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Long before the Great Recession (when 8.7 million Americans lost their jobs), there was plenty of discussion about wealth inequality, wage disparity, the shrinking middle-class, CEO pay, and low wages for everybody else. On March 20, 2006 the Wall Street Journal  reported, "Since the 1970s, CEO compensation has gone from 40 times to more than 300 times the average worker's salary, according to a study by Carola Frydman of Harvard University and Raven Saks of the Federal Reserve."

Carola Frydman, as an Assistant Professor of Finance at the MIT Sloan School of Management, posted her research papers, as well as other related links, on her MIT profile page. She is currently listed as an Assistant Professor at the Department of Economics Boston University.

That same year in 2006, then Treasury Secretary John Snow had argued that the widening gap between high-paid and low-paid Americans "reflects a labor market efficiently rewarding more-productive people". This was before he was succeeded by Henry Paulson on July 3, 2006. (See my post about Paul Paulson: George Clooney: New Spin Doctor for Goldman Sachs)

The Bush tax cuts included capital gains taxes, which were lowered three years earlier in 2003 to 15% --- a tax rate that Warren Buffett pays and said was lower than his secretary's (and still is). Secretary Snow had said that "the tax cuts have made the tax code more progressive, because the rich now pay a larger share of total individual taxes." (Of course, most us now know that was never true. The capital gains tax has been a preferential tax for the wealthy since 1921, and was first initiated by the banker and Republican Secretary of the Treasury Andrew Mellon.)

The Tax Policy Center, a joint venture of the Brookings Institution and Urban Institute think tanks, countered Treasury Secretary John Snow's claim, saying that the tax cuts still widened the gap between the after-tax incomes of rich and poor Americans.

At the time, Robert Gordon, an economist at Northwestern University, said that the past few years represented the continuation of a 35-year trend in which a growing share of all labor income goes to a small group of superstars: professional athletes, CEOs and other top corporate officers. On top of this trend, income on capital -- such as interest, dividends, rent and capital gains -- has taken a growing share of national income from labor that goes mainly to a small slice of the population at the very top. (Of course, for most of us, this is now old news.)

Fast forward to January 31, 2007  - "The fact is that income inequality is real -- it's been rising for more than 25 years." - George W. Bush in an address to Wall Street

Democrats had already been complaining of corporate greed and growing middle-class insecurity. House Democrats had pressed legislation to raise the minimum wage, cut interest rates for college loans and reduce prescription drug prices for Medicare recipients. But today we're still dealing with these same problems.

The Senate had taken aim at executive compensation, adding a provision to a minimum-wage bill that was suppose to limit the ability of executives to amass millions of dollars in tax-deferred accounts.

George W. Bush at the New York Stock Exchange, talking to his "base" on January 31, 2007

From the New York Magazine: The president was in New York yesterday, and he brought some odd tidings for our city's financial industry. In a speech strategically delivered across the street from the New York Stock Exchange, George W. Bush — who on a trip to New York years ago delivered his famous "Some call you the elite, I call you my base" line — spoke out against excessive executive pay and lush severance packages. Meantime, an editorial in the same day's Wall Street Journal posited that any legislation curbing executive pay would immediately translate into higher taxes. As the person hectoring the gaggle of Wall Streeters about fiscal modesty was the same person who had drastically cut taxes for everyone in attendance, the listeners could be forgiven for mild confusion. The Sun calls the crowd's response "muted." But of course it was: The real target audience for the speech was the general public. "The fact is that income inequality is real. It has been rising for more than 25 years." And you're first noticing that now, George? Pardon the pun, but that's rich!

Four months later on May 25, 2007 the Fair Minimum Wage Act of 2007 was signed into law that gradually raised the federal minimum wage from $5.15 per hour to the current $7.25 per hour. That very same day the New York Times published an article: More Than Ever, It Pays to Be the Top Executive.

Seven months after that, in December of 2007, was the official start of the Great Recession and the housing crash -- and less than a year after that, was the stock market crash (September 2008 to March 2009), the massive layoffs and the escalating foreclosure crisis, which included the infamous and illegal bank foreclosures due to robo-signing.)

According to the National Bureau of Economic Research, the recession had officially ended in June of 2009 --- 4 months before the unemployment rate peaked at 10.2% in October 2009 --- when 15.9 million were officially reported as unemployed by the Bureau of Labor Statistics in the U-3 rate.

The Dodd-Frank bill was later passed in 2010, but ever since then, the banks have been busy lobbying both the Republicans and Democrats to essentially allow the banks re-write their own regulations. In 2013 Attorney General Eric Holder basically told us that the bankers were too big to jail.

