The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall.
Here's a look going back to 1979. (Chart)
The article continues:
In terms of wealth rather than income, the top 1 percent control 40 percent.... Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. (My emphasis.)
Also from the article, the causes of the economic disparities include:
The ordinary dynamics of supply and demand have certainly played a role.... But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
Wealth begets power, which begets more wealth.....The Supreme Court, in its recent Citizens United case, has [removed] limitations on [corporations'] campaign [contributions].... Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work. (My emphases.)
Here's that income gap's growth since 1917, comparing the top 5% to the nation's median income:
This puts me in mind of what Warren Buffet and billionaire hedge fund manager Tom Steyer, said about the tax breaks to the ultra-rich (which the ultra-rich make sure are put into the tax code in the first place)....
There's been this increasing disparity between the rich and the poor, and we found out that a rising tide just lifted all yachts, not all boats.... The rich are always going to say that you know, just give us the money and we'll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on... [Y]ou might extend [the tax cuts] further for the lower class, middle class, maybe upper middle class but I think that you should raise taxes on the very rich. I lived in periods where capital gains taxes were 39.6 percent, when earned income taxes were 70 percent and our economy did just fine.
.....
[T]he payroll taxes become 40% of [America's] total revenue just like the income tax. And people that talk about how the rich pay their share and all that sort of thing, they totally ignore the payroll tax. You know, I did this little survey in my office a few years ago and there were 16 people who responded. And I had the lowest tax rate of the 16. I didn't have any tax shelters. I didn't have any tax planner. It was all courtesy of the U.S. Congress. I mean, they did my tax planning for me. And, literally, the average for the office, counting payroll taxes was 32% and mine was 16%.
Tom Steyer, billionaire hedge fund manager favors higher taxes on the ultra rich like himself. He says he disagrees with the sentiment: "Hang on, I did this work, this is a capitalist society, this is my just reward." Instead, he said:
I think anyone who doesn't give credit to the system that they are born into is taking an awful lot onto themselves. I mean, I really think that people have sacrificed a lot more than a little tax money to make that system available for all of us. And I would be ashamed of myself if I didn't give some credit to them.
The Vanity Fair article continues:
Economists long ago tried to justify the vast inequalities.... [T]hey came up with...“marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society.... Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
By the way, President Obama wants to restore taxes on the wealthy to where they were before Bush's big tax cuts for the wealthy. Those pre-Bush tax rates on the wealthy weren't all that high to begin with. Take a look.
What is more, if we're serious about tackling America's ongoing deficits (and our debt) we need to be honest about there major causes. Those causes include tax cuts for the weathly that were enacted by President Bush.
Take a look at this chart of the Bush policies' projected (2010) shares of the deficit.
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