the world through rainbow eyes

Leave a comment

We Have Income Redistribution, And It Isn’t Like You Think It Is, Most Likely.

This is a quick and dirty cut and paste from something I wrote up on my Facebook. 
I haven’t linked my citations or anything, but it’s all pretty readily available stuff. So, if you can’t find these numbers, or disagree, feel free to question, and I’ll see if I can go dig the citations back up.

A pretty regular trope I hear is the Welfare Fraudster.
They take in government handouts while dining on steak, wearing $200 sneakers and having under the counter jobs and income that they dodge taxes on.

Most estimates put such government assistance fraud at about 2% of the total received.

Meanwhile US companies are reported to have greater than USD1.7 Trillion in offshore profits. That’s under the counter income, essentially, that is not taxed. These holdings are being kept there by companies who insist that the money will not be repatriated and therefore need not be taxed.
We have a worldwide tax system which means that our corporate rate is 35% for US based companies on money earned around the world. BUT, there are foreign tax credits earned and taxes are deferred until profits are brought home (repatriated). So, a corporation earns money in a low tax country, pays the taxes there, and reinvests there. They earn the credit for paying the taxes, and no taxes are due because the money was reinvested rather than returning.
There’s tricks played with the money, though, naturally. Michigan Senator Carl Levin reports that a subset of 27 companies had 46% of their offshore assets invested in US banks.
Basically, it’s money laundering. Taking money to cheaper countries, putting that stamp on it and using those holdings to do international investments with “foreign” money back in the US.
It’s tricky, but Congress has no interest in changing it. Even without that, though, it’s incentivizing reinvestment overseas. No wonder we’re hemorrhaging money in the US.

These are some of the “loopholes” you’ve been hearing about during the sequester talks.

There’s more, too, with big banks earning a lower borrowing rate to help keep them from failing. This rate has been put at 0.8% by Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz. If their figures are correct that puts the 10 largest banks at an essential subsidy of USD83 Billion, or about 3 cents of every dollar in taxes brought in. The top 5 banks account for about USD64 Billion of that. Which is actually sort of horrible, as that’s nearly equal to their stated profits. Which means they’re just breaking even with that subsidy.

In other words, much of the profits they’re reporting to the stockholders are subsidies that you, the taxpayer, and all the rest of us are paying (meanwhile, corporations are dodging these by sending them overseas).

These tax loopholes were lobbied for by the same companies enjoying them. At the same time they’re lobbying for a decrease in the corporate tax rate that they claim would bring income back, but has not ever been shown to.

It’s a straight redistribution of wealth.

Meanwhile, instead of closing these loopholes, we’re cutting WIC, Medicare, free lunch programs that are often the only hot, full meals that our already high number of food insecure children are eating each week, housing subsidies that were keeping people from being homeless, and many other individual assistance programs.

And really, is it any question as to why? These massive conglomerates own the actual media that is slanting the stories you hear. They pay for the elections of politicians who then legislate bills that the company’s lobbies actually wrote. Hell, the legislators themselves are often shareholders and owners of many of these companies. Going all the way up to the Supreme Court of the United States.

Meanwhile children who are starving, people who are dying from lack of medical care, and the homeless do not have lobbies.

I don’t even care, be mad at individual assistance programs, but, for fuck’s sake? Be angry about the straight redistribution of the US economy into the hands of the very few who are making the laws that make it possible.

That’s the *actual* Socialism that you all claim to rail against.


Let Them Eat Cake

The bottom 80% of the US owns 7% of the wealth*.  That’s a fact that I’ve been sitting with for a couple years now.

Michael I. Norton an Associate Professor of Business Administration at Harvard Business School published this study in 2011 which said that as bad as wealth inequality is in the US,  the vast majority of Americans actually did not know how overwhelmingly bad it was. It wasn’t just a matter of it being different from what they thought would be ideal, it was that it was staggeringly different from what they even thought it actually was.