But there is one sliver of hope for a little justice in the future. Recently the SEC said that banks would no longer be allowed to settle some cases while “neither admitting nor denying” wrongdoing --- or, if the defendants refused, the SEC would litigate the case. In late 2011, Judge Jed S. Rakoff said that settling with banks who neither admit nor deny the allegations is a policy “hallowed by history but not by reason.” He described a settlement, which was for $285 million, as “pocket change” for a giant bank like Citigroup.

The Great Recession was the longest U.S. economic downturn since the Great Depression, and its aftermath can still be felt by the middle-class and poor today. Since the "official" end of the recession 4 years ago this month, the stock market has come roaring back, making all-time record gains, with the top income earners benefiting the most. CEO pay has also been breaking records too (A list of the 100 highest paid CEOs, who pay capital gains taxes on their stock options).

Meanwhile, their employees have just had their biggest drop in hourly pay on record. The U.S. economy continues to churn out low-paying jobs in the weakest labor-market recovery since World War II, while suburban poverty is now off the charts.

Companies like Walmart's wages and benefits are so low, it forces workers to go on Medicaid and receive housing assistance, childcare subsidies, food stamps, and more. As reported by MSN Money, according to a Congressional study, $6,000 is the average amount taxpayers are being dinged per each Walmart employee.

Inequality is still greater now than ever before. An analysis by Berkeley Professor Emmanuel Saez revealed that the top 1 percent of American earners captured all the income gains during the first two years of the current economic recovery while the other 99 percent lost ground -- and that capital gains was the major driver of inequality.

In other words, nothing has changed, but instead, is only getting worse for those nearest the bottom of the income ladder...and a whole lot better for those nearest the top. Like the proverb says, "The more things change, the more they stay the same." But in other ways, they're not the same at all. With the mergers and acquisitions over past several decades, corporations are approaching the monopolies we had over a century ago --- and the banks are bigger than ever before.

Today the only difference is, now George W. Bush is saying, "If you raise taxes on the so-called rich, you're really raising taxes on the job creators." The problem is, his job creators haven't been creating any jobs for the so-called unemployed...at least not here in America. There are only 3.8 million jobs (mostly temporary, part-time and low-paying jobs) for 11.7 million unemployed Americans --- not counting those that the Bureau of Labor Statistics and the media doesn't include in the U-3 rate.

Originally posted to Bud Meyers on Sat Jun 22, 2013 at 12:14 PM PDT.

Also republished by Income Inequality Kos, In Support of Labor and Unions, and Community Spotlight.

Poll

Should we tax capital gains as regular wages, according to one's adjusted gross income, as per the current marginal tax brackets?

88%123 votes
11%16 votes

| 139 votes | Vote | Results

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Comment Preferences

  •  From my diary (14+ / 0-)

    on this subject:
     photo fredgraph1_zps759f7c9f.png

    This is not just an American Problem.  From a great article in the Milwaukee Journal:

    Water finds its equilibrium, its own level," says Jeff Joerres, chief executive of Milwaukee-based global staffing giant ManpowerGroup Inc., who refers to this accelerating leveling of wages as "global labor arbitrage."

    "It's happening so fast on a global scale that it's scary," Joerres said.

    In the U.S., the phenomenon is not limited to isolated and vulnerable sectors, such as commodity manufacturing. Rather, wages have fallen across the entire national economy — down 1.1% in the 12-month period from September 2011 to September 2012, the most recent comparisons available.

    "Average weekly wages declined in every industry except for information," the U.S. Bureau of Labor Statistics reported in its latest economic census.

    That quarterly report has shown year-over-year declines only six times since the data collection began in 1978 — and four of those have occurred since 2009.

    Nor is the United States the only advanced economy in the world affected. The average of wages in western Europe, Japan and the U.S. fell in a "double dip," declining in both 2008 and 2011, according to the Swiss-based International Labor Organization.

    More from a must read report:
    No one disputes, however, that wages are in upheaval around the globe and that leveling pressure from low-wage rivals only accelerates the trend.

    "There is a movement toward convergence," said Patrick Belser, a senior economist in Geneva at the International Labor Organization.

    In its latest Global Wage Report, the ILO warned that wage competition between nations could trigger a "race to the bottom," with nations desperate to undercut each other with cheap labor only to end up shrinking their own economies.

    This problem is bigger than the US, and is happening a pre-tax basis.

    Its implications are so large I really don't think people can wrap their heads around it.

