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Forum Post: "What If the Greedy Rich Paid Their Share ? 8 Things to Know About Wealth and Poverty in the US", by Les Leopold.

Posted 2 years ago on April 19, 2012, 6:59 p.m. EST by shadz66 (17951)
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What If the Greedy Rich Paid Their Share? 8 Things to Know About Wealth and Poverty in the US - 'We're far from poor -- we just have a wildly lopsided distribution of wealth that makes us seem poor.'

By Les Leopold

America is loaded. We are not a struggling nation ready to go under. We are not facing an enormous debt crisis despite what the politicians and pundits proclaim. We are not the next Greece. Rather, we have an enormous concentration-of-wealth problem -- one that must be solved for the good of our commonwealth. We are a very rich nation but it doesn’t seem that way because our wealth is so concentrated in the hands of a few. This is America’s disaster.

But wait. Doesn’t the wealth belong to the super-rich? Didn’t they earn it fair and square? Isn’t that the way it’s always been? Not by a long shot. The amount of wealth that flows to the super-rich is determined by our public policies. It’s all about how we choose to share our nation’s productivity.

Productivity and the Wealth of Nations.

Our country is rich because we are enormously productive as measured by output per hour worked. The greater our collective output per hour, the more our economy produces and the wealthier we are…or should be. It’s not a perfect measure since it doesn’t adequately take into account our environment, our health or our overall well-being. But it is a good gauge of our collective level of effort, skill, knowledge, level of organization, and productive capacity. As the top line on the productivity chart below shows, we’ve been able to produce more and more per hour year after year since WWII. It’s a remarkable achievement.

From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with working people. As productivity rose so did workers’ real wages (See the bottom line in the chart below. It represents the average weekly wage of non-supervisory workers who make up about 80 percent of the entire workforce.) This wasn’t socialism. There were still plenty of rich people who earned a significant slice of the productivity harvest. But much of that wealth was plowed back into the economy through taxation rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s dollars). Much of that money was used to build our physical and knowledge infrastructures, and to fight the Cold War. Unions were supported by public policy and workers' real wages rose steadily after accounting for inflation. Wall Street was tightly controlled and the middle-class grew like never before.

Then something happened.

It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy makers decided that deregulation and tax cuts should become the order of the day starting in the mid-1970s. The idea was that if we cut taxes on the super-rich and deregulated the economy (and especially Wall Street), investment would dramatically increase and all boats would rise. But as we can see from the chart below, the average worker's wage in real terms stalled and even declined after the mid-'70s. The fruits of productivity no longer were shared equitably. The enormous gap between the two lines (trillions of dollars per year) went almost entirely to the super-rich. The wealth of the wealthy skyrocketed, not by accident, but by policy design. "Greed is good" replaced the middle-class American dream.

http://images.alternet.org/images/managed/storyimages_1334694793_ourcountryissuper.gif

What Is Wealth and Who Has It ?

Wealth or net worth is the total value of what you own (your assets) minus the total value of your debts (your liabilities.) Our collective net worth is really huge. We’re talking big, big numbers. As of the end of 2011, U.S. households had $30 trillion in private assets and $13.6 trillion in liabilities for a total net worth of $16.4 trillion (PDF). How much is that? It comes to an average of $141,000 per household – free and clear of any debts.

But averages are extremely misleading, because wealth is so highly concentrated at the top. Here are some eye-popping numbers.

  1. The number of households with a million dollars or more of net worth grew by 202 percent between 1983 and 2007.

  2. The number of households with a net worth of $5 million or more grew by 494 percent.

  3. The number of $10 million or more households grew by a whopping 598 percent!

  4. There are now more than 464,000 households worth $10 million or more. (PDF)

  5. But the bottom 40 percent of American households has a net worth of nearly zero (.2 percent).

  6. If you take out the value of our homes, the bottom 40 percent has a negative net worth of minus 1 percent – meaning they owe more than their assets are worth.

  7. Meanwhile the top one percent holds 34.6 percent of our total net worth and 42.7 percent of all financial assets (excluding homes).

  8. That means that the top one percent has a positive net worth valued at approximately $5,700,000,000,000 (that’s $5.7 trillion).

Why We Need a Financial Transaction Tax.

