INEQUALITY: Of the 1%, by the 1%, for the 1%

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?printable=true#ixzz1ULlbBu4b

US military spending is down to 4% GDP, compared to the Eisenhower administration's 15% in the Fifties.  

And 25% of American citizens pay 86% of the federal income tax.  How much more would you consider their "fair" share? 

Currently, 51% of Americans pay no federal income tax at all. 

If you taxed "the rich" (a conveniently flexible term) 100% and confiscated their wealth, you could not pay a year's worth of interest on the national debt.

You sir, are an idiot.

BC...feel free to moderate.

Lack of regulation allows lucky people to take advantage of less lucky people. It is a hallmark of an immature system run by those advantaged lucky people.

Mike:

what do you make of Warren Buffet's observation that he's taxed at a lower rate than his own secretary? Forbes estimates his worth at $50 billion, so maybe we can agree he qualifies as "rich."

"Mr. Buffett said he paid just under $7 million in federal payroll and income taxes last year, about 17 percent of his income, a lower percentage than anyone else in his office.

Echoing comments he has made in the past, he called on Congress to make the tax system more fair by rolling back the so-called Bush tax cuts on people who earn more than $1 million a year and on income from capital gains and dividends. He would also close the loophole allowing hedge fund managers to be taxed at a lower rate. ... the tax increase on all three fronts would generate as much as $500 billion in new revenue over the next decade — about a third of what the Congressional committee is supposed to cut from the deficit. ...

Mr. Buffett called for two new tax brackets for high earners — for income above $1 million a year and another above $10 million. While Mr. Buffett’s proposal did not suggest a rate, the Tax Policy Center has estimated that a 50 percent tax rate on income over $1 million would raise $48 billion over the next decade.

...

Restoring capital gains and dividend rates to the levels before the Bush tax cuts — when capital gains were taxed at a top rate of 20 percent and dividends were treated as ordinary income — would bring the Treasury an additional $340 billion over the next decade."

http://www.nytimes.com/2011/08/16/business/buffett-calls-on-congress-to-raise-taxes-on-the-rich.html?_r=1&ref=business

BTW, "In 1950, the top income bracket had a 91 percent rate; today it is 35 percent."

I think we can classify Warren Buffet as rich.  I applaud Buffet's willingness to share his wealth and despite his tax rate, he is entitled to donate as much of his wealth ABOVE his mandatory tax bill as he desires.  That is actually built into the tax law--the ability to donate money to the federal government.  He is not however, entitled to volunteer the wealth of others.

I also note that the majority of Buffet's income is from Capital Gains.  So too are the private pension plans of most Americans (including me).  Those capital gains are reinvested and create wealth for all Americans, not just rich Americans.  So the net effect of a hike in Capital Gains will be smaller senior citizen savings accounts and greater dependence on the government...exactly the desired endstate of Socialism.  Personally, I'd like to see capital gains rates reduced to 5% or less to spur investment capital and grow more Americans into rich Americans that can be like Buffet and give more away.   I'd like to be one of those rich Americans some day too!

But thanks for asking.

"Personally, I'd like to see capital gains rates reduced to 5% or less to spur investment capital and grow more Americans into rich Americans that can be like Buffet and give more away. "

An interesting idea.  Would you want to invest in the United States, or some place where the rate of return might be higher? 

Do you think the US would be in better shape if there were a few more rich Americans and many more poor Americans?

An interesting idea.  Would you want to invest in the United States, or some place where the rate of return might be higher? 

I invest domestically and internationally.  I believe in spreading the risk, rather than putting all my eggs in one basket.

Do you think the US would be in better shape if there were a few more rich Americans and many more poor Americans?

I reject the premise.  It is not a zero-sum game where someone must lose for another to gain.  A modest monthly investment over sufficient time is all it takes.  It's simply dollar-cost averaging and compound interest.  If you define "rich" as financially independent, then yes--it will make many, many more rich Americans who will not need public assistance.

The lack of regulation on the private ownership of capital exacerbates certain problems of unfairness in society; it does not cause the problems the US economy is suffering from. Those problems emerge from the freedom the US government has to spend more than it takes in taxes. The solution for this problem is clear; do not allow government to create a national debt. The question of where it chooses to spend it is another matter.

It Is No Longer Safe To Invest In US

The head of state-owned Chinese rating agency Dagong, Guan Jianzhong, 57, speaks to SPIEGEL about China’s economic model, why he believes the rating system used by the Big Three is a threat to the world and the twilight of Western dominance.  

http://stratrisks.com/geostrat/706

"there does NOT have to be such a strawman question and mechanisms already exist which empower class mobility."

The question is NOT a strawman. Many people take it as an accurate description of what's happened in the U.S. since the 1970's.

" The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent."

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

One percent of the U.S. population owns approximately 40 percent of the nation's wealth.(http://www.npr.org/2011/04/16/135472478/study-americas-wealth-not-widely-distributed)

A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244."

Do you think this is an accurate description? If so, how do you explain it?  If not, how would you describe what's been happening?

If we're going to discuss "mechanisms" and "class mobility" (I'm not sure what that means), we should at least start from a common bottom line.

No I don't think it's an accurate description. 

That 'Top One Percent'

Americans in the top one percent, like Americans in most income brackets, are not there permanently, despite being talked about and written about as if they are an enduring "class" -- especially by those who have overdosed on the magic formula of "race, class and gender," which has replaced thought in many intellectual circles.

At the highest income levels, people are especially likely to be transient at that level. Recent data from the Internal Revenue Service show that more than half the people who were in the top one percent in 1996 were no longer there in 2005.

Among the top one-hundredth of one percent, three-quarters of them were no longer there at the end of the decade.

These are not permanent classes but mostly people at current income levels reached by spikes in income that don't last.

Just as there may be spikes in income in a given year, so there are troughs in income, which can be just as misleading in the hands of those who are ready to grab a statistic and run with it.

Many people who are genuinely affluent, or even rich, can have business losses or an off year in their profession, so that their income in a given year may be very low, or even negative, without their being poor in any meaningful sense.

This may help explain such things as hundreds of thousands of people with incomes below $20,000 a year living in homes that cost $300,000 and up. Many low-income people also have swimming pools or other luxuries that they could not afford if their incomes were permanently at their current level.