless of merit; more enduring; and consequential for generations. (It should be noted that debt, wealth’s evil twin, operates with similar dynamics, but in the opposite direction.)
The persistence of wealth inequality across generations can calcify economic classes into increasingly fixed entities, undermining the opportunities for upward social mobility that Americans value. The system of unequal income distribution can, at least theoretically, be based more or less on a meritorious system, with more income going to those who demonstrate the most talent and effort. But the dynamics of wealth transcend the rules and logic of meritocracy.
Wealth Is a Short Cut to the American Dream
As a hard-working individual, I earned a Ph.D. from U.C. Berkeley and was hired as a tenure-track professor by Saint Mary’s College of California. I’ve done well in my job, have been promoted, and am now at the top of the income scale for professors at the College. When I die, however, my income will stop. That is, Saint Mary’s College, for understandable reasons, will no longer directly deposit a salary bimonthly into my bank account. Neither my wife nor my son will inherit the right to continue receiving my income. If they did, they would be rightly accused of profiting unfairly—receiving a salary without having to work for it. That is simply un-American.
However, my wife and I have been fortunate enough to make more money than we have needed for our daily expenses and (hopefully) more than we will likely need in our retirement. We have been able to buy a home and to set aside some of our income for savings and investments. These savings and investments have grown silently in the background as they earn interest and capital gains (regardless of how hard my wife and I work).
Congress recently raised and made permanent the estate-tax exemption up to $15,000,000 per person. That is, in the United States of America, each individual can, at the time of their death, transfer massive amounts of wealth to the next generation without their estate or their heirs paying any taxes—even if that fortune includes unrealized capital gains (profits from an investment) that have yet to be taxed.
When my wife and I die, our only child—without having to demonstrate any sort of individual merit—will inherit all of our wealth, including our house. And he will do so without having to pay a single penny in taxes on the financial windfall. Even with this relatively modest inheritance, he will be a big step closer to having the financial security to pursue the American dream.
Reducing Wealth Inequality Is Not Socialism
I am not a radical. Nor am I naïve. I don’t expect the U.S. to impose a 100% tax on inheritances. I don’t even want that. I want my son to inherit some financial resources when I die. Concern for the next generation is one of the reasons we are motivated to work and save.
But extreme wealth inequality threatens to slow economic growth and it creates the conditions for other social ills. Reducing wealth inequality can create healthier conditions in which all persons have a better shot at achieving the American dream.
There are policy mechanisms available to us that would not only generate significant government revenue but would have the added benefit of reducing the moral, political, and economic harms of wealth inequality. These policies could help move us slightly closer to fulfilling the American promise that individuals are free to pursue happiness without the unfair advantages or disadvantages inherited from previous generations.
A Brief Sketch of Some “Wealth Policies”
As a political slogan, “tax the rich” is limited in its appeal to Americans. Americans don’t like taxes, and targeting “the rich” appears to demonize rich individuals. But the problem is not rich people, per se. The problem is wealth inequality. Similarly, if we consider poverty to be a social problem—a problem that is the result of a set of social, economic, political and historical circumstances rather than the result of the characteristics of poor people themselves—then wealth inequality should also be framed as a social problem. Wealth inequality is not due primarily to the characteristics of individual rich people, but to the social, economic, political, and historical circumstances that produced wealth inequality. We often speak in terms of “poverty policies” that we implement to address the social problems of poverty. I think it’s time we speak in terms of “wealth policies” that we implement to address the social problems of wealth inequality.
The revenues raised with these “wealth policies” could be used to develop public/private partnerships to assist those without wealth resources to buy a home, pay for college, climb out of debt, save for retirement, subsidize health care, build an emergency savings account, start a small business, etc. We should work to shift a portion of our nation’s immense wealth resources toward the poor and middle-class families who can’t build for the future because they are just struggling to pay for today. At the very least, we should:
- Increase the capital gains tax.
To modestly make a dent in some wealth inequality, we should increase the capital gains tax for both individuals and corporations. In 1979, the tax on long-term capital gains (assets held over 10 years) was as high as 35% for individuals and 30% for corporations. In 2025 the maximum tax on long-term capital gains was a low 20% for individuals and 21% for corporations.
