by Randolph T. Holhut
December 15, 2011
FROM DEMOCRACY TO OLIGARCHY
DUMMERSTON, Vt. -- The unofficial rallying cry of Occupy Wall Street - "We are the 99 percent!" - is a brilliant slogan that sums up who didn't benefit from the last three decades of government policies that catered to the wealthy at the expense of every one else.
How can people defend a system where six Americans have as much wealth as the collective net worth of the bottom 30 percent of Americans?
Those six Americans are the heirs of Sam Walton, the founder of Walmart. Based on estimates the Survey of Consumer Fiances, a database of the wealthiest people in the world, these six people had a combined net worth of $69.7 billion as of 2007, the latest figures available.
Expand it out a little further, and the cumulative wealth of the Forbes 400 as of 2007 is $1.54 trillion, or equal to the same amount of wealth held by the bottom 50 percent of Americans.
The wealthiest 1 percent of Americans did get richer over the past three decades. How much richer? According to the Congressional Budget Office (CBO), adjusted for inflation, the after-tax income of the top one percent of families rose 275 percent between 1979 and 2007.
The top 20 percent of families saw their after-tax income grow 65 percent. The middle of the middle class saw a 40 percent increase. And the poorest fifth of Americans only saw an 18 percent increase.
Conservatives love to complain about tax policy that redistributes income, but only if that money is redistributed to the working classes. As the architects of the policies that transferred so much of our collective wealth to the people who need the least, conservatives will never complain about the unfairness of such a policy.
In fact, they've taken to attacking the 47 percent of Americans who don't earn enough money to pay federal income tax. Their lame retort to the Occupy movement, "We Are The 53 Percent," tried unsuccessfully to portray these people as freeloaders living off the labors of hard-working, tax-paying Americans.
Thanks to programs like the Earned Income Credit, the federal income tax burden is lower for families that make less than $20,000 a year. But for most of the period covered by the CBO report, workers have paid more in Social Security and Medicare taxes.
The American people are starting to get wise to these numbers, except for their elected representatives in Washington, who steadfastly support the right of the 1 percent to pay as little in taxes as possible while they freeload off the public infrastructure that the 99 percent pays for.
Thanks to three decades of economic policy designed to benefit the wealthiest among us, the United States now has the most lopsided distribution of income of any of the world's industrialized states.
How lopsided? The 99 percent in the United States takes home just 82.6 percent of the total personal income, based on 2005 data (the latest available) from the World Top Incomes Database produced by economists Emmanuel Saez, Facundo Alvaredo, Tony Atkinson and Thomas Piketty.
By comparison, it's 95.7 percent in Denmark, 93.7 percent in Sweden, 91.3 percent in France and roughly 90.9 percent in Australia and Japan. Even South Africa beats the United States at 84.5 percent.
It used to be that Americans enjoyed income distribution comparable to the Europeans. Using the World Top Incomes data, the 99 percent earned 92.3 percent of total income in 1973. Even in the mid-1980s, it was still above 90 percent. But once the policies of tax cuts, union busting, and outsourcing took took hold, the income of the 99 percent has steadily dropped since then.
What will it take to bring it back? A return to a sharply progressive income tax system would be a good start. The personal income of the 1 percent used to be taxed at 91 percent in the years between World War II and the early 1960s. As late as the early 1980s, it was 71 percent. Today, it's 35 percent.
Increases on estate and capital gains taxes for the 1 percent would be useful also, as would a securities transaction tax to discourage speculators, and subjecting all income to the Social Security and Medicare payroll tax.
Of course, saying these things gets you the almost reflexive cries of "class warfare" from conservatives. But the truth is that class warfare has been waged for the past three decades, and the wealthiest 1 percent have won.
It's time for the 99 percent to keep up the fight for an economic system based on fairness and the common good, rather than allow a system based on rapacious greed to destroy our nation.
Chief of AR Correspondents Randolph T. Holhut has been a journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.