Tag Archives: tax laws

Average income increase for 90% of us over the past 40 years: a whopping $59.00

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Average income rose just $59 from 1966 to 2011 for the bottom 90 percent once those incomes were adjusted for inflation… the top 10 percent fared much better, according to a new study of tax data from David Cay Johnston, Pulitzer Prize winner: In 2011 the average AGI of the vast majority fell to $30,437 per taxpayer, its lowest level since 1966 when measured in 2011 dollars. The vast majority averaged a mere $59 more in 2011 than in 1966. For the top 10 percent, by the same measures, average income rose by $116,071 to $254,864, an increase of 84 percent over 1966.

[...] The biggest driver in that disparity, Cay Johnston wrote, was not that the rich were working harder, “but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.” Indeed, the estate tax has been eased over recent decades and federal income taxes have become more favorable to the wealthy thanks to breaks for investment income. A recent study, in fact, found that the capital gains tax cut, which benefits the wealthy but does virtually nothing for everyone else, was “by far” the biggest driver in the growth of American income inequality.

Other important facts: 

(via ThinkProgress)

The rise in wealth inequality? It’s permanent: “the advantaged [are] becoming permanently better-off, while the disadvantaged becoming permanently worse-off.” [...] If we were seeing a lot of transient inequality, that would mean the households at the bottom in any given year still have a good shot at improving their lifetime earnings. The fact that the inequality is of the permanent sort shuts the window on that optimistic interpretation: The earners at the bottom are stuck at the bottom, and their lifetime earnings are about as low as one would think. (via Ezra Klein)

With this ever-increasing, permanent inequality, now decades in the making, what’s most important to Republicans? 95% of the GOP-led House voting in favor of Paul Ryan’s Class Warfare Budget:

  • Recent analyses have shown that [Ryan's] budget plan’s tax reforms, which lower top tax rates to 25 percent, would give millionaires at least $200,000 in tax cuts. At the same time, it would slash the social safety net, targeting poverty programs for two-thirds of its cuts. (via Travis Waldron)
  • Ryan’s budget would end Medicare, cut taxes by over $5 trillion, take health care benefits away from millions of Americans, make “massive” cuts to in programs for low-income and vulnerable Americans, and relies on smoke and mirrors to balance the budget within a decade… It’s designed to satisfy folks who believe the wealthy are over-burdened by taxes and struggling families have too much access to affordable health care. (via Steve Benen)

Unfortunately the non-wealthy, low-info Republican base voters — who have been personally harmed by income inequality just like everyone else — have been successfully programmed to chase the regularly-scheduled and completely manufactured social outrages dangled before them (usually involving guns, God, and gays), instead of paying attention to what their party is actually doing with tax laws and budgets.

Labor Day: what has happened to American working families between 1970 and today?

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Juan Cole thinks it’s important that you think further back than the Romney campaign’s dumb question “are you better off now than you were four years ago?” Instead, ask yourself if you’re better off now than you were in 1970:

See, in general, Who Rules America? The rich in this country now see an opportunity to take us back to the age of the robber barons– and get rid of all government programs for the middle classes and the workers and make us wait to age 70 (when most people will be more decrepit than they expect) to retire. Because the more of the national income they take home every year, the more politicians they can buy, and the more they can cut their taxes and shift the burden of road-building and other government services to the middle classes and workers.

It is a ratcheting process that is leaving the US an increasingly unequal society, and one in which hopes of upward mobility for ordinary people are increasingly crushed. Indeed, Europe (the “Old World”) now offers more opportunities for upward mobility and getting ahead than the United States.

The way to reverse this crisis of income stagnation is to restore rights to unionize and collectively bargain and to make the rich pay their fare share for government-provided infrastructure and for educating the work force they exploit. Guess who will do the opposite if they win in November?

— Labor Day Question: Are you Better off than You were in 1970?


image: christopherstreet

One half of all jobs in the U.S. today now pay less than $35,000 a year

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We were once a great country that proudly built things, exported goods, and earned a living wage—in large part because we had thriving labor unions. We also had a healthy public sector employment rate, which contributed to employment, the economy and America’s overall success. Over the past 30 years or more, we’ve been outsmarted with tax laws written to benefit the one percent, had our labor unions and government workers demonized by conservative ideology, and we were Bain Capitalized out of our manufacturing base—we were Bain Capitalized to death. The GOP and their wealthy benefactors have killed America’s middle class for nothing more than greed—and here we are today.

A report from NPR: How America’s Losing The War On Poverty:

According to a recent survey by The Associated Press, the number of Americans living at or below the poverty line will reach its highest point since President Johnson made his famous declaration of war on poverty in 1964.

Close to 16 percent of Americans now live at or below the poverty line. For a family of four, that’s $23,000 a year. On top of that, 100 million of us — 1 out of 3 Americans — manage to survive on a household income barely twice that amount. How is this poverty crisis happening?

