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The wealthiest one-tenth of 1 percent receives an astonishing 12.3 percent of national income (that is .01% receiving 12.3% of all U.S. national income). And when you look at assets, it goes much higher. Currently, the richest 1 percent hold about 38 percent of all privately held wealth in the United States (Hurst, Charles E. Social Inequality: Forms, Causes, and Consequences).
Statistically, the top one percent are becoming wealthier even as the working and middle class become poorer. The tea party means well but, unfortunately for America, are bent on hurting Americans to "fix" the problem rather than simply fixing the problem.
As John Hamilton, retired U.S. Foreign Service officer, points out:
"The distribution of our national income has become severely skewed. It is worse than in every single country of the Middle East and approaches Latin America's discord-sowing levels. On the Gini Index, where higher numbers represent higher inequality, the U.S. comes in at 45. For comparison, the numbers in Latin America range from 41 in Venezuela to 59 in Haiti. With a score of 23, Sweden leads all nations in having the most equal distribution of income.
The growing income inequality has been fueled by years of free trade policies, corporate offshoring of jobs, tax cuts for the rich and deregulation of the financial industry.
Such inequality throttles economic development. In the United States, the economic activity of a robust middle class has been an important driver of growth. Until recently, that is. In 1970, when our Gini coefficient was 39.4, the wealthiest 1 percent of Americans took in 9.7 percent of national income. That was a lot, but today the equivalent figure is 23.7 percent. The wealthiest one-tenth of 1 percent receives an astonishing 12.3 percent of national income.
According to former Secretary of Labor Robert Reich, middle-class economic activity is no longer generating new growth and jobs. As the purchasing power of the middle classes declined after 1970, families coped for a time. Women earned a second income; all workers put in longer hours and families drew on the equity in their homes. As those strategies are now exhausted, job growth is anemic. And because the wealthy can spend only a fraction of their income, they are not generating new growth either."
Hedge fund managers, for example, have their fee-derived income taxed at 15%. As Warren Buffet famously noted, he pays a lower rate of income tax than his salaried secretary. In the 1950's hedge funds had not caught on and the rich paid much higher capital gain taxes. The top marginal income tax rates for the super rich were over 90 percent. With John Kennedy's tax cut, the top rate dropped to 70 percent. Corporate taxes were almost 50 percent. This fueled a massive growth for the middle class whose taxes were very low and resulted in very low unemployment.
Today the super rich pay a small hedge fund tax and greatly reduced income tax. If the latest GOP tea party tax cut legislation for the rich goes through the Senate and is signed into law, the super rich income tax rate will drop to a mere 25 percent.
Meanwhile, what's left of the the middle and working classes make up the difference in federal and income tax rates while the poor join them in ever-increasing consumption taxes, sales taxes, fines, and fees. The middle class in particular is sinking into the mire and out of sight!
So what happens when the country decides not to materially tax the top one percent or public corporations any more, despite their accounting for an ever increasing percentage of national income which often doesn't get spent? The simple answer is: they go after the rest of us.
Government is currently seeking consumption taxes, fees, and fines at record levels. They are after taxes on internet purchases, the gas pump, and almost any and every imaginable way they can come up with to get more money from you and I (even as they are seeking ways to slash medical care to the poor and soon-to-be elderly though government public employee unions who live off of tax dollars are mostly protected).
This hurts the poor, blue, and middle classes, but not the super-wealthy or the corporations. Contrast the GOP proposed 25 percent tax rate for the super rich with the super rich tax rate of about 90 percent in the 1950's which fueled a huge middle class that hired American workers after the Great Depression.
Knowing this, we have to wonder why middle-class Americans line up and pull the lever at voting time to ensure the rich get richer and everyone else gets poorer and sicker. First, it is most likely a combination of passionate ignorance. A misunderstanding of what's occurred and how to right it.
