Category Archives: wealthy

New Republican Study — Millionaires Receiving Billions In Taxpayer Support

People who are protesting against the wealth inequality and a tax code that grossly favors the 1% now have a new ally, Tom Coburn, Republican Senator from Oklahoma. He has released what he describes as the “first-ever compilation of federal aid for the richest.”  

Let me be the first to say how very surprised I am by this study. Mr. Coburn is known to be a bedrock conservative who has strongly supported the no new taxes mantra, and when someone with his background starts to shine a light into the inequalities in our government I firmly believe he can do more to further the Occupy Wall Street cause than any encampment ever could. 

The study reveals some startling findings. For example, in 2009, $21 million in unemployment insurance was collected by people who earned more than a million dollars. Also, the U.S. Treasury pays out more than $30 billion a yearto people who make more than a million a year. Mr. Coburn says what the study “reveals is sheer Washington stupidity with government policies pampering the wealthy costing taxpayers billions of dollars every year.”   

In a letter that accompanied the study, Mr. Coburn wrote, “The income of the wealthiest 1 percent of Americans has risen dramatically over the last decade. Yet, the federal government lavishes these millionaires with billions of dollars in giveaways and tax breaks,” as noted in the recent Congressional Budget Officestudy that examined the growing income gap over the last 30 years.  

“From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working. This welfare for the well-off — costing billions of dollars a year — is being paid for with the taxes of the less fortunate.” 

“The government’s social safety net, which has long existed to catch those who are down and help them get back up, is now being used as a hammock by some millionaires, some who are paying less taxes than average middle class families.” 

The following list was compiled by Mr. Coburn showing federal money handed out to millionaires over several years: 

  • $18.15 million in child care tax credits 
  • $74 million in unemployment checks 
  • $89 million for preservation of ranches and estates 
  • $316 million in farm subsidies  
  • $608 million in business entertainment deductions 
  • $9 billion in retirement checks 
  • $21 billion in gambling losses 
  • $28 billion in mortgage breaks for mansions, vacation homes and yachts 

These are powerful findings and they are coming out at a crucial time during which we are debating cutting such vital programs like Medicare, Medicaid, Social Security, Education, etc.

CBO Findings Show Extent Of Wealth Inequality

I have been reading the non-partison CBO (Congressional Budget Office) study showing the trends in wealth distribution since 1979. After I read it, I thought to myself how could there be any question as to why the protesters of Occupy Wall Street took to the streets.

Since the Reagan Administration implemented the trickle-down-economics policies, giving large tax breaks to the wealthy in the belief that with more money in their pockets it will result in job growth, the income gap has reached a level that rivals 1928, a year before the Wall Street crash that marked the beginning of the Great Depression.

CBO findings  

Sources of Income — For Middle Class is Wages/Salaries. For Wealthy is Capital Gains 

Two factors accounted for the changing distribution of market income. One was an increase in the concentration of each source of market income, which consists of labor income (such as cash wages and salaries and employer-paid health insurance premiums), business income, capital gains, capital income, and other income. All of those sources of market income were less evenly distributed in 2007 than they were in 1979.  

The other factor was a shift in the composition of market income. Labor income has been more evenly distributed than capital and business income, and both capital income and business income have been more evenly distributed than capital gains. Between 1979 and 2007, the share of income coming from capital gains and business income increased, while the share coming from labor income and capital income decreased.  

More concentrated sources of income (such as business income and capital gains) grew faster than less concentrated sources (such as labor income). 

Between 1979 and 2007:  

    • For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent.  
    • For others in the 20 percent of the population with the highest income, average real after-tax household income grew by 65 percent. 
    • For the 60 percent of the population in the middle of the income scale, the growth in average real after-tax household income was just under 40 percent. 
    • For the 20 percent of the population with the lowest income, the growth in average real after-tax household income was about 18 percent.  

Growth in Real After-Tax Income from 1979 to 2007

The share of income going to higher-income households rose, while the share going to lower-income households fell. 

The top fifth of the population saw a 10-percentage-point increase in their share of after-tax income.  

Most of that growth went to the top 1 percent of the population.  

All other groups saw their shares decline by 2 to 3 percentage points. 

Shares of Market Income, 1979 and 2007

How Bad Is The Income Gap In America – A Few Facts About The 1%

Why are Occupy Wall Street protesters out there….they don’t even know what they are protesting about? That is what we are hearing over and over from Fox News and other conservative pundits on an hourly basis.

