Income Inequality News ArticlesExcerpts of key news articles on income inequality
Corporate profits are at their highest level in at least 85 years. Employee compensation is at the lowest level in 65 years. The Commerce Department last week estimated that corporations earned $2.1 trillion during 2013, and paid $419 billion in corporate taxes. The after-tax profit of $1.7 trillion amounted to 10 percent of gross domestic product during the year, the first full year it has been that high. In 2012, it was 9.7 percent, itself a record. Until 2010, the highest level of after-tax profits ever recorded was 9.1 percent, in 1929, the first year that the government began calculating the number. Before taxes, corporate profits accounted for 12.5 percent of the total economy, tying the previous record that was set in 1942, when World War II pushed up profits for many companies. But in 1942, most of those profits were taxed away. The effective corporate tax rate was nearly 55 percent, in sharp contrast to last year’s figure of under 20 percent. The trend of higher profits and lower effective taxes has been gaining strength for years, but really picked up after the Great Recession temporarily depressed profits in 2009. The effective rate has been below 20 percent in three of the last five years. Before 2009, the rate had not been that low since 1931. The Commerce Department also said total wages and salaries last year amounted to $7.1 trillion, or 42.5 percent of the entire economy. That was down from 42.6 percent in 2012 and was lower than in any year previously measured.
Note: For more on income inequality, see the deeply revealing reports from reliable major media sources available here.
Americans have never much liked government. After all, the nation was conceived in a revolution against government. But the surge of cynicism engulfing America isn't about how big government has become. It's a growing perception that our government is no longer working for average people. It's for big business, Wall Street and the very rich. The richest Americans are taking home a bigger share of total income than at any other time since the 1920s. Their tax payments are down because the Bush tax cuts reduced their top rates to the lowest level in more than half a century, and cut capital gains taxes to 15 percent. Congress hasn't even closed a loophole that allows mutual-fund and private-equity managers to treat their incomes as capital gains. So the 400 richest Americans, whose total wealth exceeds the combined wealth of the bottom 150 million Americans put together, pay an average of 17 percent of their income in taxes. That's lower than the tax rates of most day laborers. And the share of revenues coming from corporations has been dropping. The biggest, like GE, find ways to pay no federal taxes at all. Many shelter their income abroad, and every few years Congress grants them a tax amnesty to bring the money home. Get it? "Big government" isn't the problem. The problem is the big money that's taking over government. Government is doing less of the things most of us want it to do ... and more of the things big corporations, Wall Street and the wealthy want it to do.
Note: The author of this analysis, Robert Reich, is a former U.S. secretary of labor, is professor of public policy at UC Berkeley and the author of Aftershock: The Next Economy and America's Future. He blogs at www.robertreich.org.
Another 2.6 million people slipped into poverty in the United States last year, the Census Bureau reported [on Sep. 13], and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it. And in new signs of distress among the middle class, median household incomes fell last year to levels last seen in 1996. Economists pointed to a telling statistic: It was the first time since the Great Depression that median household income, adjusted for inflation, had not risen over such a long period, said Lawrence Katz, an economics professor at Harvard. “This is truly a lost decade,” Mr. Katz said. The bureau’s findings were worse than many economists expected, and brought into sharp relief the toll the past decade — including the painful declines of the financial crisis and recession — had taken on Americans at the middle and lower parts of the income ladder. It is also fresh evidence that the disappointing economic recovery has done nothing for the country’s poorest citizens. The report said the percentage of Americans living below the poverty line last year, 15.1 percent, was the highest level since 1993. (The poverty line in 2010 for a family of four was $22,314.)
Note: For key reports from reliable sources on income inequality, click here.
