“More than half of economic income generated by closely held businesses does not appear on tax returns and that ratio has declined significantly over the past 25 years.”
“From 2014 to 2018, the 25 wealthiest Americans grew about $400 billion richer, according to Forbes. To an economist, this was income, but under tax law, it was mere vapor, irrelevant. And so this group, including the likes of Bezos, Elon Musk and Warren Buffett, paid federal income taxes of about 3.4% on the $400 billion.”
“On average, the rate of income tax that people pay climbs as incomes ascend into the top 1%, but when you get to the range of $2M-$5M, that trend stops.
After that, average tax rates actually drop the further up in income you go.”
Elon Musk’s wealth has surpassed $200 billion. It would take the median U.S. worker over 4 million years to make that much.
Wealth inequality is eating this country alive. We’re now in America’s second Gilded Age, just like the late 19th century when a handful of robber barons monopolized the economy, kept wages down, and bribed lawmakers.
While today’s robber barons take joy rides into space, the distance between their gargantuan wealth and the financial struggles of working Americans has never been clearer. During the first 19 months of the pandemic, U.S. billionaires added $2.1 trillion dollars to their collective wealth and that number continues to rise.
Income is what you earn each week or month or year. Wealth refers to the sum total of your assets — your car, your stocks and bonds, your home, art — anything else you own that’s valuable.Valuable not only because there’s a market for it — a price other people are willing to pay to buy it — but because wealth itself grows.
As the population expands and the nation becomes more productive, the overall economy continues to expand. This expansion pushes up the values of stocks, bonds, rental property, homes, and most other assets. Of course recessions and occasional depressions can reduce the value of such assets. But over the long haul, the value of almost all wealth increases.
Lesson: Wealth compounds over time.
Next: personal wealth comes from two sources.The first source is the income you earn but don’t spend. That’s your savings. When you invest those savings in stocks, bonds, or real property or other assets, you create your personal wealth — which, as we’ve seen, grows over time.
The second source of personal wealth is whatever is handed down to you from your parents, grandparents, and maybe even generations before them — in other words, what you inherit.
Lesson: Personal wealth comes from your savings and/or your inheritance.
Much of their gains over the last 40 years have come from a dramatic increase in the value of shares of stock.
For example, if someone invested $1,000 in 1978 in a broad index of stocks — say, the S&P 500 —theywould have $31,823 today, adjusted for inflation.
Who has benefited from this surge? The richest 1 percent, who now own half of the entire stock market. But the typical worker’s wages have barely grown.
Lesson: Most Americans don’t make enough to save money and build wealth.
So as income inequality has widened, the amount that the few high-earning households save — their wealth — has continued to grow. Their growing wealth has allowed them to pass on more and more wealth to their heirs.
These children will be able to live off of this wealth, and then leave the bulk of it — which will continue growing — to their own children … tax-free. After a few generations of this, almost all of America’s wealth could be in the hands of a few thousand families.
Lesson: Dynastic wealth continues to grow.
III. Why wealth concentration is a problem
Concentrated wealth is already endangering our democracy. Wealth doesn’t just beget more wealth — it begets more power.
Dynastic wealth concentrates power into the hands of fewer and fewer people, who can choose what nonprofits and charities to support and which politicians to bankroll. This gives an unelected elite enormous sway over both our economy and our democracy.
If this keeps up, we’ll come to resemble the kind of dynasties common to European aristocracies in the seventeenth, eighteenth, and nineteenth centuries.
The racial wealth gap is even starker. The typical Black household owns just 13 cents of wealth for every dollar of wealth owned by the typical white household. The pandemic likely increased this gap, too.
In all these ways, dynastic wealth creates a self-perpetuating aristocracy that runs counter to the ideals we claim to live by.
Lesson: Dynastic wealth creates a self-perpetuating aristocracy.
IV. How America dealt with wealth inequality during the First Gilded Age
Roosevelt’s answer was to tax wealth. Congress enacted two kinds of wealth taxes. The first, in 1916, was the estate tax — a tax on the wealth someone has accumulated during their lifetime, paid by the heirs who inherit that wealth.
