Another Idiot Study Tells Us What WE Already Knew

Income Gap Is Widening, Data Shows

For those of us that are working and struggling to pay our bills, watching our wages stagnate while the cost of gasoline, electricity, heating fuels, health care, rent, insurance, taxes and other necessities of our life in the United States rise in a meteoric and exponential fashion--all the while watching corporations receive tax cuts, labor relations policies that line the pockets of employers, and record profits being achieved by corporations and their head honchos--the findings of this study is a redundant and unnecessary effort.

All anyone with a lick of common sense has to do is look at how much of their income is eaten up by the bills they have to pay and then tune into any of the so-called celebreality television shows that portray the spoiled antics of the filthy rich (i.e. the idiotic show that portrays the spoiled antics of Paris Hilton, Nicole Ritchie, the "Sons of Hollywood," "The Real Housewives of Orange County," "The Girls Next Door"--or read about the enormous wealth being garnered by Bush, Cheney, Biden, Kennedy, Gates, Trump or any number of the outrageously wealthy or influential--to realize that there are those of us who struggle to survive on a daily basis and those that live without any regard for what it takes to live on a working income. And its not a task of serious investigation or research to realize that the gap between those that have and those that are just trying to keep what they got is as big as the void between heaven and hell.

There are far too many of us that are living one paycheck away from financial disaster. And the number of us that are living that way directly in response to unfair laws, policies and practices in favor of big business and politicians is so great that we are verging on another great depression... and in the usual fashion, our leaders are ignoring the handwriting on the walls (c.f. recent reports from the Federal Reserve and the so-called investigations by DOJ and Congress that cleared the oil companies of any gouging at the pumps).

We have so many "studies of the obvious" that one wonders what is really being studied at all.

BTW, the author of this report is David Cay Johnston, who, despite our disagreement on what form a blogger should use to acknowledge the writings of a newspaper or other media reporter, is fast becoming someone I admire for his integrity and knowledge base regarding our economy and the way Corporate America is manipulating the rest of us. Mr. Johnston received significant mention in David Sirota's "Hostile Takeover," which outlines how US corporations are taking unfair advantage of us by way of usurping our rights and political processes through their use of lobbyists, political purchase of congress, and a violation of our foundational principles.

Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.

The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.

The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

Prof. Emmanuel Saez, the University of California, Berkeley, economist who analyzed the Internal Revenue Service data with Prof. Thomas Piketty of the Paris School of Economics, said such growing disparities were significant in terms of social and political stability.

“If the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness,” Professor Saez said. “It can have important political consequences.”

Last year, according to data from other sources, incomes for average Americans increased for the first time in several years. But because those at the top rely heavily on the stock market and business profits for their income, both of which were strong last year, it is likely that the disparities in 2005 are the same or larger now, Professor Saez said.

He noted that the analysis was based on preliminary data and that the highest-income Americans were more likely than others to file their returns late, so his data might understate the growth in inequality.

The disparities may be even greater for another reason. The Internal Revenue Service estimates that it is able to accurately tax 99 percent of wage income but that it captures only about 70 percent of business and investment income, most of which flows to upper-income individuals, because not everybody accurately reports such figures.

The Bush administration argued that its tax policies, despite cuts that benefited those at the top more than others, had not added to the widening gap but “made the tax code more progressive, not less.” Brookly McLaughlin, the chief Treasury Department spokeswoman, said that this year “the share of income taxes paid by lower-income taxpayers will be lower than it would have been without the tax relief, while the share of income taxes for higher-income taxpayers will be higher.”

Treasury Secretary Henry M. Paulson Jr., she noted, has acknowledged that income disparities have increased, but, along with a “solid consensus” of experts, attributed that shift largely to “the rapid pace of technological change has been a major driver in the decades-long widening of the income gap in the United States."

Others argued that public policies had played a role in the shift. Robert Greenstein, executive director of the Center on Budget and Policy Priorities, an advocacy group for the poor, said that the data understates the widening disparity between the top 1 percent and the rest of the country.

He said that in addition to rising incomes and reduced taxes, the equation should take into account cuts in fringe benefits to workers and in government services that middle-class and poor Americans rely on more than the affluent. These include health care, child care and education spending.