Tuesday, March 31, 2009

Wealth and Taxes

Lately, Limbaugh and others are concerned that their, not your, taxes are going to go up and you, not them, may benefit from this. They call this wealth distribution. The fact is, wealth distribution has been alive and well in this country every since the Reagan era but in reality, what wealth the poor and middle class had has been distributed to rich people and some of that has been made possible through the taxes. Clearly free trade, deregulation of financial markets and plain old fashioned greed are also culprits.

Here are some facts about wealth and taxes:

Currently, the top earners in the US earn 440 x the amount of the bottom 50%, a number which has doubled since 1980. Or you could say a CEO earns 440x the amount as their employees. So much for trickle down economics; gush up is more like it. In 1982 the top 15 wealthiest people owned $92 Billion and by 2000 their wealth increase to $1.2 trillion so the Clinton tax rates, which Obama wants to return to, weren't hurting them at all.

During WW 2 and the Korean wars the top tax rate was 90% and the economy was booming.

Over the last 50 years the top tax rate has continued to decrease from 90% to 35%. In 1980 the top rate was 70% which declined all the way down to 28%. We call those the deficit years. Through most of the Clinton years, the ones with a balanced budget, the top rate was 39.6%.

Obama proposes to restore the 39.6% tax rate on the top 1% and a 36% (1% increase) on the top 2% and lower taxes on everyone else in 2011. Capital Gains will be 1/3 the rate it was under Reagan yet the right still spins this as a tax increase.

80% of American families own less that $250,000 of wealth, the bottom 20% have nearly 0 wealth.

The richest 10% of families own 85% of all outstanding stock and 90% of all business assets. These are the guys conspiracy theorists talks about.

Eight of the top fifteen richest people in America inherited their wealth and never worked a day for it. The Estate Tax only affects 2% of the population, which accounts for over 45% of all wealth, and never exceeds 50%.

The top 10 best paid CEOs in the US made more than a half billion dollars in 2007 while the profits for their companies shrank dramatically.

In 2007 Rick Wagoner, CEO of GM, announced the closing of 4 plants producing SUVs and trucks, posted a 39 billion dollar loss and increased his pay by 64% to 15.7 million.

The CEO of KB homes earned $24.4 million in 2007 while his company lost $930 million and 60% of its stock value.

So, who are the rich? Who will be affected when Bush's tax cuts expire?

The income bracket for the top 1% income earners based on 2005 numbers is $364,657 per year all the way up to 100 million per year and beyond.

The top 1% receive 21.8 % of all income and own about 39% of all wealth in the U.S and pay 39% of all taxes.

The top 5% make about $145,283 per year, pay about 59% of all taxes and own about 59% of all wealth.

The top 10% receive 48.5 % of all reported income ('05), own 71 % of all wealth and pay 70% of all taxes.

The top 0.1 % receives an average salary of 5.8 million per year and up.

In 2005 incomes (reported incomes) rose 9% but the bottom 90% of income earners saw a .6% decrease while the top 1% saw a 14% increase and this is the new trend.

The top 300,000 income earners in America received more income than the bottom 150,000,000 Americans.

According to the US Census Bureau, people in the United States living at 50% or less than the poverty line (the extremely poor) went from 3.3% in 1976 (7 million), to 5.2% in 2007 (15.5 million)

35% of the poor in the US are children under the age of 18. And no, they aren't poor because they are lazy and unwilling to work.

In 2007, 46.8% of the people living in poverty worked, 10.9% worked full time, year around, probably a lot harder than you or Rush Limbaugh works. In 1978 the percent of full time workers in poverty was at 7.7%.

58% of Americans between 25 and 75 will spend at least one year below the poverty line.

The US has the highest rate of relative poverty in the industrialized world.

Only 21.5% of the people over the age of 16 living in poverty didn't work at all

Under the Clinton tax rates poverty hit a 26 year low in 2000 and has risen since then.

The poverty level for a family of 3 is $17,600.

So what exactly are rich people worried about?

Lesson: Trickle down economics is a myth. By giving rich people more money and lowering their taxes, they only got greedier and outsourced American jobs to the Chinese. Upon doing that, they have just transferred the wealth of the middle class to themselves, the rich. Oh ya, and when you loose your job and can no longer pay your mortgage, the same rich guy will come and repossess your house thus transferring even more wealth to the rich.


Anonymous said...

curious what are your sources?

Toad734 said...

US Census Bureau, Forbes, etc. You won't find anything that can dispute these facts.

Kelly said...

The difference between rich people and poor people is,Poor people spend their money rich people use their money to make more money.Thats why if you took all the money and distributed it equally in 10 years the rich would own it all again.

Toad734 said...

With what you are saying, technically no one would end up with more or less money because if everyone were given an equal amount, the poor people would no longer be poor and the rich people would no longer be rich and therefore neither would fall into the stereotype of spending vs. investing.

I am not saying that many poor people don't have good money management skills I am just saying that a lot of rich people don't either.

I think what you meant to say is that people who have money were born with it and pass that on to subsequent generations and people who were descendents of slaves for instance, remain poor as do their offspring. The majority of the people who are rich today came from something and the majority of the poor came from nothing. How many people who were born rich now live in the projects?? Someone born rich is more likely to be educated in good schools and has more connections and are far less likely to become poor...and it isn't because of their superior money management skills. Do you really think Paris Hilton is some sort of financial genius? No, of course not, she is an idiot; she will never be poor not because she worked for it or she is a savvy investor but because she is a rich white kid who had rich grandparents, great grandparents, etc.