Approximately 40% of those filing tax returns did not pay any federal income tax because these wage earners did not earn enough income to require income tax payments. Over the past 2 decades, the disparity between average middle-income wages and executive pay jumped from 27 times the average income to 270 times the average income. The theory of trickle down economics to encourage economic growth from business is not working, growth is slowing, wages are stagnant, employee benefits declining. It is incomprehensible to Main Street America that executives of failed institutions are earning tens of millions of dollars a year while Main Street wages remain stagnant. Main Street America is losing expendable income needed to support businesses.
The Obama tax plan would lower the tax burden so the Average Joe, including “Joe the Plumber”, would have an increased opportunity to buy that small business he desires and would stimulate entrepreneurship. As Main Street America sees less available income and more income needed for basic needs, i.e., food, clothing, fuel, home, medical costs, insurance and of course, taxes, there is little left. The American Dream is dissolving.
The trend in the United States which is eroding the middle class is moving more towards the economic inequality of Mexico as the Gini Coefficient Index documents.
A Well-Established Trend (http://www.sustainablemiddleclass.com/Gini-Coefficient.html)
The Gini Coefficient for the United States has risen steadily since 1967. If the current trend continues, the United States will reach a Gini Coefficient of 0.546 in about 37-years, or 2043. This coefficient is equal to the one Mexico had in year 2000. Unless the United States breaks this trend, the American middle class will be a thing of the past.
Notice that the Gini Index for the United States is closer Mexico's than it is to Canada's
Data Source: U.S. Department of Labor, Census Bureau Income Statistics
Japan 24.9
Sweden 25.0
Germany 28.3
France 32.7
Pakistan 33.0
Canada 33.1
Switzerland 33.1
United Kingdom 36.0
Iran 43.0
United States 46.6
Argentina 52.2
Mexico 54.6
South Africa 57.8
Namibia 70.7
US Gini Coefficients, Year 1970-0.394; 1980-0.403; 1990-0.428; 1994-0.456
Other Research (W.Kitterer[4]) also shows, that in perfect markets inequality does not influence growth. In real markets redistribution contributes to growth.
Considering the inequalities in economically well developed countries, public policy should target an ‘efficient inequality range’. The authors claim that such efficiency range roughly lies between the values of the Gini coefficients of 25 (the inequality value of a typical Northern European country) and 40 (that of countries such as China and the USA).
“As of 2006, the United States had one of the highest levels of income inequality, as measured through the Gini index, among high income countries, comparable to that of some middle income countries such as Russia or Turkey,[15] being one of only few developed countries where inequality has increased since 1980.[16]”
America needs to find a direction back to a sustainable middle class. John McCain in 2001 and 2002 agreed the Bush Tax Plan was detrimental to the middle class. We have waited 20 years for trickle down economics to work, it is not working and now it is time for our government to take a lead in restoring Main Street America. When 40% of wage earners do not earn enough to support federal income tax we are in serious jeopardy.
NOTES (researched through Wikipedia)
4 # ^ Wolfgang Kitterer: Mehr Wachstum durch Umverteilung? (More Growth through Redistribution?), 2006
15 # ^ a b "CIA. (June 14, 2007). Field Listing - Distribution of family income - Gini index. Factbook". Retrieved on 2007-06-20.
16 ^ a b Weeks, J. (2007). Inequality Trends in Some Developed OECD countries. In J. K. S. & J. Baudot (Ed.), Flat World, Big Gaps (159-174). New York: ZED Books (published in association with the United Nations).
Showing posts with label Middle America. Show all posts
Showing posts with label Middle America. Show all posts
Sunday, November 02, 2008
Wednesday, October 22, 2008
Hamsters, Middle America and the Economy
Have you ever watched a hamster running in one of those wire wheels in it’s cage? The faster it runs, the faster the wheel spins. But no matter how fast that hamster runs, it never gets anywhere. Finally, exhausted, it quits running and gets out of the wheel. It does this day after day thinking it will get somewhere but always ends up in the same place.
That is how “middle America, main street America, blue collar workers”, feel today. We’re like the hamster spinning the wheel and the wheel keeps getting bigger. Our expectations aren’t high anymore, we aren’t even hoping to get ahead, we’d just like to break even, not continue falling behind. Wages are stagnant, worker benefits declining, pension plans disappearing, 401k’s at risk on the stock market, medical benefits escalating, home foreclosures increasing, the national debt growing as we continue spinning the wheel.
