[Peace-discuss] Fw: [CentralILJwJ] 1% get 93%of gains

[David Green]

This article has a correct thesis, but it also over-estimates the role of taxation. It's important to understand the underlying long-term trends in inequality apart from tax policy: http://www.cepr.net/index.php/blogs/beat-the-press/steve-rattner-misleads-on-inequality-in-the-nyt



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> From: David Johnson <dlj725 at hughes.net>
>To: Undisclosed-Recipient:;@mail0.frost.chambana.net 
>Sent: Monday, March 26, 2012 9:23 PM
>Subject: [Peace-discuss] Fw: [CentralILJwJ] 1% get 93%of gains
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>----- Original Message ----- 
>From: Astrid Berkson  
>To: lp53forum at lpths.org ; lp53forum at lpths.org  
>Sent: Monday, March 26, 2012 7:28 AM 
>Subject: [CentralILJwJ] 1% get 93%of gains 
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>March 25, 2012 
>The Rich Get Even 
RicherBy STEVEN 
RATTNER 
>NEW statistics show an ever-more-startling divergence 
between the fortunes of the wealthy and everybody else — and the desperate need 
to address this wrenching problem. Even in a country that sometimes seems inured 
to income 
inequality, these takeaways are truly stunning.  
>In 2010, as the nation continued to recover from the recession, 
a dizzying 93 percent of the additional income created in the country that year, 
compared to 2009 — $288 billion — went to the top 1 percent of taxpayers, those 
with at least $352,000 in income. That delivered an average single-year pay 
increase of 11.6 percent to each of these households.  
>Still more astonishing was the extent to which the 
super rich got rich faster than the merely rich. In 2010, 37 percent of 
these additional earnings went to just the top 0.01 percent, a teaspoon-size 
collection of about 15,000 households with average incomes of $23.8 million. 
These fortunate few saw their incomes rise by 21.5 percent.  
>The bottom 99 percent received a microscopic $80 
increase in pay per person in 2010, after adjusting for inflation. The top 1 
percent, whose average income is $1,019,089, had an 11.6 percent increase in 
income.  
>This new data, derived by the French economists Thomas 
Piketty and Emmanuel Saez from American tax returns, also suggests that those at 
the top were more likely to earn than inherit their riches. That’s not 
completely surprising: the rapid growth of new American industries — from 
technology to financial services — has increased the need for highly educated 
and skilled workers. At the same time, old industries like manufacturing are 
employing fewer blue-collar workers.  
>The result? Pay for college graduates has risen by 
15.7 percent over the past 32 years (after adjustment for inflation) while the 
income of a worker without a high school diploma has plummeted by 25.7 percent 
over the same period.  
>Government has also played a role, particularly the 
George W. Bush tax cuts, which, among other things, gave the wealthy a 15 
percent tax on capital gains and dividends. That’s the provision that caused 
Warren E. Buffett’s secretary to have a higher tax rate than he does.  
>As a result, the top 1 percent has done progressively 
better in each economic recovery of the past two decades. In the Clinton era 
expansion, 45 percent of the total income gains went to the top 1 percent; in 
the Bush recovery, the figure was 65 percent; now it is 93 percent.  
>Just as the causes of the growing inequality are 
becoming better known, so have the contours of solving the problem: better 
education and training, a fairer tax system, more aid programs for the 
disadvantaged to encourage the social mobility needed for them escape the bottom 
rung, and so on.  
>Government, of course, can’t fully address some of the 
challenges, like globalization, but it can help.  
>By the end of the year, deadlines built into several 
pieces of complex legislation will force a gridlocked Congress’s hand. Most 
significantly, all of the Bush 
tax cuts will expire. If Congress does not act, tax rates will return to the 
higher, pre-2000, Clinton-era levels. In addition, $1.2 trillion of automatic 
spending cuts that were set in motion by the failure of the last attempt at a 
deficit reduction deal will take effect.  
>So far, the prospects for progress are at best 
worrisome, at worst terrifying. Earlier this week, House Republicans unveiled an 
unsavory stew of highly regressive tax cuts, large but unspecified reductions in 
discretionary spending (a category that importantly includes education, 
infrastructure and research and development), and an evisceration of programs 
devoted to lifting those at the bottom, including unemployment insurance, food 
stamps, earned income tax credits and many more.  
>Policies of this sort would exacerbate the very 
problem of income inequality that most needs fixing. Next week’s package from 
House Democrats will almost certainly be more appealing. And to his credit, 
President Obama has spoken eloquently about the need to address this problem. 
But with Democrats in the minority in the House and an election looming, passage 
is unlikely.  
>The only way to redress the income imbalance is by 
implementing policies that are oriented toward reversing the forces that caused 
it. That means letting the Bush tax cuts expire for the wealthy and adding money 
to some of the programs that House Republicans seek to cut. Allowing this 
disparity to continue is both bad economic policy and bad social policy. We owe 
those at the bottom a fairer shot at moving up.  
>Steven Rattner is a contributing 
writer for Op-Ed and a longtime Wall Street executive.  
>
>-- 
Life is like a roll of toilet paper.
The closer it gets to the end, the faster it goes.  
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