A few days ago while out walking I saw this headline in a local newspaper “Income Disparity Gap Revealed”.
I was quite surprised that such studies are still being commissioned and published. I wondered how many more reports will have to be written before we know for sure that the United States has the greatest income disparity between the rich and the poor since 1928. A Google search for “income disparity gap” turned up 5,950,000 articles in .08 seconds. After reading every one of them (LOL!) I can tell you they say the same thing: we have an income disparity gap in the United States, the largest ever in the history of our nation. In 1928, the wealthiest .001% of the U.S. population owned 892 times more than 90% of the nation’s citizens. Today, the top .001% of the U.S. population owns 976 times more than the entire bottom 90%. In fact, income inequality is so extreme here that the U.S. now ranks 93rd in the world in “income equality” China’s ahead of us. So is India. So is Iran. This is according to the CIA (Central Intelligence Agency) Factbook, 2010. And the top .001 percent here does much better than the top .001 percent in other first world countries.
Later in the day, I heard Mitt Romney say he made a “very small amount” of his 2010 income from speaker’s fees, in the form of wages, taxed as ordinary income. As it turns out, that “very small amount” of ordinary income is almost $375,000, representing more than seven times the average annual income of most middle class workers. He also mentioned he only pays about a 15 percent income tax rate, thanks to legislation allowing tax dodging and favorable tax laws for earned income to be treated like dividends.
Ah, the Reality Distortion Field called into play once again. Nation Magazine says we’ve gone from “robber barons to the awesomely affluent”.
The Reality Distortion Field tells us we are a democracy while operating as a Plu·toc·ra·cy: 1. the rule or power of wealth or of the wealthy. 2. A government or state in which the wealthy class rules. 3. A class or group ruling, or exercising power or influence, by virtue of its wealth.
We know the greater the disparity in wealth between the very rich and everyone else, the more unstable an economy becomes. “It’s the Inequality, Stupid”: says Peter Smirniotopouls, a National expert in urban redevelopment, housing policy, and project and public finance:
” A much larger concentration of both income and wealth increasingly benefits a smaller and smaller group of uber-wealthy taxpayers. At the same time, the number of households living in or near poverty is almost 50%. U.S.-based corporations have become increasingly more profitable, allowing already outrageous executive compensation to soar further out of sight, while the average American is working harder each year for wages that are shrinking when adjusted for inflation.”
Reading the tax plans of the Republican candidates running for President clearly demonstrates who they are promising to work for if elected. I have news for you – it ain’t us. Every candidate promises with sincere zeal to cut taxes, for the plutocracy, i.e. the wealthy and very wealthy, and corporations:
- Mitt Romney: would lower individual income tax rates in the future, but has not announced specific figures. Would permanently extend the 2001-3 tax cuts scheduled to expire in 2013 and repeal certain tax provisions in the 2010 health reform law. Would eliminate taxes on long-term capital gains, dividends and interest income for married couples filing jointly with income under $200,000. Corporate taxes would be reduced to 25 percent.
Result: Not analyzed yet by the think tanks
- New Gingrich: Would extend the 2001-10 tax cuts for individual income taxes or allow taxpayers to pay a single 15 percent tax rate and be exempted from taxes on capital gains and dividends. Corporate Taxes would be reduced to 12.5 percent.
Result: Loss of $1.28 Trillion in 2015 Federal Tax Revenues
- Ron Paul: Would extend the 2001-10 tax cuts, but eventually replace the individual income tax with a fair tax or flat tax after repealing the 16th Amendment. Would exempt capital gains. Corporate Taxes would be reduced to 15 percent.
- Rick Santorum: Would cut the number of individual tax rates to just two: 10 percent and 28 percent, reduce the rate for capital gains and dividends to 12 percent from 15 percent and extend the 2001-10 tax cuts. Corporate Taxes would be reduced to 17.5 percent. No tax on manufacturers.
Result: Loss of $1.3 Trillion in 2015 Federal Tax Revenues
It’s very important to pay attention to the proposed tax plans. This is a major distortion in the Reality Field. The Bush Tax cuts created this huge re-distribution of wealth, especially when capital gains taxes were reduced to 15 percent. As I wrote in my post on November 24th, 2011,”The growth of wealth for the one percent is not the result of hard work nor an accident. The wealth has been made off the backs of the working classes, because they have been able to buy lobbyists and congress officials to write laws that benefit them”. A 15 percent rate on capital gains is the key ingredient of income disparity in theU.S. — and the force behind the winner takes all in our economic system. If we want to even out earning power in the U.S, we have to raise the 15 percent capital gains tax, not lower it. We are going to end up like Greece if we don’t. As Warren Buffet has said several times, he pays less in taxes than his secretary.
