Dr. Richard Wolffhttp://www.truth-out.org/how-rich-soaked-rest-us68155
All,
This article very succinctly and ominously explains precisely how the wealthiest class of Americans are systematically exploiting and engaging in massive "legalized" THEFT from the rest of us with the direct and indirect, implicit and complicit, covert AND overt support of the federal government, various state governments, banks, corporations, Wall Street, the tax system, and the Federal Reserve. The result has been the largest and most sustained redistribution of wealth and income over the past 30 years FROM THE POOR, WORKING, AND MIDDLE CLASS TO THE RICH in the history of the United States. In other words the wealthiest 1% of the population not so ironically has socialist-like protections/safeguards and massive public welfare (dishonestly called "subsidies") while the rest of us have virtually NOTHING in the way of actual wealth while our incomes keep falling and jobs keep disappearing in the millions per year as the multinational American based corporations keep shipping those jobs overseas for far cheaper and even more exploited labor which of course are completely absent of unions or any other economic protections and safeguards whatsoever.
The only great mystery in all of this is why the masses of American people are not yet openly calling for social revolution in this country--for real. In any other self respecting Third World nation (which the rest of us are fast turning into thanks to and aside from the coercive and consensual rule of the wealthy!) the people would have the common sense to at least call for massive, organized rebellion in the streets and sytematically call out and denounce the corporate and political class of criminals who are totally responsible for this debacle. One thing is absolutely certain over the next decade however: There will have to be something akin to radical leftist activity on the part of millions of American citizens or we will be thorouhly crushed by the ruling class and their wimpering political servants in the Republican, Tea, and Democratic parties. The final wakeup call is coming--and soon, and we won't be able to escape or sidestep the very dire consequences. In that case we will either fight back and demand fundamental changes in our political and economic system in a serious organized fashion on a national scale or we and future generations will be economically and politically destroyed and turned into mere impoverished wards of the State...Stay tuned...
Kofi
How the Rich Soaked the Rest of Us
by Richard D. Wolff
Wednesday 02 March 2011
Truthout
This article was also published in The Guardian (UK)
How the rich soaked the rest of us: The astonishing story of the last few decades is a massive redistribution of wealth, as the rich have shifted the tax burden.
Over the last half-century, the richest Americans have shifted the burden of the federal individual income tax off themselves and onto everybody else. The three convenient and accurate Wikipedia graphs below show the details. The first graph compares the official tax rates paid by the top and bottom income earners. Note especially that from the end of the Second World War into the early 1960s, the highest income earners paid a tax rate over 90 percent for many years. Today, the top earners pay a rate of only 35 percent. Note, also, how the gap between the rates paid by the richest and the poorest has narrowed. If we take into account the many loopholes the rich can and do use far more than the poor, the gap narrows even more. One conclusion is clear and obvious: the richest Americans have dramatically lowered their income tax burden since 1945, both absolutely and relative to the tax burdens of the middle income groups and the poor.
Historical tax rates for the highest and lowest income earners.
Consider two further points based on this graph: first, if the highest income earners today were required to pay the same rate that they paid for many years after 1945, the federal government would need far lower deficits to support the private economy through its current crisis; and second, those tax-the-rich years after 1945 experienced far lower unemployment and far faster economic growth than we have had for years.
The lower taxes the rich got for themselves are one reason why they have become so much richer over the last half-century. Just as their tax rates started to come down from their 1960s heights, so their shares of the total national income began their rise. As the two other Wikipedia graphs below show, we have now returned to the extreme inequality of income that characterized the US a century ago.
Share of national income taken by top tranches of earners.
The graph above shows the portion/percentage of total national income taken by the top 1 percent, the top tenth of a percent, and the top 100th of a percent of individuals and families: the richest of the rich. The third graph compares what happened to the after-tax household incomes of Americans from 1979 to 2005 (adjusted for inflation). The bottom fifth of poorest citizens saw their income barely rise at all. The middle fifth of income earners saw their after-tax household income rise by less than 25 percent. Meanwhile, the top 1 percent of households saw their after-tax household incomes rise by 175 percent.
Relative increases in net household incomes of Americans from 1979 to 2005.
