Editorial: Nation’s wealth gap challenged
Vermont’s Sen. Bernie Sanders made national news this week when he tweeted that six members of the Walton family, which owns Walmart, own more wealth than the bottom 40 percent of Americans. Politifact, a non-partisan fact-checking institute that focuses on American politics, decided to check it out to see if the proverbially progressive Independent was on target or exaggerating for effect.
They defined wealth as being measured in terms of net worth, or the value of assets minus liabilities. PolitiFact explains wealth in this context: “For someone in the middle class, that could encompass the value of their 401(k) or other retirement accounts, bank savings and personal assets, such as jewelry or cars, minus what they owe on a home mortgage, credit cards and a car loan. It does not include income – what people earn in wages. For that reason, someone who earns a good salary but has little savings and owes a lot of money on their house would have a negative net worth.
“In fact, because so many Americans invest in real estate to buy a home, middle-class wealth has been one of the biggest casualties of the housing-driven recession. From 2007 to 2010, typical families lost 39 percent of their wealth. In 2007, the median family net worth was $126,400. In 2010, it was $77,300.”
This definition is key because it also shows what’s happened to middle class families in the Great Recession that hit a few months before George W. Bush left office and continued for the next couple of years.
As to Sen. Sanders’ claim, said PolitiFacts, six members of the Walton family appear on the Forbes 400 list of the wealthiest Americans, amassing $102.7 billion for the whole family. According to Sylvia Allegretto, a labor economist at the University of California-Berkeley, in 2007, the wealth held by the six Waltons was equal to that of the bottom 30.5 percent of families in the U.S. In 2010, the Waltons’ share equaled the entire bottom 41.5 percent of families. That 41.5 percent represents nearly 49 million families.
What’s also interesting is that while the median family wealth fell 38.8 percent between 2007-2010, the Walton family’s wealth increased from $73.3 billion in 2007 to $89.5 billion in 2010, or about 22 percent growth.
This information highlights another alarming stat on the nation’s growing wage gap.
A half-century ago, back in the 1950s and 1960s, Americans largely looked at the nation’s Gilded Age as ancient history. The thought that the era of Robber Barons could again dominate the nation’s economic and political landscape as they did at the height of the railroad boom was almost inconceivable. The middle class had grown immensely, the nation had one of the best educational systems in the world, job growth was good, productivity was high, and our consumer-driven economy was creating wealth for the masses.
But that has changed. There’s an economic principle that says: “the greater the gap between the rich and everyone else, the more dangerously unstable economies become.” In 1928, just before the Great Depression, the top one-hundredth of 1 percent of U.S. families averaged 892 times more income than families in the bottom 90 percent. In 2006, the top one-hundredth percent averaged 976 times more income than American’s bottom 90 percent.
Part of the reason for today’s growing wage gap is the decrease in the nation’s federal tax rate. Throughout much of the 20th Century, the high marginal tax rates on the wealthy helped keep the concentration of wealth from being dominated by the wealthiest few. In 1944, the top marginal tax rate hit 94 percent. In that year, according to The Nation, taxpayers earning more than $1 million income paid 65 percent of their total income in taxes. In 2005, taxpayers making more than $1 million annually faced a top marginal rate of 35 percent and paid just 23 percent of their income in federal tax. In the one year that presidential candidate Mitt Romney has released his tax returns, he paid just 13.9 percent in taxes. Current speculation is that he won’t release his tax returns for the past decade because it would show he has paid no taxes in those years (says Democratic Senate Majority Leader Harry Reid) — not because he didn’t make money, but because he has used loopholes to hide his money abroad to keep it from being taxed (which is apparently legal, though of questionable morality and certainly unpatriotic.)
The point is plain enough: the wage gap in this country is at a dangerously high level, to the point of creating what Sanders calls an American oligarchy. It is caused in part by tax policies that favor the very wealthy over the vast majority of Americans.
Why so many Republicans who are not in the upper 10 percent of income earners think this is in their best interest is one of the coups of the political voodoo so cleverly crafted by a Republican Party focused on political dogma rather than the good of the nation.
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