Friday, August 26, 2011

The Great Economic Divide

The Increasing Gap Between the “Haves” and the “Have-Nots."  Surveys taken over time show that the gap between the “haves” and the “have-nots” is very wide and continues to get wider with each passing year. Most people know that a gap exists, but few truly comprehend just how wide that gap has become, that it is actually increasing, and that the impact that this gap has on our government and our economy. Here are a few examples of the disparity:

Wealth Disparity. A 2001 survey reported that the top 1 percent owned 39.7% of the non-home wealth, while the bottom 95 percent owned 32.5%
By 2004, the gap grew, and the survey reported that the top 1 percent owned 42.2% of the non-home wealth, while the bottom 95 percent owned 31%.

By 2007, the gap widened more, as the survey reported that the top 1 percent owned 48.4% of the non-home wealth, while the bottom 95 percent owned 20%

In only six years, the non-home wealth of the top 1% went from 39.7% to 48.4%, up by 8.7%.  Meanwhile, the non-home wealth of the bottom 95% went from 32.5% to 20%, down 12.5%.

The gap between these two groups widened from 7.2% to 28.4% – almost a fourfold increase in a six-year period. Yes, the rich got richer and the poor got poorer. And, if something isn't done about it, that gap will just continue to widen, along with all the political clout and influence that wealth brings to what is, in sheer numbers, an infinitesimal minority called the super rich.

Nota Bene. Keep in mind that these figures are comparing a very small 1%of the population against a huge 95%, which makes the results far more dramatic. They also do not include homes, which are generally going to cost significantly more for the exceedingly wealthy, and are likely to include second and third homes, and more. costing millions of dollars. The inclusion of these would make the disparity even wider.

Privately-Held Wealth Disparity. In 2007, the top 1% (the uppermost class) owned 34.6% of all privately-held wealth in this country. The next 19% (mostly managers, professionals, and small business owners) held 50.5%, As a result, this 20% minority owned a huge 85% of all privately-held wealth, while the bottom 80% (primarily wage and salary workers) were left with only15% of all privately-held wealth – a tremendous disparity.

Stock Ownership Disparity. When it comes to stock ownership, we see similar disparities:  The top US 20% owned 89.1% of the stock in 2001, 90.6% in 2004 and 91.1% in 2007.  The bottom 80% owned 10.7% of the stock in 2001, 9.4% in 2004, and 8.9% in 2007.  The top 20% (in actual numbers, only one-fourth the size of the bottom 80%) owns ten times more stock.

Income and Capital Gains Tax Rate Disparity.  To add insult to injury, Forbes Magazine recently reported that the The 400 Richest Americans pay their federal income tax at an effective rate of on;y 18% That's right – only 18%. Even Warren Buffett, one of America's riches, reports that his effective tax rate is only 17.4%, while the 20 people who work for him in his office pay at rates ranging from 33% to 41%.  The wealthy elite once paid an average 30% of their total income in taxes, but now they pay 40% less, thanks to the Bush era's income tax cuts and a cut in the capital gains rate -- both of which favor the wealthy..

Sharing the Pain?  Forbes also noted that “Shockingly, the plan to raise the debt ceiling collects nothing from the wealthiest Americans to reduce our budget deficit.” Nor does it address our national debt, the burden on the average citizen, or the huge and growing disparity between the super-rich and the rest of the population. Forbes states further, “It’s a sad day for the principle of sharing the pain equitably.”

Coming Up. 

How the Pursuit of Profits Kills Innovation and the Economy

An Open Letter to the One Percenters

Duopoly and Wealth: The Ties that Bind
                        Political Duopoly: Working Partner of the Plutocracy

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