I can’t speak for them all but here are a few clues: How about protesting to object corporate control of government policies, which has led to unfair tax loopholes, job outsourcing, cuts to public programs and gross overcompensation of executive employees, a widening wealth disparity between the top 1 percent and the rest of the country. 

So what is the disparity? How is wealth distributed in the United States? When you hear your conservative, Tea Party relatives or friends talking down the OWS movement, here are a few fun facts you can mention. These were compiled by staff writer of Life’s Little Mysteries, Natalie Wolchover

FACT #1: The wealthiest 1 percent of households own 34.6 percent of all privately held wealth, and 42.7 percent of all financial wealth (total net worth minus the value of one’s home). 

According to the NYU economist Edward Wolff a 2010 report, the bottom 80 percent of the population holds just 15 percent of the total wealth and only 7 percent of the total financial wealth (as a large portion of their wealth is tied up in their homes). The bottom 40 percent of Americans — that’s 120 million people — hold just 0.3 percent of the wealth. 

FACT #2: The United States has more income and wealth inequality than most countries that have been studied, including India and China — countries that are traditionally viewed as having unequal distributions of wealth. 

The degree of income inequality in each country is assigned a “Gini coefficient” — a number that ranges from zero (if everyone in the country has the same income) to 1 (if one person in the country has all the income). According to data gathered by the Central Intelligence Agency for 2010, the United States has a Gini coefficient of 0.45, on par with such countries as Iran (0.44) and Mexico (0.48); this is higher than the Gini coefficients of 94 of the 134 countries that have been studied, including China (0.42) and India (0.37), and much higher than Canada, Australia and all of Europe. Sweden has the lowest Gini coefficient at 0.23.  

The United States’ Gini coefficient has been rising for decades; it was just 0.35 in the 1960s. 

FACT #3: Among the 299 companies listed in the S&P 500 Index, the average CEO’s compensation was $11.4 million in 2010, or 343 times more than the median pay ($33,190) of American workers. The ratio of CEO pay to median worker pay was just 42:1 in 1980, and is currently 25:1 in Europe. 

Bill Domhoff, a sociologist at UC Santa Cruz, claims the ballooning of chief executives’ salaries in recent years has resulted from the fact that, for the most part, they set their own wages. “If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select — and which includes some fellow CEOs on whose boards they sit — gives them the pay they want,” Domhoff wrote in a 2011 articleon his website. 

FACT #4: Between 1979 and 2005, the average after-tax income for the top 1 percent increased by 176 percent, compared with an increase of only 6 percent for the bottom 20 percent. Between 1990 and 2005, the purchasing power of the federal minimum wage actually declined by 9.3 percent when adjusted for inflation. 

This rapid widening in the income gap between the rich and poor was identified in a 2007 report by the Center on Budget and Policy Priorities. The report attributed the trend to tax policies that favor the wealthy. According to Domhoff, other contributing factors include the diminishing political clout of labor unions and decreased expenditure on social services. 

FACT #5: Most Americans have no idea that the wealth distribution is as concentrated as it is, but regardless of their gender, age, income level or party affiliation, they believe wealth should be much more evenly distributed than they think it is

In 2010, Michael Norton of Harvard Business School and behavioral economist Dan Ariely of Duke University surveyed 5,522 Americans about their views on the country’s wealth distribution. They found that most respondents (regardless of their genders, ages, income levels and party affiliations) guessed that the top 20 percent of Americans hold about 60 percent of the wealth (rather than the 85 percent that they actually hold). Survey respondents also guessed that the bottom 40 percent hold between 8 and 10 percent of the wealth in the U.S. (rather than the 0.3 percent that they actually hold).

The Richest Americans and Their Tax Rate

The GOP has been saying in ad nauseam that the way to grow the economy is not by raising taxes on the wealthiest because they are the ones that create jobs, the trickle down economics theory.

Needless to say this has been proven wrong over and over. Just in the past decade, tax rates were decreased to their lowest levels in over 50 years (I have also previously posted an interview with Warren Buffett who acknowledged the inequality in our current tax system stating that his secretary pays more in taxes than he does).   

 The IRS has released data on the tax rates for the 400 richest Americans in 2008. 