In simplest terms, the richest Americans have done by far the best over the last 30 years; they are more able to pay taxes today than they have been in many decades, and they are more able to pay than other Americans by a far wider margin. At a time of national economic crisis, especially, they can and should contribute far more in taxes. Instead, a rather vicious cycle has been at work for years. Reduced taxes on the rich leave them with more money to influence politicians and politics. Their influence wins them further tax reductions, which gives them still more money to put to political use. When the loss of tax revenue from the rich worsens already strained government budgets, the rich press politicians to cut public services and government jobs and not even debate a return to the higher taxes the rich used to pay. So it goes - from Washington, to Wisconsin to New York City. How do the rich justify and excuse this record? They claim that they can invest the money they save from taxes and thereby create jobs etc. But do they? In fact, cutting rich people's taxes is often very bad for the rest of us (beyond the worsening inequality and hobbled government it produces). Several examples show this. First, a good part of the money the rich save from taxes is then lent by them to the government (in the form of buying US Treasury securities for their personal investment portfolios). It would obviously be better for the government to tax the rich to maintain its expenditures, and thereby avoid deficits and debts. Then, the government would not need to tax the rest of us to pay interest on those debts to the rich. Second, the richest Americans take the money they save from taxes and invest big parts of it in China, India, and elsewhere. That often produces more jobs over there, fewer jobs here, and more imports of goods produced abroad. US dollars flow out to pay for those imports and so accumulate in the hands of foreign banks and foreign governments. They, in turn, lend from that wealth to the US government because it does not tax our rich, and so we get taxed to pay for the interest Washington has to give those foreign banks and governments. The largest single recipient of such interest payments today is the People's Republic of China. Third, the richest Americans take the money they don't pay in taxes and invest it in hedge funds and with stockbrokers to make profitable investments. These days, that often means speculating in oil and food, which drives up their prices, undermines economic recovery for the mass of Americans and produces acute suffering around the globe. Those hedge funds and brokers likewise use part of the money rich people save from taxes to speculate in the US stock markets. That has recently driven stock prices higher: hence, the stock market recovery. And that mostly helps - you guessed it - the richest Americans who own most of the stocks. The one kind of significant wealth average Americans own, if they own any, is their individual home. And home values remain deeply depressed: no recovery there. Cutting the taxes on the rich in no way guarantees social benefits from what they may choose to do with their money. Indeed, their choices can worsen economic conditions for the mass of people. These days, that is exactly what they are doing.
Richard D Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, where he taught economics from 1973 to 2008. He is currently a visiting professor in the graduate programme in international affairs of the New School University, New York City. Richard also teaches classes regularly at the Brecht Forum in Manhattan. His most recent book is Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It (2009). A full archive of Richard's work, including videos and podcasts, can be found on his site: http://www.rdwolff.com/
All,
This article very succinctly and ominously explains precisely how the wealthiest class of Americans are systematically exploiting and engaging in massive "legalized" THEFT from the rest of us with the direct and indirect, implicit and complicit, covert AND overt support of the federal government, various state governments, banks, corporations, Wall Street, the tax system, and the Federal Reserve. The result has been the largest and most sustained redistribution of wealth and income over the past 30 years FROM THE POOR, WORKING, AND MIDDLE CLASS TO THE RICH in the history of the United States. In other words the wealthiest 1% of the population not so ironically has socialist-like protections/safeguards and massive public welfare (dishonestly called "subsidies") while the rest of us have virtually NOTHING in the way of actual wealth while our incomes keep falling and jobs keep disappearing in the millions per year as the multinational American based corporations keep shipping those jobs overseas for far cheaper and even more exploited labor which of course are completely absent of unions or any other economic protections and safeguards whatsoever.
The only great mystery in all of this is why the masses of American people are not yet openly calling for social revolution in this country--for real. In any other self respecting Third World nation (which the rest of us are fast turning into thanks to and aside from the coercive and consensual rule of the wealthy!) the people would have the common sense to at least call for massive, organized rebellion in the streets and sytematically call out and denounce the corporate and political class of criminals who are totally responsible for this debacle. One thing is absolutely certain over the next decade however: There will have to be something akin to radical leftist activity on the part of millions of American citizens or we will be thorouhly crushed by the ruling class and their wimpering political servants in the Republican, Tea, and Democratic parties. The final wakeup call is coming--and soon, and we won't be able to escape or sidestep the very dire consequences. In that case we will either fight back and demand fundamental changes in our political and economic system in a serious organized fashion on a national scale or we and future generations will be economically and politically destroyed and turned into mere impoverished wards of the State...Stay tuned...
Kofi
How the Rich Soaked the Rest of Us
by Richard D. Wolff
Wednesday 02 March 2011
Truthout
This article was also published in The Guardian (UK)
How the rich soaked the rest of us: The astonishing story of the last few decades is a massive redistribution of wealth, as the rich have shifted the tax burden.
Over the last half-century, the richest Americans have shifted the burden of the federal individual income tax off themselves and onto everybody else. The three convenient and accurate Wikipedia graphs below show the details. The first graph compares the official tax rates paid by the top and bottom income earners. Note especially that from the end of the Second World War into the early 1960s, the highest income earners paid a tax rate over 90 percent for many years. Today, the top earners pay a rate of only 35 percent. Note, also, how the gap between the rates paid by the richest and the poorest has narrowed. If we take into account the many loopholes the rich can and do use far more than the poor, the gap narrows even more. One conclusion is clear and obvious: the richest Americans have dramatically lowered their income tax burden since 1945, both absolutely and relative to the tax burdens of the middle income groups and the poor.
Historical tax rates for the highest and lowest income earners.
Consider two further points based on this graph: first, if the highest income earners today were required to pay the same rate that they paid for many years after 1945, the federal government would need far lower deficits to support the private economy through its current crisis; and second, those tax-the-rich years after 1945 experienced far lower unemployment and far faster economic growth than we have had for years.
The lower taxes the rich got for themselves are one reason why they have become so much richer over the last half-century. Just as their tax rates started to come down from their 1960s heights, so their shares of the total national income began their rise. As the two other Wikipedia graphs below show, we have now returned to the extreme inequality of income that characterized the US a century ago.
Share of national income taken by top tranches of earners.
The graph above shows the portion/percentage of total national income taken by the top 1 percent, the top tenth of a percent, and the top 100th of a percent of individuals and families: the richest of the rich. The third graph compares what happened to the after-tax household incomes of Americans from 1979 to 2005 (adjusted for inflation). The bottom fifth of poorest citizens saw their income barely rise at all. The middle fifth of income earners saw their after-tax household income rise by less than 25 percent. Meanwhile, the top 1 percent of households saw their after-tax household incomes rise by 175 percent.
Relative increases in net household incomes of Americans from 1979 to 2005.
In simplest terms, the richest Americans have done by far the best over the last 30 years; they are more able to pay taxes today than they have been in many decades, and they are more able to pay than other Americans by a far wider margin. At a time of national economic crisis, especially, they can and should contribute far more in taxes. Instead, a rather vicious cycle has been at work for years. Reduced taxes on the rich leave them with more money to influence politicians and politics. Their influence wins them further tax reductions, which gives them still more money to put to political use. When the loss of tax revenue from the rich worsens already strained government budgets, the rich press politicians to cut public services and government jobs and not even debate a return to the higher taxes the rich used to pay. So it goes - from Washington, to Wisconsin to New York City. How do the rich justify and excuse this record? They claim that they can invest the money they save from taxes and thereby create jobs etc. But do they? In fact, cutting rich people's taxes is often very bad for the rest of us (beyond the worsening inequality and hobbled government it produces). Several examples show this. First, a good part of the money the rich save from taxes is then lent by them to the government (in the form of buying US Treasury securities for their personal investment portfolios). It would obviously be better for the government to tax the rich to maintain its expenditures, and thereby avoid deficits and debts. Then, the government would not need to tax the rest of us to pay interest on those debts to the rich. Second, the richest Americans take the money they save from taxes and invest big parts of it in China, India, and elsewhere. That often produces more jobs over there, fewer jobs here, and more imports of goods produced abroad. US dollars flow out to pay for those imports and so accumulate in the hands of foreign banks and foreign governments. They, in turn, lend from that wealth to the US government because it does not tax our rich, and so we get taxed to pay for the interest Washington has to give those foreign banks and governments. The largest single recipient of such interest payments today is the People's Republic of China. Third, the richest Americans take the money they don't pay in taxes and invest it in hedge funds and with stockbrokers to make profitable investments. These days, that often means speculating in oil and food, which drives up their prices, undermines economic recovery for the mass of Americans and produces acute suffering around the globe. Those hedge funds and brokers likewise use part of the money rich people save from taxes to speculate in the US stock markets. That has recently driven stock prices higher: hence, the stock market recovery. And that mostly helps - you guessed it - the richest Americans who own most of the stocks. The one kind of significant wealth average Americans own, if they own any, is their individual home. And home values remain deeply depressed: no recovery there. Cutting the taxes on the rich in no way guarantees social benefits from what they may choose to do with their money. Indeed, their choices can worsen economic conditions for the mass of people. These days, that is exactly what they are doing.
Richard D Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, where he taught economics from 1973 to 2008. He is currently a visiting professor in the graduate programme in international affairs of the New School University, New York City. Richard also teaches classes regularly at the Brecht Forum in Manhattan. His most recent book is Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It (2009). A full archive of Richard's work, including videos and podcasts, can be found on his site: http://www.rdwolff.com/