"The Conehead economy" [is] the idea that if the economy were a person, its growth over the past few decades would've turned it from a normal-looking individual into a conehead. Jacob Hacker and Paul Pierson get at this idea slightly differently [in their book Winner-Take-All Politics]. They've got a table showing how incomes would look if growth had been equally shared from 1979 to 2006 -- much as it was in the decades before 1979. If growth had been equally shared, the middle quintile would be making $64,395 today. Instead, they're making $52,100. That's a 23 percent raise those folks didn't get -- and that I'm sure they would've noticed. The top 1 percent ... made, on average, $1,200,300 in 2006. If growth had been equally shared in the three decades before that, however, their incomes would've been cut by more than half, down to $506,002. That's real, serious money we're talking about. The top 1 percent now accounts for 23.5 percent of the national income if you include capital gains. In 1979, they only had 9.8 percent of the nation's earnings. During that same period, tax rates on the richest Americans have actually dropped. So as the economy went one way -- toward more money going to the rich -- the tax system went the other.
Note: For lots more on income inequality from reliable sources, click here.
The [IRS] reports that the nation's 400 highest-earning households reported an average income of $345 million in 2007 — up 31% from 2006 — and that their average tax bill fell to a 15-year low. Bloomberg writes that the elite 400's average income more than doubled that year from $131.1 million in 2001, the year Congress adopted tax cuts urged by then-President George W. Bush. Each household in the top 400 of earners paid an average tax rate of 16.6 percent, the lowest since the agency began tracking the data in 1992. Their average effective tax rate was about half the 29.4 percent in 1993, the first year of President Bill Clinton's administration. The top 400 earners received a total $138 billion in 2007, up from $105.3 billion a year earlier. On an inflation-adjusted basis, their average income grew almost fivefold since 1992. Almost three-quarters of the highest earners' income was in capital gains and dividends taxed at a 15 percent rate set as part of Bush-backed tax cuts in 2003.
Note: For key reports from major media sources on income inequality, click here. And for a powerful summary of 10 top corporations which avoided taxes in most egregious ways, see the excellent list compiled by independent U.S. Senator Bernie Sanders at this link.
When Jody Richards saw a homeless man begging outside a downtown McDonald's recently, he bought the man a cheeseburger. There's nothing unusual about that, except that Richards is homeless, too, and the 99-cent cheeseburger was an outsize chunk of the $9.50 he'd earned that day panhandling. The generosity of poor people isn't so much rare as rarely noticed, however. In fact, the nation's poor donate more, in percentage terms, than higher-income groups do, surveys of charitable giving show. What's more, their generosity declines less in hard times than the generosity of richer givers does. "The lowest-income fifth [of the population] always give at more than their capacity," said Virginia Hodgkinson, former vice president for research at Independent Sector, a Washington, D.C.-based association of nonprofit agencies. "The next two-fifths give at capacity, and those above that are capable of giving two or three times more than they give." The Bureau of Labor Statistics' latest survey of consumer expenditure found that the poorest fifth of U.S. households contributed an average of 4.3 percent of their incomes to charitable organizations in 2007. The richest fifth gave at less than half that rate, 2.1 percent. The figures probably undercount remittances by legal and illegal immigrants to family and friends back home, a multibillion-dollar outlay to which the poor contribute disproportionally. None of the middle fifths of U.S. households, in contrast, gave away as much as 3 percent of their incomes. What makes poor people's generosity even more impressive is that their giving generally isn't tax deductible, because they don't earn enough to itemize their charitable tax deductions.
The United States of America is becoming less united by the day. A 30-year gap now exists in the average life expectancy between Mississippi, in the Deep South, and Connecticut, in prosperous New England. Huge disparities have also opened up in income, health and education depending on where people live in the US, according to a report published yesterday. The American Human Development Index has [issued a report] measuring well-being ... with shocking results. The US finds itself ranked 42nd in global life expectancy and 34th in survival of infants to age. Suicide and murder are among the top 15 causes of death and although the US is home to just 5 per cent of the global population it accounts for 24 per cent of the world's prisoners. The report points to a rigged system that does little to lessen inequalities. "The report shows that although America is one of the richest nations in the world, it is woefully behind when it comes to providing opportunity and choices to all Americans to build a better life," the authors said. Some of its more shocking findings reveal that ... Asian-American males have the best quality of life and black Americans the lowest, with a staggering 50-year life expectancy gap between the two groups. Using official government statistics, the study points out that because American schools are funded primarily from local property taxes, rich districts get the best state education. The US has no federally mandated sick pay, paternity leave or annual paid vacation.
Note: For lots more on health issues from reliable, verifiable sources, click here.
