… is to inherit a large fortune. Old joke. However, these days it’s even easier to inherit a large fortune and make an even larger one. It’s practically idiot-proof, actually.
A new book by French economist Thomas Piketty is causing quite a stir because Piketty just plain comes out and says that the malefactors of great inherited wealth are eating the world economy. Krugman says,
Mr. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to “patrimonial capitalism,†in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent. …
… It’s generally understood that George W. Bush did all he could to cut taxes on the very affluent, that the middle-class cuts he included were essentially political loss leaders. It’s less well understood that the biggest breaks went not to people paid high salaries but to coupon-clippers and heirs to large estates. True, the top tax bracket on earned income fell from 39.6 to 35 percent. But the top rate on dividends fell from 39.6 percent (because they were taxed as ordinary income) to 15 percent — and the estate tax was completely eliminated.
Some of these cuts were reversed under President Obama, but the point is that the great tax-cut push of the Bush years was mainly about reducing taxes on unearned income. And when Republicans retook one house of Congress, they promptly came up with a plan — Representative Paul Ryan’s “road map†— calling for the elimination of taxes on interest, dividends, capital gains and estates. Under this plan, someone living solely off inherited wealth would have owed no federal taxes at all. …
… Why is this happening? Well, bear in mind that both Koch brothers are numbered among the 10 wealthiest Americans, and so are four Walmart heirs. Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of megadonors. Not surprisingly, those inside the bubble tend to assume, instinctively, that what is good for oligarchs is good for America.
A 2011 study by Edward Wolff and Maury Gittleman found that the wealthiest 1 percent of families had inherited an average of $2.7 million from their parents. This was 447 times more money than the least wealthy group of people — those with wealth less than $25K — had inherited. In between the wealthiest and least wealthy groups, inheritance levels ran in exactly the direction you would expect: the wealthier a group of people was, the more they had inherited.
As outrageously lopsided as these inheritance disparities seem, they only reflect half of the inheritance problem. The funny thing about piles of wealth is that they deliver to their owners passive, unearned streams of income variously called rents, dividends, profits, capital gains, interest and so on. Those who get big inheritances can park those inheritances in investment accounts that just get bigger and bigger without them having to lift a finger. As a result, the gaping inheritance disparity actually grows even more gaping each year after the inheritances have been received. …
…Children of the wealthy could wind up receiving increasingly larger shares of the national wealth bequeathed to them, wealth that will allow them to generate soaring incomes from capital income alone. If that happens, the meritocratic rhetoric that we use to justify America’s extraordinary levels of inequality will only become even more preposterous and delusional. Inheriting big piles of wealth and then using those piles to bring in even more unearned wealth is the exact opposite of meritocracy.
Sigh.
Walmart still sells pitchforks, tiki-torches, wheelbarrows, sheet-metal, and wooden sticks that can be sharpened into pikes, no?
Let’s wait for the uber-rich fools to have a sale!!!!!
Cundgulag, you mean “the pitch fork that skewers the last capitalist will be purchased in his store?”
It seems the road to the neo-feudal dystopia is paved with tax cuts!
And then of course you’ve got the reports where if you aren’t rich, you’re actually taxed more in red states. I found here, for instance, a post talking about how sales taxes tend to be higher in “low tax” states.
I mean, really, there has to be the breaking point. At a minimum, the Democrats should realize they have nothing to fear from thundering against the malefactors of great wealth. It’s not like it’s going to hurt the economy to repossess some of the wealth these assholes aren’t even using. And it really shouldn’t be a political loser when the reality is that people in red states are voting themselves higher taxes in order to help the 1% build their fortunes.
And it’s not even un-American. “Malefactors of great wealth” comes from the Republican Roosevelt for Christ’s sake. While the libertarians cling to their Austrian economists.
Walmart still sells pitchforks, tiki-torches, wheelbarrows, sheet-metal, and wooden sticks that can be sharpened into pikes, no?
I prefer Target for all my angry mob-related needs.
No matter where we’re supplied, we’re still gonna be met with a simple, “Release the hounds.”
Well, don’t forget Ginni Thomas with her $800,000. dollar windfall of Heritage Foundation dollars. I can’t be sure that it came easy, but I can’t imagine it being considered earned in the traditional sense.. Even if it is only six figures I’d still consider it a small fortune.
Gulag…Tiki torches?.. Really ? No self respecting peasant would storm a castle with a Tiki torch. You can tell a mechanic by his tools and you can tell a genuinely incensed peasant by their torch.
