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By Dmitri Iglitzin and Steven Hill
When pets are poisoned by imported pet food or U.S. attorneys are fired under suspicious circumstances, Congress gears up hearings and vows quick action. A far greater scandal, however, has hardly gained the interest of legislators or the presidential candidates. That is the increasing wealth gap between the rich, the middle class and the poor, which is reaching alarming proportions.
The top 10 percent of income earners in the United States now owns 70 percent of the wealth, and the wealthiest one percent owns more than the bottom 95 percent, according to the Federal Reserve. In 2005, the top 300,000 Americans enjoyed about the same share of the nation's income -- 21.8 percent -- as the bottom 150 million.
New York is an especially bleak case study. The top fifth of earners in Manhattan now makes 52 times what the lowest fifth makes -- $365,826 annually compared with $7,047 -- roughly comparable to income disparity in Namibia.
Meanwhile, the ratio of average CEO-to-worker pay in the U.S. shot up from 301-to-1 to 431-to-1 in 2004. The average CEO now earns substantially more in one day than the average worker earns all year. Adding insult to injury, taxpayers actually give tax breaks to corporations for those salaries, to the tune of hundreds of millions of dollars.
In a country founded on the principle that "all men are created equal," this stark and growing economic inequality has become a third rail of politics. Almost no one in political leadership touches it for fear of being accused of inciting class warfare.
But we've reached a point where the "land of equality" has become a very unequal place. Government has an important role to play in restoring another fine American value: fairness.
A small first step would be passing the Income Equity Act, denying corporations a tax deduction for excessive CEO salaries (defined as pay greater than 25 times the company's lowest full-time worker). They could still pay CEOs whatever they wished, but taxpayers would no longer subsidize it. That would create some downward pressure on executive income while saving taxpayers hundreds of millions of dollars.
More substantive would be a fix to Social Security's dirty little secret of favoring the rich: Annual wage income above $94,200 is completely untaxed by Social Security. While an average worker pays 6.2 percent of her income to Social Security, a CEO earning $1 million pays only 1 percent of his salary. As is, only 83 percent of all wages are subject to Social Security taxes, so this would increase annual revenues by nearly 20 percent, or $100 billion a year, keeping Social Security solvent.
Other worthy proposals include increasing the minimum wage, providing child care for working parents, expanding health care and lowering college costs. But the most direct way to address inequality is to reimpose higher income tax rates. Current rates are extremely low, historically-speaking. Under President Dwight Eisenhower's Republican administration, the maximum marginal tax rate was 87 percent. The Reagan tax cut of 1981 dramatically lowered this to 50 percent, then again to 28 percent in 1986. Since then, no surprise, our nation has seen a steady rise in wealth disparity.
It is long past time for our political leaders to put aside the scandal du jour and take urgently needed action to slow if not reverse our nation's growing economic inequality.
Dmitri Iglitzin is a labor law attorney based in Seattle. Steven Hill is director of the political reform program of the New America Foundation and author of 10 Steps to Repair American Democracy.
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Why the population doesn't see this disparity and they don't do anyhting about it is a function of discrimination: people have been given a series of scapegoats to blame for their financial and economic difficulties. If you were a peasant, suffering on some noble's land in Eastern Europe, the jews were the cause of all your ills. In Southern Europe, the gypsies are the traditional scapegoats. Here in the U.S. (What's The Matter With Kansas?), Black Americans have been hoisted in the face of America as the cause for economic hardship; first as welfare cheats - having babys and causing abnormally high taxes in the working class, then as recipients of affirmative action - taking jobs away from more deserving white Americans.
Read Marvin Harris' book "Cows, Pigs, Witches and the Riddles of Culture" (anthropology)for a great description of how this plays out. He claims the witch hunts in Europe that killed 500,000 people between 1500 - 1700 was really an effort by nobles (with help from the Church) to crush a peasant movement to gain greater economic equality.
Let's examine some facts:
1. The pay of US Congressmen (Reps. & Sens.): $165,200.
2. Maximum amount of income subject to ss tax: $94,200.
3. Total amount of US Congressmen pay not subject to ss tax: $71,000.
Thus, by eliminating the ceiling, you are asking our CongressCritters to raise their own taxes.
Do you think they have an incentive to keep the current system?
Do our 'leaders' care? Well, they need money to maintain their positions, since election campaigns are costly. They care very much for those who can supply them with that needed money. They are willing -- nay, eager -- to serve them.
Now who can give the pols money? The beloved rich or the worthless poor?
Money makes the political world go 'round.
We have, therefore, the best government that money can buy.
And the pols care. How they care!
Just ask (if he'll let you) the great sympathizer of the American underclasses: Joe Biden. He cares so much for those among us who have suffered job loss, catastrophic medical bills, divorce and the host of other disasters that he was determined to protect our integrity as debtors by voting for the 2005 Bankruptcy Reform Bill.
