On Food and Cooking: The Science and Lore of the Kitchen can all too easily numb, but occasionally a few very simple numbers are worth pondering a bit more closely than others. Like these three:
The United States now ranks number 77 out of 142 countries in the United Nations Human Development Report's latest estimates of income inequality--tied with Turkmenistan, Tunisia and Georgia.
In the 2009 OECD review of the 30 most advanced nations, the United States ranked 27th---ahead only of Mexico, Turkey and Portugal.
Over the last quarter-century, IRS data indicate that the top one percent of American taxpayers increased their share of the nation's total pre-tax adjusted gross income from 10 percent in 1980 to 23.5 percent (in 2007).
These are not routine numbers. Yes, of course, we know there is great inequality in the nation. But something is going on here that is quite extraordinary. Consider the following bit of arithmetic:
If the top one percent had not increased its income share from 10 to 23.5 percent in recent years, then the bottom 99 percent would obviously still have a 90 percent income share. Quite clearly, the top one percent has somehow been able to capture huge amounts that would normally have flowed to the bottom 99 percent.
If the federal government -- instead of the top one percent -- had taxed away that 13.5 percent of income from the bottom 99 percent over this period, it would have been deemed an extraordinary outrage.
The top one percent was, of course, taxed on what it took in, but in practice--after accounting for various deductions and loopholes--only at an effective rate of approximately 25 percent (including state and local taxes.) In 2007 they kept roughly $900 billion of the $1.2 trillion they gained in that year alone.
If the federal government had collected this entire amount in taxes, it could have used $900 billion to offset a large share of the 2009 budget deficit of $1.4 trillion. If it were to capture amounts in this range annually for the next ten years it would dramatically reduce our current (and growing) $13 trillion national debt. Alternatively, of course, the funds could be used for health care, schools, new energy technologies and created much-needed public or private sector jobs. Or, quite simply, the amount taken from the bottom 99% could be returned in appropriate tax cuts.
A good part of the income bonanza received by the top one percent derived from the recent unusual financial sector gains: The top one percent owns more than half of all stocks, bonds, and mutual fund assets; the bottom 90 percent own less than 10 percent. When the value of equity in homes and other assets are added in, the top one percent also owns more than the entire bottom 90 percent.
It is difficult to argue that such shares, to say nothing of major changes in the distribution of income like those recorded in recent years, have anything to do with a commensurate contribution that might merit extraordinary compensation. Indeed, as the revelations of the financial crisis have so dramatically shown, often top dollar bonuses went to bankers and brokers who did little more than move financial paper at huge taxpayer cost.
Building on the Nobel Prize-winning work of Robert Solow (and of Edward Denison), Lew Daly and I have recently pointed out that in general not only do income shares of the kind that flow to the top one percent have little to with what anyone has actually done to deserve; rather the flows are largely traceable to technologies that ultimately either were paid for by the public, or, more importantly, that derive from our collective inheritance of scientific and technological knowledge.
Unfortunately, our national discourse is focused almost entirely on different questions. A new presidential panel -- the National Commission on Fiscal Responsibility and Reform -- has begun meeting to try to find ways to cut spending and increase taxation at the margins. We are told nothing else can be done. Moreover, given our unwillingness to increase taxation, we can be sure that if changes occur, the big cuts will impact the same 99 percent at the bottom who have already lost huge shares of income to those at the top.
The challenge posed by our Turkmenistan levels of inequality is to somehow jolt ourselves out of our usual complacency to open a very different dialogue. It is time to stop looking away as we tinker around the margins and the one percent continues on its merry way. Top marginal tax rates, we might remind ourselves, stood at 91 percent during the presidencies of both Democrats and Republicans (Truman and Eisenhower). Contrary to those who argue significant taxation must impede economic growth, these high tax rates coincided with the postwar boom, the period of greatest economic growth in all of American history.
Follow Gar Alperovitz on Twitter: www.twitter.com/Garalper
Is it immoral to steal, enslave or kill? If so then why is it considered ok when we have our government do it for us?
At one time in our past a certain segment of our population was required to give 100% of what they produced to their masters. Today we discuss in a cold and calculating way what percentage is acceptable to steal from some segments to provide for other segments. The only difference is the percentage.
The unproductive masters in the antibellum America posed as gentlemen. The unproductive masters of today are the poor, the elderly and the lazy. It's still immoral.
Commodity speculators smooth out peaks and valleys in the market by projecting anomolies and making them manifest before they become reality.
An example is that oil speculators may foresee a shortage of oil on the horizon and by bidding up the price cause people to reduce consumption today. This has the effect of reducing the potential price increase or shortage of oil.
Alternatively they project a stockpile of oil and bid the price down causing producers to lower production because of lower profits and clearing the market of excess raw material.
The result is that price volitility is reduced and future supplies are guaranteed.
http://blog.mises.org/8327/speculators-are-part-of-the-market/
The study does not measure how individual people or their family's income changes over time. Knowing that you can one day be rich despite growing up poor is relatively unique to the US. We have the best University system in the world. Despite antidotes about getting into too much college debt, through grants, scholarships, and loans almost anyone can pay to go to any school.
The article assumes that that the 1% took their wealth from the other 99%. This ignores the fact that every income bracket has become more wealthy since 1970. This happens because wealth is generated with every translation. In the simplest example, person 1 values an item at $25 person B values it at $35. When the item passes from person 1 to person B, the sum of the two's wealth goes up by $10. That is how wealth is generated.
Really?
The article assumes that that the 1% took their wealth from the other 99%. This ignores the fact that every income bracket has become more wealthy since 1970
Well then, how come the amount of people (or percentage) in poverty has also increased?
Throughout its existence, the Academic Ranking of World Universities has said that 17 of the top 20 ranked universities have been in USA.
