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The Audacity of Hope Tackles the Enormity of Inequality

By Sam Pizzigati, Too Much: A Commentary on Excess and Inequality. Posted February 14, 2009.


Our new White House has begun a counterattack against the grand divide between the rich and everyone else. It will be an uphill battle.

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Last Thursday, the day after President Obama announced a $500,000 cap on executive pay at bailed-out banking giants, the banking industry's trade journal celebrated. The President's cap, the American Banker exulted, would be "unlikely to have much impact" on banking executive compensation.

American Banker, in one sense, has that right. The new White House cap doesn’t apply to most enterprises getting bailout dollars, and, even where the cap does apply, bankers can still eventually pocket millions in stock awards.

But the Obama $500,000 cap does have symbolic value -- and a good bit of it. A President of the United States has sent the message that rewards at the top can sometimes be too titanic to tolerate. That’s a necessary first step down the road toward a more equal, less top-heavy America.

We have, to be sure, an enormously long way down that road yet to travel.

Consider, for instance, the story of Mark McGoldrick, a Wall Street trader who spent 2006 with investment banking kingpin Goldman Sachs. McGoldrick took home $70 million that year, a sum that amounted to about $200,000 for every day he labored.

McGoldrick, interestingly, actually considered his labors somewhat undervalued. The next year he exited Goldman Sachs to start his own hedge fund. 

How could someone making $200,000 a day feel undervalued? Researchers at the IRS late last month released a set of fascinating data that can help us understand. High-flyers like McGoldrick may indeed have been making $200,000 a day. But a sizeable cohort of Americans have been making fantastically more.

In fact, says the IRS, the top 400 U.S. tax returns in 2006 -- the year McGoldrick pulled in $70 million -- reported an average $263.3 million in income, nearly quadruple McGoldrick’s personal bottom line.

How can someone pocket over $263 million in a single year? Simple. Find a line of work that pays $60,000 an hour. Then work 12 hours a day, seven days a week, for an entire 12 months.

America’s most fortunate 400 don’t, of course, spend 12 hours a day behind some desk working. In fact, precious little of top 400 income comes from actual wages and salaries, just 7.4 percent in 2006.

The income of the super rich comes overwhelmingly from wealth, not work. Capital gains -- income from the sale of assets America’s deepest pockets already owned -- supplied nearly two-thirds, 63 percent, of the top 400's 2006 income. Many millions more came from dividends and interest payments.

In all, the top 400 reported $105 billion in income over the course of the year. They paid a mere 17.2 percent of that in federal income tax, a smaller share of their income than the rich right below them ended up paying in tax. In 2006, America’s top 1 percent -- taxpayers with at least $388,806 in income -- paid federal income tax at an average 23 percent rate.


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See more stories tagged with: obama, irs, financial crisis, wealth gap

Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.

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View:
Income is income....or is it?
Posted by: wrinklemomma on Feb 14, 2009 12:00 PM   
Current rating: 5    [1 = poor; 5 = excellent]
The US tax code (written by and for thems as has) somehow defines income as several different things. I, for one, don't get the distinctions. If you are given money, stocks or whatever because you "work" for Corporation x, that's income. It's coming into your accounts. Why do they get to disguise it,defer it, pay different, or no, tax on it? We need to insist that the bailout include a re-write of the tax code. If you earn money (or Something of value) for your "work", then you pay tax on it. Person or corporation, no matter. We could have some VERY SPECIFIC exemptions for deductions (college payments, house interest up to x dollars, child care up to x dollars), graduate the whole thing so the lower income levels aren't carrying the upper incomes. The continual clumping of all assets at the top of the heap is going to result in a violent re-allocation of assets by force. Isn't it simpler and less messy if we do it by law?

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» http://www.ExtremeInequality.org Posted by: Defenestrator
The Reagan "Revolution" 1980 to President Obama
Posted by: jvaljon1 on Feb 14, 2009 3:18 PM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
indeed, was peacable. The next one, won't be.

Too many people have been hurt and plain out stolen from (by the same Fortune 500 ghouls who brought us Korea and Viet Nam--aka "Stop duh Kommies! Stop duh Commies!" (I gave it the Klan spelling first, LOL!)

Americans had forgotten, after decades of social liberalism, (where the American citizen's rights were paramount over those of corporate America) just what the reverse situation, would entail. How many people are still alive today, who were still alive during the First Great Depression?

Answer: Can't be too many, because now the Cato Institute feels safe in re-writing American History by insisting that FDR--far from stopping the First Great Depression--instead made it worse, by (GASP!) putting people back to work!