If, for instance, my wife and I sold an investment that netted $600,000 in profit, we would pay a tax of only 15% on that capital gains income. For comparison, the marginal federal tax rate on regular income in the ballpark of $600,000 is 35%. For comparison, middle-income earners likely pay the marginal rate of 22% on most of their income.
In other words, the government taxes workers’ wages and salaries at a higher rate than it taxes the gains the rich make on their investments. While the middle class generates their income primarily from their work salaries, the wealthy tend to generate more of their income from the profits on their investments
- Decrease the threshold that triggers the estate tax.
As mentioned previously, Americans can pass up to $15 million per person to the next generation without paying a penny in federal tax. For historical context, this tax-free exemption was less than $5.5 million as recently as 2017. In 1999 the tax exemption was only $650,000! In 1999, 2.3% of all estates paid some federal estate taxes. Twenty years later, after the estate tax exemption had been raised to $11.4 million, 25 times fewer estates (only .08% of all estates) paid any taxes on the wealth they transferred to the next generation. The United States government is enabling the wealthy to leave increasingly large tax-free fortunes to the next generation.
Revising tax policy so that more wealthy estates pay federal taxes would not only generate much needed public revenue, but it would be a modest attempt to reduce the un-American perpetuation of wealth inequality across generations.
- Directly tax wealth.
As wealth inequality grows ever larger, it is in our interest as a nation to modestly tax a portion of extreme wealth directly. U.S. Senators Warren, Jaypal, and Boyle introduced a wealth tax last year. The Ultra-Millionaire Tax Act, as they write, “would bring in at least $3 trillion in revenue over 10 years by requiring that the top 0.05 percent of American households chip in 2 cents for every dollar of wealth over $50 million.” It’s a modest proposal to ask those with immense wealth to pay just 2% only on their wealth holdings that exceed $50 million. This tax would raise money for public investments while slightly slowing the growth of wealth inequality.
Reframing Wealth Inequality
It is time we re-frame the social problem of wealth inequality. Intergenerational wealth inequality flies in the face of the American ideals of hard work and individual achievement in a meritocratic system. The wealthy will, of course, continue to attack attempts to reduce wealth inequality as “class warfare” and “socialism,” attempting to frame their particular interests as being ideologically consistent with what is in the best interests of the entire country. But policies to reduce wealth inequality are rooted in the American ideals of individualism, hard work, and merit. Building a solid economic foundation for working and middle-class Americans would truly be in the interests of all Americans, the rich included.
Robert C. Bulman is a Professor of Sociology at Saint Mary’s College of California, He’s lived in Davis for 28 years. You can follow him at https://robertbulman.substack.com/
From article: “Americans understand, and accept, that a certain amount of inequality will result from a system organized around these values.”
Kind of the opposite in regard to what you say in the rest of the article (not that I necessarily disagree with it).
Though I’d argue that the pursuit of wealth inequality underlies the entire American (capitalistic) system. It IS the system, and has probably been since the country was created. (And not just America, for that matter.) This is also the reason that housing, for example – “isn’t a human right” in this system – nor is food, clothing, or medical care.
Ultimately, the sentiment behind this article is the “justification” used to shoot a health care CEO, if taken to an illegal extreme. Perhaps the surprising part about that is the large number of people who apparently support that result, per social media at least.
Ron – I think you’ve misunderstood the point of the op-ed. It’s quite a stretch to suggest that the “sentiment behind this article” justifies violence against rich people. You’ll have to walk me through your logic. Otherwise, it sounds like a poorly reasoned knee-jerk reaction to suggest I support some sort of class warfare. In fact, I make the point explicitly that rich people are not the problem (shooting them wouldn’t change a damn thing about wealth inequality!). Also, based on your first criticism above, I can only conclude that you misunderstood the important distinction between income and wealth inequality. Cheers, Robert
Really? You don’t see the connection?
Resentment of well-paid CEOs, while their companies are perceived as screwing-over the little guy?
Point me to where “I” (or you) said that shooting a CEO is justified. The point was that plenty of people apparently DO feel that way (and that reaction was well-covered in news media).
