The Top 0.1% Of The Nation Earn Half Of All Capital Gains

Capital gains are the key ingredient of income disparity in the US– and the force behind the winner takes all mantra of our economic system. If you want even out earning power in the U.S, you have to raise the 15% capital gains tax.

Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation’s earners– rather than the more common 1%. The top 0.1%– about 315,000 individuals out of 315 million– are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400.

It’s crystal clear that the Bush tax reduction on capital gains and dividend income in 2003 was the cutting edge policy that has created the immense increase in net worth of corporate executives, Wall St. professionals and other entrepreneurs.

The reduction in the tax from 20% to 15% continued the step-by-step tradition of cutting this tax to create more wealth. It had first been reduced from 35% in 1978 at a time of stock market and economic stagnation to 28% . Again , in 1981, at the start of the Reagan era, it was reduced again to 20%– raised back to 28% in 1987, on the eve of the October 19 th– 23% crash in the market. In 1997 Clinton agreed to reduce it back to 20%, which move was an inducement for the explosion in the formation of multi-billion dollar hedge funds and private equity firms– the most “rapidly rising cohort within the top 1 per cent, according to a recent paper by Laura D’Andrea Tyson, Univ. of California economist.”

Make no mistake; the battle that is to be fought over the coming attempt to reverse this reduction in capital gains will be bloody and intense. The facts are clear according to the Congressional Budget Office; more than 80% of the increase in income inequality the past several years was the result of an increase in the share of household income from capital gains. In fact, you can go so far as to claim that “Capital Gains income is the most unevenly distributed– and volatile– source of household income,” according to Laura D’Andrea Tyson, University of California business professor and former chairwoman of the Council of Economic Advisers under President Clinton.

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http://www.forbes.com/sites/robertlenzner/2011/11/20/the-top-0-1-of-the-nation-earn-half-of-all-capital-gains/

The Numbers: How do U.S. taxes compare internationally?

U.S. taxes are low relative to those in other developed countries. In 2008 U.S. taxes at all levels of government claimed 26 percent of GDP, compared with an average of 35 percent of GDP for the 33 member countries of the Organization for Economic Co-operation and Development (OECD).



Among OECD countries only Mexico, Chile and Turkey had lower taxes than the United States as a percentage of GDP. In many European countries taxes exceeded 40 percent of GDP, but those countries generally provide much more extensive government services to their citizens than the United States does.

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http://www.taxpolicycenter.org/briefing-book/background/numbers/international.cfm

How the Top 2 Candidates for Defense Secretary Differ
Chuck Hagel and Michele Flournoy, both haunted by the ghosts of Vietnam, represent a stark choice for Obama.

By Michael Hirsh
Updated: December 14, 2012 | 2:28 p.m.

Chuck Hagel is, by his own admission, haunted by Vietnam. When asked to explain his early opposition to George W. Bush’s 2003 Iraq invasion in an interview in 2011, the former Nebraska senator harked back to his experience as an Army private fighting the Tet offensive in 1968. That maverick stance cost Hagel his reputation as a leading Republican, and it may be one reason why President Obama is now considering him as his next Defense secretary, with Leon Panetta set to retire. “We sent home almost 16,000 body bags that year," Hagel told me. "And I always thought to myself, ‘If I get through this, if I have the opportunity to influence anyone, I owe it to those guys to never let this happen again to the country.’ ”

When Obama mounted a Bush-like “surge” in Afghanistan in 2009, Hagel wasn’t happy either. “I’m not sure we know what the hell we are doing in Afghanistan,” Hagel told me in 2010. “It’s not sustainable at all. I think we’re marking time as we slaughter more young people.” Hagel had also opposed the surge in Iraq. In a dramatic moment on the Senate Foreign Relations Committee in 2007, Hagel implored his fellow Republicans to stop avoiding the truth about what he called the futile “grinder” of Iraq, and asked them not to send in more troops. “Don't hide anymore; none of us!” Hagel declared, raising his voice. Although several Republicans expressed misgivings, in the end only Hagel voted in favor of the nonbinding resolution.

Michele Flournoy, the former under secretary of Defense who is also a leading candidate to replace Panetta, is also somewhat haunted by the ghosts of Vietnam, by her own account, but in a very different way. Though far too young (she turned 52 on Friday) to have served there with the 66-year-old Hagel, Flournoy warned in a speech this week that military planners might still be too “risk-averse” because of the Vietnam experience. She said the military was endangered by a new "Vietnam syndrome" in which planners might seek to avoid the lessons of counterinsurgency and guerrilla warfare simply because the last decade of this kind of conflict has been so costly in Iraq and Afghanistan.

At a time when Hagel was worried about the cost of the Afghan surge in body bags, Flournoy was promoting the idea as a leading supporter of counterinsurgency strategy in 2009. During this period, a fierce debate occurred inside the Obama administration over whether to pare down the U.S. presence in Afghanistan and Pakistan to mere “counterterror operations”—the position taken by Vice President Joe Biden, a longtime Hagel ally—or whether to mount a larger counterinsurgency or “hearts-and-minds,” nation-building-type war. After leaving the Pentagon, Flournoy took over the Center for a New American Security, a think tank known for its work in counterinsurgency policy.

http://www.nationaljournal.com/nationalsecurity/how-the-top-2-candidates-for-defense-secretary-differ-20121214

John Boehner’s Plan B would raise taxes on the poor
Posted by Dylan Matthews on December 19, 2012 at 2:23 pm

Details keep coming in about “Plan B,” House Speaker John Boehner’s proposal to extend the Bush tax cuts for income under $1 million permanently. A lot gets extended. The current very low estate tax rates are made permanent, and the phase-out of the personal exemption for high earners, and the “Pease” limit on high earners’ itemized deductions, are completely eliminated.