[...] One half of all jobs in the U.S. today now pay less than $35,000 a year. Adjusted for inflation, that’s one of the lowest rates for American workers in five decades.

There’s a common perception that somebody who’s poor or living below the poverty level is lazy or simply living off government handouts. Edelman says the actual average poor person is working.

[...] Many economists say that when the economy does recover, a lot of the jobs that were lost won’t be coming back. That suggests the possibility of significantly high unemployment for a long time — maybe even a permanently large class of Americans who live in poverty. Blackwell says we can act to prevent that future. “And it’s not rocket science.”

“We know now that by 2018, 45 percent of all jobs in this nation will require at least an associate’s degree,” she says. “We could invest in the system of training — particularly focusing on community colleges and preparing people to go to four-year institutions and improving our high school education.”

“We actually have extraordinary infrastructure in this country, from the manufacturing base we once had,” she continues. “We need to retool it, we need to refit it, we need to make sure that it’s ready for the kind of advanced manufacturing that we’re seeing develop in other countries.”

What we don’t need is to be “Bain Capitalized” further — or more of those “great” ideas like outsourcing work that can be done locally in the public sector. To let Republicans find more ways to cut spending, more austerity cuts for 99% of us—just to give the wealthiest even more tax breaks—costs our society, and our people, in too many ways to count.


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Wealth inequality is a threat to Capitalism: Obama is right, Romney is wrong

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The GOP and Mitt Romney are rabidly defending his wealth, and the wealth of the one percenters. President Obama (and, incidentally, the Occupy Wall Street protesters) are trying to educate the nation on the reality of our wealth inequality. It comes down to TAX LAWS which favor the wealthy and place the burden of our nation’s treasury on the shoulders of the working and middle class. Less money in the treasury, by the way, then places additional burdens on the poor, working, and middle classes because there will be austerity: cuts to government programs and services.

State of the Union 2012: Barack Obama is right — wealth inequality is a threat to capitalism: Jonathan Kay

Income inequality in the United States now stands at its highest rate since the Great Depression. At Occupy protests and in activist circles, this fact usually is cast as a social justice issue, which is why too many conservatives snidely dismiss it. In fact, free market capitalists are the ones who should be most concerned about inequality. A mass market consumer economy cannot function when earners cluster at the poles: Poor people buy very little, and wealthy people spend only a small fraction of their income on retail goods and services. The income of America’s middle class — the people who fuel the retail economy — has been stagnant, in real terms, for three decades.

[...] Why are Republicans and their supporters so out of touch with economic reality? The conventional explanation is class mobility: Americans, including poor Americans, refuse to soak the rich because they believe they’ll be rich one day, too. And there likely is some truth to this, despite the fact that economic mobility is now lower in the United States than it is in Canada and many European nations.

But I’d say an even better explanation is: Americans’ pure, undiluted ignorance about how unequal their society has become.

In recent years, a Harvard business professor named Michael Norton has been surveying Americans about wealth distribution in America, comparing their perceptions with fact. The reality in the United States is that the richest fifth of the population controls about 85% of the country’s wealth (while the poorest fifth controls about 0%). But when Norton’s survey respondents were asked to state the share of wealth that they believed was controlled by the richest fifth of Americans, the number they came up with was closer to 60%. Even more tellingly, when Norton asked survey respondents what would be the ideal percentage of wealth that should be controlled by the richest fifth, the average figure reported was only 35% — a full fifty points below the 85% reality.

“The closer countries to what our respondents wanted [America to look like] are countries that are amusingly dissimilar to us, such as countries like Sweden,” Norton told an interviewer. “And I should say, the other thing that we found is not just that people think things should be fairer in some sense than they are, but that there’s wide agreement about that. So if we look at very rich people and very poor people, or if we look at Republicans and Democrats, all of these groups think that wealth should be more equally distributed when we asked them these questions than it actually is.”

leftish: JON STEWART:  It might be nice if Romney thought his TAX RATE was WRONG!

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Romney’s income is 12 times higher than Obama’s, yet Romney paid half of Obama’s tax rate

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The numbers on the ‘Politics of Envy’ –

  • Obama: income – $1.8 million, tax paid $454,000 (25 percent)
  • Romney: income – $21.7 million, tax paid $3 million (13.8 percent)

According to 2010 tax returns (PDF) released by the White House, the president paid $454,000 in federal taxes on $1.8 million earned — or about 25 percent of his gross income. Over the same time period, Romney paid about $3 million in federal taxes on gross income of $21.7 million, a rate of about 13.8 percent. Estimates released by the campaign showed that Romney expected to pay $3.2 million in taxes for 2011 on $20.9 million income, an effective 15.4 percent rate. – Romney earned 12 times more than Obama, had nearly half the tax rate

Politics of envy though.


image: BobCesca

Mitt Romney’s message to the poor and middle class

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Here’s what Mitt thinks:

image: christianbaled

“Again, the point here is not that Romney did something wrong by paying the low rates current tax law lavishes on people like him. It is, instead, that in an election campaign that will be in part about issues of inequality, the likely GOP candidate is a living, breathing, coupon-clipping example of how favorable our system is to the very rich; and he also happens to be advocating policies that would greatly benefit people like him, while hurting the poor and the middle class.