The GOP Ryan plan will strip away Medicare and Social Security benefits for everyone under 55 (despite them paying into the fund their entire working lives), eliminate much student aid, encourage states to raise taxes through increasing state taxes, sales taxes, consumption taxes, fees, and fines yet will slash taxes on the rich to record lows while ignoring the issues of trade reform, corporate offshoring of jobs, deregulation of the financial industry, etc... all of which benefits the top 1 percent but hurts the American worker and small businesses.
Secondly, the 55+ demographic is guaranteed their full government entitlements. They will receive full Medicare, full social security, full everything. So it's really easy for the 55+ Republicans to send representatives to Congress to steal from everyone else's funds (that they have been paying into their whole working lives) what they themselves are already guaranteed.
But here's the real problem with the GOP tea party best thinking:
The rich are the primary investors in the large public corporations which have been moving into middle class spaces and offshoring/outsourcing/insourcing middle and working class American labor to other countries citizens rather than Americans now for a couple decades. This has created a hollowed out middle class, a poorer working class, more poor, and high unemployment (i.e. the unemployment rate doesn't account for the number of actual unemployed).
So now you have fewer of those middle and working class taxpayers left but the top 1 percent have gotten much wealthier. They are accumulating an ever increasing share of national income which used to be in the middle and working classes hands... people who worked, paid taxes, and spent their income in America all of which was good for America.
The public corporate takeover of the middle and working class space has been likened to locust swarms of old that flew in, consumed everything in their path, and left nothing behind them but big retail centers to dump their foreign made consumption junk (which is now rising in price since demand for it overseas has increased) on what's left of America.
This is not an anti-corporation article. The small private corporations of the middle-class, employee owned corporations, and yes large public corporations have a healthy role to play in our economy. But what's been going on for decades is completely out of balance. And any real solutions, must account for it.
All of this has put tremendous pressure on the middle and working American classes and they spawned the tea party in an attempt to address it. Unfortunately, they really don't understand what we've shared and so they voted for corporate sponsored and paid for GOP legislatures to do something about it. What do you think those legislatures are doing?
They are taking steps to ACCELERATE the problem by giving big tax cuts to the rich and ensuring corporations can continue to operate without paying federal taxes so the large public corporate takeover of the middle class space continues faster making lowly paid wage slaves out of those Americans who are "fortunate" to get one of their jobs!
We would like to see them taxed, the loop holes on them closed, and the law changed so they cannot just run off to a foreign country while continuing to enjoy all the benefits of being Americans. In the 1950's, public corporations in America had a choice of which state they were going to domicile in, not which foreign country. We want to see middle-class Americans empowered with the tax cuts to regain their space. They hire American working class workers and both classes spend their money in America.
The choice here is simple:
1. You can reduce taxes on the rich and large public corporations more and further accelerate the decline of the middle and working classes hurting them and the poor and driving us right into a new American caste system.
2. You can raise taxes on the rich and large public corporations and close their loopholes and ability to simply relocate outside the country (if they want to continue to enjoy American citizenship and identity) while greatly lowering taxes for the middle and working class like we did in the 1950's. You let the corporations put their eggs in competing state baskets like we used to do, not the baskets of foreign countries skipping out on America like they do now.
This funds the government and invigorates the middle-class which expands hiring the working class (and poor) at decent wages (not minimum wage retail outlets which dump foreign made goods on the public after decimating all middle and working class in the spaces they took over) and greatly reducing unemployment. Since these people actually spend their money, it further drives economic domestic recovery and domestic economic expansion.
The tea party is pushing us the wrong way into a new American caste system where everyone but the super rich become poorer and sicker by the year, including our children, and every generation to come. But then the GOP has been going down this road for a long time.
Reagan signed the great amnesty and engaged in massive deficit spending and every other Republican administration has since. They outspent the Democrats, who under Clinton managed to incur a surplus which the Republicans spent during the Bush years and then continued running massive deficits beyond anything the Democrats did in the years since Reagan.