Mr. Biden, son of working stiff parents, is the senator from Delaware, the state that produces most of the credit cards that spread from sea to shining sea. Most were unsecured before 2005, now all secured thereafter.
Still, with less risk, Mr. Biden did not insist on lower interest rates for us in return, nor the end of the menu of revenue generating fees and arbitrary boosts of rates. He did insist minimum payments be raise to encourage us to clear debt quicker, but Big Credit just raised rates to maintain profits that, otherwise, would have slightly shrunk.
Thank you, Joe, for being a Democrat's Democrat. What do you have in store for we little people tomorrow? Perhaps our organs to satisfy BigCredit should death get in the way of what we owe.
I was standing in line at the Post Office earlier this year. I forgot to bring something to read so I grabbed the booklet of instructions for federal income tax. I came to the pages with the tax tables and was a little surprized at how little you can earn and still owe taxes. Really, if you didn't tax, say, the first $20,000 of income - particularly for folks with kids (and there are many folks in this category) all of that money would go back into circulation. They would spend every penny of it. If you cut taxes for richer folks, it might get invested or some other avenue that might, in some way "trickle down" (this is a jab at Reagan) put probably stays in the the rich man's neighborhood instead of helping poorer folks get a leg-up.
You don't get the whole picture by reading the tax rates. For a family of four, the first $23k is not taxed because of exemptions and the standard deduction. In fact many people receive 'refunds' when they haven't paid any tax at all. It is called the earned income credit.
This is a meritocracy. Why is that so hard for libs to understand?
mbafromha'va'd,
Meritocracy? This lib “doesn’t get it”?
Meritocracy tends to…”forget” certain groups. And individuals. Those without the gifts you SEEM to take for granted. (Maybe I’m wrong. Prove it, if you even care.) Those who work as hard as any employer could ever wish, but have an IQ of 80 at best (through NO fault of their own.) Needless to say, they will NOT be overcoming that handicap, no matter how many family members or parents or children they have to support (either out of choice, obligation or law) with their 80 hours a week at minimum wage. No matter how high their medical bills may be, or how great their handicaps, whether they be mental, physical or emotional. No matter how LACKING in imagination they will remain, or how many ideas they will never gain from books they will never have the time or intelligence to read, or how many other burdens they may carry for life (that MBAs from Harvard like you seem to have COMPLETELY disregarde
You know, them. The ones who can’t spell meritocracy, and you laugh at if they try. (And I assure you, a great many of them try. Try harder at some things than you ever did or will. Because you don’t NEED to try. It just happened because your mother taught you to read before school, or because your brain developed better and faster due to proper diet.). They’re the ones who didn’t grow up healthy, for lack of any number of things, like parents who could read. Or maybe just parents at all..
MBA from Harvard. That’s a free hall pass to spit on these people who do ALL your shit work without complaint, I’d guess while you laugh at them.
Please, please tell me I’m wrong. I’ve worked with these people, and I’ve seen their efforts and their sweat and their tears. Have you?
Is meritocracy what it's called when America’s hardest working people are spit on and laughed at?
mbafromha'va'd,
What?
No response?
Please respond, if you GET it. After all, HuffPo IS a meritocracy.
Thank you.
LOL! A model of elitist delusion. Is that what they teach at Harvard? George Bush, and man with obvious intellectual (not to mention moral) limitations, who failed miserably at everything he tried to do, became very rich, and is the President. Merit? I seriously doubt there is any evidence that the best and brightest thrive, while the dumbest fail. In fact, there was an article to support my thesis not long ago. If by "merit" you mean lucky birth, ruthlessness, ethical limitation, and a willingness to submit to anything for a buck, I'm right there with you. When you were at Harvard, did you do your senior thesis on life experience? (This is a Simpsons reference, BTW). Thanks for the laugh!
It's worse than a lack of caring by our 'leaders'. They are complicit in the dynamics that have brought this injustice down on the bottom 90%. Lobbyists write most of economically ralated legislation these days and pay politicians for their aye votes with campaign dollars. Often, the passed legislation hasn't even been read by the members of congress.
The 'by, for, and of the people' system has been completely undermined by the rich and powerful in order to make themselves more rich and powerful. Ordinary citizens no longer have an effective voice.
There are ample signs that the looting of the economy by big money is having a profound destructive effect. Runaway greed will bring about the ruination of our nation if things continue as they are.
By the way, don't look to the Democrats to help. They have bought in to this broken system as well. The only difference is that the speed of the runaway train to hell will be slightly slower with them in charge!
Thats one of several flaws with capitalism.
There is no way a truly democratic society can coexsist with capitalism.
True, if by capitalism one means a corporation dominated state and society like ours. But that is definitely not a free enterprise system as viewed by Adam Smith, who destrusted corporations for their corruption of capitalism. They are, as they were intended to be, obstacles to free enterprise, since their purposes are monopolistic. In the presence of succh corporations, there is no free market. But none of this matters if you are stupid enough to swallow the praise we constantly give to our corporation dominated "free enterprise" system -- which is, of course, why all the little Neocons and their dupes go around proclaiminng: "We're not a democracy. We're a Republic."
