The Salaries of all Public School Teachers in New York City, Paid to One Man.

Posted by Paul Buchheit, AlterNet at 11:50 PM on April 25, 2008.

The United States has the highest inequality rate in the developed world. 28 million Americans -- almost 1 in 10 -- are using food stamps. The average worker has seen virtually no real increase in wages since 1970.

Some hedge fund managers made over a billion dollars last year. Hedge fund manager John Paulson, who made a clever bet against subprime mortgages, made close to $4 billion.

How much is 4 billion dollars? If you work as a sales clerk in a retail store, you'd have to work 200,000 YEARS to make 4 billion dollars. If you have a steady $50,000 a year job as a laborer and work for 50 years, in all that time you'd make as much as the hedge fund manager gets in one hour at the office.

4 billion dollars would pay a year's salary for ALL the public school teachers in New York City.

Yet this money goes to one individual.

Is any one person worth all those teachers? Some people defend ultra-high salaries, claiming the money is earned because of the risks involved, and that any American can get rich with hard work and a little luck. But only a tiny percentage of Americans take most of the money. They have the savvy and connections and good fortune to benefit from financial dealings that transfer the gains from America's productivity to their own pockets. Then, in most cases, they pay only a 15 percent capital gains tax on their huge fortunes, while regular workers pay up to 40 percent of their earnings for payroll tax, income tax, sales tax, transportation, and utilities.

Even if the unfairness of this all is accepted, it seems that nothing can be done about it. Plato said, "Any city, however small, is in fact divided into two, one the city of the poor, the other of the rich; these are at war with one another."

But something CAN be done. The Working Group on Extreme Inequality, part of the Institute for Policy Studies in Washington, DC, proposes (1) an increase in the top marginal federal income tax rate on ultra-high incomes; (2) a cap on the tax deductibility of executive pay at no more than 25 times worker pay; and (3) a reforming of the estate tax to include a progressive rate structure. Other measures might include a revision of the capital gains tax to a level approaching the tax on regular income, and the overhauling of a system that allows corporations to avoid income taxes in the very country responsible for their success.

Any of these will give us the opportunity to redirect some of America's productivity to the people who do most of the work.

Tagged as: john paulson, inequality, subprime crisis

Paul Buchheit is on the faculty of DePaul University and the Chicago City Colleges. He is the founder of Global Initiative Chicago (GIChicago.org), and the founder of fightingpoverty.org. He is the editor and main contributor to American Wars: Illusions and Realities (Clarity Press).