The second tax on wealth, enacted in 1922, was a capital gains tax — a tax on the increased value of assets, paid when those assets are sold.
Lesson: The estate tax and the capital gains tax were created to curb wealth concentration.
But both of these wealth taxes have shrunk since then, or become so riddled with loopholes that they haven’t been able to prevent a new American aristocracy from emerging.
The Trump Republican tax cut enabled individuals to exclude $11.18 million from their estate taxes. That means one couple can pass on more than $22 million to their kids tax-free. Not to mention the very rich often find ways around this tax entirely. As Trump’s former White House National Economic Council director Gary Cohn put it, “only morons pay the estate tax.”
What about capital gains on the soaring values of wealthy people’s stocks, bonds, mansions, and works of art? Here, the biggest loophole is something called the “stepped-up basis.” If the wealthy hold on to these assets until they die, their heirs inherit them without paying any capital gains taxes whatsoever. All the increased value of those assets is simply erased, for tax purposes. This loophole saves heirs an estimated $40 billion a year.
This means that huge accumulations of wealth in the hands of a relatively few households can be passed from generation to generation untaxed — growing along the way — generating comfortable incomes for rich descendants who will never have to work a day of their lives. That’s the dynastic class we’re creating right now.
Lesson: The estate tax and the capital gains tax have been gutted.
Why have these two wealth taxes eroded? Because, as America’s wealth has concentrated in fewer and fewer hands, the wealthy have more capacity to donate to political campaigns and public relations — and they’ve used that political power to reduce their taxes. It’s exactly what Teddy Roosevelt feared so many years ago.
V. How to reduce the wealth gap
So what do we do? Follow the wisdom of Teddy Roosevelt and tax great accumulations of wealth.
The ultra-rich have benefited from the American system — from laws that protect their wealth, and our economy that enabled them to build their fortunes in the first place. They should pay their fair share.
The majority of Americans, both Democrats and Republicans, believe the ultra rich should pay higher taxes. There are many ways to make them do so: closing the stepped up basis loophole, raising the capital gains tax, and fully funding the Internal Revenue Service so it can properly audit the wealthiest taxpayers, for starters.
Beyond those fixes, we need a new wealth tax: a tax of just 2 percent a year on wealth in excess of $1 million. That’s hardly a drop in the bucket for centi-billionaires like Jeff Bezos and Elon Musk, but would generate plenty of revenue to invest in healthcare and education so that millions of Americans have a fair shot at making it.
One of the most important things you as an individual can do is take the time to understand the realities of wealth inequality in America and how the system has become rigged in favor of those at the top — and demand your political representatives take action to unrig it.
Wealth inequality is worse than it has been in a century – and it has contributed to a vicious political-economic cycle in which taxes are cut on the top, resulting in even more concentration of wealth there – while everyone else lives under the cruelest form of capitalism in the world.
We must stop this vicious cycle — and demand an economy that works for the many, not one that concentrates more and more wealth in the hands of a privileged few.
“I need feminism because… I definitely deserve to get PAID as much as (or more than) anyone else.”
- If you are a casual worker, you do not deserve to get paid as much as the store manager. - If you are a high school teacher, you do not deserve to get paid as much as a university professor. - If you are a nurse, you do not deserve to get paid as much as a doctor. - If you are an apprentice chef, you do not deserve to get paid as much as the head chef. - Just because you are a woman, doesn’t mean you deserve to get paid as much, or more than a man (and vice versa).
No one deserves anything, especially if the only factor contributing to that entitlement is your gender. You earn your pay. Simple as that. If you choose a lower income job, then you need to realise that you will earn a lower income than someone else who has chosen a higher income job.
How about an example to make this more clear: CHILDREN GET PAID 2c FOR EVERY DOLLAR AN ADULT MAKES!