A global study reveals an overwhelming wealth gap, with the world's three richest people having more money than the poorest 48 nations combined. The richest 2% of the world's population owns more than half of the world's household wealth. For the first time, personal wealth -- not income -- has been measured around the world. The findings may be surprising, for what makes people "wealthy" across the world spectrum is a relatively low bar. The research indicates that assets of just $2,200 per adult place a household in the top half of the world's wealthiest. To be among the richest 10% of adults in the world, just $61,000 in assets is needed. If you have more than $500,000, you're part of the richest 1%, the United Nations study says. If it takes just a couple of thousand dollars to qualify as rich in this world, imagine what it means to be poor. Half the world, nearly 3 billion people, live on less than $2 a day. The three richest people in the world –- Microsoft Chairman Bill Gates, investor Warren Buffett and Mexican telecom mogul Carlos Slim Helú -- have more money than the poorest 48 nations combined.
Note: For key reports from reliable sources on income inequality, click here.
The most important--and unfortunately the least debated--issue in politics today is our society's steady drift toward a class-based system, the likes of which we have not seen since the 19th century. America's top tier has grown infinitely richer and more removed over the past 25 years. Few among them send their children to public schools; fewer still send their loved ones to fight our wars. They own most of our stocks, making the stock market an unreliable indicator of the economic health of working people. The top 1% now takes in an astounding 16% of national income, up from 8% in 1980. The tax codes protect them, just as they protect corporate America, through a vast system of loopholes. Incestuous corporate boards regularly approve compensation packages for chief executives and others that are out of logic's range. As this newspaper has reported, the average CEO of a sizeable corporation makes more than $10 million a year, while the minimum wage for workers amounts to about $10,000 a year, and has not been raised in nearly a decade. When I graduated from college in the 1960s, the average CEO made 20 times what the average worker made. Today, that CEO makes 400 times as much. Trickle-down economics didn't happen. Wages and salaries are at all-time lows as a percentage of the national wealth. This ever-widening divide is too often ignored or downplayed by its beneficiaries. A sense of entitlement has set in among elites, bordering on hubris.
Note: For some reason the Wall Street Journal has removed this article. You can read it on the website of the article's author at this link.
The level of hunger in U.S. households almost tripled between 2019 and August of this year, according to an analysis of new data from the Census Bureau and the Department of Agriculture. Even more alarming, the proportion of American children who sometimes do not have enough to eat is now as much as 14 times higher than it was last year. The Agriculture Department conducts yearly studies on food insecurity in the U.S., with its report on 2019 released this month. The Census Bureau began frequent household surveys in April in response to Covid-19 that include questions about hunger. The analysis, by the Washington, D.C.-based Center on Budget and Policy Priorities, found that 3.7 percent of U.S. households reported they sometimes or often had “not enough to eat” during 2019. Meanwhile, the most recent Census data from the end of August of this year showed that 10 percent of households said they sometimes or often did not have enough to eat within the past seven days. Levels of food insecurity in Black and Latino households are significantly higher, at 19 percent and 17 percent, respectively, compared to 7 percent in white households. Remarkably, this increase in hunger has nothing to do with any actual shortage of food. It is purely the result of political decisions.
Note: How much is severe collateral damage like this from the coronavirus lockdown policies being considered? For more along these lines, see concise summaries of deeply revealing news articles on income inequality from reliable major media sources.
The growing gap between America’s rich and everyone else is hardly new. But the extra-ordinarily rapid economic collapse catalyzed by COVID-19 has made the chasm deeper and wider. Since mid-March, more than 30 million people have filed for unemployment. Meanwhile, after a steep but brief dip in March, the stock market rallied. The richest and most well–connected are seeing their wealth reaccumulate, as if by magic, while middle- and working–class families drown in debt that deepens with every passing week. The contrast isn’t just between low-wage workers and billionaire bosses. Bills are mounting for small restaurants and retailers as their applications for the federal Paycheck Protection Program go unanswered. Small retailers closed to comply with social–distancing orders while e-commerce sales, especially from the biggest online platforms, have spiked. Assistance is most readily available to those with lawyers and lobbyists on the payroll. It’s not an exaggeration to say that inequality has the potential to undermine democratic society and threaten global stability. Only about 1 in 4 adults in lower-income households say they have enough money to cover expenses for three months in the case of an emergency. The majority of people laid off are working–class and disproportionately women and people of color. One lost job or missed rent payment threatens to tip them into an economic abyss. More businesses will fail, creating more unemployment and further diminishing consumer demand. About 12.7 million Americans have likely lost employer–provided health insurance since the pandemic began. The richest are steadily climbing ever higher while workers without stable jobs, incomes or savings are sent plummeting downward.
