Friday, February 19, 2010

Article Of The Week

Former Bush 43 press secretary Ari Fleischer sees the very wealthy paying a disproportionate share of income taxes and calls it "redistribution of income, and it is getting out of hand."

Rush Limbaugh believes President Obama "thinks that the poor and lower middle class have had the wealth that is rightfully theirs stolen by other people. It is his intention to return the nation's wealth, quote, unquote, to its rightful owners."

Senator John Thune (R-SD), who liked the bailout of huge financial institutions when it was proposed by, and approved during the administration of, a Republican President, is aghast that President Obama wants to limit the ability of banks to make risky investments and threaten another economic cataclysm. He claims Democrats want to "create enough animosity toward Wall Street and corporate America, they get into this traditional sort of Democrat rhetoric and tap into the populist anger out there. For Democrats to be successful they’ve got to create a sense of class warfare and an us versus them mindset."

It's a slightly more modern variation of the "Democrats are waging class warfare" that the late syndicated columnist Robert Novak used to be obsessed with. And to be sure, class warfare has been waged in this country for some time.

Only the attack has been on the American middle and lower classes and not on the wealthy, as pointed out by Jon Perr in "The Bush 400" on February 19. (Another splendid piece on the distribution of benefits to the wealthy came from Perr last April.)

Reprinting a portion of a chart from The New York Times, Perr notes "the income share of the 400 richest Americans doubled over the past decade. From 2001 through 2007, the average income (in thousands) of the 400 Americans with the highest income soared from $131,099 to $344,759. The average income of the individual in this class rose from $263.3 million to $344.8 million (a 31 percent increase) from 2006 to 2007 alone. This was nine times the rate of increase for the bottom 90 percent of the population. Income of the bottom 90% of the population crawled from $33,445 to $33,546. For all millionaires, after-tax income rose by 7.6%, "while the gains for the middle quintile and bottom 20% of Americans were a paltry 2.3% and 0.4%, respectively."

Here are some of the facts:

* The effective tax rate of the 400 richest taxpayers in the nation dropped from 29.4% in 1993 to 16.6% in 2007. During that period, their income went up more than seven-fold, to an average of $345 million. Income of the bottom 90% increased from $29,577 to a mere $33,546, far less than 20%. That would be an advantage of more than 35 times, during which the share of all adjusted income of the privileged group rose from .52% to 1.59%.

* Among those 400 eligible to pay the top rate in 2007, only 33 actually paid that 35%.

* From 2006 to 2007 alone, the average income of the bottom 90% rose only 3%, but 31% for the top 400, whose share of adjusted gross income rose by .28% while their effective tax rate dropped by .55%.

* The highest marginal tax rate for single filers (not in constant dollars): in 2010, 35% for income over $373,650; in 1993, 39% for income over $250,000; in 1986, 50% for income over $88,270; and in 1980, 70% for income over $108,300.

Over the last three decades, the top tax rate has continuously dropped. The percentage of national income possessed by the wealthiest of all Americans has steadily increased (although not in 2008, due in part to the plunge of the stock market). Though outside of the scope of Perr's post, this would be less disturbing if real income of the middle class had risen significantly during this period. But it hasn't, and given Republican hostility to the middle class masked by charges of "socialism," the growing gap between the two Americas, the wealthy and the rest of us, may be our biggest challenge.

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