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A Great Year
For Inequality
It looks like 1999 is going to be a banner
year for inequality. According to a new report from the Center
on Budget and Policy Priorities, this year we’re likely to
see the widest after-tax income gap since the Congressional
Budget Office started keeping track of these numbers back in
1977. This despite a record-long economic expansion and seven
years of a Democratic president in office. Among the Center’s
findings:
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In 1999, the richest one percent of the
population is projected to receive as much after-tax income as
the bottom 38 percent of Americans combined. That means that
the 2.7 million richest Americans have as much after-tax
income as the bottom 100 million Americans.
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Back in 1977, the richest one percent of
Americans received 7.3 percent of all national after-tax
income. In 1999, they’ll get 12.9 percent. But the 60
percent of Americans in the middle of the income scale are
expected to receive a smaller percentage of the national
after-tax income than any time since 1977.
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The Center analyzed after-tax income for a
reason: The study clearly shows how taxes have redistributed
income upward instead of downward. The tax policies of 1977–1999
have only widened an already cavernous income gap. In fact,
the study found, if the richest one percent of Americans were
paying the same percentage of federal income tax as they were
back in 1977, they’d each owe $40,000 more this year.
The study was released about a month after
Congress crafted a tax plan that would send even more money
back to the extremely wealthy (see page 3). Clinton vetoed the
proposal, which would have handed the richest one percent of
Americans another $46,000 in tax cuts. But even the Democratic
plan would have given the richest one percent of Americans a
$2,600 tax break, while netting people in the bottom 20
percent a mere $43.
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Wages and Wall Street
By some measures the economy is still
galloping ahead. And yet the wages of working Americans are
moving at a slow crawl. Between May 1998 and May 1999, wages
increased only about 3.6 percent.
Naturally, this leaves most Americans with
little money to spare for Wall Street speculating. And yet
these days it seems no TV or radio news report is complete
without a report on the Wall Street numbers, and often a
little running commentary to go along with it. The implication
is that most of us have a lot at stake on Wall Street, and
really need to hear how it’s going on the trading floor
minute-to-minute.
But the numbers don’t support this
assumption. New York University economist Edward N. Wolff
studied the percentage of stock shares owned in 1997 by
different income groups, and here’s what he found:
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The richest one percent of Americans own
51.4 percent of stocks.
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The next richest 9 percent own 37 percent.
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The bottom 90 percent, own just 11.6
percent of Wall Street shares.
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Only 43 percent of all households own any
stock at all.
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The Global
View —
On the Wage Gap ...
If you believe that most Americans have a
sizable stake in the stock market, you may also believe that
America is the land of the big middle class. But if you
compare the size of the class divide in the U.S. to other
industrialized countries, only Russia looks worse.
Using a set of data called the Luxembourg
Income Study, Tim Smeeding and Koen Vleminckx reported in
economist Doug Henwood’s Left Business Observer that of 15
industrialized countries, the U.S. has a higher percentage of
poor or near poor, a higher percentage of well-to-do, and a
smaller percentage of middle-class people than any nation but
Russia.
The country with the biggest middle class is
Finland (about 75 percent middle class), followed by Sweden,
Norway, Belgium, Luxembourg, Germany, Taiwan, Netherlands,
France, Poland, Hungary, Australia, and the U.K. Pulling up
the rear is the U.S. with about 45 percent, followed by Russia
with about 40 percent. (Middle class is defined as people who
have a household income of 62.5 percent to 150 percent of the
median — after taxes and after public assistance payments.)
In Sweden, the LIS data show, 35 percent of
the population start out poor. But government transfer
payments, especially to the elderly, reduce that poverty rate
to 5 percent. The U.S., by contrast, starts out with a 28
percent poverty rate. But transfer payments, including Social
Security and welfare, bring the level down to a still high 17
percent.
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The Global View —
On Working too Much
According to the International Labor Organization, U.S.
workers now have the dubious distinction of working the
longest hours of any workforce in the world. In 1996-97, U.S.
workers put in 77 more hours than our Japanese counterparts
... and a whopping 567 more hours than workers in Norway (see
chart, below). What suffers? Our families, our health and our
quality of life. Who benefits? Well ... you know! Just another
reason to build the Labor Party!
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US
Workers Top the List |
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