How come the amount of people (or percentage) in poverty has also increased:
Usually by changing the definition of poverty. What we call living in poverty in the US, most other countries would not. The worldwide poverty line is generally agreed to be $1.25 per day. In the US, that would only be people not working. Which would be unemployed and retired people. Both groups of people have been growing over the past few decades.
Primarily, they exploit workers by using the scarcity of jobs as leverage against the workers, to get them to work for wages below what is commensurate. The business owner, though, sets his/her own salary. In this country, the average worker spends the majority of their life working or preparing to work. We are expected to work more and more each year for the same or less money, ostensibly to make up for staffing reductions. In reality, they are just increasing the exploitation to increase their profits. Businesses have been outsourcing work overseas, because foreign workers have been more willing to be exploited. Workers around the world must start considering the risk associated with a given company (solvency, outsourcing, corruption, etc), and adjust their compensation expectations accordingly. The government should impose fair-value labor compensation standards that force businesses to distribute their profits more equitably across the workforce.
Some businesses exploit their customers through excess fees, exorbitant markup, and unethical legal and marketing schemes. Arbitrageurs are a strange lot in that they exploit both the producer and consumer. This is where banks generate much of their profits.
(Continued...)
David Cay Johnston* for Tax Analysts
"The long-term data show that under current tax and economic rules, the incomes of the top earners rise when the economy expands and contract during recessions, only to rise again. Their effective income tax rate fell to 16.62 percent, down more than half a percentage point from 17.17 percent in 2006, the new data show. That rate is lower than the typical effective income tax rate paid by Americans with incomes in the low six figures, which is what each taxpayer in the top group earned in the first three hours of 2007. "
"Payroll taxes did not add a significant burden to the top 400, not changing the rounding of rates by even one decimal. With payroll taxes taken into account, the effective tax rate of the top 400 would be 17.2 percent in 2006 and 16.6 percent in 2007, my analysis shows -- the same as not counting payroll taxes. As a point of comparison, about two-thirds of Americans pay more in Social Security, Medicare, and unemployment taxes than in federal income taxes."
http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument
When you factor in Medicare, Social security, and other taxes the rich don;t pay they pay an effective tax rate of LESS than 20%.
One thing that people need to keep in mind is, tax rates aren't set on people or persons. Tax rates are set on money. So when we say let's raise the tax rate on incomes above $500,000, the rate applies to the income, not the person. EVERYONE pays the same rate on the first $15,000 of (earned) income. The super-rich pay the same amount on their first $15,000 of (earned) income as the guy who climbs up a ladder and rescues him from the fire. The super-rich pay the same amount on their second tier of (earned) income as the guy who loads their trash into the truck.
A minor point, perhaps, and it might seem like I'm quibbling but it makes a difference in how we perceive things. We ALL pay the same amount of tax on our money. The only reason some have a higher effective rate is they're reached another tier. But we all paid the same rate on that first tier of (earned) income.
(Earned income as opposed to capital gains, which of course are taxed lower than income people earn by working. I know I'll never to actual work another day in my life -- I let my money earn my income for me now.)
I am not disagreeing with the substance of the article, but some of the facts and figures presented do raise some questions. The previous statement presumes that the nations wealth is finite, i.e., that if someones income increases it comes at the expense of everyone else. It would be possible for the the top 1%'s share to increase from 10% to 25% and still have the income of the 99% increase also. I do not believe that to be the case, but I believe there's a flaw in your logic.
'The top one percent was, of course, taxed on what it took in, but in practice--after accounting for various deductions and loopholes--only at an effective rate of approximately 25 percent'
To gain a fuller understanding of that statistic, it would be interesting to see what the effective rates are for the second to highest 1%, the third to highest 1%, etc. all the way down to the bottom 1%. Which percentile is paying the highest effective rate on their income, who is paying the least?
For example an average top 1%er makes $1.45 million and pays 30.9% of that in total taxes. Someone who makes $66,000 pays 30.0% in taxes. It is hardly the burden on the wealthy that the propaganda that only talks about federal income taxes, would have you believe. The U.S. is practically a flat tax country.
Lowest 20%, Avg Income $12,000, Avg Total Tax 18.7%
Second 20% Avg Income $24,500, Avg Total Tax 22.3%
Middle 20% Avg Income $40,000, Avg Total Tax 27.0%
Fourth 20% Avg Income $66,100, Avg Total Tax 30.0%
Next 10% Avg Income $101,000, Avg Total Tax 31.5%
Next 5% Avg Income $144,000, Avg Total Tax 32.2%
Next 4% Avg Income $253,000, Avg Total Tax 32.1%
Top 1% Avg. Income $1,445,000, Avg Total Tax 30.9%
www.ctj.org/pdf/taxday2009.pdf
From 1995 until the present The US has lost over 6,000,000 manufacturing jobs. In addition, whether you agree or not with policy, we have taken on in the neighborhood of 15,000,000 illegal immigrants. All these people cannot wait tables or work in agriculture. Where should they go and what should they do?
Until we as a country begin to recreate incentive with the tax code and a level playing field in foreign currency exchange rates these great manufacturing jobs that built America will never return and we will never recover.
When the administration begins to encourage domestic production again we will see the gap of income become smaller. We have allowed the core of America to be stripped and put into foreign lands and as a result we have seen the wealth disparity grow to equal such great countries as Tunisia.
Where do we start? www.savingpontiac.org suggests that we own GM and can create 60,000 jobs overnight...why not? We own these jobs let's get started!
The people with the money can afford to create and fund all sorts of:
Think tanks
Action committees
Divisive issues
Promote untruths and lies
Personalities
The sheep need to wise up and educate themselves.
The sheep need to wise up and vote their interests.
The sheep need to wise up and combat the avarice.