AND THE POOR GET POORER

Some Filthy Facts About the Rich

By Paul Buchheit/ Nation of Change/ August 26, 2013

First of all, who are they? Mostly the 1%. But the top 2-5% have also done quite well, increasing their inflation-adjusted wealth by 75 percent from 1983 to 2009 while average wealth went down for 80 percent of American households. The rest of the top 20% have been prosperous, realizing a 32 percent gain in inflation-adjusted wealth since 1983. The facts to follow are primarily about the richest 1%, with occasional dips into the groups scrambling to make it to the top.

1. Accumulating almost all the wealth

As evidence of the extremes between the very rich and the rest of us, the average household net worth for the top 1% in 2009 was almost $14 million, while the average household net worth for the bottom 47% was almost ZERO. For nearly half of America, average debt is about the same as average asset ownership.

The extremes are just as filthy at the global level. The richest 300 persons on earth (about a third of them in the U.S.) have more money than the poorest 3 billion people. Out of all developed and undeveloped countries with at least a quarter-million adults, the U.S. has the 4th-highest degree of wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon.

2. Creating their own wealth

In another alarming testament to wealth at the top, the richest 10% own almost 90 percent of stocks excluding pensions. Consider what that means. The stock market has historically risen three times faster than the GDP itself. Since the recession, as the U.S. economy has “recovered,” 62 percent of the gain was due to growth in the stock market, which surged as much in four years as it did during the “greatest bull market in history” from 1996 to 2000.

Many stock owners see a couple thousand dollars added to their fortunes every time they go online.

But that’s not enough for the very rich. Thanks in good part to the derivatives market, the world’s wealth has doubled in ten years, from $113 trillion to $223 trillion, and is expected to reach $330 trillion by 2017. The financial industry has figured out how to double or triple its buying power while most of the world has proportionately less.

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3. Taking ALL the income gains

If the richest 1% had taken the same percentage of total U.S. income in 2006 as they did in 1980, they would have taken a trillion dollars less out of the economy. Instead they tripled their share of post-tax income. And then they captured ALL the income gains in the first two years of the post-recession recovery.

4. Donating a smaller share than the poorest Americans

Two dependable sources provide pretty much the same information. Barclays reported that those with earnings in the top 20% donated on average 1.3 percent of their income, whereas those in the bottom 20% donated 3.2 percent. And according to the New York Times, the nonprofit Independent Sector found that households earning less than $25,000 a year gave away an average of 4.2 percent of their incomes, while those with earnings of more than $75,000 gave away 2.7 percent.

5. Making enough to feed 800 million people

India just approved a program to spend $4 billion a year to feed 800 million people. Half of Indian children under 5 are malnourished.

In 2012, three members of the Walton family each made over $4 billion just from stocks and other investments. So did Charles Koch, and David Koch, and Bill Gates, and Warren Buffett, and Larry Ellison, and Michael Bloomberg, and Jeff Bezos.

It’s not the obligation of any one of these individuals to feed the world. The disgrace is in the fact that our unregulated capitalist system allows such outrageous extremes to exist.

Here’s more to provoke outrage. The 400 richest Americans made $200 billion in just one year. That’s equivalent to the combined total of the federal food stampeducation, and housing budgets.

6. Taking two-thirds of a trillion dollars in subsidies

Even all that is not enough for the very rich. About two-thirds of nearly $1 trillion in individual “tax expenditures” (tax subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes) goes to the top quintile of taxpayers. An astounding 75 percent of dividend and capital gain subsidies go to the richest 1%.

And that doesn’t include business subsidies, like the $16.8 billion per year in agricultural benefits paid out to big companies and to wealthy individuals who happen to have farms in their portfolios. The filthiest fact, in terms of detestable extremes, is that much of Congress wants to cut the $4.35 a day food benefit to hungry Americans, almost half of them children, so that money can keep flowing to the top.

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22 Responses to AND THE POOR GET POORER

  1. Jeffrey, your attitude toward drugs is very libertarian and another issue we agree on.

    • Arlen Grossman, many libertarian types say legalize all drugs. I do not condone drug use personally, however, if we legalized, taxed and regulated their sale, we could use the tax revenue for the truly important things. Money saved by reduced incarceration rates could go back into the pockets of the people.

      • Not surprisingly, you’ll get no argument from me.

        • Arlen Grossman, here is another added benefit: If money saved by reductions in incarceration rates goes back into the pockets of the people, more people could afford the payment of income taxes. Personally, if we have to have an income tax, a flat tax would be better, if we structured it in such a way that poor and most middle class families are free of the liability. Capital Gains would be taxed on a sliding scale, between 15%-25%, as I had suggested. Just so I have some clarification as to why you said you would tax short term capital gains at 25% and long term Capital Gains at 15%, why would you give a higher rate to short term Capital Gains and lower rate to long term Capital Gains? I am not trying to argue the point. Just seeking some clarification.

          • I wasn’t really distinguishing between long or short-term capital gains. I just think there should be a point at which obscene wealth should be taxed more. I just don’t see the point of having multi-billionaires, unless they give back enough to help all of society. For example, a 75% top marginal rate over $1 billion would help fund a lot of things society needs.

    • Arlen Grossman, the drugs that libertarians advocate legalization of would be those that I would never touch personally. Having said that, there is a glaring hypocrisy regarding politicians who openly admit to using these drugs and yet wanting to punish the rest of us for doing the same thing.

        • Arlen Grossman, I agree with the Libertarian Party on everything personally. Some people can argue correctly that our actions may have a ripple affect that will touch other people, which is true in some ways. Having said that, what goes on in the confines of a person’s home is nobody else’s business. There are some things that I object to personally, however, I just elect not to engage in the behavior or associate with people who engage in said behavior.

  2. From what I know, Jeffrey, Red Cross and the Salvation Army do good work.

    • Arlen Grossman, I agree with you. The problem is that many on the Left seem to view charity as something that should be forced. How can you force someone to be charitable?

      • Only by making them pay taxes.

        • Arlen Grossman, any person who preaches about fairness and yet encourages policies that promote unfairness is a hypocrite. Leftist political types are guilty of this hypocrisy.

          • I’m not sure what you mean, Jeffrey. You would have to give me examples of the policies you feel promote unfairness.

          • Arlen Grossman, as it exists presently, the policy toward illegal drug use is discriminatory. If you are poor, you get your ass thrown in jail. A person who is rich can get a get out of jail free card. Drug use is something I find distasteful personally, however, whatever drug someone uses within the confines of their own home is nobody’s business.

  3. The problem with the rich is that they keep getting rich while the rest of us don’t. The system is so rigged because they buy politicians who keep giving them subsidies and tax cuts.

  4. This post is inaccurate. In many cases, rich people may get rich on the backs of other people, which is wrong, however, being rich itself is not a bad thing if you earned your money honestly. Many people try to equate being rich with being immoral.

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