Now, is it reasonable to call that discrimination towards children? Should we stage protests and demand an intervention to ensure that parents are forced to pay their kids $11.45 for every hour that they stand at their shitty homemade lemonade stall? No, because in the situation involving the children/adults wage gap, it is so blatantly obvious that the statistic involved doesn’t disclose some really crucial information such as: - How often do children work, compared to adults? - How much time off do children take, compared to adults? - How labour intensive is the work children do, compared to adults? - Do the majority of children actively choose lower income jobs to accommodate their lifestyles, compared to adults? - Do the majority of adults sacrifice a larger portion of their time and lifestyle to take these higher income jobs, compared to children?
So when we spew around this statistic about women earning 77c for every dollar a man makes… Why isn’tit is so blatantly obvious that the statistic involved doesn’t disclose some really crucial information such as: - How often do women work, compared to men? - How much time off do women take, compared to men? - How labour intensive is the work women do, compared to men? - Do the majority of women actively choose lower income jobs to accommodate their lifestyles, compared to the majority of men? - Do the majority of men sacrifice a larger portion of their time and lifestyle to take these higher income jobs, compared to women?
Is this really so hard to comprehend, or are we going to blame the patriarchy again?
(PS. Most modern countries have some sort of legal watchdog that prevents and punishes discrimination in the workforce. In Australia we have what is called the Fair Work Ombudsman that gives out information and advice and informs you of your legal rights for those who find themselves in situations that involve discrimination. If you are being discriminated against in the workforce, including payment issues, these institutions will help you out. You don’t have an excuse not to ask.)
Mom you can stop stressing Mom you can stop crying Mom I can buy the groceries Mom I can pay for the house Mom I can give you whatever the fuck you need money
where tf you paying 2k rent lmao? i’m not even making that much
wait.why does it only have one head?
are you fucking with me
Dude. The “affordable housing” rent here is 1k. I know people that don’t earn ENOUGH money to pay for affordable housing.
-fae
I just went through the process of failing to qualify for a mortgage.
My rent is $1,100 which is literally the minimum for my house size of a three bed two bath here in the city that sits right on the inner loop; average is $2,400 with some as high as $4k. The mortgage would’ve been $1,300 for a $180k house. Average cost for a house on the lower end is $350k.
Anyways, yeah gist of it is we didn’t qualify because it was too big of a risk to have a $200 gap even though we technically DID have that extra amount available for the mortgage. Our income was cut drastically on paper because my husband works for a restaurant while I run my own food stand business on the side.
My income doesn’t count if the business is less than two years old. Doesn’t matter if I’m pulling in six figures, as the loan officer said in his own words. However, if I were to get a job that said they were giving me x amount and it was enough to fill the gap, didn’t matter if I haven’t technically started yet it would still count towards income. So I picked up a job waiting tables for another acquaintance.
My first paycheck was $300. My second $660. It’s all a joke and we’re the punchline. They don’t want us to live, they want us to barely survive.
(also, sidenote, I honestly have no idea if @red-spy-is-in-the-base is fucking or not but they meant the two headed bear flag from the Fallout game)
Workers compete for jobs. Employers choose those who will accept the lowest wage.
As poorer nations entered the market, employers moved jobs en masse to those places. Workers do the same work on very low wages.
This created mass unemployment in the countries where capitalism began.
Without an income, individuals cannot buy what capitalists are selling. Workers in poor countries can’t afford the products of their labour - wages are too low.
Welfare programmes, although they were won by workers, create a consumer base in the countries left behind by industrial capitalists (they enable the unemployed to buy).
The market depends on the capitalist state. They appear antagonistic, but the capitalist state continually saves the market from extinction by its own hand (this is a ’bourgeois dictatorship’).
Maximisation of profit minimises disposable income. Therefore, a ‘free’ market is impossible, as is ‘anarcho-capitalism’ (also known as ‘right libertarianism’).
It’s no secret that the disparity in wealth is growing. This inequality manifests itself geographically; in most cities, the rich tend to cluster in opulent neighborhoods while poorer families live in more affordable areas. Here, I’ve mapped the median household income by census tract for nine counties (labeled by the largest city in the county). I selected cities that highlight the remarkable degree of economic segregation that can occur.
