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THIS WEEK

No one knows for sure yet how many political ads aired for the 2014 elections. The Wesleyan Media Project, in a late October tally, counted 2,969,370 spots.

The number of these ads that defended America’s top-heavy distribution of income and wealth? Zero. The number of ads that directly confronted that top-heavy distribution? That appears to be zero, too.

A year ago, President Obama called inequality “the defining challenge of our time.” Candidates this fall, most Democrats included, ignored that challenge. Outside the minimum wage, as analyst Harold Meyerson notes, the Dems never gave voters a clue about that they “propose to do about the shift in income from wages to profits, from labor to capital, from the 99 percent to the 1 percent.”

The end result? In the words of the political insiders’ bible, the Cook Political Report: “an epic turnout collapse and motivational deficit” for Democrats. In this week’s Too Much, more on plutocratic America’s latest stab at democracy.

 

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GREED AT A GLANCE

What agenda will newly elected Republicans be pushing in 2015? Tax cuts on capital gains and dividends will almost certainly figure in the mix. Such cuts, conservatives argued during the George W. Bush years, would usher in an “ownership society” where “everyone would be a part owner in the American dream.” The cuts enacted back then, journalist David Cay Johnston pointed out last week, have had the exact opposite effect. In 2000, one of every eight taxpayers reported capital gains income. In 2012, only one in fifteen. Americans making over $2 million a year collected 18 percent of the nation’s dividends in 2000 — and 38 percent in 2012. The over-$2 million-a-year set saw their average annual dividends swell, after inflation, from $246,000 to $1,169,600 . . .

Richard LeFrakHow exhausting can raising millions from billionaires — for billionaire-friendly candidates — really be? More exhausting than you might imagine. New Jersey governor Chris Christie raised a record $102 million for GOP gubernatorial hopefuls, then told reporters the morning after Election Day that he needed to take a nap. But Christie went on instead to take a lunch that same day with two of his favorite billionaires, gaming kingpin Steve Wynn and developer Richard LeFrak. The conversation at Manhattan’s swank Four Seasons Grill Room, reporters learned later, touched on the Sotheby’s auction earlier in the week that had netted $101 million for an Alberto Giacometti chariot sculpture. Not on the topic list: Christie’s presidential future. Observed LeFrak afterwards: “A lot of us would think he would be a good candidate.”

Thierry Stern, the top exec at the Swiss watchmaker Patek Philippe, doesn’t like to see himself as a maker of baubles for the super rich. Patek Philippe, Stern believes, is making art — and all those deep-pocketed philistines out there can keep their money. Stern wants none of it. The proof? To get your hands on Patek Philippe’s new 175th anniversary gold-and-sapphire-crystal timepiece, deep pockets will have to shovel up $2.6 million and subject themselves to a personal interrogation that Stern himself will conduct. Explains the Patek Phillipe chief: “I would like to chat with the client and make sure he’s a watch lover.”

 

Quote of the Week

“The real story of the election’s campaign finance chapter was not which side had more resources, but that such a large chunk of the cost was paid for by a small group of ultra-wealthy donors using outside groups to bury voters with an avalanche of spending.”
Russ Choma, Center for Responsive Politics, November 5, 2014

 

 

PETULANT PLUTOCRAT OF THE WEEK

Richard BransonSir Richard Branson wants the world to know that his dream — of giving mega millionaires suborbital joyrides in space at $250,000 a trip — “lives on.” The billionaire pledged himself to that dream right after his Virgin Galactic SpaceShipTwo blew up late last month in a test flight over California’s Mojave Desert. A pilot died in the crash. Three Branson engineers had earlier died in a 2007 space engine test on the ground. Critics have been pounding Virgin Galactic on its safety record ever since. The latest death? “Exactly what I was expecting,” says one expert from the International Association for the Advancement of Space Safety. Says Branson: “I think those self-proclaimed experts can now go on and be self-proclaiming about something else.”

 

 

 

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IMAGES OF INEQUALITY

Kong Kong condos

In the world today, you can’t get much more unequal than Hong Kong, a city that hosts 45 billionaires and home prices over twice as unaffordable to average families as residences in New York. How tight has Hong Kong’s squeeze become? Billionaire Li Ka-Shing’s development company is now marketing to Hong Kong’s beleaguered middle class condos that stretch all of 177 square feet, not all that much bigger, the South China Post helpfully points out, than the size of a typical solitary confinement cell in Hong Kong’s Stanley Prison. Only $232,861 each.

