The Big O will give us the SOTU pep talk tonight. Obama will pound on the theme of income inequality in America. A Wordle of the SOTUS will look like:
The President will be using language that misses the mark. The issue at hand is not just Income Equality, it’s Wealth AND Income Inequality. The problem that Obama faces is that America does not tax wealth, it only taxes income. So until America gets around to a tax on wealth, the Prez is stuck with increasing income taxes (reducing deductions) for high income folks in his attempt at leveling the playing field.
To be sure, there is plenty of income disparity in the USA. The question is how much, and what has changed over time. I looked at data on all EARNED income over the past 23 years. The info come from the Social Security Administration (AKA Treasury/IRS). The link to this data, a few graphs of the results:
How many people make it to the 1% club every year? I was surprised that the number has not changed all that much over a 1/4 decade. The number of folks who made the financial limelight has varied by only 400k. It’s worth noting however, that 2012 produced the largest number of ‘fat cats’ ever.
What income level did it take to be in the 1% club?
How many total dollars have the 1% taken in each year? In 2012 the 1% raked in 1.05 Trillion. Four times what they made in 1990.
What was the 1%ers total income as a percent of GDP? It’s increased quite a bit over time, and it’s the highest ever today.
What is the 1%’s income as compared to total earned income? (A better way to look at this ). This comparison shows a trend that should be a bit scary to those earning the big bucks. As of 2012 it was 17% of all income. 1% make 17%. That’s pretty far out of whack.
The numbers from SSA confirm that a small percentage of workers take home a huge percent of the pie. So what’s Obama going to propose tonight? He can yack about a bunch of things that might make a small difference, but if he really wants to move the needle on inequality, he has to raise taxes on the 1%. The problem that O faces is that he’s already tapped this well. Tax rates on the 1% are now at the highest level in a long time:
One of the 1%ers, Tom Perkins, a heavy hitter with Kleiner Perkins Caufield & Byers. (VC – of course) , manged to get an OpEd letter at the WSJ. Tommy likened the rising sentiment against the ‘haves’ to a Nazi atrocity.
Kristallnacht was unthinkable in 1930; is its descendent “progressive” radicalism unthinkable now?
Looking good Tommy! Not….
Mr. Perkins needs to get a grip. If he feels threatened today, he’s going to be crapping in his pants tomorrow. Obama will be gunning for his pocketbook. And tonight, when O does call for higher taxes on the rich, half of the congressmen will stand and applaud.