WEALTH DISTRIBUTION II

[clarence swinney]

Corporations systematically created a wealth gap over the last 30 years. In 1955, IRS records indicated the 400 richest people in the country were worth an average $12.6 million, adjusted for inflation. In 2006, the 400 richest increased their average to $263 million, representing an epochal shift of wealth upward in the U.S.

In 1955, the richest tier paid an average 51.2 percent of their income in taxes under a progressive federal income tax that included loopholes. By 2006, the richest paid only 17.2 percent of their income in taxes. In 1955, the proportion of federal income from corporate taxes was 33 percent; by 2003, it decreased to 7.4 percent. Today, the top taxpayers pay the same percentage of their incomes in taxes as those making $50,000 to $75,000, although they doubled their share of total U.S. income.

"Over the past 30 years, the income of the top one percent, adjusted for inflation, doubled: the top one-tenth of one percent tripled, and the one-one-hundredth quadrupled," says Pizzigati. "Meanwhile, the average income of the bottom 90 percent has gone down slightly. This is a stunning transformation."

Meanwhile, wages for most Americans didn't improve from 1979 to 1998, and the median male wage in 2000 was below the 1979 level, despite productivity increases of 44.5 percent. Between 2002 and 2004, inflation-adjusted median household income declined $1669 a year. To make up for lost income, credit card debt soared 315 percent between 1989 and 2006, representing 138 percent of disposable income in 2007.

According to Pizzigati, the wealth disparity is the result of corporations squeezing more profits from workers.

"In the past corporations laid off workers because business was bad," Pizzigati says. "But over the past few decades, downsizing has been a corporate wealth generating strategy. Today, CEOs don't spend their time making trying to make better products: they maneuver to take over other companies, steal their customers and fire their workers."

Progressive taxation used to prevent the rich from capturing a disproportionate share of national compensation, and the labor movement, which represented 35 percent of private sector employees and today represents 8 percent, once served as a political force to limit excessive executive pay. The Reagan backlash cut the top income tax rates, and saw the creation of right-wing think tanks that spent $30 billion over the past 30 years, propagandizing for deregulation, privatization, and wealth worship.

Bubble economies over the past 30 years helped CEOs pump up their income, and efforts to corral their pay are weak and ineffective. CEO pay may fall during these economic hard times, but disparity isn't going away. Without a strong movement for change, the wealth gap will only increase in this downturn.

"There won't be a restructuring of the economy unless we take on executive compensation," concludes Pizzigati. "Outrageously large rewards give executives an incentive to behave outrageously. If we allow these incentives to continue, we will just see more of the reckless behavior that has driven the global economy into the ditch."
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About author
Don Monkerud is an Aptos, California-based writer who writes about culture and politics. He can be reached at [e-mail] <1>.