It is no surprise to working families that the rich are getting richer and richer while the rest of us are using our credit card to buy groceries.
The numbers, though, are a little stunning. The gap between the upper crust of Americans, those whose yearly income exceeds $348,000, and the rest of us deepened, says IRS records for 2005, the most recent available. There are 300,000 of these upper crusts who own corporations and banks, and 150 million of us who work for those corporations and banks. At the close of 2005, for every little dollar in our paycheck, they got $440, found a study by professors Emmanuel Saez and Thomas Piketty, economists at the University of California–Berkeley, who studied tax data.
That figure is astounding, especially so because the upper crust would never dream of cheating on their income tax or hire attorneys to slither through loopholes!
Capitalism works for the upper crust
This is not a one-year glitch. Data posted on Saez’s web site show that while wages increased 15.2 percent between 1970 and 2005, the average CEO check grew by 2,193 percent for the same period. Who says capitalism isn’t working?
The income spread between the majority of the people, who are working families, and the tiny minority who benefit from their labor has not been this wide since 1928, the year before the Great Depression began.
The Saez/Piketty study gets better. In 2005, while 1 percent of the population increased their fortunes by $1.1 million each, 90 percent of us took a hit, dropping by .06 percent or an average of $172.
“If the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness,” Saez told The New York Times. “It can have important political consequences.”
He added that other data for 2006 shows the incomes for working families increased for the first time in several years, but predicted that income gap between the many and the few is even wider.
Bush defends the indefensible
Although quick to defend tax breaks to the wealthy 300,000 who do not use payroll deductions, and rejecting the imposition of taxes on them, President Bush provided one political response to the yawning income gap. “The fact is that income inequality is real — it’s been rising for more than 25 years,” he said in a Jan. 31 speech on Wall Street. “The reason is clear: We have an economy that increasingly rewards education and skills because of that education.”
For working families, Bush tax cuts produced little change in their bank account, while for the 300,000, it meant an average increase of $150,000 per year.
Money for billionaires, but not for health care
“The nation faces some tough choices in coming years,” said Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a research group. “That such a large share of the income gains are going to the very top, at a minimum, raises serious questions about continuing to provide tax cuts averaging $150,000 a year to people making more than a million dollars a year, while saying we do not have enough money to provide health insurance to 47 million and cutting education benefits.”
Tax the rich – it’s only fair
Unions, their members and working families have another political response to income inequality: strengthen worker’s rights to join a union and bargain a contract by making the Employee Free Choice Act the law and tax the beneficiaries of their ill-gotten booty. It’s only fair, as professor Saez says.
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