| REVISED 1/18/2012 THE TOP 1%: Selected Characteristics of Those in the top 1% of the U.S.population. Joel C. Snell Professor Emeritus Kirkwood College Introduction: There is a veritable blizzard of statistic relative to the division of wealth and income in this country. It is also politicized. Using one set of statistics. it appears that the very rich are being punished for their holdings; thus they should pay less taxes and their tax rates should be lowered.(National Taxpayers Union, 2009)Using another set, the rich have never had it better relative to the same definitions. Critics of the above statements indicate some of the statistical tricks include exchanging real with relative numbers. Another is using inflated numbers instead of adjusted numbers. After looking at numerous studies, the author came to trust just a few studies. The author does not maintain that this is the ultimate study embedded with validity. It is just that an attempt was made to present/offer clear and reliable information as well as a short and simple article. When possible, caveats will be noted because not all the information is targeted to just one group, the top 1%. We must acknowledge the term that a “taxpayer” does not necessarily apply to every person in the country. Numerous children, homeless, disabled, or poor do not pay direct taxes. Indirectly, they may pay for the taxes of the wealthy by buying a product or service in which the taxes are passed along to the consumer. These hidden taxes have many names including embeds or a pass- through. As noted above, embeds are hidden taxes. Originally, the producer or owner pays the tax to the government. After that, the tax paid to federal or state by the producer is then added on to a product or service in the price that is charged. Further, the working poor may pay payroll tax discussed later. Therefore, 1% may be an imperfect statistic. Description :With the information provided and with various cautions, we state the following: 1.WEALTH For 2009,the richest person and/ or household in the U.S.A. was that of Bill Gates at 54 billion dollars in terms of wealth (all assets combined)(www.forbes.com/wealth/forbes-400/gallery) The top 1% owned about 43% of privately held wealth in 2007. They also owned 63% of business equities, 61% of financial securities, and nearly 50% of total investment assets. Overall, the top 1% own more than the bottom 90% (www.mybudget360.com, Domhoff, W,2011) 2. ANNUAL INCOME Individual or household for annual income (salary and capital gains) varies from year to year. Stephen Schwarzman made 702 million a year in 2009. Schwarzman is head of the Blackstone Investment group. The other top 11 published here in millions are Larry Ellison 556, Oprah Winfrey 275, Ray Irani 222, Tiger Woods 110, Madonna 100, Tyler Perry 75, Harrison Ford 65, Adam Sandler 55, Kobe Bryant 45, Nicholas Cage 40, Dale Earnhardt 35,(www.businesspundit.com/12-highest-paid-people-of-2009/html) 3.FEDERAL TAX The taxes on this group are 35% of REPORTED income and 15% for REPORTED capital gains. That makes annual taxes when the two are combined between 22%-23% per year. Income that comes from capital gains is derived from productive property or property that makes money.(www.taxfoundation.org/news/show/250.html, Samuelson, R. 2011, Newsweek, 4-11,21) Other sources indicate it is 18% (Mathews, C. “Hardball” MSNBC, 7/ 25/4-5PM, Central Standard Time) This second source is a talk-interview format. 4.PARAMETERS OF THE AMOUNT OF MONEY REPORTED AS ANNUAL INCOME .In terms of REPORTED annual income, the very bottom limit is $380,000 (for the top 1%)(www.taxfoundation.org/news/show/250.html) The top is 702 million as indicated above with the salary of Schwarzman. 5. INCOME TAX as salary and capital gains taxes account for 25% in total tax revenue. Payroll taxes which is derived from everyone who pays for Social Security, Medicare, and related is 20%. This tax is very regressive, because it is capped at S103,000 income level or less. People above that amount do not pay any more taxes. (www.taxfoundation.org/news/show/250.html) 6. STRUCTURAL TAX The remaining income comes from taxes paid from producers including corporations, farms, factories and the like .In 2009, it was 6.6% down from 30% in tax receipts in the mid 50’s .( The Week 2011: 4/8/ 38)Nearly everyone may pay for the embeds that are passed on to the consumer. So there are a number of hidden taxes that the everyday consumer pays over and above federal and state income tax. (businessinsider.com/its-official-in terms-of -income-ineqaulity-america-is-now-a-banana-republic.html) 7. STOCK MARKET a number of Americans may have investments under $10,000 directly or indirectly in the stock market. Above $10,000, which is quite a small amount, 89% is owned by the top 1%.This is fungible capital. That means capital is fungible it is easy to move from one account or source to another without having to take extra time trying to get a second on a mortgage or related. The fungible capital is easily moved from one source or account to another by phone, computer or related instantaneous technology.