New Data on Tax Havens and Income Reveal America’s Great Divide

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Sometimes a headline writer can get carried away. Way away.

“Paychecks hit high for middle class,” shouted out the front-page headline of this past Wednesday’s Washington Post print edition.

In fact, “paychecks” in the United States — the wages workers receive for their labor — are not rising, as the actual article under the Post front-page headline makes clear. The U.S. Census Bureau’s just-released latest annual report on American incomes, that article notes, furnishes “little evidence that employers are rushing to offer raises to those who already are employed.”

In 2016, the new Census stats show, the take-homes of America’s full-time workers ended up “not statistically different” from their 2015 levels. Take-homes, overall, remain essentially stagnant.

America’s median — most typical — household incomes, on the other hand, did rise in 2016, in large part because over 2 million people shifted from part-time to full-time work. Median incomes have now risen two years in a row, to $66,487 for non-elderly households. But this increase, the Economic Policy Institute points out, still leaves typical household incomes down since the start of the century. Non-elderly household incomes, since 2000, have dropped 4.9 percent.

What’s been increasing? The incomes of America’s affluent, the latest Census figures show, are pulling away from the rest of the nation. In 2016, households in the top 5 percent saw their incomes increase over twice as fast as households in the bottom 20 percent.

Since 2000, after adjusting for inflation, top 5 percent average incomes have jumped from $351,903 to $375,088. Bottom 20 incomes, by contrast, averaged $14,161 in 2000 and then only $12,943 in 2016.

What about the top 1 percent? Census Bureau researchers make no effort to track the incomes at America’s economic summit. We have to look elsewhere — to tax data, for instance — to get a fuller sense of how unequal the United States has become.

Economists like Thomas Piketty and Emmanuel Saez have been doing this looking ever since the 21st century began. But even tax records have flaws. They’re becoming particularly less accurate yardsticks for income as super-rich taxpayers conceal more and more of their wealth in offshore tax havens.

One key collaborator of Piketty and Saez has, fortunately, been working diligently to track those hidden offshore billions. This ace statistical sleuther, Gabriel Zucman of the University of California at Berkeley, has just co-authored new research that gives us the clearest picture yet of how much income and wealth is concentrating in the pockets of our global richest.

Earlier Zucman research had estimated that 8 percent of the world’s household financial wealth is sitting offshore in tax havens. The vast bulk of the income that wealth throws off goes untaxed — and unrecorded in national income distribution figures.

Zucman’s newly published research, conducted with scholars from Norway and Denmark, factors into national statistics the wealth hidden away in tax havens. The top 0.1 percent globally, the research calculates, now holds nearly 80 percent of offshore wealth. The top 0.01 percent share? A little over half of all offshore wealth.

What happens when we incorporate this offshore loot into figures for national wealth distribution? The top 0.1 percent share of America’s household wealth ratchets up from 19.1 to 21.1 percent.

Some perspective: Back in 2000, Zucman and his colleagues estimate, America’s top 0.1 percent held just 15.6 percent of the nation’s household wealth, after taking tax-haven holdings into account. The current top 0.1 percent wealth share now nearly triples the 7.9 percent share of American household wealth the top 0.1 percent averaged back in the 1970s.

The top 0.01 percent, meanwhile, as of 2014 held 11.2 percent of household wealth in the United States, once we factor in offshore wealth. That share has jumped up from 6.9 percent in 2000 — and quadruples the 2.6 percent share of America’s wealth the top 0.01 percent held throughout the 1970s.

One cheery thought to keep in mind as we contemplate all these numbers: The first few years of the 20th century saw plutocracy on the same sort of roll we see now. But that plutocracy would essentially vanish by mid century. Our forbears became significantly more equal. We still could, too.

***

Reposted from Our Future

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches, From Campaign for America's Future

Union Matters

Failing Bridges Hold Public Hostage

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities.

The Seattle Department of Transportation (SDOT) gave the public just a few hours’ notice before closing a major bridge in March, citing significant safety concerns.

The West Seattle Bridge functioned as an essential component of  the city’s local and regional transportation network, carrying 125,000 travelers a day while serving Seattle’s critical maritime and freight industries. Closing it was a huge blow to the city and its citizens. 

Yet neither Seattle’s struggle with bridge maintenance nor the inconvenience now facing the city’s motorists is unusual. Decades of neglect left bridges across the country crumbling or near collapse, requiring a massive investment to keep traffic flowing safely.

When they opened it in 1984, officials predicted the West Seattle Bridge would last 75 years.

But in 2013, cracks started appearing in the center span’s box girders, the main horizontal support beams below the roadway. These cracks spread 2 feet in a little more than two weeks, prompting the bridge’s closure.

And it’s still at risk of falling.  

The city set up an emergency alert system so those in the “fall zone” could be quickly evacuated if the bridge deteriorates to the point of collapse.

More than one-third of U.S. bridges similarly need repair work or replacement, a reminder of America’s urgent need to invest in long-ignored infrastructure.

Fixing or replacing America’s bridges wouldn’t just keep Americans moving. It would also provide millions of family-supporting jobs for steel and cement workers, while also boosting the building trades and other industries.

With bridges across the country close to failure and millions unemployed, America needs a major infrastructure campaign now more than ever.

 

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There is Dignity in All Work

There is Dignity in All Work