The IRS report shows that in 2008 (the latest year for which data are available), the 400 richest income tax filers paid just 18.1 percent of their adjusted gross income (AGI) in federal income taxes. That is down from 22.3 percent in 2000, and is just more than half of the top statutory income tax rate of 35 percent. More than half of the income reported by those 400 taxpayers consisted of capital gains and dividends subject to the preferential rates.

The IRS report, which shows the effective federal income tax rates paid by the 400 highest-income Americans in each year since 1992, offers an important opportunity to understand how the tax system affects the most privileged Americans.

  • Only those with at least $109 million of AGI were members of this group in 2008, and the average AGI for these 400 taxpayers was $270 million. 
  • Each one of these 400 taxpayers enjoyed, on average, more than $155 million of net capital gains and dividend income that was subject to special lower tax rates in 2008.
  • Although 400 returns are less than 1/1000th of a percent of the total individual tax returns filed, these 400 taxpayers collected more than 10 percent of the total preferential-rate capital gains and dividends in the nation in 2008.
  • These 400 taxpayers paid income taxes averaging just under $49 million in 2008. As a share of AGI, their tax bills averaged 18.1 percent. 
  • This decline from 22.3 percent to18.1 percent represented a total tax cut of $4.5 billion in 2008 for this group, or an average tax cut of over $11.3 million each.

“This valuable data confirms what we already knew—that the very richest Americans are paying much less of their income in tax than many would have us believe,” noted Citizens for Tax Justice director Robert S. McIntyre. “These taxpayers are now paying lower effective tax rates than at virtually any time since the IRS began publishing these data in 1992—and the Bush Administration’s capital gains and dividends tax cuts are the main culprit.”

Breaking Point: Obama and the Death of the Democratic Party

This is an article from FireDogLake.com written by Jane Hamsher that I want to share with you guys.  President Obama and the Democratic party need to realize there is a line, and if you cross it, there are consequences. The article begins here. 

According to both the Washington Post and the New York Times, Obama is proposing cuts to Social Security in exchange for GOP support for tax hikes. Lori Montgomery in the Post:

At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.  As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal.

And Jay Carney’s carefully chosen weasel-words today do not contradict this:

“There is no news here – the President has always said that while social security is not a major driver of the deficit, we do need to strengthen the program and the President said in the State of the Union Address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn’t slash benefits.” 

Nobody ever says they want to “cut” Social Security or Medicare. They want to “save” it.  Just ask Pete Peterson, he wants to “save” it. Likewise AARP.  They don’t want reduced benefits for senior citizens, they want to “preserve” it for future generations.  If they have an enormous customer base they can market private “add-on” accounts and other retirement products to when Social Security goes bye-bye, I guess that’s just a happy coincidence.

Now if you think that this is something the President is doing because it’s the only way to get Republican cooperation you can stop reading here, because we’re going to disagree.  From the moment he took the White House, the President has wanted to cut Social Security benefits.  David Brooks reported that three administration officials called him to say Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security as well as health spending” in March of 2009.  You can only live in denial for so long and still lay claim to being tethered to reality.

And if you think it’s only the President, and the progressives in Congress will oppose him, we’ll have to disagree about that too.  Nancy Pelosi can always come up with the votes she needs to pass whatever the White House wants, and she’ll do it again this time.  It’s her only chance to ever be Speaker again.  If the Democrats somehow manage to retake control of the House, she needs Obama’s support.  She’ll shake her fist and say things like any health care bill “without a strong public option will not pass the House” — and then turn around and force her caucus to walk the plank.

Progressive Democratic “leaders” like Raul Grijalva will fold once again like a house of cards if need be — and they know it.  Today, the Huffington Post reports:

Progressives Won’t Criticize Obama For Proposed Social Security Cuts

Grijalva and Rep. Sheila Jackson Lee (D-Texas), a vice chair of the caucus, defended the president for signaling he would be willing to take a look at changes to the programs, arguing there are ways to restructure entitlement spending to save money without hurting beneficiaries.

Translation: They’ll wait for the whip count to see if their votes are needed, and if not, they can let somebody else be the “rotating villain” this time. But just in case, they’re leaving the back door open for themselves.

What we’re watching is the death of the Democratic Party.  Or, at least the Democratic Party as most of us have known it.  The one that has taken its identity in the modern era from FDR and the New Deal, from Keynesianism and the social safety net.  Despite any of its other shortcomings (and they are myriad), the Democratic Party has stood as a symbol for commitment to these principles.   As recently as 2006, Democrats retook the House in a surprise wave election because the public feared that George Bush would destroy Social Security, and they trusted the Democrats over Republicans to secure it.  Just like George Bush, Obama now wants to “save” Social Security….by giving those who want to burn it to the ground the the very thing they’ve wanted for decades. 