Hi Folks!
Isn't it interesting that the phrase. "All men are created equal" is found in the U.S. Declaration of Independence-- but not in its Constitution?
I suspect it's because the Founders had to accept, indeed, facilitate, some made-made inequalities to the Constitution in order to get it ratified. Such as the disenfranchisement of women, indigenous peoples, and men who didn't own property. Descendents of Africans were insulted even more deeply by being officially regarded as only worth 60% of other Americans.
My point is that, from our nation's very beginnings, it has taken the efforts of activist citizens, aided by an advocate government, to move equality away from lofty concepts to institutional mores supported by force of law. It will take the same combination of activism and advocacy to return sanity and fairness to the distribution of financial adequacy and security (note I did not say WEALTH)in America.
And BTW:pundits and politicians be damned-- there is plenty of compelling evidence reflected in our national policy to make that case that that class warfare is already well underway.
"Do U.S. leaders care?"
Of course they care, very passionately in fact. That kind of pathological inequality doesn't just happen on its own.
Great post.
As I see it the only problem is the same old problem. It is the golden rule; those with the gold make the rules. We are there in spades.
Yes we should start to make the rich pay their fair share. That is all we would need to right this wrong. Except if you are rich you want to keep that amount. You will spend a portion of that money to pocket a Senator or two and perhaps even a President. I am not even talking of doing anything strictly illegal. We have so many ways to legally support a candidate that the big money will make it to the lawmakers. And who can change these laws? The same people benefiting from them.
This is a classic Catch 22.
I see two ways out. The poor and middle class stop buying. All the poor and middle class lose jobs, homes ect. and the economy grinds to a halt. Then maybe we would see a change? Or we just take to the streets and have bloody riots?
It would be nice to think the rich would just do the right thing but as we have seen throughout history, the rich don't give stuff back until it is for their own safety. They have no code of honor or sense of right or wrong.
The rich do the right thing? Ha! I hear little snot noses speak of our meritocracy sometimes, and would like to ask how much of that they inherited. I see a stupid little Bush who failed at every management job he ever had, put into the Oval Office by this meritocracy of ours, and fail to see the joke.
I see crooked deals by rich farts go unpunished and recall that old advice "Never Steal Anything Small." And then think of our country. Damn, I never supposed before that anyone would actually steal anything that big!
Do the Right thing, perhaps?
Buck,
mbafromha'va'd has some a VERY interesting take on that VERY topic below.
Enjoy, as did I.
No, it means what is says - all men are created - TO BE - AS - equal and have equal rights and are due equal respect and legal protections, etc.
In other words, there are no castes.
Castes are man-made.
It does not mean all men are created by procreation - that's silly.
Although that method is the most fun---LOL!
What? You didn't laugh?
I'M SHATTERED! SHATTERED, I tell you!
Great post. Kucinich touches the rail, but he is the only one I know of.
The phrase "all men are created equal" IS true.
Sort of:
It means "the mechanical process of creation (procreation) is EQUAL in all instances!"
'Course, once you draw breath for that first bellow, all bets are OFF!
(Guess it should have read "all men are created EQUALLY", huh?)
Sorry. More than I can say.
The mechanical process isn't always..a rare few are test tube babies or due to artificial insemination in this brave new world....
Ind,
True, and I thought of it as I finished writing.
Obviously the framers read very little sci-fi.
(And I was afraid I'd get nailed (ha!) for omitting "women". Not EVEN meaning that women might question that the "process" is always equal.)
Why in hell should ANY corporation get ANY kind of tax break to subsidize a CEO's salary? Why should ANY high-income worker be subsidized by the people who have to worry about paying their bills? Why do people who make more money than almost everybody feel they have to have MORE? Why do politicians scurry like roaches to hide under their rocks when someone says "class warfare?" This shouldn't be an ideological thing, but if it is, I'd love to hear some troll defend it, especially if he's living under a bridge that's collapsed because there was no money in the budget for retrofitting. Sheesh! And we accuse the Arabs of wanting to turn the clock back to medieval times!
High income workers are not subsidized by the people. The corporation receives a tax deduction for the salary and benefits, including stock options, of all employees, not just high income workers.
To cap the deduction that a corporation can take and then in turn tax the employee is double taxation. The corporation pays tax on the corporate tax return and the employee pays tax on the individual tax return.
The max corporate and individual rate combined is 70%. I don't think the government deserves 70% of anyones income.
The answer, my friend,
Is blowing in the wind.
But the winds of change are over the horizon.
The answer to your question is
No, they don't.
Apple carts don't get up-ended
Until all the apples are gone
or rotten.
I would suggest those
'producers'
check their apple conditions
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