Tuesday, November 21, 2017

America's Divide

While underpaid American workers struggle with the basic needs of health and housing, households at the other end are each taking millions of dollars of  wealth, mostly from the surging stock market, tax-free until the stocks are cashed in. 

The average 1% household made nearly $2.6 million in the 12 months to mid-2017. Mostly from the stock market.

The U.S.A. increased its wealth by over $8.5 trillion. The 1% took $3.27 trillion of that (38.3 percent)

Each of 1.26 million households, on average, took nearly $2.6 million. In greater detail, the poor segment of the 1% averaged about $1.44 million for the year, the .1% averaged about $7.2 million, and the .01% (12,600 households) averaged nearly $65 million in just the past year

This is the second year in a row that the average 1% household has taken over $2.5 million of national wealth.

 Since the recession, as the U.S. stock market has more than TRIPLED in value, with about 90 percent of the $18 trillion dollar gain going to the richest 10% of Americans.

 The super-rich are essentially blackmailing Congress into approving a 1%-pleasing tax bill by threatening to withhold their political donations.

Congress is considering a tax bill that would eventually cause many middle- and low-income American families to PAY MORE in income taxes.

 There are two ways a corporate income tax cut can trickle down to workers’ pockets: directly through higher wages or indirectly via lower prices at stores selling the things they buy. Employers say a tax cut would mean that companies pass much of their tax benefits to their employees by paying them more or by cutting prices and increasing the buying power of current workers.  When asked how they’d spend the gains from a tax holiday on the $2.5 trillion that they currently have parked overseas – which is also part of the corporate tax cut plan – most companies indicated they’d pay back debt, repurchase shares or invest in mergers and acquisitions. Pay increases were not high on the agenda. Nor have they been for the past several decades. Since the 1970s worker productivity has increased 74 percent, while average wages have risen only 12 percent. There is no reason to believe that tax cuts would all of a sudden generate greater generosity for workers.

 If the U.S. economy were dominated by small businesses, intense competition would force these companies to lower prices rather than give it to shareholders in the form of dividends. Reduced prices for goods would translate into improved living standards for workers the same way that a wage hike would. But the economy today is dominated by large multinational corporations facing little pressure to reduce prices. So, the gains from a corporate tax cut will remain with the owners of the business – shareholders.

 CEOs also have large incentives to avoid passing the gains from a tax cut to workers: Executive pay is tied to the company’s share price. If they pass the extra money on to shareholders in the form of dividends or stock buybacks, share prices will rise – as will executive pay packages.

The consequence of the $1.5 trillion tax cut then would be continuing stagnant wages, cuts in government programs, higher interest rates and rising inequality. Translation: The rich get richer.

The children of low-income Americans would be hit hardest. The Republican plan excludes 10 million children whose parents work for low wages -- that's about 1 in 7 of all U.S. children in working families. To turn the screws a little more, rich families would benefit more than the poor. According to one source, "a family making $1 million would get 44 times more money from the government than a single mother earning the minimum wage."

According to the Centers for Disease Control, there were over 60,000 drug overdose deaths last year, and according to the National Institutes of Health there are about 88,000 Americans dying each year from alcohol-related causes. The number of teenagers hospitalized for suicidal tendencies has doubled in the past ten years. 

Around 80 percent of Americans are currently in debt, with a median debt of $70,000More and more Americans cannot afford rent. There are only 12 rural counties in the whole country where a one-bedroom apartment is affordable for minimum-wage workers, based on the 30-percent-of-income standard. Between 2010 and 2016, according to Freddie Mac, the availability of low-income housing declined by over 60 percent. From New York City down to New Orleans and out to San Francisco and up to Seattle, Americans are losing their homes as builders and landlords look for ways to make money off of high-paying customers.
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