“Wealth inequality” does not simply mean how much income a person has. It’s made up of what you own minus what you owe. Income and assets, in other words.

That sentence I started this out with about what the bottom 80% owns? Here’s a worse one. The bottom 90% owe 73% of consumer debt**.

That’s pretty grim. I’m still working those numbers, and if you find errors, pop them up.

So, that this video is now making the rounds and surprising people:

had me sort of stumped.

Oh. I thought we knew that already. I thought that was understood. You still weren’t there? Oh. Fine. Then we obviously need an awareness campaign. So, there it is. There’s that video. A pretty good layout of the disparity, along with a slant of Socialism that people are losing their minds over.

But, guys. You better wake up. If that is making you lose your mind? The reality of those numbers better scare the hell out of you. Numbers like that don’t work themselves out.

That speaks of a system that has amassed so much at the top that the top are now giants. Do you understand what giants do? They pass laws. They deregulate and loosen the laws so they can amass more. They redistribute more upwards. Then when there isn’t all that much left over, they start passing laws to force more from below and push it higher.

In case you’re lost in what I’m saying, basically everything that’s happened in the last decade and a half.
To make it even more clear, what this means is that it is costing more and more money to live a middle class lifestyle in the United States. To be able to maybe send the kids to school, or save for retirement, or purchase good healthcare that actually meets needs, to not live in a neighborhood where you and your children are being poisoned by fracking or lead or what have you, to buy clothes that don’t fall apart on your body, to buy foods that are not simply prepackaged carbs with some cheap fat, salt and sugar loaded on to make it at least taste good, to have safe and reliable transportation, to live, again a Middle Class Lifestyle, is now something that is slowly growing out of reach for those who even in the top quintile (but not in the 1%).

And so, as people become further and further into debt just to get by, they stop buying anything but the most needed of necessities and the occasional luxury on say a Black Friday sale (because at this point they’re never getting out of debt, so they might as well amass just a little bit more or else why are they working, and hey, they really are working, the vast majority of them really are working). Then that debt slowly takes over until they can’t buy anything. Not anything at all. Not clothes, not school for the kids, not retirement, not food, not a home. At that point, they’re on the street.

But the beast at the top marches on, and it’s still hungry. The 1% is still investing while this is happening. Their money is making more money. It’s what happens when it gets that big. It’s a Katamari Damacy ball that has grown to the size of the universe and it really can’t help but roll up more wealth just by being there.

So more is squeezed out. And if you look at those numbers you can see the squeezing, you can watch the ball grow. More of the 99% are  starting to become indistinguishable from the desperately poor.

And then two things start happening.

The first one is kind of funny.

Commercials stop being aimed at the majority. They start being aimed at the Luxe market. Almost exclusively. The only lifestyle that seems on offer in the marketplace is one that is so far out of reach to the common person that it is ludicrous to even suggest that it is aimed at the common person.

Before we get to the second part, understand that when that happens it will eat those top two quintiles that were squeezing by. It will eat them because they can not afford this lifestyle that is being marketed, but it is the only lifestyle being marketed, so it is the one that will be purchased. Further debt will amass, and those quintiles will flatten out faster and faster.

But then.

Then there is nothing left for the giant to eat. The Katamari Damacy ball sits still while all around lay the desperate poor.

And do you know what happens to the man who sits eating at a buffet bigger than he can ever possibly eat when he is in a room of 99 other people starving to eat?

That’s what we need to think about. It doesn’t really matter, at this point, whether it is fair or right. It doesn’t matter. We are on an edge, and things are going to get very, very, very bad if we do not change things.

If the 1% thinks that they can build a wall high enough that the 99% will not tear down that wall to take their heads… they better start reading their history.

*this figure has actually gotten worse since the original publication, as shown here.

** Hurst, Charles E. (2007), Social Inequality: Forms, Causes, and Consequences, Pearson Education, Inc., pp. 36, ISBN 0-205-69829-8