Pig revisionist history, at its ugliest. But remember - while we know better, this filth is going to be taught to our kids, as if it was REAL history. If WE don't talk to them--THEY WILL. Only they won't talk--they'll lie like rugs and insist they're telling the truth. One thing that NeoCONS do well--they know how to lie real good. (They have to--the truth about ANYTHING they've ever done, would of course land them a 10-20 bid in Maximum Security somewhere.) Then America will indeed be lost forever--the America that was the light and hope of the world in the 50s through to the eighties--will be completely gone.

We know what an unsettling feeling it must be, to have wage slaves suddenly earn their freedom, by dint of Unions like the Teamsters, the Textile Workers, Communications, etc, etc...strong unions. They delivered, too. Wages that allowed a decent, good life. Wages that, in short, created the wealthy's worst nightmare--an INDEPENDENT MIDDLE CLASS.

A Middle Class that called the shots. That's what America had in the 60s. That's what the Repuklicans vowed to a man, to destroy. And, come 1980--what happened? They DID destroy the Unions, and with that, the very rich took control of the landscape which the Middle Class had owned.

Middle Class? Exists now, at the whim of the Super-Rich, who never miss an opportunity to remind the Middle Class of who's boss.

But they had to conquer us--and we gave them the tools. We heard: Unions are no good. Some of us, disgruntled maybe because we couldn't live up to the Unions' strict labor-performance standards, echoed: "Yeah--damn lousy unions!"

But even then, those who couldn't work in a union, could work for a not-so-fussy non-union outfit--which had to maintain the same salary standards as did unions, only without the other perks--paid holidays, including birthdays, 2-week paid vacations on a 40-hour work week, etc, etc...

Even without all those perks, non-union workers were lucky to have what they had. But instead they decided that Ronnie Dearest was the way to go.

We all see where Ronnie Dearest took us. He took us - Mr. "Morning in America" from being the mightiest nation on the face of the Earth--(by dint of our Middle Class) to jockeying around as our power slip-slides away, unable to comprehend why (although we could have always tuned into the BBC or Channel 13 to find out)

Now we have to be content with watching other nations pick up where our former greatness left off--after we sent it down the tubes electing Republicans.

Republicans are always, always, always, the road to American ruin. Republicans' worst enemies, Loyal Americans, will be the first to tell you this.

We might--MIGHT--be able to climb back out of the hole in which our so-called 'leadership' dumped us, in their haste to kill the Middle Class and steal all its wealth for themself--we MIGHT be able to climb out of this mess, if we get behind our President and let him know: WE HAVE HIS BACK.

Anything else, is not an option.

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Lets get out of the income racket all together
Posted by: grosspointblank1986 on Feb 15, 2009 5:25 AM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
Since 1995 there has been a bill in congress called HR-25 also known as the fairtax bill.

This bill would put an end to all this who pays more argument by changing our tax system from one of income to one of sales.

So instead of taxes, Social Security, & Medicare being taken from the paychecks & arguing whether capital gains should be taxed at higher/lower rate than income. The fairtax wouldn't care how you earned your money. The catch is what you spend your money on. The bill Taxes "NEW" retail sales & services.

So if a millionaire wants to buy a new airplane fine he'll pay the ( 23% inclusive / 30% exclusive) sales tax. If you buy a used car, No tax, its already been paid buy the cars 1st owner.

Also no more 1040 forms, w-2 forms, wondering did I give enough or spend enough to itemize.
April 15 becomes just another spring day.

Learn all about this bill @ www.fairtax.org

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"Our" White House?
Posted by: notabilia on Feb 15, 2009 5:28 AM   
Current rating: 5    [1 = poor; 5 = excellent]
All the sentiments expressed by the estimable M. Pizzagati are fine and noble, except that if he thinks this "our white House" is going to "lead the charge" against economic inequality, he is hoping that Coca-Cola will teach the world to sing. One measly, watered-down buried clause in a gigantic odious hand-out should not appease the valiant crusader, but how else do "reformers" get through their days unless picking up imaginary silver linings? The obscene amount of money stolen by America's governing elite, now operating with "diversity" cover to plunder ever greater amounts - it does not need liberal toleration.

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Sam, Sam, Sam....
Posted by: DaBear on Feb 17, 2009 12:08 PM   
Current rating: Not yet rated    [1 = poor; 5 = excellent]
I know, drinking owning-class kool-aid has a very intoxicating effect on the human brain. Sam, you drank too deeply from it.

The stimulus package we have now is like taking a giant bucket of water, potentially the last bucket of water in a growing desert region no less, and dumping it into a giant empty oil drum chock full of gaping holes buried in owning-class sand. The sand will sure soak it all up and those of us who actually live here, work here, and eat here will end up with NOTHING.

I wouldn't call such a white house "mine" but hey, that's just from my lower class-position's POV.

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