Since the economy collapsed in 2008 -- since the housing bubble burst and the stock market crashed -- since the mass layoffs when 8.7 million Americans lost their jobs -- 5 years later, people are finally starting to get it.
All the data is in -- it's a matter of the official record -- inequality in the US is now at a record high, higher that it's ever been in over 100 years --- and inequality in the US today is higher than anywhere else in the world.
For the past 40 years we've been working our asses off, trying to get ahead, but only falling further behind. At first, as we were spinning our wheels like hamsters in their cages, we thought we might have been imagining our slowly declining economic demise.
We used to think that, what's good for the boss (our company) just HAD to be good for us, right? WRONG! So we found ourselves working overtime whenever we could, we sent the wife to work, we took a second job, we cut expenses, and we took less vacation days. We used our credit cards and borrowed on our homes...but wages stagnated as prices continued to rise.
We learned that, it wasn't us, but a deliberate squeeze that was being put upon us by a corporate America and their political enablers --- with everything from "free trade agreements" to a skewed tax code.
But there are still those who want us to forget all these horrible statistics --- and they still relentlessly argue that the rich pay too much and need more tax breaks, even though corporations are making record profits and the executives are paying themselves record salaries --- even as the poverty rate is 15% and the un-official unemployment rate is near 23%.
* The Bureau of Labor Statistics reports the "official" rate as 7.2% today, but the BLS also has a U-6 rate (at 13.1%), but that doesn't include all the unemployed. There's also an Alt U-6 rate that includes many "discourage workers", which is currently at 15.2%. The BLS used to have a U-7 rate (currently at 16.2%), but that was discontinued several years ago for unknown reasons (political perhaps?). And there's also Shadowstats showing 23%. (How can the unemployment rate keep falling when there's not been enough jobs created to keep up with high school graduates, which is about 3 million a year? We've had 18 million since the economy collapsed in 2008.
We have record trade deficits because a vast number of good-paying jobs have been offshored to low-wage countries and corporate America now affects every aspect of our democracy, all to their benefit...but these multinational corporate conglomerates will always have their cheerleaders in the media. It makes me wonder if some economists are paid to do their bidding.
Bruce Bartlett in the New York Times (October 29) writes "A New View of the Corporate Income Tax", but I saw nothing new. (Excerpts below with my italics. My comments are sub-paragraphed).
Bartlett: "Households earning less than $50,000 pay no federal income taxes; those making more than $1 million pay 34.2 percent of all federal income taxes. Thus a reduction in the top tax rate, a widely shared Republican goal, will necessarily cut taxes for the wealthy considerably.
- Households these days are mostly made up of dual incomes -- and 50% of all wage earners take home $27,000 a year or less (Bartlett uses marginal tax rates as examples and avoids addressing the tax rate on capital gains (what the wealthiest pay on stocks, etc.)
Bartlett: "Companies may try to raise prices to compensate for the corporate income tax, thus shifting some of the burden onto consumers."
- Companies will always try to shift the burden of all costs to the consumer for profits, but prices still have to be competitive. (I didn't see the often used phrase "double taxation" in his article. If I did, I would have said that corporations can always un-incorporate if they no longer want the associated advantages. See why Capitalism Requires Government)
Bartlett: "While economists still believe that the bulk of corporate income taxes is paid by the owners of capital, in recent years they have come to believe that workers ultimately pay much of the tax in the form of lower wages."
- While "effective" corporate tax rates, and corporate taxes as a percent of GDP, are lower now than they were 40 years ago, low wages still prevail. His argument holds no water. Corporations are making record profits and CEOs are raking in record salaries, but increased productivity has not translated into higher wages for workers. They have been getting ripped off for 40 years!
Bartlett: "According to the Organization for Economic Cooperation and Development, the United States has the highest statutory corporate tax rate among advanced economies. This is widely believed to reduce investment in the United States, costing jobs and income for Americans."
- Again, the "statutory" rate for corporate taxes could be 100%, but with loopholes, if companies are only paying an average "effective" tax rate of only 8%, what does it matter what the actual rate is? Also, Americans need to realize the difference between "free markets" and fraudulent markets. And investment in the US is higher today than it's ever been. In time, China could own the White House. The US is still one of the best and safest places in the world to invest.
Nancy Folbren in the New York Times (October 28) The Marginal Tax Rate Mess:
"The most recent estimates from the Congressional Budget Office conclude that more than 20 percent of low- and moderate-income taxpayers face marginal tax rates of 40 percent or more, based on the effect of their earnings on federal and state individual income taxes, federal payroll taxes and the phasing out of benefits from the Supplemental Nutrition Assistance Program."
I saw the following article in my in-box after it had been re-Tweeted several times (it's awesome) --- by Steven Pearlstein in the Washington Post (October 26) "Marty Sullivan figured out how the world’s biggest companies avoided billions in taxes. Here’s how he wants to stop them." (Excepts):
"Hauled before a Senate panel, Apple’s Tim Cook had to explain how an American company whose American engineers had created the iPhone and the iPad was able to avoid paying any taxes on billions of dollars in profits generated by those products — not to United States, not to any country. The only defense the Cook could conjure up for Apple “stateless” income was that it was all perfectly legal.
It was a 55-year-old economist named Marty Sullivan who shined an early light on how companies had finagled “transfer prices” — the price one division charges another for parts or services — to shift profits to low-tax jurisdictions.
It was Sullivan who had called out the big drug and tech companies for transferring ownership of their patents and trademarks — the source of much of their profits — to subsidiaries in Ireland and other low-tax jurisdictions.
It was Sullivan who highlighted the absurdity of tax havens in which just a handful of multinationals claimed to earn annual profits that were several times the country’s entire GDP.
And it was Sullivan who in 2010 pieced together from public filings that Apple had understated its reported profits to hide the fact that it was paying a tax rate of less than 2 percent on its overseas profits, shining the spotlight on Apple’s tax avoidance schemes.
For years, big multinational corporations, waving the banner of competitiveness, have been pushing hard for corporate tax reform. “Reform” means different things to different people, but to multinational corporations, it has meant a sizeable cut in the 35 percent corporate tax rate and an end to all U.S. taxation on profits earned overseas.
Now, however, revelations of elaborate tax dodges by respected companies such as Apple, Google, Microsoft and Starbucks have badly undermined their “reform” push......not just in the United States, but around the globe." --- Read the full story at the Washington Post >>>
As an aside: Billionaire Carl Icahn just can’t understand why Apple CEO Tim Cook won’t do something useful with the near $150 billion in cash reserves the computer colossus has sloshing around. Something useful maybe, like improving the lives for the horribly exploited workers who make Apple’s hottest gadgets? Or something useful like stop evading — and start paying — taxes?
No, Carl Icahn has something else in mind. He’s demanding that Apple “buy back” $150 billion in company shares, a move that would likely double Apple’s share value. Last week, in an open letter, Icahn declared any rationale for not going along with his plan “difficult to imagine.” Also difficult to imagine: the immensity of what Icahn stands to gain from any big Apple buy-back. He currently holds $2.4 billion worth of the company's shares. (And he would also pay a lower tax rate on those capital gains than someone else earning $35,000 a year in regular wages.)