Note: Note that the financial ruin is not caused by the virus, but by the severe lockdown policies being implemented. These policies have no scientific basis. Meanwhile in Sweden with no lockdown policies, no one is being arrested, the country has not spiraled out of control as predicted, and the economy is fairing well. Is it worth saving thousand of lives with these severe policies at the cost of hundreds of millions being plunged into poverty worldwide? For more along these lines, see concise summaries of deeply revealing news articles on the coronavirus from reliable major media sources.
The criminal justice system has given up all pretense that the crimes of the wealthy are worth taking seriously. In January 2019, white-collar prosecutions fell to their lowest level since researchers started tracking them in 1998. Since 2015, criminal penalties levied by the Justice Department have fallen from $3.6 billion to roughly $110 million. Illicit profits seized by the Securities and Exchange Commission have reportedly dropped by more than half. In 2018, a year when nearly 19,000 people were sentenced in federal court for drug crimes alone, prosecutors convicted just 37 corporate criminals. Tax evasion ... siphons up to 10,000 times more money out of the U.S. economy every year than bank robberies. In 2017, researchers estimated that fraud by America’s largest corporations cost Americans up to $360 billion annually between 1996 and 2004. That’s roughly two decades’ worth of street crime every single year. Over the last four decades, the agencies responsible for investigating elite and white-collar crime ... have seen their enforcement divisions starved into irrelevance. More than a third of the FBI investigators who patrol Wall Street were reassigned between 2001 and 2008. Even though auditing millionaires and billionaires is one of the most cost-effective government activities imaginable—an independent report estimated in 2014 that it yielded up to $4,545 in recovered revenue per hour of staff time—the IRS investigated the returns of just 3 percent of American millionaires in 2017.
ProPublica cracked open the vault on America's biggest tax grifters, revealing how the Midas men dip, dodge and duck, paying pennies on the dollar, if that, while we suckers have to pony up. How rich. "In 2007, Jeff Bezos, then a multibillionaire and now the world's richest man, did not pay a penny in federal income taxes," ProPublica reported. "He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes. "Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row." "Taken together," ProPublica concluded, "it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. The I.R.S. records show that the wealthiest can – perfectly legally – pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year." ProPublica shed light on the fact that "the superrich earn virtually all their wealth from the constantly rising value of their assets, particularly in the stock market, and that the sales of those assets are taxed at a lower rate than ordinary income from a paycheck." And while the value of those assets grows by the billion, untaxed, these rich folks can borrow against them.
The world’s wealthiest individuals have become even richer during the coronavirus pandemic as the prices of financial assets have been supported by widespread policy intervention while employment and wages, well, not so much. The Institute for Policy Studies, a liberal think tank in Washington, chronicles just how bifurcated the road the recovery from an economy slump is likely to be. At the upper end of the spectrum, the combined wealth of all U.S. billionaires increased by $821 billion or 28% between March 18, 2020 and September 10, 2020, from approximately $2.947 trillion to $3.768 trillion. That means they own the equivalent of nearly 20% of U.S. gross domestic product. The richest five billionaires, Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett, and Elon Musk, saw a 59% increase in their total wealth, from $358 billion to $569 billion. One University of Chicago study found that, between the start of February and the end of June, the lowest-income group had the highest job loss rate while the highest-income workers had the [lowest] rate of lob losses. Black and Hispanic workers were also much more likely to become unemployed during the pandemic than Whites despite their predominant role in work deemed ... essential. As the pandemic forced many industries into remote work, millions of Black and Hispanic workers have been left out. “Only 19.7% of Black and 16.2% of Latinx people work in jobs where they are able to telework, compared to 29.9% of White and 37.0% of Asian workers,” the report said.
