Inequality.org

connecting the dots on a growing divide

Counting the Dollars the Rich Want Uncounted

Americans are gaining, ever so slowly, a more accurate picture of just how wide the gap has stretched between the nation’s most fabulously privileged and everyone else.
Data collected from payroll forms and income tax returns tell us a great deal about the extent of our inequality. But the full story remains elusive.

Data collected from payroll forms and income tax returns tell us a great deal about the extent of our inequality. But the full story remains elusive.

By Sam Pizzigati

How unequal have workplaces in the United States become? Our best answer happens to come from an unlikely source: the Social Security Administration.

Social Security statisticians each year tally up how much compensation gets reported on W-2s, those forms that employers have to file for employees at all their worksites, from mailrooms to executive suites. Social Security reports these numbers out, by income level, once a year — and in the process paints an incredibly detailed pay portrait of the contemporary American workplace.

For typical Americans workers, this workplace has become steadily less rewarding. The latest Social Security figures, released last month, show annual wages for the typical American worker down $980 in 2012 from five years earlier. David Cay Johnson, the nation’s top analyst of Social Security’s wage data, last week placed that total in a paycheck perspective.

The median American worker — an employee at the nation’s exact pay midpoint — labored 52 weeks last year, notes Johnston, “but earned about the equivalent of working just 50 weeks at 2007 pay levels.”

Over in America’s elite corner offices, by contrast, the pay keeps pouring in. The ranks of Americans making over $5 million a year grew 27 percent in 2012, the new Social Security figures show, to nearly 9,000 most fortunate souls. The actual compensation this cohort collected soared 40 percent over what the $5 million-plus crowd pocketed in 2011.

The ranks of Americans making over $5 million a year grew 27 percent in 2012.

But these numbers, we need to keep in mind, don’t tell America’s full income inequality story. Social Security statisticians only tally paycheck data. Their work leaves uncounted income from dividends and interest, as well as capital gains and profits from business operations.

For income totals that take these and other non-wage income streams into account, we need to dive into data the Internal Revenue Service collects.

University of California economist Emmanuel Saez has done that diving. His latest calculations, released this past September, show that taxpayers in America’s most affluent 0.01 percent grabbed 993 times more income in 2012 than taxpayers in America’s bottom 90 percent averaged.

In 1975, this lofty top 0.01 percent only averaged 114 times the income of America’s bottom 90 percent.

These IRS numbers tell us a great deal about America’s grand income divide. Do they tell us everything? Not quite. The dramatic IRS figures on high incomes only count what America’s rich want the government to count. They don’t count all the income the wealthy harvest from secret tax havens overseas.

The dramatic IRS figures on high incomes only count what America’s rich want the government to count.

How much income are these secret stashes generating? We’re slowly getting a better idea, thanks in part to a federal amnesty program for tax evaders.

Affluent tax evaders can currently avoid criminal prosecution if they pay up all their taxes overdue on their secret income, plus interest and penalties. With this amnesty program in effect, the Wall Street Journal reports, IRS officials are now seeing “a new rush by U.S. taxpayers to confess secret offshore accounts.”

What’s driving this rush? To a surprising degree, Swiss banks. Four years ago, the long-standing Swiss bank secrecy wall started cracking when officials at the Swiss banking giant UBS found themselves forced to admit they’d been helping Americans conceal assets. UBS had to pay out $780 million in penalties.

Other Swiss banks, eager to avoid a similar fate, are now pushing their secret American depositors to end the error of their tax-evading ways, and this banker pressure is apparently having an impact.

Just one New York attorney, Bryan Skarlatos, has already handled over a thousand confessions. Skarlatos used to receive just a couple confession calls a week. How he’s getting two to three a day. Many of the wealthy Skarlatos takes to the IRS have over $10 million in their secret stashes, a few over $100 million.

Sign-up for Too MuchWe don’t know yet how many billions the current amnesty will eventually produce. As of last year, 38,000 U.S. taxpayers had revealed undeclared offshore assets. The declarations from these tax evaders, the IRS reports, figure to bring in $10.5 billion. But this total doesn’t cover the recent confession surge.

The final collections will undoubtedly dwarf the sums so far collected — and fill in still another chapter in America’s deeply distressing inequality story.