Most Americans live on earned income which is taxed instantly through substantial payroll taxes. You can’t collect a paycheck without paying taxes. The super-rich, however, receive most of their income through financial investments that are taxed at lower capital gains rates and which can be offset through a myriad of deductions and loopholes. In effect, the super-rich live by one tax code and the rest of us use another. This is why the wealthiest Americans pay lower effective tax rates than their servants. It’s also why our government appears to be starved for income. If we want a vibrant economy and good investments in our public infrastructures, the wealthy must pay a great deal more, just like they did during the early post-WWII period.

For starters we need a financial transaction tax which is a small sales tax on each and every financial trade – from stocks and bonds to futures and other derivatives. Since the super-rich hold so many financial assets, this kind of tax would directly target their excessive trading and enormous holdings. Not only would this sales tax produce upwards of $150 billion a year in federal revenue, but also, it may help eliminate much of the financial gambling that took down the economy in 2007. Considerate it a tax on financial toxic waste.

A Wealth Tax to Improve our Commonwealth.

Finland, France, Iceland, Luxembourg, Norway, Spain, Sweden and Switzerland have small net wealth taxes, and England has had a financial transaction tax for three centuries. We should join them. A 1 to 3 percent wealth tax with a million-dollar deduction would only hit the top 1 percent and would provide the nation with from $50 to $150 billion per year in income. Spare change for the super-rich.

The beauty of a wealth tax is that there are no loopholes. Your assets (which include both foreign and domestic) and your liabilities are easily calculated. It’s easier to spot the cheaters. It’s easier to press for information from other countries that may be tempted to launder money for our super-rich. There’s nowhere to run unless the super-rich want to give up their citizenship.

Even Ronald McKinnon, a conservative economist writing in the Wall Street Journal ( “The Conservative Case for a Wealth Tax”) is advocating a wealth tax on the super-rich : http://online.wsj.com/article/SB10001424052970203462304577139232881346686.html )

  • "In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed."

Combined with the financial transaction tax, we would have more than $200 to $300 billion per year which could rebuild our crumbing infrastructure, provide higher education for our children, eliminate much of the student loan burden, and hire millions of laid-off teachers. Unemployment would fall dramatically and deficit hysteria would vanish into its own hot air.

We can cry about the distribution of income all we want. We can moan and groan about the top 1 percent and how they have captured political power. We can proclaim our membership in the 99 percent for all to hear. But none of that matters much unless we build a mass movement that reclaims our fair share of the fruits of productivity.

The 1 percent didn’t get there just because they were great entrepreneurs or because they were smarter than the rest of us. They got there because they pressed for tax cuts for the super-rich and the deregulation of Wall Street. Those twin policies poured the money into their coffers and stalled our middle-class dead in its tracks. Those policies also crashed the economy and destroyed the jobs of millions of Americans.

A financial transaction tax combined with a wealth tax will bring us closer to the time when the middle-class again was growing year by year. It would put Americans back to work and place our foot right back on Wall Street’s neck – where it needs to be for the good of us all.

But you know it won’t come easy. The super-rich feel entitled to all they can grab. Which means we’ll have to organize like never before and fight like hell. Let’s hope the 99 percent are ready, able and willing.

~

radix omnium malorum est cupiditas ...

~

Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).

© 2012 Independent Media Institute. All rights reserved.

[This article is copied under "Fair Use" from http://www.informationclearinghouse.info/article31121.htm ]

36 Comments

36 Comments


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[-] 3 points by ZenDog (13628) from South Burlington, VT 1 year ago

Excellent excellent piece - On the topic of deregulation I would include deregulation of the news media, which permits the holdings of several types of news media in a single market by a single individual or entity.

I don't think the importance of this fact can be overstated when considering changes in economic - or other - policy over time. Control over the many and various presentations of public opinion has been a crucial element in shaping public opinion, and thus creating an environment conducive to policy change.

This then, becomes one of our own hurdles. If we are going to harness the media as it is, and use it to our own ends, then we must control the message and the iconography that we present to the world.

[-] 3 points by GypsyKing (9780) 2 years ago

Thanks again shadz! You are a veritable walking encyclopedia of factual information! Invaluable!

[-] 3 points by shadz66 (17951) 2 years ago

Also 'fyi' GK, this relevant article :

fiat lux ...

[-] 3 points by GypsyKing (9780) 2 years ago

I'm sure this article is true, and yet I find it somewhat sickening.

[+] -4 points by sandheden (-13) 2 years ago

And when you say "I'm sure" that makes it so. Huh, GypsyClown?

[-] 3 points by shadz66 (17951) 2 years ago

Further to the above 'forum-post', I also append :

fiat lux ...