Any member of any party who participates in this effort does not deserve, and should not get, the support of anyone who values Social Security and cares about its preservation.  The amount of damage that the Democrats under Obama have been able to do has been immeasurable, by virtue of the fact that they are less awful that George Bush.  But where George Bush failed, Obama will probably succeed. 

Which means we’re watching another casualty here:  Democracy.  Or at least, the illusion that we live in a democratic society.  The public, regardless of party,  overwhelmingly opposes cuts to Social Security and Medicare. But elected officials of both parties are hell-bent on conspiring to bring the programs to an end.  They seem to have come to grips with a fact that the public has not: their tenure in office depends on carrying out the wishes of oligarchical elites. 

There is only one thing you can reasonably conclude as you watch the political theater that is transpiring:  what the voting public thinks really isn’t all that important.  And to the extent that it does matter, it can easily be channeled by those with sufficient money to pay the tab.  Samuel Johnson said that patriotism was the last refuge of scoundrels, but in our modern era, that honor goes to tribalism.  The list of horrors that people found intolerable when George Bush was in office, but are now blithely accepting because  “Sarah Palin would be worse,” grows longer every day. 

We’ll fight this, because it’s the right thing to do.  We will probably lose. But we will make it as painful as possible for any politician from any party to participate in this wholesale looting of the public sphere, this “shock doctrine” for America.  And maybe along the way we’ll get a vision of what comes next.  Because what we believe in as Americans, and what we stand for, is not something the Democratic party represents any more.

© 2011 FireDogLake.com 

Would an Economic Collapse Benefit the GOP?

My answer is yes and I will tell you why. Over the last two years leading up to the 2010 election, their main complaint (meaning GOP and the Tea Party) has been government is too big. The only way to grow the economy is to get rid of government waste, i.e., Medicare, Medicaid, Social Security, and funding for things like education. 

In my previous posts I have written about their plan on how to do this, which is called Starve the Beast. They want to create such an economic disaster through cutting of taxes personal and corporate so low that the economy can’t continue on its present course.

They have been very successful in their goal. Through the last decade, which began with a surplus, they cut taxes on the wealthy, slashed corporate tax rates to the point some are paying net negative (actually receiving refunds from the IRS), instituted Medicare Part D that was unfunded and was a huge give away to big PhRMA, on top of fighting 2 wars that were not paid for. 

Judging by Republicans actions in the last few weeks over the debt ceiling debate, it is my belief that they feel they would benefit by pushing talks to the last minute and creating turmoil in our financial system, which would result in rising interest rates on America’s debt.

This would put our economy in such a bind that it would create a scenario where our government could no longer continue Social Security payments, Medicare and Medicaid benefits, and cause already financially burden local municipalities who are already dependent on government subsidies to collapse and default on pension payments for retired government workers (which has already occurred in some areas that were already struggling). 

I wonder if this scenario does come to pass, would the Tea Party followers and social conservatives finally get it. When their parents are no longer able to reside in their own homes because of lack of government benefits or no longer have access to vital healthcare or be eligible to go to residential facilities or nursing homes, will it finally sink in who Republicans really work for?

About GOP-Supported ALEC (American Legislative Exchange Council)

In the last few months this group has been in the news lately. I have to admit that I had never even heard of ALEC and was not even on my radar (thanks to Maddow now they are), so needless to say, I have been trying to catch up on finding out specifics about this organization, what it is they stand for and what is their purpose.

Just an FYI, what was most startling is they actually write bills or provide “model legislation” that have actually passed, some virtually verbatim, i.e., the Arizona immigration law. Each year approximately 800 bills are introduced in the states which are based in whole or in part on ALEC model legislation. Annually, about 20% of these introduced bills become law.

I have been to many different websites, read many articles and this is what I found.

Who they are:
I found 2 mission statements, one from their website and the other Wikipedia, but both pretty much are the same.

 ALEC website:
…to advance the Jeffersonian principles of free markets, limited government, federalism, and individual liberty, through a nonpartisan public-private partnership of America’s state legislators, members of the private sector, the federal government, and general public.

…to promote these principles by developing policies that ensure the powers of government are derived from, and assigned to, first the People, then the States, and finally, the Federal Government.