Easy money pouring out of central banks is a key driver behind this surge in fortunes, and the resulting wealth inequality. In recent decades, as the global population of billionaires rose more than fivefold and the largest fortunes rocketed past $100 billion, I started tracking this wealth. Rising inequality was threatening to provoke popular backlashes against capitalism itself. The pandemic has reinforced this trend. As the virus spread, central banks injected $9 trillion into economies worldwide, aiming to keep growth alive. Much of that stimulus went into financial markets, and from there into the net worth of the ultra-rich. The total wealth of billionaires worldwide rose by $5 trillion to $13 trillion in 12 months, the most dramatic surge ever registered on the annual list compiled by Forbes magazine. The billionaire population boomed as well. On the 2021 Forbes list, which runs to April 6, their numbers rose nearly 700 to more than 2,700. The biggest surge came in China, which added 238 billionaires – one every 36 hours – for a total of 626. Next came the US, which added 110 for a total of 724. India added 38 for a total of 140, and has surpassed Russia for the third largest population of billionaires in the world. The fundamental driver of the market and thus the billionaire boom: easy money pouring out of central banks. Wealth inequality is likely to continue widening until the monetary spigots are turned off.
Note: If you can't access this article on the FT website, go to this webpage. For more along these lines, see concise summaries of deeply revealing news articles on the coronavirus and income inequality from reliable major media sources.
Just as the Biden administration is pushing to raise taxes on corporations, a new study finds that at least 55 of America's largest firms paid no taxes last year on billions of dollars in profits. The sweeping tax bill passed in 2017 by a Republican Congress and signed into law by President Donald Trump reduced the corporate tax rate to 21% from 35%. But dozens of Fortune 500 companies were able to further shrink their tax bill – sometimes to zero – thanks to a range of legal deductions and exemptions that have become staples of the tax code. Salesforce, Archer-Daniels-Midland and Consolidated Edison were among those named in the report, which was done by the Institute on Taxation and Economic Policy. Twenty-six of the companies listed, including FedEx, Duke Energy and Nike, were able to avoid paying any federal income tax for the last three years even though they reported a combined income of $77 billion. Many also received millions of dollars in tax rebates. Publicly traded corporations are required to file financial reports. The institute used that data along with other information supplied by each company. The $2.2 trillion coronavirus relief act ... contained a provision that temporarily allowed businesses to use losses in 2020 to offset profits earned in previous years. Tax avoidance strategies include a mix of old standards and new innovations. Companies, for example, saved billions by allowing top executives to buy discounted stock options in the future and then deducting their value as a loss.
Note: For more along these lines, see concise summaries of deeply revealing news articles on corporate corruption from reliable major media sources.
The world economy is expected to contract by 5.2 percent this year - the worst recession in 80 years - but the sheer number of countries suffering economic losses means the scale of the downturn is worse than any recession in 150 years, the World Bank said in its latest Global Economic Prospects report. The depth of the crisis will drive 70 to 100 [million] people into extreme poverty - worse than the prior estimate of 60 million. Economists have been struggling to measure the impact of the crisis they have likened to a global natural disaster, but the sheer size of the impact across so many sectors and countries has made it hard to calculate, and made predictions about any recovery highly uncertain. Under the worst-case scenario, the global recession could mean a contraction of eight percent, according to the report. There remain some "exceptionally high" risks to the outlook, particularly if the current outbreaks linger or rebound, causing authorities to re-impose restrictions that could make the downturn as bad as eight percent. "Disruptions to activity would weaken businesses' ability to remain in operation and service their debt," the report cautioned. That, in turn, could raise interest rates for higher-risk borrowers and, "With debt levels already at historic highs, this could lead to cascading defaults and financial crises across many economies." But even if the 4.2 percent global recovery projected for 2021 materializes, "In many countries, deep recessions triggered by COVID-19 will likely weigh on potential output for years to come."
