Thursday, June 28, 2012

Ten Fingers: The Super Rich 2/3

Body: first, the state of affairs. Since Obama took office, there was a major government stimulus that went to private industry mostly. Things like the work I do which is contract for the government. But government all over the country has shrunk. Many departments have been whittled down to half their size or less—close five fingers. Despite some new regulations (about on par with the Bush administration), agencies now have to prioritize based on their limited resources.

So where is the money? Well, it didn’t actually start with the recession. Since 1979, the share of America’s wealth owned by the 1% (the tip of your pinky) has doubled (two fingers) to over 16% of America’s wealth. Basically, nearly two fingers end up being owned by the tip of a pinky. The rest of America? Well, they’re average wealth has decreased. The 99% now share 8 fingers.

And are the super-rich paying for this? Well no. In 1979 the ultra-mega-wealthy (.01%) paid 75% (7-8 fingers) of their income in taxes. Now they pay less than 4 fingers. That means two things: the super rich have more money to spend now than they ever did, and the super-rich aren’t creating jobs for reasons that aren’t monetary.

Look at it this way. The average American saves about 5% or a half finger of their income. Not much but better than the negative numbers they were saving pre-recession. And the average wealthy person saves over 50% of their money (five fingers). That’s a ten fold increase percentage wise. In real dollars it’s far more.

Let’s say you are just in the 1% and not in the .1% or .01%. You make about $1.2 million, or the equivalent of 24 American households—I don’t really have a way to put this on ten fingers unless you want to get exponential. The 24 households would save about $2500 each; about $60,000. As a 1%er you would save $600,000. Ten times as much. And that wouldn’t go into the economy.

All your fingers except for the tip of your pinky, spends on average 10 times more money that goes directly into the economy. It stands to reason that tax policies that benefit those who truly create jobs and keep the economy moving are the priority. Tax policies that encourage savings for people already saving money are awkward and dumb.