To: "Jerry Lobdill" <firstname.lastname@example.org>,
Subject: [money-ethics] A skewed American pie
A skewed American pie
Poor and average wage-earners need larger slices
Monday June 30, 2003
The gap between the rich and poor in America is fast growing into a chasm.
Latest figures show that just 400 Americans collectively had an income of
$70bn. According to America's Internal Revenue Service, in nine years the
incomes of the top few hundred taxpayers increased at 15 times the rate of the
bottom 90% of Americans.
To join the very richest taxpayers in the US in 1992 required an average income of $46.8m. In 2000, it was was almost $174m. The average income for nine-tenths of all Americans, by comparison, rose in the same period by 17% to $27,000. Of course all this happened during the dot.com boom of the Clinton years. But the Bush White House has not stemmed the rise of the rich. Instead it has accelerated their ascent.
President Bush's tax cuts are heavily skewed towards rewarding the wealthy - arguing that handing back money to the most successful American wealth creators will create more wealth for America. This analysis, known as trickle down economics, is frankly nonsense. The rich and powerful historically prefer not to save and invest. They tend to spend on consumption - mansions, luxuries, fast cars and yachts. What savings the overly compensated do have are held for trading purposes in assets, not investment in capital for production.
Nobody would want to decry affluence but wasteful, conspicuous spending has few civic virtues. America, a country with no comprehensive healthcare system, is now a place where record numbers of high earners do not pay any income tax at all. No amount of corporate scandals or outrageous tax wheezes designed to avoid coughing up seems to bother the political class. This may be because the very poorest sections of society in America, like much of the western world, are less likely to vote. But US politicians should care. If a tiny fraction of society takes an ever-larger slice of a nation's wealth that leaves less for everyone else.