(mybudget360.com) 8. URBAN LEGEND The often cited statistic that 19% believe that they are in the top 1% is an urban legend .(mattweiner.net/blog/archives/000329/html.) However, most individuals do not know where they are ranked and many or most think they are in the “middle class.”(sociology.usc.edu/whorulesamerica/power/wealth.html) 9. FALSE PERCEPTION Even though the lower cut off for the top 1% per annum is $380,000, one cannot fault many for thinking they are at the very top or near it. Most do not know the breakdowns per annum or how high is the income of the very richest.(sociology.usc.edu/whorulesamerica/power/wealth.html) 10. SOCIOGICAL PROFILE. The top 1% generally are top level executives, heirs, corporate owners, celebrities, and politicians, Many have an Ivy League education. Although other schools are becoming more acceptable. (Macionis,J., 2005) Overview:The United States has the highest inequality or disparities between the rich and poor of any developed country except Switzerland. This is also measured by the Gini Coefficient. This coefficient is able to rank countries by their currency value and adjust them to make each country comparable. However, this does not mean the income distribution is as large as some third world countries. It is generally a comparison of the first world. The top 1% can have incredible power by their direct acts or indirectly through political candidates, think tanks, and lobbyists that they support. The masses are only effective when aroused. For taxpayers, when adjusted income for inflation most have stagnated since the peak in 1970. In terms of moving up to the top of the income ladder, social mobility has slowed except for the top 20%. (Maconis, J. 2005) Conclusion: The author has tried to gather the most parsimonious material that directly defines the top 1%. This is difficult when this group is intermeshed with others and thus there is a lack of clarity. This 1% has done quite well in the last 30 years as others incomes have stagnated in adjusted income. Money has been “flushed up” to this group. Many others suffered in the Great Recession of 2008. Some of this may apply to the top 1%. However in this difficult time, it appears that the Iron Law of Oligarchy (in every society a few govern the many)and its economic features appear to survive and prevail. REFERENCES CITED www.businessinsider.com/its-official-in – terms -income-inequality-america-is-now–a banana-republic.html www.businesspundit.com/12-highest-paid-people-of-2009/html Domhoff, W (2011).www. sociology.usc.edu/whorulesamerica/power/wealth.html www.forbes.com/wealth/forbes-400/gallery Mathews,C. (2011) “Hardball” MSNBC, 7/25/6-7 PM. Central Standard Time. Macoionis,J.(2005) Sociology, Upper Saddle Back: River: Pearson/ Prentice Hall see 277-278/ see chapter 11/271-301 www.mybudget360.com National Taxpayers Union (2009) Who pays income taxes. Retrieved from http://www.ntu.org/tax basics/who- pays- income- taxes.html www. taxfoundation.org/news/show/250.html Samuelson, R. (2011) The real G.E. scandal, Newsweek, 4-11/ 21. ______(2011) General Electric: Profits yes, taxes no The Week REVISED 8/26/2011 THE TOP 1%: Selected Characteristics of Those in the top 1% of the U.S.population. Joel C. Snell Professor Emeritus Kirkwood College Introduction: There is a veritable blizzard of statistic relative to the division of wealth and income in this country. It is also politicized. Using one set of statistics. it appears that the very rich are being punished for their holdings; thus they should pay less taxes and their tax rates should be lowered.(National Taxpayers Union, 2009)Using another set, the rich have never had it better relative to the same definitions. Critics of the above statements indicate some of the statistical tricks include exchanging real with relative numbers. Another is using inflated numbers instead of adjusted numbers. After looking at numerous studies, the author came to trust just a few studies. The author does not maintain that this is the ultimate study embedded with validity. It is just that an attempt was made to present/offer clear and reliable information as well as a short and simple article. When possible, caveats will be noted because not all the information is targeted to just one group, the top 1%. We must acknowledge the term that a “taxpayer” does not necessarily apply to every person in the country. Numerous children, homeless, disabled, or poor do not pay direct taxes. Indirectly, they may pay for the taxes of the wealthy by buying a product or service in which the