 If you had a billion dollars in the bank and lived a jet-set lifestyle out of a string of luxury homes filled with valuable artworks, your taxes would be pretty hefty, right? Well not entirely, according to a Senate probe that has examined hundreds of documents and issued 74 subpoenas as it turns a spotlight on the murky tax dealings of some of America's richest citizens. The Senate's subcommittee on investigations has spent a year tracking the finances of several billionaires and discovered they funnelled hundreds of millions of dollars to tiny Caribbean islands and the Isle of Man. |
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 Some Preliminary Thoughts Man is born free, but everywhere he is in chains. ~ Jean-Jacques Rousseau Wherever one may happen to live on the planet, all modernisation is henceforth westernisation. ~ Amin Maalouf, Les Identités Meurtrières pp. 83-4 Introductory Remarks The two quotes above are related. Modernisation has caused a great deal of alienation, much of it in the poor and underdeveloped countries. Modernisation has transformed life and the world but it has also caused a great deal of hardship. The alienation caused by modernisation has taken many forms but, in this short essay, I shall focus on the scourge of extreme poverty which, I believe, is the root-cause of much pain and suffering in the poor countries. If Rousseau’s prophetic statement still resonates so powerfully in our imaginations, it must be because it still captures, some two hundred and fifty years after he wrote it (stunningly it is the opening sentence of the Social Contract), the fate of the majority of humanity in our contemporary societies: ‘Man’ continues to be ‘in chains’ (metaphorically, of course, these days) ‘everywhere’, not only in the poor but also in the rich countries. |
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The world's growing number of poor slum dwellers is a ticking time bomb that governments dare not ignore, the United Nations said on Friday.
The world will pass a critical point in 2007 when the majority of its 6 billion people will be urbanized, the world body said.
One-third of them will be slum dwellers, many trapped in poverty but overlooked by governments and with no prospects of improvement.
"When a critical mass of people are in one place, if you don't empower them they will empower themselves through revolution," Anna Tibaijuka, head of UN-HABITAT said in London, presenting the agency's State of the World's Cities 2006/7 report.
"If we want to avoid chaos we have to empower the poor people," she told a news conference ahead of the third World Urban Forum meeting in Vancouver, Canada, from June 19-23.
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Over the past generation, much mainstream economic thought has assumed that what is good for rich people is good for America. Naturally, this view has tended to transform university economics departments and business schools into cheerleaders for the Republican Party.
Ask professor Pangloss of the University of Chicago what we ought to do about capital gains or the inheritance tax or unions, and he will dazzle you with equations supposedly demonstrating that the political outcomes sought by the wealthiest Americans are also best for society as a whole.
That, at any rate, is the current economic orthodoxy. How well does it reflect reality?
Nearly 50 years ago, the economist John Kenneth Galbraith published The Affluent Society, in which he predicted that an increasingly wealthy America was in danger of producing "private wealth and public squalor." A few years later, Galbraith advised Presidents Kennedy and Johnson as they extended the post-New Deal state in ways that lessened the hardships of poverty for millions of Americans.
The America Galbraith lived to see - he died last week at the age of 97 - became an immensely rich nation. In real terms, the gross domestic product is now five times larger than when The Affluent Society appeared, which means that, when one accounts for population growth, the average American is nearly three times wealthier.
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 That’s the state to live and die in . . . . r-r-rich — Charles Dickens, Our Mutual Friend
Once again the tidings of the season and the news from the news reminded one and all that it is better to be rich than to be poor. The week ended with news of the Cheneys’ tax refund and began with stories in the New York Times and the Wall Street Journal reminding us that the rich get richer and the rest don’t.
The Cheney news was that Dick and Lynne Cheney would be getting a $1.9 million tax refund because they had overpaid their estimated taxes. They were simply getting back their own money. Being slightly more money than many of my readers anticipate receiving in wages for the foreseeable future, to say nothing of tax refunds, it highlighted the difference between Dick and Lynne, and the rest of us.
The refund has nothing to do with the pay Mr. Cheney got for being vice president, which is only $205,031, nor does it have anything to do with $211,465 of deferred compensation he received from Halliburton that a White House spokesman pointed out has nothing to do with Halliburton’s performance or earnings. It had to do with profits Mr. Cheney realized when he exercised stock options given him when he left Halliburton. The White House spokesman forgot to say those profits had something to do with Halliburton’s performance and earnings since they affect the stock price. (Halliburton and the Iraqis have been the principal beneficiaries of Mr. Bush’s invasion of Iraq. Thanks to Mr. Bush’s post-war planning, Halliburton stock has proved to be worth more than Iraqi lives).
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 It’s no secret that the Bush administration has showered high-income groups with federal tax benefits. Nor is it news that income and wealth is highly concentrated at the top. What have gone largely unnoticed, however, are new signs that outside of Washington, state by state, the public is quietly beginning to challenge the privileged position of those at the top.
The United States is the most inequitable advanced nation in the world. Every year since 1996 the top 1 percent has garnered more income than bottom 100 million Americans taken together. Wealth ownership is even more concentrated than income. Indeed, it is literally feudal: The top one percent of wealth holders owns roughly half of all financial and business wealth. The top 5 percent owns almost 70 percent of such wealth. In 2003 the top 1 percent alone received 57.5 percent of all capital gains, rent, interest and dividend income—up from 37.6 percent two decades earlier. A recent analysis by The New York Times and Citizens for Tax Justice found that 43 percent of the Bush dividend tax cuts went to taxpayers with incomes greater than $1 million, who make up a mere 1/10th of 1 percent of all taxpayers.
This extraordinary situation is bad not only for those at the bottom of the economic pyramid, but for the nation as a whole. You don’t have to be a radical to recognize that, historically, huge political power regularly follows huge wealth, with disastrous implications for democracy.
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 Investment tax reduction a greater boon for wealthy than previous Bush measures
The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by $500,000 on average.
An analysis of Internal Revenue Service data by the New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Bush's two previous tax cuts, on wages and other noninvestment income.
When Congress cut investment taxes three years ago, it was clear that the highest-income Americans would gain the most, because they had the most money in investments. But the size of the cuts and what share went to each income group have not been known.
As Congress debates whether to make the Bush tax cuts permanent, the Times analyzed IRS figures for 2003, the latest year available and the first that reflected the tax cuts for income from dividends and from the sale of stock and other assets, known as capital gains.
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