…to enlist state legislators from all parties and members of the private sector who share ALEC’s mission.

…to conduct a policy making program that unites members of the public and private sectors in a dynamic partnership to support research, policy development, and dissemination activities.

…to prepare the next generation of political leadership through educational programs that promote the principles of Jeffersonian democracy, which are necessary for a free society.

Wikipedia: To advance the principles of free markets, limited government, federalism, and individual liberty, through a partnership between America’s state legislators and concerned members of the private sector, policy experts and the general public. ALEC brings state lawmakers and business people together to substantively create policy. Both public and private task force members have a voice and a vote in shaping bills. In addition to state lawmakers, ALEC consists of about 300 corporate, foundation, and other private sector members.

Who belongs to ALEC:
See if a representative from your state is listed.

Board Members
South Carolina Representative Liston Barfield
Utah Senator Curt Bramble
North Carolina Representative Harold Brubaker
Indiana Senator Jim Buck
Texas Representative Tom Craddick
New Mexico Senator Kent Cravens
Mississippi Representative Jim Ellington
Louisiana Representative Noble Ellington
Indiana Representative Dave Frizzell
Mississippi Senator Billy Hewes III
Virginia Representative Bill Howell
New York Senator Owen Johnson
Arkansas Senator Michael Lamoureux
Tennessee Representative Steve McDaniel
Kansas Senator Ray Merrick
Connecticut Representative John Piscopo
Nevada Senator Bill Raggio
Nevada Senator Dean Rhoads
Georgia Senator Chip Rogers
Ohio Senator William Seitz
Tennessee Representative Curry Todd
Iowa Representative Linda Upmeyer
Kansas Senator Susan Wagle

Private Enterprise Board
Ms. Sano Blocker, Energy Future Holdings
Mr. Don Bohn, Johnson & Johnson
Mr. Jeff Bond, PhRMA
Mr. Bill Carmichael, American Bail Coalition
Mr. Derek Crawford, Kraft Foods, Inc.
Mr. John Del Giorno, GlaxoSmithKline
Mr. Matt Echols, Coca-Cola Company
Mr. Jim Epperson, Jr., AT&T Services, Inc.
Mr. Michael Hubert, Pfizer Inc
Ms. Teresa Jennings, Reed Elsevier, Inc.
Mr. Ken Lane, DIAGEO
Mr. Kelly Mader, Peabody Energy
Mr. Bernie McKay, Intuit, Inc.
Mr. Mike Morgan, Koch Industries, Inc.
Mr. Kevin Murphy, ExxonMobil Corp.
Mrs. Sandra Oliver, Bayer Corporation
Mr. David Powers, Reynolds American Inc.
Ms. Maggie Sans, Wal-Mart Stores, Inc.
Mr. Russell Smoldon, Salt River Project
Mr. Toby Spangler, Altria Client Services, Inc.
Mr. Roland Spies, State Farm Insurance Co.
Mr. Pat Thomas, United Parcel Service
Mr. Jerry Watson, Chairman Emeritus

Model Legislation: 
Below has been gathered from multiple sites including the ALEC site.

One of the most important resources ALEC provides to its members is model legislation. Through the combined effort and unique partnership of public and private sector members, model legislation is drafted, deliberated and approved by one of ALEC’s nine Task Forces. These bills provide a valuable framework for developing effective policy ideas aimed at protecting and expanding our free society.

ALEC’s public sector Board of Directors has thirty days to review, and approve or reject, each bill before it becomes official ALEC policy. Legislative members can introduce ALEC model bills in their states and amend them as best fits their needs.

While ALEC provides the resources, our members, long known for their legislative activism, introduced hundreds of bills based on ALEC model legislation. During the latest legislative cycle, dozens of ALEC model bills were enacted into law.

ALEC has approximately three hundred private sector members including corporations, state and national think tanks, and trade associations. Some corporations and trade groups that have supported ALEC include: American Nuclear Energy Council, American Petroleum Institute, Coors Brewing Company, Texaco, PhRMA, Philip Morris, R.J. Reynolds Tobacco, VISA, Exxon Mobile, NRA, Amway and others.

Groups critical of ALEC claim that the organization is controlled by the entities that fund it, subsequently promoting donors’ agendas and goals, along with attempting to advance legislation which favors their interests.

I will be continuing my research of them and find out just how much influence they have. Would love to hear what you think and if you have anything to add.