Why we shouldn't want a New Gilded Age Part 2
The gutting of the American Middle Class and how the wealthy gamed the system.
For this multi part series I will be using the Postwar Era as the example of what was a more equitable sharing of the nations wealth. Using that period has issues, social/cultural especially, but this series is not looking at those social/cultural issues, nor is it trying to obfuscate the suffering of those social groups. It’s being used only as a reference point for comparison of concentrations of wealth since the industrial revolution.
In the first part of this series I showed why we should not be looking at the Gilded Age as our nations North Star. It also provided some insight on how the current budget proposal would make the New Gilded Age worse than the first one, since it would push everyone else down except the 1%. I used the Postwar Era to show a better target of how to build a more equitable distribution of wealth and how that would in turn, power the economy as it did then.
In this part we will be looking at the gutting of the middle class and how that has benefited the top 1% by putting all the risk on the average tax payer who sees little in return. Why allowing an individual to reach the trillion mark would not be good for anyone. And will outline how some of the wealthiest in our country are really the welfare queens of our time, Elon Musk.
If you need a refresher, read here: Why we shouldn't want a New Gilded Age Part 1
Part 2: Gutting of the American Middle Class
Most look back at the 50’s and 60’s as the age of America’s growth to a super power, powered by the middle class. The creation of the postwar middle class gave America the fuel to generate so much wealth, but that is currently being put in so few hands again. Policy since the 70’s has shifted away from the general population to just the top 10%, and it’s getting much worse.
After the introduction of Trickle Down Economics, more and more wealth has been sucked up to the top 10% of earners in America, leaving the rest behind. Making matters worse, by allowing tax breaks and corporate bailouts, the country’s debit has exploded. Then add Citizen’s United in the mix, and now the ownership of the political class has made things much, much worse.
You can see that during the Postwar era the collection of wealth by the top 10 people (families) has exploded, yes this is just 10 people per era.
Now let’s look at collective wealth by the top 1%, top 10 people (families), and top 20 people, (families) since the turn of the century.
Now let’s look at the top 1%, their growth and compare that to the bottom 50% and see the multiple. The top 1% is ~1.3 million people; the bottom 50% is ~165 million, so the wealth distribution ratio is really bad with the top 1% controlling 10–20× more wealth than the bottom 50% combined.
That is a huge explosion of growth for the top 1% not shared by the bottom 50%, the middle and low classes have not joined in any of this growth. You can see that the most growth for these groups happened in the 1950’s (76.5%) and 1960’s (85.5%).
When Trump talks about a National Wealth Fund, well we have one, it’s just broken. It should be the tax code.
Once one breaks a trillion, everyone gets worse off
This isn’t an attack on wealth, it's a critique of how dangerously concentrated it’s become. There’s a race to crown the first trillionaire, but few recognize the cost. As wealth stretches further skyward, it pulls resources upward, inflating costs and narrowing opportunity for everyone else.
Imagine wealth as a mountain, the trillionaire sits at a peak so high it distorts the entire structure. To support that height, you need a vast base—millions barely scraping by. The sides of the mountain, once home to the middle class, are eroded. What’s left is a narrow column, steep, vertical, and hollowed out. That’s not a stable society. It’s a ticking time bomb.
The top 1% currently get to control everything in our political world with their wealth thanks to Citizen’s United, they are not going to give that up easily, but without a change we are headed back to the same dramatic wealthy inequality that existed during the Gilded Age. Really we were there in 2020, but with the new budget proposal things only will get worse.
How Everyone Below the 1% Got Stuck with the Bill
Since the Kennedy era, top marginal tax rates have steadily dropped. Each attempt to tame the deficit has shifted more of the burden onto the middle class through higher payroll taxes, slashed public services, and rising debt. Reagan’s Trickle-Down era supercharged this shift, cementing a system where the middle class shoulders the load while the richest dodge it entirely.
Today, the top 1%, especially the 0.1%, contribute little to the public good. They’re busy stockpiling real estate, yachts, jets, and rockets instead of funding libraries, parks, or community centers. Most damning? They pay less than their fair share into what should be our national wealth engine: the tax system.
Worse still, these elites often rely on massive government-funded investments paid for by taxpayers to build their fortunes. But unlike any rational investor, the government takes on all the risk and walks away empty-handed. No equity. No return. Just payroll taxes from the workers lucky enough to get hired by those who profited. It’s capitalism on public subsidy, or more simply, socialism only for the rich.
Elon Musk - the real welfare queen
Elon Musk likes to sell the image of a self-made genius who built his empire through innovation and hustle. But the truth is, Musk is one of the biggest welfare recipients in modern history, just not the kind you'd expect. His companies have been propped up by billions in taxpayer dollars, government contracts, public infrastructure, and subsidies. If the U.S. government were a venture capital firm, it funded Musk’s rise and got zero equity in return—while he walked away with the profits
If the U.S. government had acted like a venture capital firm when it funded Elon Musk’s companies, taxpayers would be sitting on trillions in equity instead of watching the excessive returns flow to one man and his inner circle. Musk played the capitalism game on a socialist playing field, and the scoreboard was rigged to his side, and he continues to do so today.
The U.S. government didn't profit in a venture capital sense, but reaped only indirect returns via payroll income taxes of the workers at these companies plus some very low corporate taxes if at all.
But what you will notice here is that the governments return is mostly coming from payroll tax. So the working class generates most of the ROI for the government vs the corporation itself or owner who got the funds in the first place.
For Elon’s personal part, he has an effective Tax Rate below 4% based on how he is able to structure his wealth/income.
Elon uses a structure to shield himself from taxes. Once he reached the point where his compensation came entirely in the form of stock options, he stopped needing a salary. Instead, he borrows against his shares using them as collateral so he has no personal income, and therefore pays no income tax.
Now, some might say, “Well, that’s risky—it’s all tied up in the stock market.”
Well, kind of. The reality is, his risk is heavily cushioned by U.S. taxpayers. One of his biggest ventures, SpaceX, is funded year after year by guaranteed government contracts. That steady stream of federal money makes his holdings about as safe as U.S. Treasuries in the eyes of banks.
So lenders offer him massive credit lines at low interest rates, secured by stock backed indirectly by government money. That’s how Musk gets a tax-free income stream while avoiding selling stock and triggering capital gains.
Yes, he paid $11 billion in 2021, and he made a lot of noise about it, but in context, it was a tiny sum compared to what he would have paid if all his wealth had been treated as regular income over time, like a worker's paycheck.
Doesn’t feel right does it?
Hey DOGE, found the fraud and abuse you have been looking for!
Elon is not the only person using this method to gain wealth or game the system, even those who don’t use government seed money use the loan strategy to avoid paying taxes. And it’s not fraud either, this is all legal, thank you Regan and those that came after, then add on Citizen’s United to help them shape this system to benefit themselves. Just look at what the current budget proposal does.
Conclusion
This isn’t an attack on wealth. It’s a reality check on how dangerously concentrated wealth has become, and how the rules, legal, but rigged, are designed to protect it. As things stand, America is subsidizing the lifestyles of billionaires while the middle class gets stuck with the bill. Future generations will be dealing with as we continue to keep kicking the can down the road to feed the ego’s of the very few.
If we want a stable economy, we need to reverse the flow — not worship the people at the peak. If this continues we will have our French Revolution moment, maybe that’s why they now have a section in Forbes selling bunkers for the rich.
In the next part of the series we will look at the 1958 tax policy and how that would have played out in kept in place.
The data being used here is provided by OpenAI using multiple models and references.