 

Web Gem

Dollars & Sense/ This eminently readable “real world economics” journal, now celebrating its 40th anniversary, concentrates regularly on the dangers concentrated wealth poses.


antidotes to inequity

Torgeir MicaelsenHow much do America’s rich — and the corporations they run — individually pay in taxes? We don’t know. That info sits closed to public scrutiny. Not so in Norway, one of the world’s most equal nations. Norway has been disclosing tax return data for generations. In 2001, these numbers — on taxable income, net worth, and taxes paid — became searchable online. This disclosure, new research shows, helps deter tax evasion. Norway’s current top taxpayer: businessman Trond Mohn. He paid $20 million in taxes last year. His income: $46 million. Norwegian lawmaker Torgeir Micaelsen calls tax disclosure “part of the national heritage.” Adds Micaelsen: “Norwegians have strong feelings of fairness, that everyone must contribute.” The United States hasn’t had any tax return disclosure since a brief experiment with it in the 1920s.

 

Take Action
on Inequality

America’s associations of two- and four-year public colleges have set up a new Economic Inequality in Our Democracy initiative that aims “to help students think about and take action to confront the complex causes of growing economic inequality.” Learn more.

inequality by the numbers

inheritance shares

 

 

 

 

 

Stat of the Week

Each year since the 2008 recession, notes analyst Paul Buchheit, America's richest 1 percent have collected a combined income that equals more than the annual outlays for all America’s basic social programs, from Social Security and Medicare to food stamps.

 

 

IN FOCUS

The Peasants Still Have Their Pitchforks

Americans want what 21st century politics has so far not delivered: real options for challenging concentrated wealth. The latest evidence.

What can we expect Congress to do about America’s staggeringly top-heavy concentration of income and wealth over the next two years? Absolutely nothing.

What do Americans want Congress to do about that concentration? A good bit.

We know the first answer from the simple math of last week’s election results. Republicans now hold a chokehold on both chambers of Congress. No legislation that would even slightly inconvenience America’s awesomely affluent has any chance of even coming up for a vote.

The answer to the second question reflects, in part, exit polling that the Washington Post and other major media outlets jointly conducted on Election Day. That polling included a suggestive question about the nation’s economy.

“Do you think,” the pollsters asked, “that the U.S. economic system generally favors the wealthy or is fair to most Americans.”

A stunning 64 percent said they believe America’s economy “favors the wealthy.”

Last Tuesday’s exit polling didn’t probe any deeper than that. The polling didn’t, for instance, ask voters about what they feel elected leaders ought to be doing to tilt the nation in a more equitable direction.

But another important piece of polling, released before last week’s elections, did go deeply into that question.

The researchers behind this little-noticed polling, Berkeley political scientists David Broockman and Douglas Ahler, didn’t set out to explore what Americans want done about inequality. They went looking instead for a better understanding of the “moderate voter.”

Pundits, these two researchers believe, tend to mythologize voter “moderation.” Many Americans, the two posit, support public policy positions more “extreme” than the positions that most Democrats and Republicans in Congress support.

To test that proposition, Broockman and Ahler fashioned a national survey that gave voters seven different policy options in 12 contentious policy areas ranging from guns and abortion to labor rights and immigration.

For each issue, the seven choices included the mainstream Democratic and Republican position, as extracted from public statements made by current U.S. senators in news releases, press reports, and online.

Two other options reflect “extreme” Senate positions on each issue, one held by Democratic senators outside the Democratic Party Senate mainstream and the other by Republicans outside the Republican Senate mainstream. Two more options represent “extreme” policy positions — one progressive, one conservative — that have no current Senate advocates.

The final option in the survey list: a “moderate” position to the right of most Senate Democrats and the left of most Senate Republicans.

In their policy options on taxes, Broockman and Ahler defined this “moderate” position as the status quo: maintain current federal tax rates. The mainstream Democratic position: up taxes about 5 percent on those making over $250,000. The mainstream GOP stance: cut taxes, even for high earners.

On the “extreme” conservative end of the seven policy options on taxes, the Broockman and Ahler survey gave two choices. The “extreme” Senate position: move to a “flat” income tax and have everyone, rich and poor alike, pay taxes at the exact same rate. The more “extreme” position: replace the income tax with a tax on consumption.

The most “extreme” progressive option in the Broockman-Ahler poll: establish a maximum annual income by taxing all income over $1 million at a 100 percent rate. The “extreme” progressive option that has some Senate support: raise taxes on those making over $250,000 by more than 5 percent.

And how did the American public react to these seven tax policy options? Just over two-thirds — 67 percent — opted for the three options that involved raising taxes on the rich. Only 22 percent chose any of the conservative tax options.

The combined support for the two “extreme” progressive positions — a 100 percent tax on income over $1 million and over a 5 percent tax increase for those making over $250,000 — more than doubled support for the two “extreme” conservative positions, by a 40 to 19 percent margin.

The public support Broockman and Ahler found for what would be, in effect, a “maximum wage” may rate as their survey’s most remarkable finding.

