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.
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 stamp, education, 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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Arlen Grossman, do you think the savings&loan debacle is a contributing factor to why poverty is an issue?
Arlen Grossman, part of the problem with poverty is having a single-parent household. To be fair, some people in single-parent households, regardless of the parental gender, may live in communities where there are 2 parent households that have parents of both genders. Part of the problem is the welfare state and government programs. The welfare state may have been created with the best of intentions in mind, however, it also has been used by democrats to get votes.
Arlen Grossman, on August 5th of 2019, I said in one comment, “people may be getting paid inadequately while at their jobs, which is why there is a call for increasing the minimum wage. However, if you mandate 1 $15.00 an hour minimum wage, why should someone who works hard get paid $15.00 by lawful dictate and someone who does not work as hard get paid the same amount of money?” I meant to say mandate a $15.00 an hour minimum wage, however, I put the #1 in there. Can you correct that comment and put in my corrected edit and then delete this one? No response is required to this comment.
I started to make the changes you wanted, Ragnar. But it takes forever to go back in my files, so I had to give up. Especially for a minuscule correction from August of 2019. The truth is it is very unlikely anyone will read the comments or notice the typo but you. I suggest you not worry about these kind of minor typos. They are not worth the time or effort. Sorry.
Arlen Grossman, my apologies if I came across as wasting your time. I just wanted to clarify the error.
Arlen Grossman, people may be getting paid inadequately while at their jobs, which is why there is a call for increasing the minimum wage. However, if you mandate 1 $15.00 an hour minimum wage, why should someone who works hard get paid $15.00 by lawful dictate and someone who does not work as hard get paid the same amount of money?
Ragnar, workers get paid by the job they are in. If someone is a hard worker, they can get promoted. Those who are poor workers can lose their job. Seems simple to me.
Arlen Grossman, you make very valid points. I know that poor and low income people need more of their money than the rich do. The problem is that neither side seems to have a perfect solution. What would be an ideal solution that you think both sides could agree on?
My answer, Ragnar, would be a more progressive income tax without deductions that favor the rich. But your point is valid, both sides would have trouble agreeing with this, especially the wealthy side.
Arlen Grossman, I was actually speaking of both sides of the political aisle.
Arlen Grossman, even though it can be argued that poor people need every dollar they have in order to be able to survive, what is a big problem in my view is the lack of incentive to save money. There are various ways people can save money.
Arlen Grossman, one of the biggest problems is a lack of incentive to save money. Poor people may need to spend a lot of what they have on basic necessities. The troublesome part is that they are not encouraged to save money and build wealth.
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.
Agreed.
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.
I’m okay with libertarianism when it comes to foreign policy and social issues. Not on economic issues.
Arlen Grossman, the drug war does more harm to the poor than the rich. Think about it this way: A wealthy individual can afford the lawyers to help them weasel their way out of jail sentences for drug crimes. Poor people don’t have that ability. Money saved by reduction in incarceration rates would be able to go back into the pockets of the people.
You’re almost sounding like a liberal, Jeffrey (I don’t mean to insult you)
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Arlen Grossman, I would say that am open to all sides of an argument on any issue. Here is one issue as an example: The tax issue. I prefer to keep more money in the private sector and in the hands of the people. A lot of people say that taxes are too high, while other people say that they are too low. If there is to be any progressive component to the tax code, I say make the effective tax rate progressive. Keep the marginal rate low across the board. Yes, it can be argued that having the top marginal tax rate so high that people put money that they would have paid themselves back into their businesses and do other things that give tax write-offs it would allow that money to flow back into the economy. Don’t get me wrong. I believe that it is wrong for a big corporate CEO to get rich off of the back of his or her employees. However, this 91% top marginal tax rate idea is just as bad as a 0% tax. Even though you say that tax rates should be progressive, in what scenario would a flat tax be acceptable to you?
We’ve gone over all these things before, Jeffrey, but you have mentioned the idea of a 91% top marginal tax rate. I know we once had it, but I am not aware of anybody advocating it now. Somewhere in-between the current 37% and 91% would do a lot to help our country (if used wisely and not spent on the military).
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.
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.
Arlen Grossman, why do you envy successful people? What is it with Leftist political types who are envious of the successes of other people?
I’m fine with having successful people, but the wealth inequalities keep getting bigger and bigger and that is bad for society. For example: https://www.cnbc.com/2018/01/22/heres-how-much-ceo-pay-has-increased-compared-to-yours-over-the-years.html (not from a leftist publication, either) Wouldn’t you agree, Jeffrey, extreme wealth disparities are not a good thing, especially when so many people in this country are in poverty. Depending on the source, about one-quarter to one-third of children in the U.S. live in poverty.
Arlen Grossman, wealth disparity is a legitimate concern. This may or may not surprise you, however, I would support increasing the minimum wage if the end result was less spending on government programs.
There are good government programs and bad ones. I don’t want to throw the baby out with the bath water.
Arlen Grossman, even if they are not technically government programs, what are your thoughts about the Salvation Army and the Red Cross?
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.