No Suprise Here......
Posted: Mon Jun 06, 2005 12:49 pm
http://seattletimes.nwsource.com/html/n ... cation=rss
Super-rich widen lead over rest of Americans
By David Cay Johnston
The New York Times
Previously in this series: On the surface, lines have blurred, but Americans still divided by class
Previously in this series: Whatever your level, we're all about class
When F. Scott Fitzgerald pronounced that the very rich "are different from you and me," Ernest Hemingway's famously dismissive response was: "Yes, they have more money." Today he might well add: much, much, much more money.
The people at the top of the U.S. money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data shows. They've even left behind people making hundreds of thousands of dollars a year.
Call them the hyper-rich.
They are not just a few Croesuslike rarities. Draw a line under the top 0.1 percent of income earners: the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more.
The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is 2-½ times the $1.2 million, adjusted for inflation, that the group made in 1980. No other income group rose nearly as fast.
The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002.
The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.
Next, examine the net worth of U.S. households. The group with homes, investments and other assets worth more than $10 million consisted of 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent.
The Bush administration's tax cuts stand to widen the gap between the hyper-rich and the rest of the nation. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden.
During the third presidential debate in October, President Bush said most of the tax cuts went to low- and middle-income Americans. In fact, most — 53 percent — will go to people with incomes in the top 10 percent of all Americans during the first 15 years of the cuts, which began in 2001 and will need reauthorization in 2010. More than 15 percent of the cuts will go just to the top 0.1 percent, those 145,000 taxpayers.
The New York Times set out to create a financial portrait of the very richest Americans, how their incomes have changed over the decades and how the tax cuts will affect them. It is no secret the gap between the rich and the poor has grown, but the extent to which the richest are leaving everyone else behind is not widely known.
The Treasury Department uses a computer model to examine the effects of tax cuts on various income groups but does not look in detail fine enough to differentiate among those within the top 1 percent.
To determine those differences, The New York Times relied on a computer model based on the Treasury's. Experts at organizations representing a range of views, including the conservative Heritage Foundation, the libertarian Cato Institute and liberal Citizens for Tax Justice, reviewed the projections and said they were reasonable. The Treasury Department said through a spokesman that the model was reliable.
The analysis also found:
• Under the Bush tax cuts, the 400 taxpayers with the highest incomes — a minimum of $87 million in 2000, the last year for which the government will release such data — now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.
Lesser tax burden
• Those earning more than $10 million a year pay a lesser share of their income in these taxes than those making $100,000 to $200,000.
• The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million, thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by the tax.
The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else likely is much larger.
The hyper-rich have emerged in the last 30 years as the biggest winners in a remarkable transformation of the U.S. economy characterized by, among other things, the creation of a more global marketplace, new technology and investment spurred partly by tax cuts.
One way to understand the growing gap is to compare earnings increases over time by the vast majority of taxpayers — everyone in the lower 90 percent — with those at the top, in the uppermost 0.01 percent (now about 14,000 households, each with $5.5 million or more in income last year).
From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to The New York Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.
President Reagan signed tax bills that benefited the wealthiest Americans and gave tax breaks to the working poor.
President Clinton raised income taxes for the wealthiest, cut taxes on investment gains and expanded breaks for the working poor.
Bush eliminated income taxes for families making less than $40,000, but his tax cuts also have benefited the wealthiest Americans far more than his predecessors' did.
The Bush administration says the cuts have made the tax system more progressive, shifting the burden slightly more to those with higher incomes. An IRS study found the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent.
But Treasury Department spokesman Taylor Griffin said the tax system is more progressive if the measurement is the share borne by the top 40 percent of Americans rather than the top 0.1 percent.
The analysis also shows that during the next decade, the tax cuts Bush wants to extend indefinitely would shift the burden further from the richest Americans. With incomes of more than $1 million or so, they would get the biggest share of the breaks, in total amounts and in the drop in their share of federal taxes paid.
One reason the merely rich will fare much less well than the very richest is the alternative minimum tax. This tax was the successor to one enacted in 1969 to make sure the wealthiest Americans could not use legal loopholes to live tax-free.
But it has never been adjusted for inflation. As a result, it stings Americans whose incomes have crept above $75,000.
