Dr. King called moderation the 'great stumbling block in the stride toward freedom.' Biden should heed that warning today.
All those millions that America’s billionaires are pouring into super PACs, where do they come from? We can trace a huge chunk of that political cash to the truly massive tax cuts our richest now enjoy.
Statistics don’t always lie. But they do always lag. And sometimes this unavoidable lag — between the time a turn of events takes place and the time we have numbers on it — can create a lie, or at least a gross misperception.
Take the just-released new IRS figures on the incomes of America’s most affluent 400. The 400 taxpayers who reported the most income on their 2009 tax returns, the new IRS stats document, averaged $202.4 million each in income, a hefty 25.2 percent less than what America’s top 400 averaged in 2008.
This $202.4 million average represents an even more substantial 41.3 percent dip from the $344.8 million that our top 400 averaged in 2007, the year before the Great Recession started pummeling the nation.
America’s rich, the new IRS stats seem to shout, have “suffered” significantly from the Great Recession, just like everyone else.
Well, not exactly. The “suffering” the new IRS stats appear to show — that substantial dip in top 400 income — took place at the bottom of the Great Recession in 2009. The new IRS data don’t tell us anything about what has happened to America’s top 400 incomes in the three years since then.
But we do have clues from other data sources. We know, for instance, that share prices on Wall Street were rebounding in 2010, setting the stage for a host of windfalls on Wall Street and in Corporate America’s top executive suites.
Next year’s IRS stats on top 400 incomes will likely reflect these 2010 windfalls and show that any “suffering” that America’s super rich experienced after the Great Recession hit turned out to be blissfully short-lived.[pullquote]The Great Recession has amounted to a temporary inconvenience for America’s super rich.[/pullquote]
What about average Americans? A different story. We know from Census data that average-income Americans are still reeling from the Great Recession. The real incomes of most Americans dropped in 2008 and kept dropping through 2010. Typical workers saw their incomes fall 4.6 percent from 2007 to 2010.
The Great Recession, in short, has amounted to a temporary inconvenience for America’s super rich — and a dream-killer for average Americans.
The new IRS data don’t tell this story. They can’t, since the new data only cover top 400 incomes through 2009. More recent figures haven’t yet become available.
But the new IRS data on 2009 incomes do have a powerful story to tell, even with the data lag. To get at this story, we need to go back in time, not forward, and compare the incomes America’s top 400 collected in 2009 — and the taxes they paid — to the incomes they collected and the taxes they paid in decades gone by.
The official IRS top 400 income figures go back to 1992. In that year, America’s top 400 taxpayers averaged, after adjusting for inflation, $46.8 million each.
The top 400 of 2009 — with their $202.4 million average income — put the rich of 1992 to shame. In 2009, the worst year of the Great Recession, America’s top 400 still took home over four times the income of 1992’s top 400.[pullquote]The top 400 of 2009 put the rich of 1992 to shame.[/pullquote]
If we go back further in time, the contrast becomes even more stunning. The IRS hasn’t published official top 400 lists for any year before 1992. But other IRS data do allow us to approximate a near top 400 for some pre-1992 years.
For 1961, for instance, we can identify a top 398. This 1961 near-400 averaged, after adjusting for inflation, only $14.5 million each. In other words, the top 400 of 2009 collected 14 times more income than their counterparts in 1961.
We can make a similar comparison for a near-400 in 1955. Those rich, in dollars inflation adjusted to 2009, averaged just $13.2 million.
More staggering still: the real-life tax rate on that $13.2 million average income. The rich of 1955, after exploiting every tax loophole they could find, paid 51.2 percent of their incomes in federal income tax.
Their counterparts in 2009, after exploiting every tax loophole they could find, paid a mere 19.9 percent of their incomes in federal income tax.
Let’s pause over these numbers for a moment. They tell a remarkable tale. America’s top 400 in the Great Recession “down” year of 2009 collected over 15 times more income, after adjusting for inflation, than the top 400 of 1955 and paid nearly three times less of their incomes in federal taxes.
Our 2009 top 400, if they had paid taxes at actual 1955 rates, would have together ended up with $25.4 billion dollars less in their pockets.
This over $25 billion in tax savings — for just 400 taxpayers — amounts to a plutocracy tax credit, a giveaway to the super rich that gives our financially favored far more capacity to dominate the American political process than America’s richest enjoyed back in the 1950s.
We can end that domination. But first we need to end that giveaway.