    •  Mind boggling how people cheer CBO immigration (2+ / 0-)
      Recommended by:
      Lujane, VTCC73

      reform report that says GDP will go up but unemployment will be higher and wages lower.

      Americans are being told to our faces by the CBO that the rich will get richer(GDP up), while the middle class will have higher unemployment if the immigration reform passes.

      Is it that we don't care, or that we cannot wrap our heads around it?

      Is higher unemployment and lower wages OK with progressives now, so long as the boss makes more money?

    •  In other words (1+ / 0-)
      Recommended by:
      IT Professional

      It's a race to the bottom when it comes to wages.

      The wealthy are not raising other countries up so much as they are driving the higher wage countries down.

      Women create the entire labor force. ---------------------------------------------------------------------------------------- Sympathy is the strongest instinct in human nature. - Charles Darwin

      by splashy on Sun Jun 23, 2013 at 12:42:14 PM PDT

      [ Parent ]

  •  Wow, so many tags! (1+ / 0-)
    Recommended by:
    ColoTim

    Makes my eyes spin. Sorry, on to regular programming.

  •  Bud - one nit (2+ / 0-)
    Recommended by:
    slothlax, Lujane

    Snow's statements were true. While after the Bush tax cuts the top rates were dropped for the top earners so were rates for everyone who paid federal income taxes, and dropped some people at the low end off the rolls. Post the Bush tax cuts the top 1, 5 & 10% did pay a higher percentage of the total federal income tax than before the cuts. This had to do with the main subject of your diary, income inequality. The top earners had their incomes grow, while those at the bottom had their incomes stagnate or decline. The CBO actually projected that the result of the Bush tax cuts would be that the top income earners would pay a higher percentage of the total individual income taxes and the CBO analysis was widely used to "sell" the Bush tax cuts to Democrats in Congress.

    "let's talk about that"

    by VClib on Sat Jun 22, 2013 at 01:38:56 PM PDT

    •  It's hard to see (0+ / 0-)

      how that makes the newer rates "more progressive", though, unless one defines "progressive" in some very unusual manner.

      Let us all have the strength to see the humanity in our enemies, and the courage to let them see the humanity in ourselves.

      by Nowhere Man on Sat Jun 22, 2013 at 09:24:12 PM PDT

      [ Parent ]

      •  It's progressive in that the rich paid a higher (0+ / 0-)

        percentage of the total individual income tax burden. We tend to think of progressive as only high marginal rates for high income earners, but any time the tax burden shifts to those with more income, it is a progressive shift regardless of marginal rates.

        "let's talk about that"

        by VClib on Sat Jun 22, 2013 at 10:30:31 PM PDT

        [ Parent ]

        •  Give me more money (6+ / 0-)

          and I'll be happy to pay more taxes.

          Once the rich get 100% of the income they will complain that they have to pay 100% of the taxes.  Poor souls.

          Republican tax policies have led to financial conditions which have caused Republicans to demand cuts to programs they have always opposed.

          by AppleP on Sun Jun 23, 2013 at 05:35:27 AM PDT

          [ Parent ]

        •  So if the lower 99% had no taxable income at all (2+ / 0-)
          Recommended by:
          liberalconservative, splashy

          and the top 1% paid all the income tax because they had all the income, that would be the ultimate in progressive taxation, right?

          I know, I know: It's an absurd hypothetical. But it illustrates the fact that looking at who is paying how much in taxes doesn't tell the whole story. In fact, it tells very little of the story.

          The generally-accepted definition of progressive taxation is that marginal rates increase as income increases. I'll stick with that definition, thankyouverymuch.

          Let us all have the strength to see the humanity in our enemies, and the courage to let them see the humanity in ourselves.

          by Nowhere Man on Sun Jun 23, 2013 at 08:50:54 AM PDT

          [ Parent ]

  •  Here is the conservative view on income inequality (8+ / 0-)

    A girl working in a bar complained to her manager that a client had groped her, and the manager replied: "It's part of the job".

    Similarly, conservatives' response to income inequality is basically "that's life, always been, always will be, nothing we can do about it", BECAUSE they are not directly affected by it.

    Conservative motto: "I've got mine, screw you"!

  •  Big deal. Bush gave speech on income inequality (5+ / 0-)

    But he was never proactive in it.  That's the problem.  And he's not fighting on the income inequality issue these days.

    Therefore, I could care less.  But I still believe income inequality is an issue that needs to be dealt with.