[-] 2 points by Marlow (1141) 1 year ago

TY. To simplify this info.. some dont read every bit of a post.. Is this: The Actual statistic for the 1% v the 99% is ... .... 1% of the Wealthiest ( about 400 people above the 100mil per Cap).. Has contol over 99% of the money..!!

... That is the Actual point. Not that 99% of us are Poor SOB's.

I do not have a single gripe with the rich, ( not the 1%, i do have a gripe with the Insanity they Breed with their Greed).. But the rich do keep the charities and other sources of enrichment in our lives going. I thank them for their contributions.. they are being attacked unfairly.

..M.

[-] 2 points by alterorabolish1 (569) 2 years ago

This article describes reality better than any I've seen! OMG, how can we wake people up so that they are aware of these truths? We may have to share it with social media because I doubt we will see this in the mainstream media.

[-] 1 points by shadz66 (17951) 2 years ago

Thanx & good point. Twitter, Facebook & many other options available via http://www.informationclearinghouse.info/article31121.htm . pax et lux ...

[-] 2 points by jrhirsch (4714) from Sun City, CA 2 years ago

"For starters we need a financial transaction tax which is a small sales tax on each and every financial trade – from stocks and bonds to futures and other derivatives."

Good. That would also put a damper on speculative trading which is often frequent and short term. Maybe suspend the tax for investors who are in for the longer term.

[-] 2 points by beautifulworld (21343) 2 years ago

Great article. Hopefully someday soon we'll begin moving in the right direction. Today was not an auspicious day for minimizing the vast gap in income distribution in the U.S.:

Today it was announced that a Congressional panel is seeking to pass a bill to cut food stamps by $33 billion over 10 years:

http://www.reuters.com/article/2012/04/18/us-usa-agriculture-stamps-idUSBRE83H16320120418

While Republicans are also trying to push through a bill that gives tax cuts to "small" businesses, a specious definition that includes plenty of wealthy people. "One estimate by the nonpartisan Tax Policy Center said 49 percent of its tax breaks would go to taxpayers with income exceeding $1 million.":

http://news.yahoo.com/gop-pushes-business-tax-cut-divided-house-175922596--finance.html

[-] 4 points by shadz66 (17951) 2 years ago

I can barely believe what I have read in both your links. To say that I'm fuming & speechless would be a massive understatement !

People need to read, realise and reflect on these article and compare and contrast just what is going on in The U$A these days !!

fiat justitia ruat caelum !!!

[-] 3 points by beautifulworld (21343) 2 years ago

And, the tax break bill for "small" businesses passed in the Congress this morning, though, fortunately, it is likely to fail in the Senate. Good grief.

[-] 2 points by shadz66 (17951) 2 years ago

A link to Les Leopold's interesting looking book :

In The Looting of America, Leopold debunks the prevailing media myths that blame low-income home buyers who got in over their heads, people who ran up too much credit-card debt, and government interference with free markets. Instead, readers will discover how Wall Street undermined itself and the rest of the economy by playing and losing at a highly lucrative and dangerous game of fantasy finance.

radix malorum est cupiditas ...

[-] 2 points by beautifulworld (21343) 2 years ago

This is great! Thanks, shadz.

[-] 2 points by DKAtoday (34889) from Coon Rapids, MN 2 years ago

You always share the good stuff. {:-])

[-] 1 points by shadz66 (17951) 2 years ago

But I'm fine with cheap wine too, hic . ~{:-p) .. in vino veritas ...

[-] 1 points by DKAtoday (34889) from Coon Rapids, MN 2 years ago

Strawberry ripple? Boonze Farm? HoKay.

[Removed]

[-] 1 points by DKAtoday (34889) from Coon Rapids, MN 1 year ago

tweeted {:-])

[Removed]

[-] -2 points by slammersworlwillremainhere (-34) from New York, NY 2 years ago

all the wealth of the top 1% is less than a single years combined wages in this country.......

and I am not sure how much more fair 40% of federal income taxes on 21% of total wages (top 1%) and 70% of federal income taxes on 46% of income, (top 10%) could be.......compared to 14% of federal income taxes on 32% of income...those earning less than 62K, and 3% of total federal income taxes of those earning less than 30K

over 47% pay ZERO, or get more back than they have withheld, taxes....

and before you claim that state/local taxes, payroll taxes, fees and sales taxes change these numbers drastically...you're wrong

federal income taxes are the largest amounts collected in this country,,,no state has regressive income taxes, and unless you use the misleading "what's left over after taxes" argument.....you can't make it even close to demonstrating that the top income earners aren't paying well in excess of what's "fair"

[-] 2 points by shadz66 (17951) 2 years ago

At the risk of your head exploding, please watch, consider and reflect upon :

Now see if you can formulate an opinion that is your own and not pre-programmed !!

