10 Things Republicans Don't Want You to Know About the "Fiscal Cliff"
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Reviewing the dismal history of the Bush tax cuts of 2001 and 2003, the Times' David Leonhardt lamented the Aughts as "the decade with the slowest average annual growth since World War II." But what the conservative cornucopia for the gilded-class does reliably produce is unprecedented income inequality.
The Center on Budget and Policy Priorities ( CBPP) found a financial Grand Canyon separating the very rich from everyone else. Over the three decades ending in 2007, the top 1 percent's share of the nation's total after-tax household income more than doubled, from 7.5 percent to 17.1 percent. During that time, the share of the middle 60% of Americans dropped from 51.1 percent to 43.5 percent; the bottom four-fifths declined from 58 percent to 48 percent. As for the poor, they fell further and further behind, with the lowest quintile's income share sliding to just 4.9%. Expressed in dollar terms, the income gap is staggering:
Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation -- an increase in income of $973,100 per household -- compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth.
As economists Emmanuel Saez and Thomas Piketty documented, income inequality isn't just as it highest level since the Great Depression. The rich, it turns out, have already more than recovered from the impact of the Bush recession which began in late 2007:
They have found that the trends have mostly continued. From 2000 to 2007, incomes for the bottom 90 percent of earners rose only about 4 percent, once adjusted for inflation. For the top 0.1 percent, incomes climbed about 94 percent.
The recession interrupted the trend, with the sharp decline in stock prices hitting the pocketbooks of the rich. But the income share of 1 percent has since rebounded. Data that the two economists released in March showed that the top 1 percent of earners got nearly every dollar of the income gains eked out in the first full year of the recovery. In 2010, the top 10 percent of earners took about half of overall income.
As it turns out, the richest one percent of Americans snared 93 percent of the total income gains in 2010. Ezra Klein summed it up this way:
After the Great Depression, inequality fell and didn't recover until 2007. That's about 80 years. After the Great Recession, inequality fell and didn't recover until ... 2009? That's one year.
Last week, the New York Times documented how the combined bite of federal, state and local taxes for most Americans is lower now than in 1980. As Michael Ettinger of the Center for American Progress put it two years ago:
"The idea that taxes are high right now is pretty much nuts."
As it turns out, a percentage of the U.S. economy, the total federal tax bite hasn't been this low in 60 years.
As the chart representing President Obama's 2012 budget proposal above reflects, the American tax burden hasn't been this low in generations. Thanks to the combination of the Bush Recession and the latest Obama tax cuts, the AP reported, "as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way." In January, the Congressional Budget Office ( CBO) explained that "revenues would be just under 15 percent of GDP; levels that low have not been seen since 1950." That finding echoed an earlier analysis from the Bureau of Economic Analysis. Last April, the Center on Budget and Policy Priorities concluded, "Middle-income Americans are now paying federal taxes at or near historically low levels, according to the latest available data."