We’re worried, discouraged, exhausted; we’re falling behind as we watch record profits for corporations with huge executive pay packages. When companies fail, executives receive unjustified compensation packages. Senator Ben Nelson on 9/10/08, reported the fired CEO’s of Fannie Mae, Daniel Mudd, and of Freddie Mac, Richard Syron, “According to news reports, the two CEOs of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation who oversaw the firms in the time that led to a taxpayer-funded rescue and federal takeover could receive $24 million in pay, bonuses and benefits.” Middle America does understand this, we just keep spinning that wheel.
When Lehman filed bankruptcy, Senator McCain announced “the fundamentals of the economy are still strong” and we should appoint a “commission” to study the failing lending institutions. But time ran out in the course of days and now we are bailing out even more institutions at a cost of $700 billion dollars. Middle America does not believe the economy is fundamentally strong.
Businesses must be given tax breaks so they will generate businesses and create more jobs. However, workers must receive adequate pay to provide the purchase power to support the businesses created. Corporate America has become accustomed to a “spending” middle America. However, according to Diane Stafford, The Kansas City Star, 9/08, “The 15th annual report, Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay, criticizes five tax loopholes that Congress has looked at but not plugged. The authors note that the compensation of the S&P 500 CEOs in 2007 averaged 344 times the average U.S. worker’s pay. Thirty years ago, the ratio was about 35 to 1.” To quote Senator Obama, “enough is enough.” Middle America has run out of spending money.
When asked whether the Obama tax plan is a form of redistribution of wealth, Senator Biden said “yes it is, so what!” Tax regulations have always redistributed the wealth in this country. With the econony in distress, unemployment rising, wages dropping, it is obvious that the current wealth redistribution plan is not effective, we need change and we need it now. This election affords you the opportunity to select a President who will effect change to bolster the economy. As voters, assess carefully the information presented and just as carefully, vote. The hamster enjoys spinning that wheel, middle America does not.
That is how “middle America, main street America, blue collar workers”, feel today. We’re like the hamster spinning the wheel and the wheel keeps getting bigger. Our expectations aren’t high anymore, we aren’t even hoping to get ahead, we’d just like to break even, not continue falling behind. Wages are stagnant, worker benefits declining, pension plans disappearing, 401k’s at risk on the stock market, medical benefits escalating, home foreclosures increasing, the national debt growing as we continue spinning the wheel.
We’re worried, discouraged, exhausted; we’re falling behind as we watch record profits for corporations with huge executive pay packages. When companies fail, executives receive unjustified compensation packages. Senator Ben Nelson on 9/10/08, reported the fired CEO’s of Fannie Mae, Daniel Mudd, and of Freddie Mac, Richard Syron, “According to news reports, the two CEOs of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation who oversaw the firms in the time that led to a taxpayer-funded rescue and federal takeover could receive $24 million in pay, bonuses and benefits.” Middle America does understand this, we just keep spinning that wheel.
When Lehman filed bankruptcy, Senator McCain announced “the fundamentals of the economy are still strong” and we should appoint a “commission” to study the failing lending institutions. But time ran out in the course of days and now we are bailing out even more institutions at a cost of $700 billion dollars. Middle America does not believe the economy is fundamentally strong.
Businesses must be given tax breaks so they will generate businesses and create more jobs. However, workers must receive adequate pay to provide the purchase power to support the businesses created. Corporate America has become accustomed to a “spending” middle America. However, according to Diane Stafford, The Kansas City Star, 9/08, “The 15th annual report, Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay, criticizes five tax loopholes that Congress has looked at but not plugged. The authors note that the compensation of the S&P 500 CEOs in 2007 averaged 344 times the average U.S. worker’s pay. Thirty years ago, the ratio was about 35 to 1.” To quote Senator Obama, “enough is enough.” Middle America has run out of spending money.
When asked whether the Obama tax plan is a form of redistribution of wealth, Senator Biden said “yes it is, so what!” Tax regulations have always redistributed the wealth in this country. With the econony in distress, unemployment rising, wages dropping, it is obvious that the current wealth redistribution plan is not effective, we need change and we need it now. This election affords you the opportunity to select a President who will effect change to bolster the economy. As voters, assess carefully the information presented and just as carefully, vote. The hamster enjoys spinning that wheel, middle America does not.
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