The Rich Get Richer - New York Times
"The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population. They have even left behind people making hundreds of thousands of dollars a year. The average income for the top 0.1 percent was $3 million. The share of the nation's income earned by those in this uppermost category has more than doubled since 1980. The share earned by the bottom 90 percent fell. An Internal Revenue Service study found that the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent. "
-- New York Times, 6/5/05
As is increasingly apparent, the rich continue to get richer, yet few people are aware of the extent of the growing gap between the ultra-rich and the rest of us. I am most thankful to the New York Times for running this highly revealing article. I've included key excerpts below, and provided the link for those who want to read the entire article. Below the New York Times article are excerpts from another revealing article in the Los Angeles Times on CEO pay increases, with link provided. "The average CEO made 42 times the average worker's pay in 1980. That increased to 85 times in 1990 and is now over 300 times."
Neither of these articles mention the rapidly growing gap between the developed and the developing nations of the world. Do you think most CEOs care how much you earn? Do you care how much those in developing countries earn? It is clear to me that greed and lack of concern for the global human family are two main forces behind the major cover-ups explored on WantToKnow.info. Let us examine where greed causes us to place our own interests above those around us. By choosing to live with full integrity in our personal lives, we can more powerfully influence those around us to join in building a brighter future.
Fred Burks for WantToKnow.info
Richest Are Leaving Even the Rich Far Behind
By DAVID CAY
Published: June 5, 2005
When F. Scott
Fitzgerald pronounced that the very rich "are different from you and
me," Ernest Hemingway's famously dismissive response was: "Yes,
they have more money." Today he might well add: much, much, much more
The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year.
Call them the hyper-rich. They are not just a few Croesus-like rarities. Draw a line under the top 0.1 percent of income earners - the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more.
The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is two and a half times the $1.2 million, adjusted for inflation, that group reported in 1980. No other income group rose nearly as fast. The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.
Next, examine the net worth of American households. The group with homes, investments and other assets worth more than $10 million comprised 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent.
The Bush administration tax cuts stand to widen the gap between the hyper-rich and the rest of America. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden.
President Bush said during the third election debate last October that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. And more than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers.
The Times set out to create a financial portrait of the very richest Americans, how their incomes have changed over the decades and how the tax cuts will affect them. It is no secret that the gap between the rich and the poor has grown, but the extent to which the richest are leaving everyone else behind is not widely known.
The analysis also found the following:
¶Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.
¶Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000.
¶The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million - thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by this tax.
The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else is almost certainly much larger.
One way to understand the growing gap is to compare earnings increases over time by the vast majority of taxpayers - say, everyone in the lower 90 percent - with those at the top, say, in the uppermost 0.01 percent (now about 14,000 households, each with $5.5 million or more in income last year).
From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to the Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.
The Bush administration says that the tax cuts have actually made the income tax system more progressive, shifting the burden slightly more to those with higher incomes. Still, an Internal Revenue Service study found that the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent.
"In this income data I see a snapshot of a very innovative society," said Tim Kane, an economist at the Heritage Foundation. "Lower taxes and lower marginal tax rates are leading to more growth. There's an explosion of wealth. We are so wealthy in a world that is profoundly poor."
But some of the wealthiest Americans, including Warren E. Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy and ultimately stifle economic growth by putting too much of the nation's capital in the hands of inheritors rather than strivers and innovators. Speaking of the increasing concentration of incomes, Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony a year ago: "For the democratic society, that is not a very desirable thing to allow it to happen."
Gulf Between Top, Bottom Gets Wider
A Times survey of the state's largest companies shows that CEOs' pay is growing at a much faster pace than that of rank-and-file employees.
By Kathy M. Kristof, Times Staff Writer
Everyone knows that the top dog makes a lot more than the rest of the pack. But the big pay hikes awarded to chief executives are leaving the pack even further behind each year, The Times' annual executive compensation survey shows.
CEOs at California's largest 100 public companies took home a collective $1.1 billion in 2004, up almost 20% from 2003. That compares with the 2.9% raise that the average California worker saw last year, according to the Economic Policy Institute in Washington.
The difference is even sharper at the top rungs of the ladder. The 10 highest-paid executives on this year's list earned 36.7% more than last year's top 10 – garnering a collective $467.5 million. That's enough to buy about 275 homes in Malibu or 1.5 million sets of golf clubs or two 747 jumbo jets. Although limited to California companies, the survey reflects a national trend: a widening chasm between the pay of chief executives and rank-and-file employees.
"The average CEO made 42 times the average worker's pay in 1980. That increased to 85 times in 1990 and is now over 300 times," said Brandon Rees, a research analyst with the AFL-CIO's office of investment, a group that tracks, and is critical of, executive pay policies. "That is clearly not a sustainable rate of growth."
Sometimes, executive pay soars even in bad years. Sanmina-SCI Corp., a San Jose telecommunications company with $12 billion in sales, lost money in 2003 and 2004. Yet Chief Executive Jure Sola scored a 1,500% hike in total pay during 2004, according to The Times survey. Sola was paid $19.8 million last year, while the company lost $14.9 million.
Note: For another excellent, in-depth article from the New York Times on the increased gap between the super-rich and the rest of us, see http://www.WantToKnow.info/060807incomeinequality
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The Rich Get Richer