Tax Cuts Have Been Bad For The Middle Class

Weekend Reading

U.S. Jobs Total Surpasses Pre-Recession Level
Walker Job Promises Appear Out Of Reach
WMC Head, UWM Professor Discuss Wisconsin Job Creation
Sheriff David Clarke: You Just Can't Take Him Seriously
Chief Judge Tells Sheriff Clarke Probation Must Be Considered In Nearly All Sentencings
DA John Chisholm Fires Back At Sheriff David Clarke
Privatisation And Government Debt
American Fared Better After Great Depression Than Today

Income Inequality: 1 Inch to 5 Miles

Income Inequality: 1 Inch to 5 Miles

In 2011 entry into the top 10 percent, where all the gains took place, required an adjusted gross income of at least $110,651. The top 1 percent started at $366,623.

The top 1 percent enjoyed 81 percent of all the increased income since 2009. Just over half of the gains went to the top one-tenth of 1 percent, and 39 percent of the gains went to the top 1 percent of the top 1 percent.

Ponder that last fact for a moment -- the top 1 percent of the top 1 percent, those making at least $7.97 million in 2011, enjoyed 39 percent of all the income gains in America. In a nation of 158.4 million households, just 15,837 of them received 39 cents out of every dollar of increased income.

That disparity in income growth rates comes as the total federal tax burdens on those at the top have been slashed, compared with 1966, especially for the long-term capital gains that account for about a third of total income at the very top.

In 2011 the average income of the bottom 90 percent was just $59 more than in 1966 in real terms.

Back in 1966, the top 1 percent of the top 1 percent reported 1.3 percent of all pretax income. In 2011 that tiny number of American households saw their slice of pie more than triple, to 4.5 percent.

Between 1980 and 2005, more than 80 percent of the total increase in income went to the top 1 percent of American households.

Those at the top are pulling away from everyone else not because of hard work, but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.

American Inequality

"The richest 400 Americans have more wealth than the bottom 150 million of us put together."

The Myth Of Living Beyond Our Means
The Middle Class In America Is Being Wiped Out

The Fortunate 400

Social Security Is Fine

Social Security Is Not Going Broke

Playing Inflation Games With Grandma

We Have A REVENUE Problem

David Cay Johnston's latest completely discredits the Republican echo-chamber's mantra, "We have a spending problem."

• Total individual income tax receipts fell 30 percent in real terms.
• Individual income taxes came to just $2,900 per capita in 2010, down 36 percent from more than $4,500 in 2000. Total income taxes and income taxes per capita declined even though the economy grew 16 percent overall and 6 percent per capita from 2000 through 2010.
• Corporate income tax receipts fell 27 percent and declined 34 percent per capita, even though profits boomed, rising 60 percent.
• As a share of GDP, income tax revenues are at their lowest level since 1951.
• The two-year growth rate [2010-2011] is almost one-third below the 3.6 percent average annual real growth rate for the half-century from 1950 to 2000, but it is better than the measly 1.6 percent growth rate from 2001 to 2009.

Deferred Wages

Paul Krugman highlights a portion of an excellent article by David Cay Johnston:

"Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers. How can that be? Because the “contributions” consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.

Thus, state workers are not being asked to simply “contribute more” to Wisconsin’ s retirement system (or as the argument goes, “pay their fair share” of retirement costs as do employees in Wisconsin’ s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.

The labor agreements show that the pension plan money is part of the total negotiated compensation. The key phrase, in those agreements I read (emphasis added), is: “The Employer shall contribute on behalf of the employee.” This shows that this is just divvying up the total compensation package, so much for cash wages, so much for paid vacations, so much for retirement, etc."

Kick 'Em While They're Down

From the indispensable David Cay Johnston, "In 2009 almost 62 million workers, 41 percent of everyone who had a job that year, made less than $20,000. And 100.6 million workers, exactly two out of three people with jobs, made less than $40,000, the Medicare tax database shows. The Obama-GOP tax increase applied to everyone with a job that paid under $20,000 ($40,000 for married heterosexual couples). So while at least 90 percent of Americans are uninformed about this tax increase, you can now contribute to the factual basis of our national tax debate by pointing out to others that Obama and the GOP, along with a lot of congressional Democrats, enacted a bipartisan tax increase on the working poor in violation of their campaign pledges."

Tax Injustice

David Cay Johnston wonders, Is Our Tax System Helping Us Create Wealth? [hat tip Economist's View]