The super-rich and the rest of us
by Paul Buchheit
Appearing in Hudson Valley Activist Newsletter
Reprinted from CounterPunch.
Paul Buchheit teaches Economic Inequality at DePaul University. He is the founder and developer of social justice and educational websites (Us Against Greed, Pay Up Now, and Rapping History) and the editor and main author of American Wars: Illusions and Realities (Clarity Press). He can be reached at paul@UsAgainstGreed.org.
Studying inequality in America reveals some facts that are truly hard to believe. Amidst all the absurdity a few stand out.
- U.S. companies in total pay a smaller percentage of taxes than the lowest-income 20% of Americans. Total corporate profits for 2011 were $1.97 trillion. Corporations paid $181 billion in federal taxes (9%) and $40 billion in state taxes (2%), for a total tax burden of 11%. The poorest 20% of American citizens pay 17.4% in federal, state, and local taxes.
- The high-profit, tax-avoiding tech industry was built on publicly-funded research. The technology sector has been more dependent on government research and development than any other industry. The U.S. government provided about half of the funding for basic research in technology and communications well into the 1980s. Even today, federal grants support about 60% of research performed at universities.
IBM was founded in 1911, Hewlett-Packard in 1947, Intel in 1968, Microsoft in 1975, Apple and Oracle in 1977, Cisco in 1984. All relied on government and military innovations. The more recently incorporated Google, which started in 1996, grew out of the Defense Department’s ARPANET system and the National Science Foundation’s Digital Library Initiative.
The combined 2011 federal tax payment for the eight companies was just 10.6%.
- The sales tax on a quadrillion dollars of financial sales is ZERO. The Bank for International Settlements reported in 2008 that total annual derivatives trades were $1.14 quadrillion. The same year, the Chicago Mercantile Exchange reported a trading volume of $1.2 quadrillion.
A quadrillion dollars is the entire world economy, 12 times over. It’s enough to give 3 million dollars to every person in the United States. But in a sense it’s not real money. Most of it is high-volume nanosecond computer trading, the type that almost crashed our economy. So it’s a good candidate for a tiny sales tax. But there is no sales tax.
Go out and buy shoes or an iPhone and you pay up to a 10% sales tax. But walk over to Wall Street and buy a million dollar high-risk credit default swap and pay 0%.
- Many Americans get just a penny on the dollar.
- For every dollar of NON-HOME wealth owned by white families, people of color have only one cent.
- For every dollar the richest .1% earned in 1980, they’ve added three more dollars. The poorest 90% have added one cent.
- For every dollar of financial securities (e.g., bonds) in the U.S., the bottom 90% of Americans have a penny and a half’s worth.
- For every dollar of 2008-2010 profits from Boeing, DuPont, Wells Fargo, Verizon, General Electric, and Dow Chemicals, the American public got a penny in taxes.
- Our society allows one man or one family to possess enough money to feed every hungry person on earth. The United Nations estimates that $30 billion is needed to eradicate hunger. Several individuals have more than this amount in personal wealth.
There are 925 million people in the world with insufficient food. According to the World Food Program, it takes about $100 a year to feed a human being. That’s $92 billion, about equal to the fortune of the six Wal-Mart heirs.
One Final Outrage…
In 2007 a hedge fund manager (John Paulson) conspired with a financial company (Goldman Sachs) to create packages of risky subprime mortgages, so that in anticipation of a housing crash he could use other people’s money to bet against his personally designed sure-to-fail financial instruments. His successful gamble paid him $3.7 billion. Three years later he made another $5 billion, which in the real world would have been enough to pay the salaries of 100,000 health care workers.
As an added insult to middle-class taxpayers, the tax rate on most of Paulson’s income was just 15%. As a double insult, he may have paid no tax at all, since hedge fund profits can be deferred indefinitely. As a triple insult, some of his payoff came from the middle-class taxpayers themselves, who bailed out the company (AIG) that had to pay off his bets.
And the people we elect to protect our interests are unable or unwilling to do anything about it.