Survival__ Structuring Prosperity for Yourself and the Nation - Charles George Smith [137]
The after-tax income of the top 1 percent of households increased by 256 percent, after adjusting for inflation, compared to an increase of 21 percent for families in the middle income quintile. The effective federal tax rate for the top 1 percent of households — i.e., the share of their taxable income that they owe in taxes — fell substantially, from 37 percent to 31.2 percent As a result, the share of the nation’s total after-tax income going to the top 1 percent of households more than doubled, from 7.5 percent in 1979 to 16.3 percent in 2006.
While non-taxable income statistics are hard to come by, we know that the vast majority of tax-free municipal bonds are owned by the top 5% of households, and that the vast majority of Elite wealth is protected from taxes by family and estate trusts, funds and income held overseas and a multitude of other tax avoidance schemes (legal and quasi-legal) unavailable to middle class households. The vast majority of the Elite's income is unearned, that is, not wages but rents, dividends, capital gains, etc., which are either taxed at lower rates or subject to multiple deductions and other tax avoidance strategies.
Thus the top 1%'s share of total national income (nontaxable or protected from taxation as well as taxable) is more on the order of a third. (Approximately 60% of the income-generated wealth of the nation--rents protected by depreciation, dividends, interest, capital gains, tax-free bond income, non-taxable trust income, etc.-- flows to the top 1%. Thus wages/salaries/taxable income is a poor measure of total wealth and income.)
Historically, this concentration of wealth and income is an extreme for this nation. The State (all government, state, county, city, semi-autonomous public agencies, transit authorities, public universities, etc.) currently absorbs approximately 40% of the nation's GDP, also an extreme. (The Federal government absorbs about 20% of GDP.)
We should also note that the rise of entitlements/dependency has occurred in parallel with rising inequality/ever greater share of national income diverted to the State and Plutocracy; the skyrocketing cost of "pay as you go" entitlements is thus paid with borrowed money and higher taxes on the dwindling productive middle class, leaving the Plutocracy and State fiefdoms' shares of the national income intact.
None of this is of course common knowledge, for the corporate Elite owns the highly concentrated mass media, and it would not serve their interest for this sort of data to be widely disseminated in the mass media.
Given that elites form in all societies with any surplus, the notion of eradicating Elites entirely is impractical.
Clearing away old Elites (liquidating, murdering or imprisoning them on the Soviet, Chinese or Cambodian models) has merely provided opportunities for a new Elite to take the place of the old Elite.
But reducing extreme inequality by restricting the diversion of the productive classes' earnings to the Elite/State partnership is not just entirely possible but it has recent historical precedent (the rapid drop in inequality 1940 - 1970).
It is important to note that eras of relatively low inequality have generally been the most widely prosperous, stable and creative in American history.
As noted elsewhere in this analysis, the U.S. Constitution does not restrict the growth of Elites or the State, nor does it contain any mechanism to limit the concentration of their wealth, power and influence. The Elites and high-caste State elites effectively control all three branches of the U.S. government and so the "balance of powers" is ineffective in limiting the rise of inequality. It is up to the citizenry to limit rising inequality; the structure of government itself only feeds an ever-enlarging State.
Having noted this, we must also note that the U.S. Constitution does