You also seem to be perceiving a criticism of your article that isn’t there. Though again, I’d argue that pursuit of wealth (which results in discrepancy) IS the American/capitalistic system.
Regarding a distinction between income and wealth inequality, differences in income are often a primary factor in wealth inequality. Also, income is not always from a job. (Ask Mark Zuckerberg about that.)
https://www.nytimes.com/2025/08/10/us/mark-zuckerberg-palo-alto.html
I get the feeling you are responding to arguments I’ve not made in my piece.
My arguments:
1. Americans value hard work, individualism, and social mobility based on effort and ability.
2. Income inequality is a legitimate outcome of the meritocracy we value.
3. Wealth is analytically distinct from income.
4. Wealth inequality is growing substantially because of government policies, not because rich people are mean or greedy.
5. Increasingly large sums of wealth are allowed to pass from generation to generation without taxation.
6. Such inter-generational wealth transfers are at odds with the American values of hard work, individualism, and merit because it leads to fixed classes, undermining the ability of individuals to be upwardly mobile in an open-class system.
7. Modestly reducing wealth inequality and the intergenerational transfer of wealth is not socialism.
8. Public policies can reduce the harms of wealth inequality while simultaneously reinforcing traditional American values of individualism and hard work.
Here’s the part that stood out to me (repeated again):
From article: “Americans understand, and accept, that a certain amount of inequality will result from a system organized around these values.”
The rest of your article is an argument against inequality. (Apparently, you’re judging that it’s “too much” inequality for your taste. Which of course is subjective – even if I, for example, agree.)
Just yesterday, I noted the same thing you did regarding tax-free inheritance.
One thing I have realized (as I get older) is that the totality of wealth is not a “fixed number”. But growing that number sometimes comes at the expense of the natural environment, and sometimes at the expense of “taking advantage of” other people (in a way) as a result of a system which enables it.
To some degree, money and wealth are an illusion – we make it up, so to speak.
Of course, a lot of the poorest people in this country are better-off than perhaps the majority of people in the world, or at least the “third world”. So some of this depends upon who and what you’re comparing it to.
Personally, I compare myself to Zuckerberg and Musk, and come to a conclusion that life isn’t treating me fairly, either. Yes, that’s a joke, sort-of. I’m pretty sure that they’re both smarter than I am (in the ways that generate wealth at least), but a billion times smarter?
In any case, I did “somewhat o.k.” in picking out my parents this time, but I plan to do better next time.
Ron O has “good jeans”, but hopes to get better ones next time. (Plus, next time I plan to be born with a better ass – even if i come back as a “dude”.)
Ron O
Robert is proposing a solution that is more likely to PREVENT the shooting of health care CEOs! His proposal is likely to REDUCE the resentment against the wealthy as they pay a larger fair share. Robert isn’t voicing something new–it’s obvious from the social media reaction that the resentment is already there. Are you fantasizing that if we somehow sweep this under the rug that it will go away?
You clearly don’t understand the source of resentment over wealth and income equality. That resentment is one factor that has driven Trump to office today. (And yes, it’s driven even more by resentment over loss of status and a lack of a vision of how they fit into our new society.) That our poor are better off in most cases than those in Africa will not make that resentment go away (and it shouldn’t). Your expressing the libertarian/Randian fantasy that the rest of us should just accept that we are parasites off the great endeavors of the billionaires. There’s an awful lot of arrogance in that (false) attitude.
I calculated that a 2% wealth tax on all registered property and securities (equal to 95% of US wealth holdings of $160 trillion) could replace the entire federal income tax of $2.6 trillion. Such a wealth tax is much easier to administer than an income tax and harder to avoid in the US. In the nineteenth century, the wealth tax was the preferred option, but with everything on paper then, it was easier to track income instead. Now almost all wealth is tracked electronically and registered with the government. Most states have a property tax, including those without income taxes, because it is so easy to administer.
I would phase this is over 10 years and aim to get down to a $100,000 exemption. It also should be based on wealth net of debt, so home mortgages would be subtracted and creditors would pay on the outstanding loan to avoid double taxation.
https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/
https://finance.yahoo.com/news/wealth-evenly-distributed-across-america-120133824.html