Note: What this article fails to mention is that it is not the pandemic that is driving all this, but rather the questionable lockdown policies developed to address the pandemic. Sweden, which has never instituted a lockdown, did not spiral out of control and has been less impacted economically. For more along these lines, see concise summaries of deeply revealing news articles on the coronavirus and income inequality from reliable major media sources.
The coronavirus pandemic has brought hunger to millions of people around the world. National lockdowns and social distancing measures are drying up work and incomes, and are likely to disrupt agricultural production and supply routes — leaving millions to worry how they will get enough to eat. Already, 135 million people had been facing acute food shortages, but now with the pandemic, 130 million more could go hungry in 2020, said Arif Husain, chief economist at the World Food Program, a United Nations agency. Altogether, an estimated 265 million people could be pushed to the brink of starvation by year’s end. “We’ve never seen anything like this before,” Mr. Husain said. “It wasn’t a pretty picture to begin with, but this makes it truly unprecedented and uncharted territory.” This hunger crisis, experts say, is global and caused by a multitude of factors linked to the coronavirus pandemic and the ensuing interruption of the economic order: the sudden loss in income for countless millions who were already living hand-to-mouth; the collapse in oil prices; widespread shortages of hard currency from tourism drying up; overseas workers not having earnings to send home; and ongoing problems like climate change, violence ... and humanitarian disasters. The curfews and restrictions on movement are already devastating the meager incomes of displaced people. The effects of the restrictions “may cause more suffering than the disease itself,” said Kurt Tjossem ... at the International Rescue Committee.
This month, ProPublica revealed that American billionaires essentially do not pay taxes, and within hours the White House had awkwardly promised no fewer than four federal investigations into the identity of the individual who had alerted the news organization to this fact. By Thursday, a North Carolina congressman was demanding the FBI director explain why he hadn't made any arrests or at the very least, "executed any search warrants or raided any offices" in the international manhunt for the leaker. ProPublica carefully chose the six billionaires whose tax returns it chose to single out for specific scrutiny. But ProPublica seems to have deliberately underthrown. After breathlessly informing readers they possessed a "trove" of 15 years' worth of tax returns on literally "thousands" of the world's richest people, the story's three authors proceeded to weave a few juicy and non-contextualized facts into a narrative that felt like a protracted sidebar to the "real" story. We learned that the 25 richest billionaires in America added $401bn to their net worths between 2014 and 2018 and paid about 3% of that amount in taxes, but we didn't learn much about any specific billionaire's tax avoidance strategies. Fifteen years of tax return information on thousands of American plutocrats is, to be sure, one of the biggest stories of the decade. It's just not clear ProPublica has that much appetite for sticking with the story.
Note: In the US, former tax lobbyists often write the rules on tax dodging. For more along these lines, see concise summaries of deeply revealing news articles on government corruption and income inequality from reliable major media sources.
For years, the Gates Foundation has been steered by an unusually small board of trustees, made up of Bill, his estranged wife, Melinda, and the billionaire investor Warren Buffett. The larger the foundation became, the less anyone seemed willing to ask tough questions about its secretive management structure or its penchant for giving money to lucrative pharmaceutical and credit card companies such as Mastercard, despite the fact that giving away billions to wealthy corporations set an unusual and troubling precedent in the philanthropic sector. Billionaires who make their fortunes through corporate practices that undercut workers and deepen inequality – like corporate tax avoidance, insufficient sick pay and the immoral gap in pay between executives and low-paid workers – are not the solution to problems they generate. Asking Bill Gates to fix inequality is like asking an arsonist to hose down your house after he just set it on fire. In April last year, the University of Oxford was reportedly considering offering a Covid-19 vaccine developed by its scientists on a nonexclusive basis. But then, Kaiser Health News reported, "Oxford – urged on by the Bill & Melinda Gates Foundation – reversed course. It signed an exclusive vaccine deal with AstraZeneca that gave the pharmaceutical giant sole rights and no guarantee of low prices." This dealmaking .. seemed to conflict with the Gates Foundation's stated mission to improve global access to medicines, but it's not surprising.
Note: Read more about the Gates Foundation's startling degree of media influence during the pandemic. For more along these lines, see concise summaries of deeply revealing news articles on corporate corruption and the coronavirus vaccine from reliable major media sources.
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