It's the Wealth Gap, Stupid

[TBF]

I know I'm preaching to the choir in this group, but nice to see relatively mainstream sources starting to talk about this:

It's the Wealth Gap, Stupid
Why the truly alarming economic trend is not income inequality.

—By Reid Cramer
Mon Feb. 13, 2012 3:00 AM PST

When Mitt Romney bowed to political pressure and released his 2010 tax return, it showed, to no one's great surprise, that the Romneys are rich. Really, really rich. They reported income of more than $21 million, itemized deductions of over $4.5 million, and a total tax bill of just over $3 million. They made charitable contributions of almost $3 million, although more than half of that went to their church.

But what really stood out in the tax return—beyond the presidential candidate's 13.9 percent tax rate—is not that Mitt makes a lot of money, it's that he has a lot of money. Romney's finances are illustrative of the growing gulf between haves and have-nots. It's not about income equality; it's about the widening wealth gap.

In recent years, the fortunes of the Romneys and others in their cohort have continued to grow, notably diverging from the majority of Americans still struggling to deal with a slow economic recovery...

... Recent estimates indicate that the while the top 1 percent earn 21 percent of the nation's income, they possess 36 percent of total wealth. This is especially troubling because while income dictates how well you're doing today, it is access to wealth (the stock of resources) that creates opportunities down the line...

more here: http://motherjones.com/politics/2012/02/its-wealth-gap-stupid

[limpyhobbler]

1. Hey

I just read that article.

One of the stats in the article really stood out to me so I wanted to make a post to draw extra attention to it:

One of the most dispiriting trends is a quickly expanding racial wealth gap. Prior to the recession, the average African American and nonwhite Hispanic families owned 10 percent of the wealth of the average white families. But the recession has hit hard. Not only do minority families have larger shares of their assets held as housing equity, they are also more likely to live in communities hard hit by foreclosures and housing price drops. New findings from Pew Charitable Trusts estimate that this figure has been cut in half: Minority families now own a nickel for every dollar of their white counterparts.

(emphasis added)
A nickle on the dollar. Wow.
That number is truly astonishing to me. Maybe it shouldn't be, but it is.

[TBF]

4. Interesting stat and not surprising -

I offer stats on the wealthiest Americans because they of course have most of the money - and this is how it breaks down for Fortune 500 CEO's and Board Members.

I found a report on corporate boardrooms of the Fortune 500 and lack of minority presence (fairly recent numbers):

In the Fortune 100, between 2004 and 2010:
Men still dominated boardrooms. In 2010 they held 82.0 percent of board seats; in 2004, 83.1 percent.
White men have actually increased their share of board seats in corporate America—from 71.2 to 72.9 percent. Minorities and women shared the remainder, with very few seats occupied by Asian Pacific Islanders, Hispanics, or minority women in particular. With the exception of African-American men, who lost seats, the percentages have not changed notably since 2004.
More specifically, African-American women held 2.1 percent of seats; Hispanic women held 0.9 percent; Asian Pacific Islander women held 0.5 percent; African-American men held 4.2 percent; Hispanic men held 3.1 percent; and Asian Pacific Islander men held 1.7 percent.
Although women gained 16 board seats—7 occupied by minority women—the overall 1.1 percentage point increase over 6 years was not appreciable.

http://theabd.org/Women%20and%20Minorities%20Lose%20Ground%20on%20Fortune%20500%20Corporate%20Boards,%20Alliance%20for%20Board%20Diversity%20Census%20Shows.html


As to Fortune 500 CEO's here are some numbers from Oct. 2011 -

Fortune 500 CEOs remain primarily white and male. Rometty’s addition to this listing results in only an incremental shift (a 1.0 percent gain to total 3.4 percent; 3.6 percent if including Bresch) in the percentage of female Fortune 500 CEOs. There are four Black (0.8 percent), nine Asian (1.8 percent) and five Latino (1 percent) CEOs. They include: Kenneth Chenault, American Express (No. 13); Kenneth C. Frazier, Merck & Co. (No.15); and Ajay Banga, MasterCard (No. 31).

http://diversityinc.com/leadership/ibm-ceo-is-14th-woman-to-head-fortune-500-company/

[socialist_n_TN]

2. this is why i'm a big believer in taxing wealth......

Not just income. Wealth is long term, income can be just temporary. Plus as a good Marxist I believe that wealth is what has been stolen from the working class over years, decades, and centuries.

[TBF]

3. Yup, and that was the biggest thing W did as president - lowered the tax on capital gains

substantially - that's why the old repugs loved him so much. That was the real mission accomplished.

Here's a decent article on it: http://www.nytimes.com/2012/01/18/us/politics/for-wealthy-tax-cuts-since-1980s-have-been-gain-gain.html

This quote is staggering: "Between 1985 and 2008, the wealthiest 400 Americans saw the percentage of their income paid in federal income taxes drop from 29 percent to 18 percent, according to data from the Internal Revenue Service."

And dems aren't always much better - Clinton also lowered the rate on capital gains. They ostensibly do it to "stimulate" the economy or "promote savings" - but in the end the only ones who really benefit are the 1%. I'll give Pres. Obama kudos if he can actually reverse this, but so far he hasn't had much luck.

[limpyhobbler]

5. yep.

We do have some forms of wealth tax, although not enough of course.

Some states and localities have property tax, which is sort of a wealth tax. Although property tax is actually a real estate + home-value tax, and in my opinion it sometimes hits too hard on people who have very small patches of land.

Another is the inheritance tax or estate tax, which the right-wing has notably smeared as the "death" tax.

A desire to pass inheritance on to one's children is understandable. But what we have now is a de facto aristocracy as extreme wealth is passed through multiple generations of the same family over the course of decades and even centuries.

Taxing net wealth, beyond just annual income, is a good socialist-type idea that progressive democrats will also hopefully be able to appreciate.

[TheKentuckian]

6. It is the only way to ever climb out of this hole short of radical change.

It would seem that those who are largely married to the status quo would have to seriously consider that to make any kind of a go at maintaining the system and avoiding severe disruptions and upheaval that wealth must be taxed to restore any sort of balance and to mitigate over collection of resources which effectively removes them from the economy resulting in a stagnation of circulation.

What we are doing is insane, eventually even for the wealthy. Eventually, the whole system will take on a level of entropy that their accumolation will be worthless because the system will break under the weight of the imbalance. Sure, there will be a season of lordly power but it will eventually collapse because of the inate ever decreasing value of the pie since growth must come from games, rigging, and scams.

[socialist_n_TN]

7. Of course it's bad (ultimately) for the capitalists too.........

It always has been. But that doesn't matter. They're so invested in the system that they can't break out even if they want to. I've always said that the capitalists can't even save themselves. Because that's true. that's why it's up to us to save us ALL.