Wednesday, April 05, 2006
It's Official: Richest Getting Richer While Most Americans Are Getting Poorer
In this article from June of last year, David Cay Johnston cuts through the gaslighting and gives us the numbers to prove what we already suspected was true:
The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year. Call them the hyper-rich. They are not just a few Croesus-like rarities. Draw a line under the top 0.1 percent of income earners - the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more. The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is two and a half times the $1.2 million, adjusted for inflation, that group reported in 1980. No other income group rose nearly as fast. The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.And if you were wondering who got most of the big-ass tax cuts that Bush promised all Americans, guess what? It probably wasn't you:
The Bush administration tax cuts stand to widen the gap between the hyper-rich and the rest of America. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden. President Bush said during the third election debate last October that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. And more than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers.And just in case it wasn't crystal-clear:
The analysis also found the following: ¶Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. ¶Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000. ¶The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million - thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by this tax. The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else is almost certainly much larger.Of course, most of the people who most benefit from this are in favor of this arrangement -- though there are some who are actual patriots and who understand why this is so wrong:
While most economists recognize that the richest are pulling away, they disagree on what this means. Those who contend that the extraordinary accumulation of wealth is a good thing say that while the rich are indeed getting richer, so are most people who work hard and save. They say that the tax cuts encourage the investment and the innovation that will make everyone better off. "In this income data I see a snapshot of a very innovative society," said Tim Kane, an economist at the Heritage Foundation. "Lower taxes and lower marginal tax rates are leading to more growth. There's an explosion of wealth. We are so wealthy in a world that is profoundly poor." But some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation's capital in the hands of inheritors rather than strivers and innovators. Speaking of the increasing concentration of incomes, Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony a year ago: "For the democratic society, that is not a very desirable thing to allow it to happen." Others say most Americans have no problem with this trend. The central question is mobility, said Bruce R. Bartlett, an advocate of lower taxes who served in the Reagan and George H. W. Bush administrations. "As long as people think they have a chance of getting to the top, they just don't care how rich the rich are." But in fact, economic mobility - moving from one income group to another over a lifetime - has actually stopped rising in the United States, researchers say. Some recent studies suggest it has even declined over the last generation.And in fact, the American standard of living has indeed declined for most Americans over the past generation. The upshot: If our country is to survive, the first order of business is not only undoing the Bush tax cuts, but putting a surtax on the wealthiest 0.1 percent, the hyper-fortunate few who have gotten the lion's share of Bush's free-money giveaways.
Sorry, but I just don't understand why repealing the tax cuts should be on the to-do list. Nobody had their taxes increased, everyone kept more of their own money, yet there's a problem with that?
Oh, and standards of living in the US today are as good or better than anywhere in the world and at anytime in the history of the world. Again, I'm failing to see why that's a problem, or why it's relevant to tax cuts. How about a breakdown of what you think tax rates should be and how much you think the "rich" and "poor" should pay. It may also be nice to know what you think "poor" is and what makes a "good" standard of living. I just can't wait to know.
Now, given your neanderthal mind, you no doubt are a wingnut on it, could you tell us why ABORTION is on the top agenda?
You are correct to question whether corporate taxes are included in my figure. They are not. Here's a link for your individual taxpayer pleasure. And it's from the socialist side of the aisle so you might believe it.
Ultimately these stats come from the CBO. Enjoy.
What's wrong? Wrong to let people keep their money? Yikes! Remind me not to work so much after you get elected.
And though it has nothing to do with the topic at hand (you all seem to love soooo much getting off point), I don't care much about abortion; do with it what you want.
So much for your credibility, Annie -- or rather, Sandi. How are things at Duke, by the way?
And again, thanks to you all for staying on point with the argument. Oh, wait, nevermind.
If the super-rich you worship -- in the vain hope that they will throw you some crumbs from their table -- are such generators of economic nirvana, then why is it that we're still nearly seven million jobs short of achieving the employment rate we had when Bush took office? (Remember, our population is growing faster than our economy. We can't just get back to the same number of jobs we had in March of 2001, when the Bush Recession started. We have to have the same percentage of people employed as we did back then. And we don't.
And it's amazing how many of these same super-rich are the biggest feeders at the public trough, especially where DoD contracts are concerned. The Republicans in Congress and the White House treat our tax dollars as pork for the people who put them in office: Iraq in particular, especially under the College Republican frat boys and girls (hey, you're from Duke, you must know a few!) that used Paul Bremer's CPA as a license to plunder.
By the way: If these people you worship really cared about America, they'd willingly give up the tax breaks in order to help out the war effort. You DO know that there's a war on, don't you?
Never before has anyone, even Republicans, been so unpatriotically insane as to back tax cuts, especially ones targeting the richest of the rich, during a time when the United States was at war. These people get humongous free-money tax breaks and then get fat government contracts on top of it. Coughing up one of their double-dipping scoops is the least they can do.
Pick up a copy of Perfectly Legal. It'll rock your Limbaugh-loving world.
All I was saying is that the top few percent finance your life and that the 2003 tax cuts cut everybody's taxes. Of course the rich got a higher break--they make more money and pay a grossly larger share than those whom you like to champion. Even you can agree with the numbers. Instead of some ambiguous double-dipped nonsense such as “that’s the least they can do,” you might try and define who “they” are and how much “least” is. Who is rich? How much should their tax rate be?
Oh, and though it’s off the subject (but that’s what you like to do so it’s OK), how did the “Bush Recession” start in March 2001 if he’d only been in office for a month? Sometimes you should at least pretend to think.
1. If one person had 100% of the income, how much of the taxes would he pay? Answer: all of them. Would one say he was burdened... relative to everyone else who had no money?
2. The country is currently running some of the largest deficits of the post-war era. The end result of that will be a decline in the dollar and/or inflation, which will have the result of reducing the value of everyone's money. In other words, there is no free lunch.
On a related note, if we measure the success of the Bush era by national net worth, it's a disaster. And this is before the inevitable dollar decline and/or inflation. This is all prosperity borrowed from our children, completely illusory.
3. Living standards as measured by broader measures than GDP are generally agreed to have peaked in the 1970s and are declining worldwide. As PW has posted, even measured by GDP, Americans are forced to work harder to achieve the same standard of living.
4. Giving exact tax rates is impossible. It depends on the economy, budgetary policy in Washington, demographics, technology, etc. However, here is a statistic to ponder. Below a 70% marginal rate, tax revenue to the Treasury increases.
Note: marginal rate is not average rate. Most Americans pay at about 10% and have, no matter what the upper marginal rate is for a long time.
So, what should income tax rates be? Well, for most families, they should be zero... exactly as they were under FDR. Only the wealthiest third or so of the nation makes enough to make it really efficient to tax them. Repeal the maze of tax law that has sprung up since 1986 and it might be efficient to tax the upper half.
More blogs about politics.