Tom Tomorrow, The One Rich Guy – “Over the years, income inequality continued to rise…until finally, one rich guy owned as much as the rest of the planet combined”.
The Middle Class is Totally Hosed – “What most of us fail to recognize is that the gulf between the very rich and the rest of us will almost certainly continue to get worse, a lot worse! Most importantly, it may be too late to do much about it.”
Last but not least:
“Why is Bernie Madoff the only Wall St criminal to face jail time?”
“Because he robbed the 1%, not the 99%.”
Bernie Madoff is the lamb of Wall St. He took away the sins of predator capitalism. The perfect propitiation for corporate greed.
Greater love hath no financial scam artist than to lay down his life and earthly accumulations for his corporate confederates.
On this subject, the New Nationalism Speech, a century old is still progressive gospel.
“No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered — not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective — a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.”
Teddy Roosevelt 1910
There are some universal truths here which get danced around.
1) People,. unless regulated will cheat. Agriculture was developed around 8,000 years ago. Within two or three thousand years cheating on weights and measures was so common that trade had to be policed by the gods through the temples. Ancients chipped gold off coins leaving them with the appearance of stop signs for 2,000 years until Isaac newton put little grooves on the outside (mill marks) to indicate tampering. The Puritans were well aware of this and policed commerce right from the start in the U.S.
2) Taxes are far lower than they were during the period from the 1930’s to 1976, when income taxes were reduced to 50% on EARNED income.
3) The U.S. Constitution gives the federal government the right to tax. The Supreme Court recognized in McCullough vs. Maryland (1819) that the states couldn’t tax the feds and (implicitly) that the Feds couldn’t tax the states. Daniel Webster argued for the US, “The power to tax is the power to destroy.” It might also be argued that the power to shift tax burdens is the power to selectively destroy.
4) Far from creating jobs and producing progress, the malefactors of great wealth reduce jobs in the US, shipping some over seas, and make product research and development anethema because the money needs to go to the stockholders rather than being invested in new products to keep the business afloat for the long term. Vulture capitalists either weigh down the acquired company with debt or force the company to increase short run profits and current dividends at the expense of future growth. The old fashioned term is that these looters are eating our collective seed.
5) Between 1836 and 1932, two term Presidents were rare. Now, when people are more disaffected, two term Presidents have become the norm (three in a row and four of the last five). Local elections in the Census year (2010) determine the makeup of Congress more than the voters. Following the Panic of 1893, Democrats lost 1235 seats in a 357 seat House. Following the 1929 Crash, republican lost control of both the House and the White House. Now it’s two peas in a same old/ same old pod with the legacy parties.
The answers are pretty simple if we don’t let the big money people buy what they want.
those inside the bubble tend to assume, instinctively, that what is good for oligarchs is good for America.
those inside the bubble tend to assume, instinctively, that they are the only people who count, and don’t care if they wreck the country as long as they personally are getting richer out of it.
It’s strange how words can adjust in meaning through experience and solidify into recognizable concepts that had previously been incomprehensible. I mean, had somebody used the phrase “downwardly mobile” in a conversation or a written article prior to the Bush administrations collapsing of our economy, I wouldn’t have been able to grasp what they were trying to convey.
Now, thanks to the Repugs that term is an integral part of my experience. Although, at times, I do wonder if downwardly immobile would be a more concise description.
“Them that’s got, shall get —
Them that’s not, shall lose;
So the Bible says
And it still is news…”
I’m a firm believer in the idea that if you want to destroy a child’s spirit it’s best to give them a good dose of rejection at an early age. If you emotionally devastate them at an early age chances are they’ll never recover for the rest of their lives. Praise Jesus!
http://living.msn.com/family-parenting/raising-kids/this-little-girl-was-pulled-out-of-christian-school-for-her-tomboy-haircut
Off topic: Gloria Steinem is 80 years old today. At 80, she is in Africa riding elephants; and, she is still my hero.
Make a small fortune?… Why heck, Bush and his Repuglican’t buddies screwed up the economy so bad that I can’t even make a small paycheck. In my case they not only eliminated the inheritance tax.. They eliminated the necessity for an inheritance tax.
Gloria Steinem is 80 years old today. At 80, she is in Africa riding elephants; and, she is still my hero.
80 going on 25, that’s what I want to be when it gets here!
When I was 25, was when I started to feel like 80.
YAY, MS. GLORIA STEINEM!!!!