In today's mad world, underpaid workers are bailing out banks and corporations run by overpaid, undertaxed bosses who milked their companies and our country like cash cows, and trashed the global economy.
AIG’s rewards for ripoffs are just the latest scandal in the Enronization of the economy and longtime looting of working America. Government-appointed AIG CEO Edward Liddy -- who gets the latest post-Vietnam War prize for judging “the best and the brightest” -- made $137 million as chair of Allstate from 1999 to 2007 and was a director of bailout kingpin Goldman Sachs before joining AIG.
Workers have been ripped off for years. Average worker paychecks are worth less now than in 1973, but CEOs and other rich Americans not only make much more -- they pay less in taxes.
Average full-time workers made $41,198 in 1973 and $37,606 in 2008, adjusted for inflation.
CEOs made 45 times as much as workers in 1973 and 353 times as much as workers in 2007.
The top tax rate was 70 percent in 1973 and just 35 percent now; taxpayers pay the top rate on the portion of taxable income that falls within the highest bracket and pay lower rates on income below that. The top rate for capital gains on the sale of stock and other assets was 36.5 percent in 1973 and 15 percent now.
Irrational pay and tax cuts have generated a massive redistribution of income and wealth from workers to CEOs, hedge fund managers and others in the richest 1 percent.
By 2006, the richest 1 percent had increased their share of the nation's income to the second-highest level on record. The only year higher was 1928 -- on the eve of the Great Depression.
According to the latest IRS data, excluding tax-exempt interest income from state and local government bonds, the richest 400 taxpayers had an average adjusted gross income of $263 million each on their federal income tax returns in 2006 -- up from $221 million in 2005 and $67 million in 1992, adjusted for inflation.
Remember, that's annual income, not accumulated wealth. $263 million comes to more than $5 million a week.
In 2006, the 400 ultrarich were taxed at an average rate of 17 percent -- down from 26 percent in 1992. The ultrarich get most of their income from capital gains. The capital gains tax was cut from 28 percent in 1992 to 20 percent in 1997 and cut again to 15 percent in 2003.
To make matters worse, the rich cheat more on their taxes. Forbes recently reported on a study using IRS data showing that taxpayers with income between $500,000 and $1 million a year understated their adjusted gross incomes by 21 percent in 2001, compared to 8 percent for those earning $50,000 to $100,000, and lower rates for those earning less.
We should raise taxes at the top so the nation's richest bosses no longer pay lower effective rates than workers and we can start reversing the obscene rise in inequality rather than reinforcing it.
Millionaires and billionaires got tax breaks while millions of people went without health insurance and the infrastructure built by earlier generations of taxpayers fell apart. Enough is enough.
At the very least, President Obama should not delay restoring the top tax rate to the 39.6 percent rate that prevailed in 2000. The Bush tax cuts saved the top 1 percent nearly half a trillion dollars between 2001 and 2008, reports Citizens for Tax Justice. In 2008, it took an annual income greater than $462,000 just to get into the top 1 percent.
The $79.5 billion in tax cuts for the top 1 percent in 2008 was more than the budgets of the Department of Education and Environmental Protection Agency combined.
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