  •  Fuck Bush (9+ / 0-)

    And the Bush Crime Family

    All I want is the truth. Just gimmie some truth John Lennon

    by gimmie truth on Sat Jun 22, 2013 at 08:26:44 PM PDT

    •  ^^^ yes - this ^^^ (0+ / 0-)

      rec'd 1000X

      Help American return to sanity - vote the GOP OUT OF the House Majority and reduce their numbers in the Senate in 2014 elections. Democrats move America forward - Republicans take us backward!

      by dagnome on Sun Jun 23, 2013 at 07:02:54 AM PDT

      [ Parent ]

  •  Bush no longer has any power, and Obama (3+ / 0-)

    extended the bill in 2010.  If you don't agree with the policy, Obama is the one to blame.

  •  Capital gains rate is way too low now, but I (2+ / 0-)
    Recommended by:
    unfangus, liberalconservative

    disagree on making it equal to regular tax rate as it does involve some risk and rewards investment.  I think it should be somewhere around 75% to 80% of the top rate (as opposed to about 40% of the top rate as it is now). [I presume your poll is about long term capital gains, not short term ones.]

    Long term capital gains rates were cut in half, from 40% to 20%, by Jimmy Carter as a correct measure to revive the economy. Sadly for him, and for the Country, the revived economy took a few years and Republicans talk about the Reagan boom, which really was (to a great extent) the boom from Carter's capital gains rate.

    I think a long term capital gains tax rate around 28% to 30% would still reward investors sufficiently so that they invest, bring in much needed revenue, and give a little help in turning around the DOOH NIBOR situation we are in.

    Short term capital gains rate should definitively be taxed as regular wages and perhaps the line between short term and long term (usually 1 year) be moved to 2-3 years.

  •  Start with "Carried Interest" (6+ / 0-)

    Make hedge fund fatcats cough up their fair share of taxes on every penny earned, for the most part, BY DESTROYING BUSINESSES.

    Start with Romney and his brood... prime offenders,

    Help American return to sanity - vote the GOP OUT OF the House Majority and reduce their numbers in the Senate in 2014 elections. Democrats move America forward - Republicans take us backward!

    by dagnome on Sun Jun 23, 2013 at 07:05:07 AM PDT

  •  George W. Bush wouldn't know inequality... (3+ / 0-)

    if it bit him in the ass... which it will NEVER do, because he is part of the "lucky sperm club" - sons and daughters of the modern equivalent of 19th century Robber Barons.

    It's time for income REALITY to set in - caps on executive compensation, ESPECIALLY in Health Care.

    Tell me: what EXACTLY does the CEO of ANY insurance provider do to earn such exorbitant sums, except DENY compassionate care and coverage to sick and dying people to "boost the bottom line"?

    A For-Profit health care system could ONLY flourish in America, where many place WEALTH and GREED ABOVE their moral obligation to "First do no harm".

    Help American return to sanity - vote the GOP OUT OF the House Majority and reduce their numbers in the Senate in 2014 elections. Democrats move America forward - Republicans take us backward!

    by dagnome on Sun Jun 23, 2013 at 07:10:22 AM PDT

  •  Regarding taxing capital gains (1+ / 0-)
    Recommended by:
    splashy

    I did some stock market investing myself, back when "the little guy" could actually make money doing so, and I was shocked the first time I filed my taxes that included capital gains to find that the rate was lower. Even though it gave me a break, I felt that it was very wrong. Why should people pay a higher rate on money they earn by actually working than people pay on money they are doing very little work (other than researching what to invest in) to earn?

    Not only that, but money earned through investing vs. working at a job is often gravy (extra money on top of living wages) and thus is not needed for necessities of life, but for the extras, so why should they get a break on it? And I've known a few people who actually earned their living by day trading, but then it should fall into the same category as money people earn in other jobs. So either way, it does not deserve a lower rate.

  •  Sorry, but we know this already... (0+ / 0-)

    I read about 2 diaries like this a week.

    The real problem is that nobody seems to be willing to do anything about the income disparity.

    "Those who can make you believe absurdities, can make you commit atrocities" Voltaire.

    by JWK on Sun Jun 23, 2013 at 10:21:11 AM PDT

  •  I desperately looked for the snark tag (0+ / 0-)

    and I couldn't find it.  You're kidding me.  The Grand Visier of income inequality...

    "Hatred is never appeased by hatred in this world. By non-hatred alone is hatred appeased. This is a law eternal."

    by sujigu on Sun Jun 23, 2013 at 06:12:00 PM PDT

  •  ... as per the current marginal tax brackets? (0+ / 0-)

    No, the current tax brackets have become far to regressive.
    You confounded your poll by asking a complex question.

    Should we tax capital gains as regular wages?
    Yes.

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