But some features don’t get extended. While the bill makes permanent the expansion of the Child Tax Credit (CTC) signed into law by George W. Bush as part of the 2001 tax cut deal — which bumped the credit from $500 to $1,000 — it does not extend an expansion that was passed as part of the 2009 stimulus package, and has been renewed since then, allowing poor families to refund more of the credit. Nor does it extend the stimulus’s expansion of the Earned Income Tax Credit (EITC), by far the most important anti-poverty program the federal government has, or the American Opportunity Credit (AOC), which provides tuition assistance for middle-class families.

That has a huge impact on lower-income families. The Tax Policy Center hasn’t projected the distributional effect of extending the AOC, but it has estimated those effects for the stimulus expansions of EITC and CTC:



The working poor, on average, would see taxes go up between $1,000 and $1,500 dollars. Barely anyone making over $100,000 would see a tax increase, and as a percentage of income, middle and upper middle class people making between $40,000 and $100,000 a year would see taxes go up less. But low income families earning $10,000 to $30,000 a year really take a beating under Boehner’s plan. Of course, if we do nothing, then the 2001 provisions expire as well and poor families are really in for a bruising.

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/19/john-boehners-plan-b-would-raise-taxes-on-the-poor/

Eight Ways Obama Can Jam Through His Agenda Without Congress
The unilateralist manifesto.

Timothy Noah November 16, 2012

THE 2012 ELECTIONS were a little bit like Groundhog Day. After spending an estimated $5.8 billion on the House, Senate, and presidential elections, America woke up on November 7 to find that the president was still Barack Obama, the Senate was still Democratic, the House retained a slightly smaller Republican majority, and prospects for bipartisan cooperation remained as slim as ever. In a post-election statement, Senate Republican leader Mitch McConnell called on Obama “to propose solutions that actually have a chance of passing ... and deliver in a way that he did not in his first four years in office.” Translation: “We still see no reason to cooperate with you.”

One circumstance, however, has changed. With the election over, the president can now take bolder action on a host of domestic issues that don’t require cooperation—or even input—from Congress. Though some of these actions might be controversial, that concern matters less now that Obama has faced voters for the last time. What follows are eight policies that the executive branch can carry out on its own, in many cases immediately. Obama will almost certainly do some of these. Others require a bit more gumption. He should do those, too.

Cut Carbon Emissions

HURRICANE SANDY lent urgency to the Obama administration’s stated goal of grappling with climate change. While cap-and-trade legislation may have died in Congress, the administration has several powerful tools at its disposal that would limit emissions. One would be to initiate a combined rule governing power plant emissions, the most concentrated source of greenhouse gases in our atmosphere. In March, the Environmental Protection Agency proposed new Clean Air Act regulations for carbon emissions from future power plants. It should link those regulations with a rule governing existing plants, too.

President Obama should also consider permanently canceling the Keystone XL pipeline, a project he put on hold last January. Keystone XL would transmit Canadian oil extracted from tar sands that would release vast amounts of carbon into the atmosphere. In addition, creation of the pipeline would require extensive removal of ancient, carbon-absorbing forest. The final product is, per unit of carbon released, “equivalent to burning coal in your automobile,” according to the NASA climate scientist James Hansen.

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http://www.tnr.com/article/politics/magazine/110227/eight-ways-obama-can-jam-through-his-agenda-without-congress?page=0,0

The Morning Plum: Left warns Dems not to cave on fiscal cliff
By Greg Sargent

So how far are Dems willing to go in making concessions on entitlements in the fiscal cliff talks? The general sense in liberal and labor circles is one of cautious optimism — tempered by an awareness that a cave is always possible.

A coalition of unions — SEIU, AFSCME, and the NEA — has released new ads today pressuring Dems not to give in to GOP demands for deep spending cuts. The ads — which target Dem senators Mark Udall, Michael Bennet, Claire McCaskill, Jim Webb, and Mark Warner in their states — make the key point that the best way to reduce the deficit is to invest in job creation and grow the economy, and they demand that the senators protect Medicare, Medicaid and education. They insist that Dems “continue to stand up for us,” rather than cut “programs that families rely on most.”

This comes as some self-described “centrist” Democrats are already making noise about not necessarily supporting the Obama plan to raise taxes on the rich. And the centrist group Third Way, in a message intended to generate inside-the-Beltway chatter, released a new poll supposedly showing support for a bipartisan deficit “deal.”

http://www.washingtonpost.com/blogs/plum-line/post/the-morning-plum-left-warns-dems-not-to-cave-on-fiscal-cliff/2012/11/20/5eb5e59a-32ff-11e2-9cfa-e41bac906cc9_blog.html


Q.59 Some Say Social Security and Medicare are in financial trouble. In your view, do Social Security and Medicare have major financial problems, minor financial problems, or no financial problems?

Major Problems 53%
Minor Problems 36%
No Problems 6%
Don't Know 6%

http://content.thirdway.org/publications/617/Third_Way_Memo_-_Post-Election_Poll_Obama_Voters_Say_Lets_Make_a_Deal.pdf