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United States of America

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Unnecessary Austerity, Unnecessary Shutdown
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Much of America’s wealth has become concentrated in the hands of individuals and companies who pay little or no tax. Reversing tax giveaways to the super-rich and the nation's largest corporations could raise $4 trillion within a decade and avert possible government closures, says a report by the Institute for Policy Studies.

Link to PDF of report: Unnecessary Austerity, Unnecessary Shutdown

US Deficits Worsened By Failure to Tax Millionaires and Dodging Global Corporations - Institute for Policy Studies

Executive summary - Institute for Policy Studies

13th April 2011

US Deficits Worsened By Failure to Tax Millionaires and Dodging Global Corporations

7th April 2011 - Chuck Collins, Alison Goldberg, Scott Klinger and Sam Pizzigati, Institute for Policy Studies

"We're broke."

Or so claim governors and lawmakers all over the country. Our states and our nation can no longer afford, their plaint goes, the programs and services that Americans expect government to provide. We must do with less. We need "austerity."

But we're not broke. Not even close. The United States of America is awash in wealth. Our corporations are holding record trillions in cash. And overall individual wealth in the United States, the Credit Suisse Research Institute reported this past fall, has risen 23 percent since the year 2000, to $236,213 per American adult.

We have, these indicators of overall wealth suggest, survived the Great Recession quite nicely. So how can average families — and the national, state, and local governments that exist to serve them — be doing so poorly? Why do "deficits" dominate our political discourse? What explains the red-ink hurricane now pounding government budgets at every level?

This Tax Day report identifies two prime drivers behind our current budget "squeeze."

One, we have indeed become wealthier than ever. But our wealth has become incredibly more concentrated at our economic summit. U.S. income is cascading disproportionately to the top.

Two, we are taxing the dollars that go to our ever-richer rich — and the corporations they own — at levels far below the tax rates that America levied just a few decades ago. We have, in effect, shifted our tax burden off the shoulders of those most able to bear it and away from those who disproportionately benefit from government investments the most.

These two factors — more dollars at the top, significantly lower taxes on these dollars — have unleashed a fiscal nightmare. Can we wake up in time to avoid the crippling austerity that so many of our political leaders insist we must accept?

This report offers both an analysis of our current predicament and a series of proposals that can help open our eyes to a far more equitable — and brighter — future.

Key Tax Facts

  • 15,753: The number of households in 1961 with $1 million in taxable income (adjusted for inflation).

  • 361,000: The number of households in 2011 estimated to have $1 million in taxable income.

  • 43.1: Percent of total reported income that Americans earning $1 million paid in taxes in 1961 (adjusted for 2011 dollars)

  • 23.1: Percent of total reported income that Americans earning $1 million are likely to pay in taxes in 2011, estimated from latest IRS data.

  • 47.4: Percent of profits corporations paid in taxes in 1961.

  • 11.1: Percent of profits corporations paid in taxes in 2011.

Link to original source

Executive summary

7th April 2011 - Chuck Collins, Alison Goldberg, Scott Klinger and Sam Pizzigati, Institute for Policy Studies

The United States is a wealthy society. But our wealth has pooled at the top.

• We face mammoth state and federal budget cuts because we have, in large part, failed to sufficiently tax America’s millionaires and prevent aggressive tax avoidance by multinational companies.

• Wealth and income have concentrated in the United States at incredibly rapid levels. The richest 1 percent of households own over 35.6 percent of all private wealth, approximately $20 trillion. The number of households with incomes exceeding $1 million has grown from 15,753 in 1961 to 361,000 today, adjusted for inflation. This is a 968.4 percent increase, while the U.S. population only grew 69.3 percent over this same 50-year period.

• As wealth and income have become increasingly concentrated in the hands of a few, middle class living standards have imploded, due both to wage stagnation and the deterioration of public services and investment. Poverty has remained persistent — and even worsened. As a result of the economic meltdown, the number of Americans living in poverty has spiked to the highest level in 15 years.

Our tax system now raises proportionately less from affluent taxpayers and large corporations than it did 50 years ago in 1961, the year President Barack Obama was born.

• Households with incomes over $1 million in 1961 paid an average 43.1 percent of their incomes in federal income taxes. Today, households with $1 million income or more pay 23.1 percent, almost half as much, adjusting for inflation.

• If households with income over $1 million today paid their federal income taxes at the same rate that comparable households paid taxes in 1961, we would this year raise an additional $231 billion.

• If affluent households, those with incomes in 2011 between $200,000 and $1 million, paid at 1961 rates, the U.S. Treasury would see another $151 billion.

• If U.S. corporations paid at the same effective tax rate that they paid in 1961, the additional tax revenue would total $485 billion.

• In 1961, small business owners and individuals paid twice as much in federal income taxes as large corporations. By 2011, small business owners and individuals will be paying nearly five times in taxes what corporations pay.

These five tax revenue reforms could raise a total of as much as $4 trillion over the next decade.

• Establish several higher income tax brackets for millionaires: $60-$80 billion a year

• Scrap overseas corporate tax havens: $100 billion a year

• Introduce a modest financial transaction tax: $150 billion a year

• Revamp the estate tax to include progressive rates: $25 billion a year

• End preferential treatment for income from dividends and capital gains: $88 billion

Link to original source