The analysis shows that by 2010, the tax will affect more than four-fifths of the people making $100,000 to $500,000 and will take away from them nearly one-half to more than two-thirds of the recent tax cuts.
For example, the group making $200,000 to $500,000 a year will lose 70 percent of their tax cut to the alternative minimum tax in 2010, an average of $9,177 for those affected.
But because of the way it is devised, the tax affects far fewer of the very richest: about one-third of the taxpayers reporting more than $1 million in income. One big reason is that dividends and investment gains, which go mostly to the richest, are not subject to the tax.
Another reason the wealthiest will fare much better is that the tax cuts in the past decade have sharply lowered rates on income from investments.
While most economists recognize the richest are pulling away, they disagree on what this means. Those who contend the extraordinary accumulation of wealth is good say that while the rich are getting richer, so are most people who work hard and save.
They say the tax cuts encourage investment and innovation that will make everyone better off.
"In this income data, I see a snapshot of a very innovative society," said Tim Kane, an economist at the Heritage Foundation. "Lower taxes and lower marginal tax rates are leading to more growth. There's an explosion of wealth."
Concentration bad sign
But some of the wealthiest Americans, including Warren Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and stifle economic growth by putting too much capital in the hands of inheritors rather than strivers and innovators.
Federal Reserve Chairman Alan Greenspan warned of the growing concentration of wealth in congressional testimony a year ago: "For the democratic society, that is not a very desirable thing to allow it to happen."
Others say most Americans have no problem with this trend. The central question is mobility, said Bruce Bartlett, an advocate of lower taxes who served in the administrations of Ronald Reagan and the elder George Bush.
"As long as people think they have a chance of getting to the top, they just don't care how rich the rich are," he said.
But in fact, economic mobility — moving from one income group to another over a lifetime — has stopped rising in the United States, researchers say. Some recent studies suggest it has declined in the past generation.
Copyright © 2005 The Seattle Times Company
==============================
That putz Bartlett doesn't know what he's talking about. People don't care how rich the rich are as long as they can pay their own bills. And the number of working people who can't is growing.
One can bet the farm that these trends won't change anytime in the near future. :roll:
Super-rich widen lead over rest of Americans
By David Cay Johnston
The New York Times
Previously in this series: On the surface, lines have blurred, but Americans still divided by class
Previously in this series: Whatever your level, we're all about class
When F. Scott Fitzgerald pronounced that the very rich "are different from you and me," Ernest Hemingway's famously dismissive response was: "Yes, they have more money." Today he might well add: much, much, much more money.
The people at the top of the U.S. money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data shows. They've even left behind people making hundreds of thousands of dollars a year.
Call them the hyper-rich.
They are not just a few Croesuslike rarities. Draw a line under the top 0.1 percent of income earners: the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more.
The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is 2-½ times the $1.2 million, adjusted for inflation, that the group made in 1980. No other income group rose nearly as fast.
The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002.
The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.
Next, examine the net worth of U.S. households. The group with homes, investments and other assets worth more than $10 million consisted of 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent.
The Bush administration's tax cuts stand to widen the gap between the hyper-rich and the rest of the nation. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden.
During the third presidential debate in October, President Bush said most of the tax cuts went to low- and middle-income Americans. In fact, most — 53 percent — will go to people with incomes in the top 10 percent of all Americans during the first 15 years of the cuts, which began in 2001 and will need reauthorization in 2010. More than 15 percent of the cuts will go just to the top 0.1 percent, those 145,000 taxpayers.
The New York Times set out to create a financial portrait of the very richest Americans, how their incomes have changed over the decades and how the tax cuts will affect them. It is no secret the gap between the rich and the poor has grown, but the extent to which the richest are leaving everyone else behind is not widely known.
The Treasury Department uses a computer model to examine the effects of tax cuts on various income groups but does not look in detail fine enough to differentiate among those within the top 1 percent.
To determine those differences, The New York Times relied on a computer model based on the Treasury's. Experts at organizations representing a range of views, including the conservative Heritage Foundation, the libertarian Cato Institute and liberal Citizens for Tax Justice, reviewed the projections and said they were reasonable. The Treasury Department said through a spokesman that the model was reliable.