~*~

fiat lux et fiat justitia ...

[-] -2 points by slammersworlwillremainhere (-34) from New York, NY 2 years ago

funny...all you libs say the same things, who is the one pre=programed....

the nightly news and popular media and culture are parrots of your idea's...you have to research and learn to be a constitutional market capitalist.....

the second link doesn't reflect the 1.5 trillion that is borrowed and spent.....and that is intentional so they can portray defense spending as a higher percentage than it actually is....

and the second link is Richard Wolff......a fool, and manipulator of facts.....

try again...all forms of socialism lead to tyranny.....when the ruling class gets a taste of power....

[-] 4 points by shadz66 (17951) 2 years ago

Please do not make the mistake of thinking that I am a 'liberal' and re. the rest of the 'brain-fart' that you are trying to pass off as 'considered opinion', please also see and consider :

ad iudicium ...

[-] -1 points by slammersworlwillremainhere (-34) from New York, NY 2 years ago

liberal is the term you socialist/collectivists cloak yourselves under these days...

there is not myth of the liberal media, most proudly admit it.....and the back and forth migration from media to liberal democrat administrations is further proof.....your links are nonsense..... .

corona sapientium divitiae eorum fatuitas stultorum inprudentia

[-] 4 points by shadz66 (17951) 2 years ago

Hmmm. Now consider that mere materialism, money & more and more 'stuff' will never fill that hole deep inside you where your 'soul' used to be !!

radix omnium malorum est cupiditas ...

[-] -3 points by slammersworlwillremainhere (-34) from New York, NY 2 years ago

my soul is quite intact......I haven't ruined anyone's lives by providing them with excuses for their poor behaviors, or advocated for their lesser selves....

you folks do that all the time, keep telling them it's not their fault and encourage them to blame everything and everyone else for their troubles.....nice that you think destroying someone's initiative and self-worth is a positive thing.....

.

a fructibus eorum cognoscetis eos numquid colligunt de spinis uvas aut de tribulis ficus...

[-] -2 points by fleaparty (-18) 2 years ago

What if nearly half the people didn't pay nothing? Might they then stop demanding more government? Might they then weigh more government against the cost of more government rather than like now when they couldn't give a fuck because the "wealthy" can pay for it?

[-] 4 points by shadz66 (17951) 2 years ago

People like you say things like that because you hate any thought or idea of "DEMOCRACY" as you prefer the demoCRAZY deMOCKERYcy we live under now !!!

Pretty Piss Poor first comment from you really !!

"Morning Shows The Day", no doubt !

temet nosce ...

[-] -3 points by fleaparty (-18) 2 years ago

Democracy isn't just one group of people voting to make the other guy pay for something.

[-] 3 points by shadz66 (17951) 2 years ago

WTF would you know about it anyway ?!!!

Go and click those links at the top of this thread, read, reflect and realise and then come back and speak about "Democracy" !!

nosce te ipsum !

[-] 3 points by gnomunny (5783) from St Louis, MO 2 years ago

Shadz, SHADZ, SHADZ! His username is 'fleaparty!'

You know better. ;-

[-] 2 points by shadz66 (17951) 2 years ago

I've 'scratched that itch' now thanx :-) pax et lux ...

[-] -3 points by fleaparty (-18) 2 years ago

You vote, someone else pays. Nice democracy. Citizenship comes with responsibility, not just the responsibility to vote that someone else gets the bill.

[-] 1 points by shadz66 (17951) 2 years ago

Here is your fat ass : (,,,x,,,) and here is your elbow ; |_ & perhaps you should consider stopping wearing the former as a hat !!!

gnothi seauton ...

[-] -3 points by fleaparty (-18) 2 years ago

Here is a pen, here is one of YOUR checks. Start paying for your government and join a real democracy, one of shared citizenship and responsibility.

[-] 1 points by shadz66 (17951) 2 years ago

"Mic-Check" : The word that you're looking for is 'Cheque' !!!

Futhermore, you ought not write any that you can't cash !!

verum ex absurdo !