Short piece on wealth transfer from households to corporations.

[geckosfeet]

Gee. It seems clearer than ever - home and 401k/mutual fund/IRA ownership are simply not-so-well obfuscated methods of wealth transfer. Is it possible financial corporations have rigged the game in their favor, and that there are no regulatory agencies that have power of oversight or reform?

US household wealth takes biggest hit since 2008

Americans' wealth last summer suffered its biggest quarterly loss in more than two years as stocks, pension funds and home values lost value.

Household net worth fell 4 percent to $57.4 trillion in the July-September quarter, according to a Federal Reserve report released Thursday. It was the sharpest drop since the October-December quarter of 2008 and was the second straight quarterly decline.

Lower net worth can hurt the economy. When people feel poorer, they spend less. That slows growth. Businesses typically then cut back on hiring and expansion.

Corporations held a record $2.1 trillion in cash at the end of September.

Please explain to me again, how do corporate and higher income tax breaks create jobs and wealth and stimulate the economy?

Cross linking to related OP:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2452670

[xchrom]

1. recommend

[barbtries]

2. they don't.

greed appears to be coupled with stupid. and 99% suffer for it.
i'm so pissed all the time listening to the news, reading the news. i keep yelling "that's so STUPID!" at the radio. and that's NPR. aargh

[zalinda]

3. It doesn't, and never has

A higher tax rate encourages companies to invest in their company with new equipment, hiring more employees, etc., because it becomes a tax write off. Businesses hate paying taxes, and will spend their way into paying fewer taxes. Charities also have felt the brunt of lower tax rates. It used to be that come December, charities would get a shit load of money, so that the donations could become deductions on income tax forms.

zalinda

[ParkieDem]

4. I don't see this as a "transfer."

There's no doubt there needs to be a rebalancing of corporate vs. individual wealth and income in this country, but this article isn't talking about a "transfer" of wealth from people to corporations. The decline in household wealth is largely connected to (1) overall decline in real estate values, and (2) hits to the stock market and individual portfolios (whether in IRAs, 401(k)s, or traditional pensions). These declines also hit the 1% as well as the 99%.

It's wrong to imply that corporate cash hoarding took money out of the hands of individuals and put it into corporate bank accounts.

[geckosfeet]

5. The cash/wealth moves from one place to another. How is that not a transfer?

on edit:

When people have jobs and are able sell their homes (and at least break even) to move to areas where there are jobs, real estate values stabilize and likely go up.

The 1% reap the spoils of bailouts and tax breaks on capital gains. They own portfolios managed by high priced investment houses, investment house where the 99% are priced out. To think that they do not benefit from insider information is naive.

Investment houses and financial institutions are not buying over the counter investment instruments. Indeed, this is part of the issue. They engage in highly leveraged, speculative, unregulated investment practices that never see the light of day.