Is Warren 'Winning'?

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A look at the victors and vanquished after a generation of unrelenting class war in the United States

A look at the victors and vanquished after a generation of unrelenting class war in the United States

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  • If we look at the entire top 10 percent, those folks did nicely. Between 1975 and 2006, after inflation, their incomes a little more than doubled.If we just look at the top 5 percent, even better. Top five incomes went up nearly 150 percent.But what about just the top 1 percent? Now we’re really on to something.
  • The richest 400 American families have nearly as much wealth as theover 58 million families in the bottom half.
  • Compared to the rest of us, our rich are as rich as they’ve ever been in modern times.
  • The top 1 percent of American families have more wealth than the bottom 90 percent – and not just more wealth, but $3.5 trillion more in wealth and that’s not even counting the wealth of anyone who appears in the Forbes 400. The Federal Reserve does not survey these folks for privacy reasons.
  • We’ve seen who’s winning the class war. Who’s losing?

Transcript

  • 1. Is Warren Winning? The victors and vanquished after a generation of unrelenting class war Sam Pizzigati Institute for Policy Studies America’s Future Now! Washington, D.C. June 1, 2009
  • 2. The sage of Omaha speaks “There‟s class warfare, all right, but it‟s my class, the rich class, that‟s making war, and we‟re winning.” Warren Buffett, billionaire investor, New York Times, November 26, 2006
  • 3. But who sits in Warren‟s class? Who exactly is really winning?
  • 4. Is Warren‟s income class . . . Income needed to enter affluent income categories, 2006 $388,806 $153,542 $108,904 Top 10% Top 5% Top 1% Data source: Internal Revenue Service
  • 5. How we define income class matters Income increase, after inflation, 1975 - 2006 265.2% 146.0% 109.5% Top 10% Top 5% Top 1% Data source: Internal Revenue Service
  • 6. The real winners sit at the summit Income increase, after inflation, 1975 - 2006 815.8% 406.5% 184.8% 113.0% Bottom half, top Top 99.5 - 99.9% Top 99.9 - 99.99% Top 0.01% 1% Source: Saez-Piketty analysis of Internal Revenue Service data
  • 7. Warren‟s side: even more exclusive Average income, 2006 $263,306,00 0 $29,726,899 Top 0.01% (14,836 families) Top 400
  • 8. Since 1955, top 400 income up 2048% $263,306,00 0 Top 400 average income, 1955 and 2006, inflation- adjusted $12,256,976 1955 2006
  • 9. Top 400 wealth even more impressive Net worth, 2007 $1.61 trillion $1.54 trillion Forbes 400 Bottom 50%, U.S. families Source: Federal Reserve Board
  • 10. Our rich by far the world‟s richest World billionaires, by nation, 2009 Rest of world, 252 USA, 369 China, 47 India, 24 UK, 25 Russia, 32 Germany, 44 Source: Forbes magazine
  • 11. The Last 30 Years: A Grand Reversal Average income of top 0.01 percent of U.S. families as a multiple of average income of bottom 90 percent of U.S. families Top 0.01% in 1000 Top 0.01% in 2006 makes 1928 makes 976 times 892 times the the bottom bottom 90% 90% 800 average income 600 Top 0.01% in Top 0.01% in 1980 makes 1955 makes 176 times the 400 179 times the bottom 90% bottom 90% 200 0 1917 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
  • 12. How extremely concentrated has wealth in the United States become? Total net worth, 2007 $21.9 trillion $18.4 Does not trillion include total net worth of the Forbes 400 Top 1% Bottom 90% Source: Federal Reserve Board, January 2009
  • 13. Who‟s losing the class war?
  • 14. Bottom 90%: Going nowhere fast $1,400,000 $1,242,595 $1,200,000 $1,000,000 $800,000 $600,000 Average top 1% income $400,000 $200,000 Average bottom 90% income $30,659 $0 1975 1979 1983 1987 1991 1995 1999 2003 2006
  • 15. The missing American Dream The more that income concentrates at the top, the less lives have improved for average Americans. Real family income growth, 1947–1979 vs 1979 - 2005 Up 116% Up 114% Up 111% Up 100% Up 99% Up 86% Up 81% Up 53% Up 25% Up 15% Up 9% Down 1% Bottom Fifth Second Fifth Middle Fifth Fourth Fifth Top Fifth Top 5% 1947-1979 1979-2005
  • 16. How did all this happen? One major factor: We stopped taxing the rich.
  • 17. Taxing the rich: now and then Top tax rates by income category 91% 35% 39.6% 25% 20% 15% 2009 2000 1959 Ordinary Capital Gains
  • 18. The Great Tax Shift Share of income paid in federal income tax by top 400 51.2% 17.2% 1955 2006
  • 19. Sweet times at the tippy top $263,306,000 Top 400 income and federal income tax, 1955 and 2006, inflation-adjusted $12,256,976 $45,216,000 $6,275,573 1955 2006
  • 20. The right’s argument „We‟re overtaxed‟ Not by comparison with our global peers Current top tax rate on income in top income bracket 45% 40% 40% 35% USA UK Germany France
  • 21. The right’s argument „The rich can easily avoid high taxes‟ But the wealthy pay more in taxes when tax rates start high 91% Tax rate on income in top income bracket 70% 35% Share of total income actually paid in taxes 51.2% 42.3% 17.2% 1955 1966 2006
  • 22. The right’s argument „High taxes endanger philanthropy‟ Foundation giving pales against revenue taxing the rich would generate $3.7 billion Average 1955 tax rate for top 400 $2.0 billion $1.9 billion Average current tax rate for top 400 $636 million John Paulson 2007 income Gates Foundation 2007 grants
  • 23. Understanding the impact of inequality The more equality, the more giving Indeed, everything that matters improves as we become less unequal The more middle class a society, research shows, the better the society for all the people in it.  The more democratic  The more economically vibrant  The more environmentally sound  The more honest  The more trustful  The more compassionate  The more healthy
  • 24. America‟s mid 20th century consensus Smart societies do not let wealth concentrate in a precious few hands. Smart societies tax the rich to invest in opportunity for all. ‘In many countries of the free world private enterprise is greatly different from what we know here. In some, a few families are fabulously wealthy, contribute far less than they should in taxes, and are indifferent to the poverty of the great masses of the people . . . Dwight D. A country in this situation is fraught Eisenhower National Automobile with continual instability. It is ripe for Show Industry Dinner Detroit, October 17, 1960 revolution.’
  • 25. Our current reigning wisdom We can‟t go back to the equality we had In 2004, to give America‟s bottom 80% the same share of the nation‟s income they received in 1979 “would have required transferring Lawrence $664 billion from the Summers, currently top 1% of director, Obama households to the White House National Economic bottom 80%.” Council “No one would suggest this is feasible or even desirable . . .”
  • 26. For a America that works for everyone, maybe we need to start doing the suggesting.