The analysis also found:
• Under the Bush tax cuts, the 400 taxpayers with the highest incomes — a minimum of $87 million in 2000, the last year for which the government will release such data — now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.
Lesser tax burden
• Those earning more than $10 million a year pay a lesser share of their income in these taxes than those making $100,000 to $200,000.
• The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million, thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by the tax.
The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else likely is much larger.
The hyper-rich have emerged in the last 30 years as the biggest winners in a remarkable transformation of the U.S. economy characterized by, among other things, the creation of a more global marketplace, new technology and investment spurred partly by tax cuts.
One way to understand the growing gap is to compare earnings increases over time by the vast majority of taxpayers — everyone in the lower 90 percent — with those at the top, in the uppermost 0.01 percent (now about 14,000 households, each with $5.5 million or more in income last year).
From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to The New York Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.
President Reagan signed tax bills that benefited the wealthiest Americans and gave tax breaks to the working poor.
President Clinton raised income taxes for the wealthiest, cut taxes on investment gains and expanded breaks for the working poor.
Bush eliminated income taxes for families making less than $40,000, but his tax cuts also have benefited the wealthiest Americans far more than his predecessors' did.
The Bush administration says the cuts have made the tax system more progressive, shifting the burden slightly more to those with higher incomes. An IRS study found the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent.
But Treasury Department spokesman Taylor Griffin said the tax system is more progressive if the measurement is the share borne by the top 40 percent of Americans rather than the top 0.1 percent.
The analysis also shows that during the next decade, the tax cuts Bush wants to extend indefinitely would shift the burden further from the richest Americans. With incomes of more than $1 million or so, they would get the biggest share of the breaks, in total amounts and in the drop in their share of federal taxes paid.
One reason the merely rich will fare much less well than the very richest is the alternative minimum tax. This tax was the successor to one enacted in 1969 to make sure the wealthiest Americans could not use legal loopholes to live tax-free.
But it has never been adjusted for inflation. As a result, it stings Americans whose incomes have crept above $75,000.
The analysis shows that by 2010, the tax will affect more than four-fifths of the people making $100,000 to $500,000 and will take away from them nearly one-half to more than two-thirds of the recent tax cuts.
For example, the group making $200,000 to $500,000 a year will lose 70 percent of their tax cut to the alternative minimum tax in 2010, an average of $9,177 for those affected.
But because of the way it is devised, the tax affects far fewer of the very richest: about one-third of the taxpayers reporting more than $1 million in income. One big reason is that dividends and investment gains, which go mostly to the richest, are not subject to the tax.
Another reason the wealthiest will fare much better is that the tax cuts in the past decade have sharply lowered rates on income from investments.
While most economists recognize the richest are pulling away, they disagree on what this means. Those who contend the extraordinary accumulation of wealth is good say that while the rich are getting richer, so are most people who work hard and save.
They say the tax cuts encourage investment and innovation that will make everyone better off.
"In this income data, I see a snapshot of a very innovative society," said Tim Kane, an economist at the Heritage Foundation. "Lower taxes and lower marginal tax rates are leading to more growth. There's an explosion of wealth."
Concentration bad sign
But some of the wealthiest Americans, including Warren Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and stifle economic growth by putting too much capital in the hands of inheritors rather than strivers and innovators.
Federal Reserve Chairman Alan Greenspan warned of the growing concentration of wealth in congressional testimony a year ago: "For the democratic society, that is not a very desirable thing to allow it to happen."
Others say most Americans have no problem with this trend. The central question is mobility, said Bruce Bartlett, an advocate of lower taxes who served in the administrations of Ronald Reagan and the elder George Bush.
"As long as people think they have a chance of getting to the top, they just don't care how rich the rich are," he said.
But in fact, economic mobility — moving from one income group to another over a lifetime — has stopped rising in the United States, researchers say. Some recent studies suggest it has declined in the past generation.
Copyright © 2005 The Seattle Times Company
==============================
That putz Bartlett doesn't know what he's talking about. People don't care how rich the rich are as long as they can pay their own bills. And the number of working people who can't is growing.
One can bet the farm that these trends won't change anytime in the near future. :roll: