MB360: U.S. income divide is a yawning chasm

Here MB360 reminds us how the U.S. middle class has disappeared in our new Gilded Age of wealth inequality, where the top 10 Percent own 75 percent of all wealth [emphasis mine]:

Since the 1950s the trend has only moved in one direction.  People often talk about top tax brackets and how high income taxes are but if you look at the above chart, the average tax rate for those in the top 1 percent is 23.5 percent.  How is that when the top tax bracket is 39.6 percent?  First, many people have better methods of tax avoidance: IRAs, 401ks, dividend income, real estate deductions, etc.  Since the bulk of wealth is in the hands of the top 10 percent, this group is already lowering their tax burden via these deductions and beneficial tax structures.  Since the typical American is living paycheck to paycheck with little saved for retirement these tax reducers don’t really help.  Besides, their income tax burden share is minimal.  However, their other tax burdens are large as a proportion to their income.  This is usually ignored when people talk about how little the working class pay in this country as they try to scapegoat the disappearing middle class.

More to the point, the middle class by definition should be well, the middle.  In this case, being middle class is a household making $35,000 or more.  We often hear about $250,000 being middle class by the media but by the IRS tax data, this is closer to being in the top 2 percent of AGI.  Not exactly middle class when 98 percent are below you.  Even if we look at the bottom 75 percent, the cutoff here is $70,492; certainly a far away cry from $250,000.  Or even the top 5 percent starting point of $167,728.

Remember the 2012 presidential campaign when Romney said, amazingly, that the middle class was any household making "$200,000 to $250,000 and less"?  And less, indeed. The media didn't put his absurd comment in context, although the IRS income data was right there for them to see -- probably because the Obama campaign's definition of middle class was basically the same. 

Folks, U.S. economic inequality is still the elephant in the room; it was the most under-reported story of 2013.

Happy New Year!  Let's hope it's a more equitable one.

The Great Income Divide: IRS data shows 50 percent of households make less than $35,000 per year. Top 10 percent pay 68 percent of income taxes.

Posted by mybudget360 | December 31, 2013

URL: http://www.mybudget360.com/great-income-divide-tax-rates-who-pays-income-taxes-wealth-inequality-tax-pay/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+mybudget360%2FQePx+%28My+Budget+360%29

MB360: We are in the new Gilded Age

And like so many bad things in America, this trend started in the 1980s.

The Sequestered Gilded Age: Top 20 percent of households control over 90 percent of all stocks and financial wealth: Bottom 40 percent of all households have an average net worth of -$10,600.

By mybudget360 | March 3, 2013

URL: http://www.mybudget360.com/the-sequestered-gilded-age-top-20-percent-of-households-control-over-90-percent-of-all-stocks/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+mybudget360%2FQePx+%28My+Budget+360%29

Sirota: Bloomberg, Yankees, & socializing risk

Concludes Sirota: "In the new Gilded Age, socializing risk and privatizing profit has become the standard." While Joe the Plumber and teabaggers may think that spreading private risk among taxpayers while keeping profits private began with Obama, the truth is that it's been going on for decades. Both parties are guilty. All those rich people and corporations don't give fat campaign contributions for nothing! They're not dumb: U.S. oligarchs expect a nice return on their investment.

The House That Taxpayers Built

By David Sirota

May 22, 2009 | Creators.com

Somewhere, likely in a basement, the next great documentarian is scavenging YouTube for clips of congressional inquisitions, Wall Street perp walks, and CNBC rants for a future Oscar-winning film about the times we're living through. I'm hoping this future star calls her film "Wall Street II: Cataclysmic Boogaloo," and more importantly, I'm hoping she gets footage of New York Mayor Michael Bloomberg, preferably wearing a top hat and monocle.

Even amid CEO testimony, Bernie Madoff grimaces and Rick Santelli diatribes, nothing better captures the moment's destructive greed than a billionaire politician using the municipal office he bought to defend charging $2,500 a ticket to a new Yankee Stadium he forced the public to finance. If there is a single act showing how kleptocracy and let-them-eat-cake-ism are systemic and local rather than momentary and exclusively federal, Bloomberg turning the House that Ruth Built into the House That Taxpayers Built is it.

Foreign oligarchs use guns to confiscate citizens' wages. American oligarchs rely on government to give theft the aura of legitimacy, and Manhattan's richest man is no exception. As an investigation by Assemblyman Richard Brodsky (D) documents, Bloomberg used various public agencies to extract between $1 billion and $4 billion from taxpayers and then spent the cash on a new stadium for the Yankees, the wealthiest corporation in sports.

The move followed a Bloomberg-backed 2005 initiative giving infamous investment bank Goldman Sachs $1.6 billion in taxpayer-financed bonds to construct its new headquarters — and amazingly, this encore rip-off is more spectacular. Mimicking tax cheats' deliberately complex transactions, the city owns the stadium, leases it to an agency, which then leases it to a corporate subsidiary, which then leases it to the Yankees. At the end of the Ponzi scheme, the team is permitted to use the taxes it already owes to pay off the mortgage on its new chateau.

New Yorkers might be celebrating if these giveaways delivered verifiable returns to taxpayers.

But Brodsky's report notes that "there is little in new job creation, private investment, or new economic activity" from the expenditure. Taxpayers don't even get affordable seats. According to Newsday, they get a stadium charging the highest ticket prices in baseball — $2,500 for "premium" views (since reduced to "just" $1,250) and $410 for a family of four in the cheap seats.

Like Wall Street firms insisting that trillion-dollar bailouts are a small price for economic stability, Bloomberg first justified everything first by saying taxpayers "put next to nothing" into the stadium. (In fairness, a media-mogul mayor who is the planet's 17th wealthiest man may genuinely believe a few billion is "next to nothing" — but, for comparison, it's more than all the devastating cuts to police, firefighting, school and infrastructure budgets that he proposed in his budget).

Then Bloomberg offered the same laissez-faire paean that financial CEOs cite in opposing executive pay caps. "Don't ever think sports is anything but a business," he said, joining bankers in selectively forgetting that arguments for free-market "business" ring hollow when government is propping up said "business."

If this tale of the House that Taxpayers Built was some anomaly, it might be vaguely funny. But while Bloomberg sets milestones for avarice, the bailout-ism he espouses is the norm.

In Washington, "The Obama administration has broken all records in the distribution of taxpayer dollars to American businesses, primarily banks, automobile manufacturers and insurance companies," reports the Huffington Post. At the local level, lawmakers trip over themselves to throw giveaways at corporate campaign donors.

In the new Gilded Age, socializing risk and privatizing profit has become the standard — as American as General Motors, Bank of America and, yes, the New York Yankees.