No prominent elected leader in America is currently banging the drums for a 100 percent tax rate on income over $1 million. Yet this option received more support — 13 percent of those surveyed back it — than the “flat tax,” a proposal prominent GOP national figures have been pushing for decades.

Americans overall, this new polling suggests, want a tax system that targets the concentration of income at America’s economic summit. And Americans don’t just make this tax-the-rich preference plain to pollsters. They vote that way, too, whenever they have that opportunity.

Last Tuesday, voters had that opportunity in Illinois. On that state’s ballot: an advisory referendum on the question of whether Illinois should impose a new 3 percent tax on income over $1 million to help improve education funding.

The measure drew overwhelming support, with 63.6 percent voting yes to the notion of a “millionaire’s tax” and only 36.4 percent voting no.

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But don’t hold your breath waiting for a millionaire’s tax in Illinois. Political observers see no chance whatsoever that Illinois lawmakers, even with last week’s vote, will seriously consider such a tax in their upcoming session.

And people wonder why so few Americans turn out to vote.

 

New Wisdom
on Wealth

Zephyr Teachout, What ever happened to ‘of the people, by the people, for the people’? Guardian, November 4, 2014. The super rich have just bought another election. Can we take the power back?

Ryan Derousseau, Why do American CEOs make twice as much as German CEOs? Fortune, November 4, 2014. One reason: workers sit on German corporate boards.

Gara LaMarche, Democracy and the Donor Class, Democracy, Fall 2014. The underside of philanthropy.

Eduardo Porter, Seeking New Tools to Address a Wage Gap, New York Times, November 5, 2014. On focusing the fight against inequality on corporations.

Michael Konczal, Frenzied Financialization, Washington Monthly, November-December 2014. A small sliver of capital holders are strip-mining our wealth.

Matt Taibbi, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare, Rolling Stone, November 6, 2014. How big bank execs get away with fraud and find grand fortune.

Ryan Cooper, What Democrats get wrong about inequality, The Week, November 6, 2014. To bring down inequality, we need to target Big Finance.

Matt Bruenig, The Problem With Income Inequality, PolicyShop, November 6, 2014. Skewering a right-wing analyst who claims “Income Inequality Is Good For The Poor.”

Richard Wike, With 41% of global wealth in the hands of less than 1%, elites and citizens agree inequality is a top priority, Pew Research Center, November 8, 2014. The latest global polling.

  

The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class cover

In 1942 President Franklin Roosevelt proposed a 100 percent tax on income over $25,000, about $350,000 today. Where did that idea come from? Too Much editor Sam Pizzigati’s gripping history of the battle against America’s original plutocracy traces the roots of FDR’s “maximum wage.” Read the book’s intro online, then get the special publisher discount.

new reads

What Did Folks Your Age Own 25 Years Ago?

CEPR report coverDavid Rosnick and Dean Baker, The Wealth of Households: An Analysis of the 2013 Survey of Consumer Finances, Center for Economic and Policy Research, November 2014.

Every three years the Federal Reserve Board conducts a comprehensive survey on American household income and wealth. The latest edition of this Survey of Consumer Finances, with updates through 2013, appeared this past September.

Fed researchers do an official summary for each of these triennial surveys. But these summaries only skim the surface. Deeper insights on the Fed numbers have come from follow-up analyses by scholars like NYU economist Edward Wolff. They’ve dug deep into each SCF data dump and emerged with useful studies that go beyond the Fed’s initial summary.

These insightful analyses are now starting to emerge for the 2013 Fed data. The Washington, D.C.-based Center for Economic and Policy Research, for instance, has just chimed in with a brief paper that tracks household net work by age group — and wealth level — for the quarter century since 1989.

This new CEPR paper essentially compares how Americans in the same age and economic cohorts have fared over recent years.

Let’s say you now fall in the “older prime-aged worker” cohort, the age 45-54 group. How does the wealth of you and your fellow older primes compare with the wealth, inflation-adjusted, that older primes held back in 1989?

Not particularly well. In 2013, the middle class of this age 45-54 cohort averaged $57,400 in net worth, not counting personal residences, a total well below the $74,600 that middle class 45-to-54-year-olds averaged back in 1989.

Authors David Rosnick and Dean Baker run the numbers for every age group from 18-34 to 65-74. The new Fed data, they sum up, reveal an “economy where the bulk of the benefits are going to those at the top of the income distribution.”

Other analysts, of course, have painted the same general picture. But Rosnick and Baker, with their focus on age cohorts, have made that picture personal.

 

 

 

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About Too Much

Too Much, an online weekly publication of the Institute for Policy Studies | 1112 16th Street NW, Suite 600, Washington, DC 20036 | (202) 234-9382 | Editor: Sam Pizzigati. | E-mail: editor@toomuchonline.org | Unsubscribe.

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