taxes are passed along to the consumer. These hidden taxes have many names including embeds or a pass- through. As noted above, embeds are hidden taxes. Originally, the producer or owner pays the tax to the government. After that, the tax paid to federal or state by the producer is then added on to a product or service in the price that is charged. Further, the working poor may pay payroll tax discussed later. Therefore, 1% may be an imperfect statistic. Description :With the information provided and with various cautions, we state the following: 1.WEALTH For 2009,the richest person and/ or household in the U.S.A. was that of Bill Gates at 54 billion dollars in terms of wealth (all assets combined)(www.forbes.com/wealth/forbes-400/gallery) The top 1% owned about 43% of privately held wealth in 2007. They also owned 63% of business equities, 61% of financial securities, and nearly 50% of total investment assets. Overall, the top 1% own more than the bottom 90% (www.mybudget360.com, Domhoff, W,2011) 2. ANNUAL INCOME Individual or household for annual income (salary and capital gains) varies from year to year. Stephen Schwarzman made 702 million a year in 2009. Schwarzman is head of the Blackstone Investment group. The other top 11 published here in millions are Larry Ellison 556, Oprah Winfrey 275, Ray Irani 222, Tiger Woods 110, Madonna 100, Tyler Perry 75, Harrison Ford 65, Adam Sandler 55, Kobe Bryant 45, Nicholas Cage 40, Dale Earnhardt 35,(www.businesspundit.com/12-highest-paid-people-of-2009/html) 3.FEDERAL TAX The taxes on this group are 35% of REPORTED income and 15% for REPORTED capital gains. That makes annual taxes when the two are combined between 22%-23% per year. Income that comes from capital gains is derived from productive property or property that makes money.(www.taxfoundation.org/news/show/250.html, Samuelson, R. 2011, Newsweek, 4-11,21) Other sources indicate it is 18% (Mathews, C. “Hardball” MSNBC, 7/ 25/4-5PM, Central Standard Time) This second source is a talk-interview format. 4.PARAMETERS OF THE AMOUNT OF MONEY REPORTED AS ANNUAL INCOME .In terms of REPORTED annual income, the very bottom limit is $380,000 (for the top 1%)(www.taxfoundation.org/news/show/250.html) The top is 702 million as indicated above with the salary of Schwarzman. 5. INCOME TAX as salary and capital gains taxes account for 25% in total tax revenue. Payroll taxes which is derived from everyone who pays for Social Security, Medicare, and related is 20%. This tax is very regressive, because it is capped at S103,000 income level or less. People above that amount do not pay any more taxes. (www.taxfoundation.org/news/show/250.html) 6. STRUCTURAL TAX The remaining income comes from taxes paid from producers including corporations, farms, factories and the like .In 2009, it was 6.6% down from 30% in tax receipts in the mid 50’s .( The Week 2011: 4/8/ 38)Nearly everyone may pay for the embeds that are passed on to the consumer. So there are a number of hidden taxes that the everyday consumer pays over and above federal and state income tax. (businessinsider.com/its-official-in terms-of -income-ineqaulity-america-is-now-a-banana-republic.html) 7. STOCK MARKET a number of Americans may have investments under $10,000 directly or indirectly in the stock market. Above $10,000, which is quite a small amount, 89% is owned by the top 1%.This is fungible capital. That means capital is fungible it is easy to move from one account or source to another without having to take extra time trying to get a second on a mortgage or related. The fungible capital is easily moved from one source or account to another by phone, computer or related instantaneous technology.(mybudget360.com) 8. URBAN LEGEND The often cited statistic that 19% believe that they are in the top 1% is an urban legend .(mattweiner.net/blog/archives/000329/html.) However, most individuals do not know where they are ranked and many or most think they are in the “middle class.”(sociology.usc.edu/whorulesamerica/power/wealth.html) 9. FALSE PERCEPTION Even though the lower cut off for the top 1% per annum is $380,000, one cannot fault many for thinking they are at the very top or near it. Most do not know the breakdowns per annum or how high is the income of the very richest.