PS: Yes, my tax rate is a lot higher than Romney’s. And I support policies that would raise it further.”

— Paul Krugman on Romney’s Taxes 

via: randomactsofchaos

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Six fast facts on Romney’s low, low taxes and big, big income

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Think Progress: 6 Facts About Mitt Romney’s Taxes/ Lack Thereof

  1. Romney paid a lower tax rate than many middle-class Americans, at 13.9 percent.
  2. Romney makes more in a day than the average American makes in a year, and becomes a 1 percenter every week.
  3. Romney likely paid $0 in payroll taxes.
  4. Romney has accounts in countries notorious for tax dodging, like Switzerland, Luxembourg, and the Cayman Islands.
  5. Romney and Gingrich’s tax plans would slash Romney’s taxes in half.
  6. Romney needs four lawyers, including the former IRS commissioner to defend his tax plan.

via: think-progress

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Note: #5 — Newt’s taxes would be slashed also.

Romney’s tax return release: too little, too late?

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Josh Marshall thinks the reality of Mitt’s tax rate and income, combined with being forced into releasing his returns, are very bad news for his campaign:

“My quick take on this is that there’s a lot here that’s fairly damaging for Romney in political terms, largely for the reasons I set forth earlier in this post. Beyond that there’s a lesson about the consequences of losing control of events. For a man running for president in 2012 it’s damaging stuff. But now everything in these documents comes with a preface that reads “We really wanted to keep this secret. But that didn’t work out.”

 

Mitt’s tax returns and the politics of envy (we’re all envious about his effective tax rate)

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Pages and pages are devoted to foreign entities in which Romney is invested. Many are located in places like Luxembourg, Ireland and the Cayman Islands, all famous tax havens. None shows much income. “These entities are not evading one dime of taxes.” — Brad Malt, Romney’s trustee

“I will not apologize for success.” The Huffington Post

Bowing to increasing political pressure to provide more detail about his vast wealth, the former private equity executive released tax returns indicating he and his wife, Ann, paid an effective tax rate of 13.9 percent in 2010. They expect to pay a 15.4 percent rate when they file their returns for 2011.

Wow, his taxes will GO UP from 13.9 percent to 15.4 percent? No wonder Mitt wants even more tax cuts for the wealthy / himself. If he paid 13.9 percent in 2010, I wonder what effective tax rate he paid in prior years…

Romney’s tax rate is below that of most wage-earning Americans because most of his income, as outlined in more than 500 pages of tax documents, flows from capital gains on investments.

Under the U.S. tax code, capital gains are taxed at 15 percent, compared with a top tax rate of 35 percent for wage earners.

Wage earners are disposable plebeians. That’s why we pay a higher effective tax rate on our incomes.

[...] Romney’s campaign officials stressed that his tax rate is based mostly on income from investments that are held in a blind trust. Romney’s holdings include an undisclosed amount in funds based in the Grand Cayman Islands and other overseas entities.

Romney advisers stressed that the holdings in the Caymans – along with those in a Swiss bank account that was closed in 2010 after an investment adviser decided it could be politically embarrassing to Romney – were reported on tax returns and were not vehicles to avoid taxes.

Sure. Of course that has to be SAID. We’ll never know, one way or the other. Can you imagine how many “Romneybot, Inc.” accountants, campaign managers, and public relations personnel worked 24/7 to give us the return that was released today?

They also stressed that Romney, whose holdings are in three blind trusts, makes no decisions as to how his money is invested.

Hahaha, you see? Mitt doesn’t know how his $250 million is managed or in which foreign accounts in the Caymans and Switzerland it’s hidden! He just spends it! Trust him.

What’s a Blind trust? It’s a trust in which the fiduciaries, namely the trustees or those who have been given power of attorney, have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust and no right to intervene in their handling. Blind trusts are generally used when a settlor (sometimes called a trustor or donor) wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments. Politicians or others in sensitive positions often place their personal assets (including investment income) into blind trusts, to avoid public scrutiny and accusations of conflicts of interest when they direct government funds to the private sector. — Wikipedia

Billionaire investor Warren Buffett, who is calling for raising taxes on high-income Americans, said he blames Congress, not Romney, for the governor’s tax rate. “It’s the wrong policy to have,” Buffett told Bloomberg Television’s Betty Liu in an interview yesterday. “He’s not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays.” —  Warren Buffett speaking about capital gains tax rates vs. earned income tax rates

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