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

An Invitation to Sunny Miami. What Could Be Bad?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

If a billionaire “invites” you somewhere, you’d better go. Or be prepared to suffer the consequences. This past May, hedge fund kingpin Carl Icahn announced in a letter to his New York-based staff of about 50 that he would be moving his business operations to Florida. But the 83-year-old Icahn assured his staffers they had no reason to worry: “My employees have always been very important to the company, so I’d like to invite you all to join me in Miami.” Those who go south, his letter added, would get a $50,000 relocation benefit “once you have established your permanent residence in Florida.” Those who stay put, the letter continued, can file for state unemployment benefits, a $450 weekly maximum that “you can receive for a total of 26 weeks.” What about severance from Icahn Enterprises? The New York Post reported last week that the two dozen employees who have chosen not to uproot their families and follow Icahn to Florida “will be let go without any severance” when the billionaire shutters his New York offices this coming March. Bloomberg currently puts Carl Icahn’s net worth at $20.5 billion.

***

More ...

Health Care Should Not Be A Bargaining Weapon

Health Care Should Not Be A Bargaining Weapon