(sociology.usc.edu/whorulesamerica/power/wealth.html) 10. SOCIOGICAL PROFILE. The top 1% generally are top level executives, heirs, corporate owners, celebrities, and politicians, Many have an Ivy League education. Although other schools are becoming more acceptable. (Macionis,J., 2005) Overview:The United States has the highest inequality or disparities between the rich and poor of any developed country except Switzerland. This is also measured by the Gini Coefficient. This coefficient is able to rank countries by their currency value and adjust them to make each country comparable. However, this does not mean the income distribution is as large as some third world countries. It is generally a comparison of the first world. The top 1% can have incredible power by their direct acts or indirectly through political candidates, think tanks, and lobbyists that they support. The masses are only effective when aroused. For taxpayers, when adjusted income for inflation most have stagnated since the peak in 1970. In terms of moving up to the top of the income ladder, social mobility has slowed except for the top 20%. (Maconis, J. 2005) Conclusion: The author has tried to gather the most parsimonious material that directly defines the top 1%. This is difficult when this group is intermeshed with others and thus there is a lack of clarity. This 1% has done quite well in the last 30 years as others incomes have stagnated in adjusted income. Money has been “flushed up” to this group. Many others suffered in the Great Recession of 2008. Some of this may apply to the top 1%. However in this difficult time, it appears that the Iron Law of Oligarchy (in every society a few govern the many)and its economic features appear to survive and prevail. REFERENCES CITED www.businessinsider.com/its-official-in – terms -income-inequality-america-is-now–a banana-republic.html www.businesspundit.com/12-highest-paid-people-of-2009/html Domhoff, W (2011).www. sociology.usc.edu/whorulesamerica/power/wealth.html www.forbes.com/wealth/forbes-400/gallery Mathews,C. (2011) “Hardball” MSNBC, 7/25/6-7 PM. Central Standard Time. Macoionis,J.(2005) Sociology, Upper Saddle Back: River: Pearson/ Prentice Hall see 277-278/ see chapter 11/271-301 www.mybudget360.com National Taxpayers Union (2009) Who pays income taxes. Retrieved from http://www.ntu.org/tax basics/who- pays- income- taxes.html www. taxfoundation.org/news/show/250.html Samuelson, R. (2011) The real G.E. scandal, Newsweek, 4-11/ 21. ______(2011) General Electric: Profits yes, taxes no The Week ADDITIONAL INFORMATION THAT MAY NOT BE DIRECTLY RELATED TO THE TOP 1% As of 2012, payroll taxes are roughly now 42% these are highly regressive and it’s top limit is $106,000. That means a billionaire and a middle income person could both pay the same amount. Further excise tax is 3 % (tax on gasoline and related.) Again this is regressive. So 45% of the total tax of the USA falls heavily on middle and lower income. Samuels, L (2012) U. S. Tax Reform, The Gazette, 1/15, 11A. From 1948 to 2000, the country did better under Democrats. However, the top 1% does better under Republicans. Sharpton, A. (2011)” Politics Nation” MSNBC, 10/17/ 5PM From 1970 to today, most of the citizen’s wages have stagnated, the top 1% soared 275%.______, The Week, (2011) 11/11/p.18 66% of the top 1% want a tax increase. Rattigan, D. (2011) MSNBC, 10/28/ 3PM CST The top 1% average a yearly income of $1,530,773. The bottom 99% have an average of $54,792. The top marginal rate during the 1950’s was 91%, and 70% during the 1970’s. Over half of the U.S. Senators and Representatives are in the top 1%.______, The Week,( 2011,) 11/4/p.11 Half of all U.S. workers make less than $26,364. _____The Week, (2011) The Week, 11/4/ p. 18. Special thanks to Dr. R. Gary Dean, Former Professor of Business and Accounting and Dr. David Knudson, Financial Planner. However, the author is totally responsible for all of the article. Home Essays Small Talk Books About Joel Snell Publications Links ADDITIONAL INFORMATION THAT MAY NOT BE DIRECTLY RELATED TO THE TOP 1% As of 2012, payroll taxes are roughly now 42% these are highly regressive and it’s top limit is $106,000. That means a billionaire and a middle income person could both pay the same amount. Further excise tax is 3 % (tax on gasoline and related.) Again this is regressive. So 45% of the total tax of the USA falls heavily on middle and lower income. Samuels, L (2012) U. S. Tax Reform, The Gazette, 1/15, 11A. From 1948 to 2000, the country did better under Democrats. However, the top 1% does better under Republicans. Sharpton, A. (2011)” Politics Nation” MSNBC, 10/17/ 5PM From 1970 to today, most of the citizen’s wages have stagnated, the top 1% soared 275%.______, The Week, (2011) 11/11/p.18 66% of the top 1% want a tax increase. Rattigan, D. (2011) MSNBC, 10/28/ 3PM CST The top 1% average a yearly income of $1,530,773. The bottom 99% have an average of $54,792. The top marginal rate during the 1950’s was 91%, and 70% during the 1970’s. Over half of the U.S. Senators and Representatives are in the top 1%.______, The Week,( 2011,) 11/4/p.11 Half of all U.S. workers make less than $26,364. _____The Week, (2011) The Week, 11/4/ p. 18. Special thanks to Dr. R. Gary Dean, Former Professor of Business and Accounting and Dr. David Knudson, Financial Planner. However, the author is totally responsible for all of the article. |
