Why Inequality Matters

[Donnachaidh]

http://www.counterpunch.org/robertson01032011.html

The U.S. social and economic landscape is rapidly changing. Inequalities in wealth, which began an upward ascent back in the 1980s, accelerated in the 1990s. Now they are flying off the charts, thanks first to the tax cuts ushered in by Bush II and second to Obama's recent continuation of those tax cuts, plus more, which have the effect of taking from the working class and poor in order to give to the rich.

Nicholas Kristof of The New York Times provides these grim statistics: "C.E.O.'s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent." (November 6, 2010).

Obama's continuation of Bush's tax cuts amount to an additional massive transfer of wealth from working people to the rich. For example, at least one-quarter of the benefits of these tax cuts go to the wealthiest 1 percent of the population, thereby increasing the inequalities in wealth. Most working people will only see a slight drop in their taxes, but the stunning provision is that families that make less than $40,000 will actually suffer a tax increase. If they could only lobby the politicians like the bankers do, they wouldn't be in this predicament.

Changes in the estate tax will greatly benefit the rich. Instead of being taxed at the pre-Bush rate of 55 percent, the estate taxes will remain at a mere 35 percent. And estates exempt from paying any taxes, instead of being only those under $1 million, will be set at $5 million, another windfall for the rich. The wealthiest Americans will also be able to maintain their super low 15 percent tax bracket on capital gains and dividend income, well below what most working people pay on their income. And the hedge fund managers and private equity investors, who often make millions of dollars a year, get to keep their obscenely low tax rate of 15 percent.

More at the link --

[dkf]

1. They should have replaced "making work pay" with an increased standard deduction.

Wouldn't that have done the same thing?