Just-Released IRS Data Show Effects of Our Radical New Greed-Is-Good Culture

by: David Sirota

Thu Dec 16, 2010 at 15:00

As the House considers a bill to extend the Bush tax cuts for the top 2%, slash corporate taxes and potentially make the Estate Tax more generous to billionaires than ever before, it's instructive to put the move into a larger cultural/historical context. And thanks to newly released IRS documents, we can do just that.

As the Institute for Policy Studies reports, officials at the National Archives recently released a 67-year-old U.S. Treasury Department report detailing what the richest Americans once paid in taxes in the middle of the 20th century. IPS notes that "We have simply never had clearer evidence of just how much America used to expect out of individual wealthy Americans - and just how little, by comparison, we expect out of our wealthy today." Here are some of the details:

We learn, for instance, that 1941's top executive at IBM, Thomas Watson, collected $517,221 in compensation that year, about $7.7 million in current dollars. Watson paid 69 percent of his total 1941 income in federal income tax.

Last year, today's chief exec at IBM, Sam Palmisano, took home $24.3 million for his executive labors. We don't know how much income above that sum Palmisano reported in 2009, or exactly how much of that total he paid in taxes.

But we do know that the 13,374 Americans who reported incomes over $10 million in 2008, the latest year with IRS stats available, paid an average 24.1 percent of their taxable incomes in federal income tax.

In other words, IBM CEO Palmisano last year took home, after adjusting for inflation, over three times more than his predecessor Thomas Watson took home in 1941. Yet Watson in 1941 paid almost three times more of his income in federal income taxes than Palmisano likely paid in 2009.

So assuming that Palmisano pays roughly what his fellow millionaires pay in taxes, we've seen IBM CEO tax rates go from 69 percent down to 24 percent. That's a massive tax cut, and it's no coincidence that it came over the very same period we saw an explosion in federal deficits. And remember, these numbers compare the data that exists before this week's expected passage of even more new deficit-expanding tax cuts for the super-rich.

Save for being referenced in Bernie Sanders' 9-hour-long quasi-filibuster, these new numbers weren't a part of the debate about the new tax cuts - and they certainly didn't play a decisive role for White House and congressional policymakers. That's because the numbers represent a deeper cultural/attitudinal shift toward wealth deification in this, a radical new greed-is-good epoch (by "new" I mean the last 30 years in our country's 200+ year history). Embedded in our tax and budget debates is the bipartisan assumption that the super-rich shouldn't pay the tax rates they paid during the mid-20th century - aka. the tax rates that existed when our economy boomed.

Somehow, this assumption goes unquestioned at a time when we simultaneously wonder why we have huge deficits and why our economy is now faltering. We are so enthralled with preserving the riches of the so-called Masters of the Universe that we have become willfully ignorant of history's lessons about taxes - even the lessons that are as crystal clear as this new IRS data.

David Sirota :: Just-Released IRS Data Show Effects of Our Radical New Greed-Is-Good Culture

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Another Key Difference (0.00 / 0)
Buried in your comparison of IBM chiefs is an interesting and critical detail about wealth: where it comes from. Watson built IBM, if I recall, and therefore deserved to be treated differently than Palmisano who is an apparatchik. Any number of people can maintain an existing public company and keep it profitable. But the number of people who can create an IBM, and create all its jobs over time, that number is rather small. So Palmisano's gains actually are more heinous than your comparison works out in terms of numbers.

How you make your money matters, not just what you make.

This is an issue that is unresolvable until such times as (0.00 / 0)
A majority of American voters decides that unlimited wealth with no responsibility to maintain the system that created it is not good government.  As long as our leaders are indebted servants of the people David discusses, I do not see that even a majority electorate can stop the usurpation of wealth by those at the top.  

If anyone has any realistic manner in which this tyranny of the wealthy can be overcome, I would really like to hear it.  

"Oh. My. God. .... We're doomed." -- Paul Krugman

ok...so here are the (0.00 / 0)
current tax rates for "Taxable Income"....

Married individuals filing joint returns and surviving spouses
If Taxable Income Is: The Tax Is:

Not over $16,750 10% of the taxable income

Over $16,750 but not over $68,000 = $1,675 plus 15% of the excess over $16,750

Over $68,000 but not over $137,300 = $9,362.50 plus 25% of the excess over $68,000

Over $137,300 but not over $209,250 = $26,687.50 plus 28% of the excess over $137,300

Over $209,250 but not over $373,650 = $46,883.50 plus 33% of the excess over $209,250

Over $373,650 = $101,085.50 plus 35% of the excess over $373,650  

And using the same income categories (4.00 / 3)
adjusted for inflation to 2009 - there were many more categories in 1941 - here are the 1941 rates:

For income up to $1,148 (= $16,750 in 2009 dollars) - 10%

For income over that up to $4,660 (= $68,000 in 2009 dollars) - from 10% to 17%

For income over that up to $9,410 (= $137,300 in 2009 dollars) - 17% to 25%

For income over that up to $14,342 (= $209,250 in 2009 dollars) - 25% to 36%

For income over that up to $25,610 (= $373,650 in 2009 dollars) - 36% to 48%

For income over $26,000 (= $379,340 in 2009 dollars), the individual tax rates started at 51% and went to 81%.

So, tax rates at the low and middle end of the spectrum have stayed roughly the same or gone up slightly since 1941, while tax rates for the elite have dropped over 50%.

I'm not clear what point you were trying to make, but this comparison obviously confirms David's point that our system now endorses the greed-is-good ethic.  

Decarbonize, Deglobalize, Demilitarize

[ Parent ]
not dissagreeing with you at all... (0.00 / 0)
the middle class income (between 68K and 137K) is taxed at 25% while the upper income is taxed at 35%.  there is something very wrong with this.  

[ Parent ]

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