Friday, April 8, 2011

Somebody Has the Money

We have all heard the same refrain for months now. The US is broke. The only way to maintain solvency is to slash, slash, slash. It is the only responsible thing to do.

The only problem with this broken record is that it is not true. While our federal treasury may be lacking in necessary funds, the money is still here...it is just sitting in certain people's pockets. According to the Credit Suisse Research Institute, overall wealth "has risen 23 percent since the year 2000, to $236,213 per American adult."

So, if income for some individuals and most major corporations is on the rise, why is government starved for money? Chuck Collins, Alison Goldberg, Scott Klinger and Sam Pizzigati tackle this question in a recently release report, "Unnecessary Austerity, Unnecessary Shutdown."

You will need to use the link above to download the report because the chances are remote that you will see or hear any of its documented findings in the mainstream media!
Key Tax Facts
  • 15,753: The number of households in 1961 with $1 million in taxable income (adjusted for inflation).
  • 361,000: The number of households in 2011 estimated to have $1 million in taxable income.
  • 43.1: Percent of total reported income that Americans earning $1 million paid in taxes in 1961 (adjusted for 2011 dollars)
  • 23.1: Percent of total reported income that Americans earning $1 million are likely to pay in taxes in 2011, estimated from latest IRS data.
  • 47.4: Percent of profits corporations paid in taxes in 1961.
  • 11.1: Percent of profits corporations paid in taxes in 2010.
In terms of that last figure, the report states:
In 2010, U.S. corporations recorded pre-tax domestic income of $1.241 trillion and paid $138 million in corporate income taxes, an effective tax rate of 11.1 percent. If these pre-tax profits had been taxed at the current 35 percent statutory tax rate, an additional $296 billion in corporate taxes would have been paid. If 2010 pre-tax profits were taxed at the 50.25 percent statutory tax rate in effect in 1961, $485 billion of additional tax revenues would have been collected, reducing the 2011 federal budget deficit by 38 percent.
This report ties in nicely with my post this morning, On Wealth. As I wrote then, my problem has less to do with the concept of wealth and far more to do with irresponsible wealth. When people and businesses take advantage of all the various public services our nation has to offer and yet figure out ways not to repay the debt to the public commons, this is what I define as irresponsible, unethical and immoral.

It is this new mentality that goes a long way toward explaining why our nation finds itself in the current predicament: The poor and middle class repay their debts and then some, while those who reap the greatest benefits, don't.

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