lunes, 16 de septiembre de 2013

The Best and the Brightest Have No Solution for the Obscene Disparity in Wealth - Forbes

The op-ed wailing about the growing disparity between the 1% and the other 99% of American wealth-holders have no pragmatic solutions, no concrete ideas about how to reverse the trend by which the 1% gets richer and the other 99% struggle along for better or in many cases for worse. Yet, I don't see unrest developing either in political or social circles.

The Occupy Wall Street Legacy of the disaffected never set down any roots and for all intents and purposes was a protest without an attainable goal and was meant to be no more than a kind of charade of the anti-war movement in the 1970s that had a valid concrete end in mind; end the war in Vietnam and bring our troops home. The recent Pew poll which showed   a portion of young Millennials preferring Socialism to Capitalism was pathetic and meaningless as only a paltry 233 individuals were polled. And I'd bet most of them have no idea at all that Socialism means that GM, Apple Apple, and Goldman Sachs are to be owned and managed by the government, not private  enterprise. We are bereft of new ideas to organize a movement to redress the record disparity in wealth between the 1% and thee 99%.

Paul Krugman in his " Rich Man's Recovery" op-ed in the New York Times, came up with the rather weak solution of " smaller steps, initiatives that do at least a bit to level the playing field." Steve Rattner, on the "Mornings With Joe" MSNBC show this week, underscored that the wealthiest 1% gained 95% of the increase in wealth from  financial system's recovery since 2008. He shook his head in honest dismay, but had no clever prescriptions the equal of his plan to restore the automobile industry during the meltdown.

Even President Obama looked void of any bold new policy when he railed in his 2012 State of the Union; " We can either settle for a country where a shrinking number of people do really well while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules." Pie in the sky with no follow up.

Let's look at a few of the rules: The leading tax breaks for the fiscal year 2014 are 1. the exclusion of employer health insurance,2. the exclusion of employer pensions,3. the mortgage-interest deduction, 4. the exclusion of Medicare,5. the modest capital gain rates,6. the earned-income credit, 7. the deduction of income taxes paid,  8. tax breaks for estate taxes,9. child credit,and 10.  the deduction for charitable contributions. Numbers 3,5,7,8 and 10 are especially useful to the 1% to  reduce the taxes they pay on their gross income.

Now compare with the share of income tax paid in 2010 by income group. The top 1% paid 37.8% of the income taxes collected, while broadening the wealthy to the top 5% produced almost 60% of the tax revenue. By comparison the bottom 50% of the nation paid only 2.2% of the tax revenue collected by Uncle Sam. What this shows is that while the 1% pay more taxes than any other cohort, they also magnify their income and thus their wealth at a far greater rate.

You can see the trend happening before your eyes. The Twitter IPO will create billionaires as well as multimillionaires on paper at least in the same manner as the Facebook Facebook IPO did, and the stunning success of Apple and before it Microsoft Microsoft(The Gates Foundation is worth $38 billion, more than the Ford, Getty , Robert Wood Johnson Foundation and Kellogg Kellogg foundation added together) And the social media IPOs will continue to be rolled out placing values on the public shares that are a vast multiple of the companies revenues or profits.

On Wall Street the banks helping Verizon raise the money to buy back 45% of its cellular business will reap fees in the hundreds of millions. The lawyers and accountants working on the Lehman bankruptcy will be paid fees totaling $3  billion, proving that sorting out the pieces of the largest bankruptcy in history can be enormously rewarding for a handful of people. The  dollar value mobility from this kind of work will always fetch a premium.

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