Ronald Reagan must be credited for winning the Cold War with this tactic of massive deficit spending on the military; however, the Republicans chose to continue the practice while passing unfair "free" trade legislation with its offshoring and outsourcing; tax cuts for the rich; massive immigration and insourcing, etc... which when coupled with Democrat mismanagement in almost all of these same areas led us into the situation we are in today.
It can even be argued that initially, Obama simply implemented the previous administration's bailout and spend philosophy after the Bush administration wasted a taxpayer fortune to charge Iraq for still missing WMDs instead of stopping a domestic economic meltdown caused by systemic changes in our economy, the trade imbalance, credit bubble, post-financial deregulation debacle, and housing bubble though it is true that the Bush administration and the Republicans did try to reign in Fannie and Freddie (but the Democrats would not let them). Afterwards, Obama certainly displayed a massive deficit spending philosophy of his own.
The truth is that Democrats are not fiscally conservative and the Republicans are primarily fiscally conservative these days when it comes to hurting the next generations of elderly and poor sick unemployed Americans in a Great Recession.
They won't let wealthy Asian countries like South Korea and Europe pay for their own defense choosing to spend trillions of taxpayer dollars to do that for them each decade. They spend trillions more fighting wars all over the globe. They pass deep tax cuts for the super rich and trade legislation that only helps the top 1 percent wealthiest and largest corporations but hurts the American worker and small businesses. They won't revise the scheduled rates and make medical providers accept them which would fix Medicare/Medicaid. They ignore government public employee unions and pensions and true pork. Those are areas they should be examining.
Instead they have turned on poor, sick, and soon-to-be elderly Americans to give the rich a big tax break so they can hollow out the middle class some more, deprive working class Americans of employment, and local communities the money both classes spend.
That's tea party best thinking and it's bad for Americans. Honestly, it has the makings of the beginnings of a Republican sponsored democide on Americans which can be expected to be overturned in the future as deep pain and suffering sets in.
Americans need jobs. We simply cannot just innovate our way out of this. This is because the way business is done has changed as a result of the free trade legislation. It used to be that innovation happened here, was closely protected, and wielded to give the USA and the world what they needed and wanted using American labor.
Increasingly today, innovation happens here and there and the innovation that occurs here is simply shipped overseas as fast as possible to China, India, etc... where foreign labor is used to produce the goods that are then shipped back and dumped on the American public through large public corporate retail chains.
The Americans that materially benefit from American innovation today are the inventors/innovators themselves, rich investors (e.g. shareholders), and large public corporate management. Lowly paid workers get a pittance and most of the jobs it used to take are gone so unemployment continues to rise despite the unemployment rate (this is because the unemployment rate doesn't count the number of unemployed Americans but just the number that have registered as being unemployed in the last 4 weeks).
It's a pail with a big hole in the bottom. You pour the idea creation, invention, innovation water in and it runs out the bottom into other countries buckets. This situation is going to get a LOT worse my fellow Americans unless the right changes are made.
Then there’s the issue of massive illegal immigration and chain migration from the poorest of Latin America which has materially affected state’s safety nets, taxpayers, and economy in negative ways. Instead of bringing the brightest people on the planet and making them Americans, we simply allowed the poorest to violate our laws… those least able to contribute to America and gave them and their children citizenship without ever properly enculturating them to be Americans.
Should we give them a path to citizenship at this point? Some say we should and some say we should not. Personally, we believe we can by opening up the normal process of becoming an American to them (no amnesty) and we finally take the steps to end the employment of illegal immigrants through a national E-Verify program (administered by the states as a check to federal power) and altering our open chain migration policy. We need to create loyal Americans who can really contribute to our country and economy… not Americans-In-Name-Only (AINO) who have no idea what it means to be an American and whose loyalty is somewhere else.
Both parties are responsible for the current economic mess and pursuing policies that hurt Americans instead of fixing them in a way that is good for Americans. But you have to look at the facts, instead of the hyperbole coming from both parties, to understand this.
-http://helpfixamericafirst.blogspot.com/2011/04/rich-get-richer-and-everyone-else-gets.html
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