And Corporate Taxes? Another Reality Distortion Field. A study conducted by Citizens for Tax Justice and the Institute on Taxation & Economic Policy published in November, 2011, examined the tax payments of 280 companies from the Fortune 500 – those that recorded profits in 2008, 2009 and 2010. (Companies that registered a loss for at least one year were not included in the study.) These companies reported total pre-tax U.S. profits of $1.4 trillion, and many of the companies examined did pay close to the official corporate tax rate of 35 percent. CBS was one of the many news organizations to run this story: “Corporate Taxpayers & Corporate Tax Dodgers 2008-10”
In the aggregate, the 280 companies studied actually paid about half the official corporate tax rate – 18.5 percent over the 2008-10 period, and slightly less (17.3 percent) over the last two years. With tax breaks and loopholes, many paid little or nothing at all.
“Two-thirds of the corporations studied which earned significant foreign AND U.S. profits over the same three-year period paid higher tax rates to foreign governments on their foreign profits than they paid to the U.S. government on their domestic profits.” How can corporations and our elected officials say the United States has the highest corporate tax rates???
These tax breaks cost the United States more than $200 billion in revenue over three years.
The following 30 profitable corporations paid no U.S. income tax from 2008-2010:
Company / 2008-10 Profits ($ millions) / 2008-10 Taxes ($ millions) / Effective 2008-10 Rate
Pepco Holdings $ 882 / $ -508 / -57.6%
General Electric 10,460 / -4,737 / -45.3%
Paccar 365 / -112 / -30.5%
PG&E Corp. 4,855 / -1,027 / -21.2%
Computer Sciences 1,666 / -305 / -18.3%
NiSource 1,385 / -227 / -16.4%
CenterPoint Energy 1,931 / -284 / -14.7%
Tenet Healthcare 415 / -48 / -11.6%
Atmos Energy 897 / -104 / -11.6%
Integrys Energy Group 818 / -92 / -11.3%
American Electric Power 5,899 / -545 / -9.2%
Con-way 286 / -26 / -9.1%
Ryder System 627 / -46 / -7.3%
Baxter International 926 / -66 / -7.1%
Wisconsin Energy 1,725 / -85 / -4.9%
Duke Energy 5,475 / -216 / -3.9%
DuPont 2,124 / -72 / -3.4%
Consolidated Edison 4,263 / -127 / -3.0%
Verizon Communications 32,518 / -951 / -2.9%
Interpublic Group 571 / -15 / -2.6%
CMS Energy 1,292 / -29 / -2.2%
NextEra Energy 6,403 / -139 / -2.2%
Navistar International 896 / -18 / -2.0%
Boeing 9,735 / -178 / -1.8%
Wells Fargo 49,370 / -681 / -1.4%
El Paso 4,105 / -41 / -1.0%
Mattel 1,020 / -9 / -0.9%
Honeywell International 4,903 / -34 / -0.7%
DTE Energy 2,551 / -17 / -0.7%
Corning 1,977 / -4 / -0.2%
TOTAL: On $160.341 billion in profits, they paid $ -10.742 billion in taxes, for an average effective tax rate of -6.7%.
From Business Insider “Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief happy period in 2007 (just before the crash), profits are higher than they’ve been since the 1950s. And they are VASTLY higher than they’ve been for most of the intervening half-century”.
I have included all this information because it’s important to be informed on these issues. Our government cannot cut revenues and keep spending. We all know the definition of insanity: doing the same thing over and over again and expecting different results.( Albert Einstein) The tax rate cuts for corporations and the wealthiest as proposed by the presidential candidates is just that – insane.
Maplight illuminates money’s influence on Congress. It’s worth taking a look at. Their studies show the return on investment (ROI) of lobbying dollars is 1,000 to 1. Where do you get a return like that on your investment? Since we don’t have that kind of help, we are going to have to get active or be content with the government we have. We need to get the money out of politics. We need to educate people on the importance of voting, to vote on the facts, not the emotions. Otherwise, whatever money the 99 percent still has will be taken away, legally by the lack of regulation, the lack of integrity in our political system, and the Addiction to Greed, the current Higher power of those whom we have elected to represent we, the people.