The Occupy Wall Street movement struck nerves that have caused knees to jerk. Fox News, the Wall Street Journal and GOP hierarchy express disdain and contempt for the have nots, characterizing them as a generally reprehensible band of societal detractors who should just get a job. Most of them would take one if actually offered.
While it is common knowledge that we have a wealthy class in the U.S., it is also something that is both accepted and ignored. The wealthy in this country have been treated far more fairly and equitably than the wealthy class in any other nation.
Their property rights are held sacrosanct and they are not regressively taxed as in many other countries. The rich have absolutely nothing to complain about. All the ads and commercials aired on television are expressly tailored for them.
Those that are not part of the wealthy class want to be, so rather than attacking the rich, they work to join it. The OWS group is depicted by the right as hating the rich or an enemy of capitalism. I don’t think that is the case, but I will ask them when visiting New York City this month. While most everyone knows that there is disparate wealth in the U.S., it is a lot more disparate than the vast majority realize. The OWS protestors are educating the public on the disparity of wealth by describing themselves as “we are the 99 percent.”
Who is the 1 percent? How much wealth and income is required to be part of the elite wealth class in the U.S.? Membership in the 1 percent can be measured by more than one way – by wealth or income. According to the Federal Reserve Board’s study of Americans’ finances, IRS decides the cutoff for qualifying for being in the 1 percent club is $9 million in household wealth or a $700,000 income.
Farmland value appreciation on a couple thousand acres of corn could quantify those farmers to be in the 1 percent. The top 20 percent of U.S. taxpayers reported 50.3 percent of the income and have 85 percent of the wealth. The bottom 20 percent of Americans collect just 3.3 percent of the income.
The middle class, the 60 percent in between, receive 46.3 percent of the income. In terms of 2010 annual income, the top 20 percent of households earn $99,891 per year. The bottom 20 percent earned $20,699, which is below the poverty level. The middle class earned between $39,311 and $62,150.
“Overall, in inflation-adjusted dollars, average after-tax household income grew by 62 percent from 1979 to 2007, according to the Congressional Budget Office. This sounds great, but only until you examine the breakdown. The bottom one fifth of lowest incomes, was up 18 percent. The middle three-fifths, increased by 40 percent. The top 20 percent was compounded on a much larger number, so dollars add up much more significantly. The top 1 percent of earners’ income increased by an astonishing 275 percent.”
In 1962, the top 1 percent had a $6 million household net worth. By 2009, their net worth had risen to $14 million. The top 20 percent had an average net worth of $800,000 in 1962. Their net worth had appreciated to $1.7 million by 2009. The middle 20 pecent had a net worth of $52,000 in 1962 and $65,000 by 2009. The bottom 20 percent had a negative net worth of -$7,000 in 1962. They went deeper in debt since, with an estimated -$27,000 negative net worth in 2009.
The bottom line of all this is that the statistics are pretty clear on one thing … the rich are not being taken advantage of in the U.S. The statistics show that the rich are getting richer and the poor poorer under the current tax system which does favor the rich.
I think that if there is something that the Occupy Wall Street and Tea Party agree on, its crony capitalism. It isn’t just the bailouts, but the grants, loans, tax breaks and guarantees that have created a corporate welfare state that actually, in terms of real dollars, dwarfs what the welfare queens even dreamt of getting from the government.
Estimates are that corporate welfare tallies $220 billion annually. Regardless of what they say on the campaign trail, GOP candidates like Rick Perry do want to choose winners and losers. That would be $220 billion the country would not have to borrow.
While corporate taxes are X and capital gains are Y, they are not paying X and Y. By the time they take deductions and exemptions and incentives, the nominal tax rate of what is actually paid minus the corporate welfare is roughly half the official 35 percent corporate tax rate.
None of the Fortune 500 pay 35 percent after tax breaks. The effective corporate tax rate is 18.5 percent. A quarter of corporations already pay just 9 percent as prompted by Herman Cain. Dupont, the parent of Pioneer Hybrid reportedly paid no income taxes for 3 years.
Among Fortune 500 companies, 78 collectively made $1.4 trillion in profits and paid nothing in taxes; but it did cost them some investment in lobbyists and campaign donations to corrupt the tax code over time.
David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.