  • benleet

    The Tax Justice Network estimates that between $21 trillion and $32 trillion are hidden in tax havens, and perhaps a third of that originates from U.S. citizens — so the numbers yet to be recovered are very substantial. Quite incredibly, the richest one percent since 1995 have officially recorded a small dip in their wealth share; since 1995 their share has dropped from 34.6% to 34.5%. I left a comment a year ago at an article by Lawrence Mishel of the Economic Policy Institute, here it is:

    Recently a BBC news report — http://www.bbc.co.uk/news/business-18944097 — on tax-free havens claims that $21 trillion has been “stashed” to avoid taxes. The web newsletter TooMuchonline.org reported on this also — http://www.toomuchonline.org/tmweekly.html — claiming that the portion of wealth owned by the top 1% is closer to 50% than 34%. This “stashing” of course is most likely illegal tax avoidance.

    Mishel’s report, a close look shows, that between 1995 to 2010 the percentiles 90 to 99 increased their share of wealth from 33.2% to 40.0% an increase of 6.8%. The top one percent, it says, decreased their share from 34.6% to 34.5% — a decrease of 0.1%. This decrease is very difficult to believe. This finding supports the plausibility that the very richest have “stashed” their additional wealth in places the Federal Reserve cannot find. The Congressional Budget Office report Trends in the Distribution of Income [not wealth] Between 1979 and 2007 finds that the top 1% increased its income, post-taxes and post-transfers, from 8% to 17%, a 9% increase in the size of their “income pie”. A 9% increase equals an increase of over $1 trillion more income annually in the year 2010. ($11.468 trillion times 9%, using Joint Committee on Taxation figure for total personal income). All the increase came as a decrease in the share of the lower-earning 80%. So it is just implausible that the wealthiest 1% did not increase the size of their “wealth pie” slice. Unbelievable. At least it’s worthy of an FBI investigation. My blog: http://benL8.blogspot.com

    The article by Lawrence Mishel at the Economic Policy Institute carries the table showing income share levels here: http://www.epi.org/blog/confirming-redistribution-wealth-upward/

  • JustmyOpnion

    Anti Trust Violation:
    • For family health coverage in Michigan during 2000 – 2007, the average annual combined [ ILLEGAL health insurance ] premium [ increases ] for employers and employees rose from $6,817 to $12,151.3
    • For family health coverage in Michigan from 2000 to 2007, the
    average employer’s portion of annual premiums rose 63 percent, while the average worker’s share grew by 171 percent.
    • From 2000 to 2007, the median earnings of Michigan workers increased 5 percent, from $25,910 to $27,096. During that time health insurance premiums for Michigan working families rose 17 times faster than median earnings – FORCED POVERTY
    .
    Anti Trust – Democrat
    SENATOR Michigan — 2003 Federal Budget Committee – Debbie Stabenow – Defrauded U.S. Citizens of $130 Billion Dollars – in U.S. Attorney General and HHS — ‘Volentary Discloused’ Health Care Fraud and Abuse AGAINST Entitled Federal Beneficiaries and Federal Health Care Programs ~ Claiming it [ Denial of Covered Claims - anti trust violation: 1998 OIG HHS Gov - fraud - self disclosure . asp - HCFA|CMS, 1996 HIPAA Violation - Adverse Determinations, used to force illegal HCFA|CMS State Medicaid Kickback Conversions - forced poverty_money laundering ] was ‘from increased ‘costs of care’ for Retiring Babyboomers ‘.
    .
    T18CFR242CRIME: United _ States _ SENATE _ Judiciary _ Subcommittee _ on _ Antitrust _ Competition _Policy _ and _Consumer _ Rights – Jurisdiction
    Oversight of antitrust and competition policy laws, including the Sherman and Clayton Acts;
    Oversight of antitrust enforcement policies of Justice Department;
    and Oversight of antitrust and competition policies of the Federal Trade
    Commission.
    .
    Financial Crime — 24 FEB 2010 — 12:00 PM Noon — U. S.
    House H.R. 4626 just passed – Removal of the ANTI TRUST EXEMPTION T18CFR242CRIME – US Attorney General and HHS_OIG illegal agreement with Federal Providers and State Attorney Generals, to allow illegal termination of existing Federal hospital insurance policies – Patient Dumping, to force illegal CMS State Medicaid kickback conversion —- NOT passed by the SENATE
    .
    2012 – State of Michigan HMO Complaints can range from a consumer disagreeing with a DENIAL of SERVICE – PATIENT DUMPING, $25,000 felony Each defrauded individual.
    .
    Congressional Budget Office ( CBO ) testimony – C-Span November 2013 – falsely claiming: anti trust violation: Denial of Covered Federal Hospital Insurance Claims: Patient Dumping, to force illegal CMS State Medicaid Kickback conversion — is Still from increased ‘costs of care’ for Retiring Babyboomers ‘.

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