[Marxism] America's 400 Rich control vast wealth

["Nasir Khan" <nasir.khan@xxxxxxx>]

Republished: http://sudhan.wordpres.com and http://nasir-khan.blogspot.com
 
America's "Fortunate 400" control vast wealth
 WSWS, 7 March 2008
The richest four hundred American taxpayers have amassed immense wealth, and 
that amount is steadily increasing, according to figures reported by the Wall 
Street Journal Wednesday.
The Journal piece and the latest celebration of the world's billionaires 
carried out by Forbes magazine point to an increasingly and malignantly 
polarized American and global social order, with fabulous riches accumulated at 
one pole and widespread social wretchedness at the other.
The data published in the Wall Street Journal article come from an Internal 
Revenue Service (IRS) study of wealthy US taxpayers in 2005, an update of a 
report conducted five years earlier. The study reveals that the 400 
super-rich-who represent approximately .0003 percent of the nation's 134 
million taxpayers-reported total income of $85.6 billion in 2005, an average of 
$213.9 million each.
To be a member of this exclusive crowd, "the Fortunate 400," as one academic 
terms the group, an individual had to report an income of at least $100.3 
million in 2005, a sharp increase from the $74.5 million such membership would 
have required only the year before.
The increase in the fortunes of the 400 wealthiest taxpayers over the four 
years 2002-2005 was phenomenal. In 2002 the average income of the 400 was 
'merely' $104.1 million, little more than the "entry level" in 2005. The 2002 
total income of the group was $41.6 billion, less than half the 2005 total.
The 400 wealthiest absorbed 1.15 percent of total national income in 2005 (in 
other words, three-millionths of the taxpaying population took in an 
eighty-seventh of total income), an increase from 1.02 percent in 2004 and more 
than double the 0.49 percent in 1995. After adjusting for inflation, the 
minimum income required for entry into the club of 400 has tripled since 1992. 
This provides a snapshot of a social process that has gone on uninterruptedly 
under both Democratic and Republican administrations.
The Journal emphasizes that the figures "actually understate the group of 400's 
remarkable performance." The IRS measured the 2005 earnings by what is known as 
"adjusted gross income," and does not include tax-exempt interest income from 
state and local government bonds. In addition, adjusted gross income is only 
calculated after deducting for various expenses, including moving, alimony and 
the self-employed health insurance deduction.
The newspaper also notes, "The IRS relied only on what taxpayers actually 
reported, without making any independent effort to estimate unreported income."
The parasitic character of the wealth accumulation found expression in the fact 
that a majority of the income accumulated by the super-rich in 2005 came from 
capital gains-the amount by which the selling price of an asset exceeds the 
purchase price. Presumably, much of this came from the stock market boom.
The 400, according to the IRS, reported net capital gains in 2005 of nearly $50 
billion, an average of $125 million per tax return, or 58 percent of their 
total income.
The Bush tax cuts helped this group enrich itself to the tune of billions of 
dollars. The individuals paid an average federal income tax rate of 18.23 
percent in 2005, an increase from 18.16 percent the year prior, but otherwise a 
lower percentage than in any year since 1992. The richest 400 paid an average 
tax rate of 30 percent as recently as 1995.
It is some measure of the social regression that has occurred in the US that 
this tiny handful of obscenely wealthy individuals paid only slightly more than 
the average income tax rate for all taxpayers in 2005, 12.6 percent.
The IRS study reveals that 322 of the 400 reported total salaries and wages of 
$7.38 billion, or some $22 million per tax return. Three hundred ninety three 
reported income from dividends, some $5.9 billion, an average of $15 million 
each.
The $85 billion in income reported by 400 US taxpayers in a single year is 
equal to the entire amount that the Bush administration claims it has committed 
to helping rebuild the Gulf Coast in the wake of Hurricane Katrina, a disaster 
that devastated the lives of hundreds of thousands. The income of this group in 
2005 alone could pay off all outstanding student loans in the US.
Over the last several decades, a transfer of vast amounts of wealth has taken 
place in the US, to the benefit of the very rich. According to Gregory D. 
Squires, professor of sociology and public policy and public administration at 
George Washington University, Washington, D.C., on the Economic Policy 
Institute web site, between 1967 and 2005 the share of income going to the top 
quintile of all households increased from 43.6 percent to 50.4 percent, while 
the share going to the bottom fifth fell from 4 percent to 3.4 percent. In 2004 
those in the top one percent experienced a 12.5 percent increase in their 
incomes while everyone else, the other 99 percent of the population, saw an 
increase of only 1.5 percent.
In January 2008 workers' real hourly and weekly earnings in the US were both 
down by 1 percent from the year before.
The IRS figures for 2005, and there is every reason to believe the process has 
continued unabated, reveal that the greatest increase in wealth has occurred 
within a small layer, a tiny fraction of the population. These are the people 
who "count" in America, the ones who ultimately decide the economic fate of 
tens of millions, determine the principal actions of the two big business 
parties and shape the officially-sanctioned "public opinion" daily transmitted 
through the airwaves and in countless newspaper columns and editorials.
The figures on the "Fortunate 400" shocked even quite respectable members of 
the establishment. The Journal cited the comment of Michael Graetz, a professor 
of law at Yale University and a Treasury Department official under President 
George H. W. Bush: "Those numbers are really stunning. One hundred million 
dollars is an enormous estate to be accumulated over a lifetime, and not what 
we think of as one year's income for anybody."
1,125 billionaires worldwide
Meanwhile the world's billionaires continue to grow fatter and fatter. This 
year's crop of 1,125, according to Forbes, are worth a total of $4.4 trillion 
among them, an increase of 26 percent from the year before. On the annual list 
published a year ago, the magazine calculated 946 billionaires, with combined 
income of $3.5 trillion.
The existence of this group of financial and corporate predators, who cohabit 
the planet with some three billion human beings who survive (or fail to) on 
less than $2 a day, is a symptom of a diseased and doomed social order. In its 
usual manner, Forbes treated the cancerous growth of personal wealth as the 
opportunity for a special kind of celebrity watch.
Investor Warren Buffett displaced Microsoft's Bill Gates as the world's richest 
individual, according to Forbes. Buffett was worth some $62 billion as of 
February 11, an increase of $10 billion from a year ago. Gates gained $2 
billion in net worth during the past 12 months, but lost ground to Buffett as 
the result of his company's recent unsolicited bid for Yahoo! Gates actually 
slipped to third place, with $58 billion, falling behind Mexican telecom mogul 
Carlos Slim Helu ($60 billion).
Reflecting the general drift of the US in the world economy, only four of the 
world's 20 richest individuals were Americans, down from ten only two years 
ago. India now claims four of the world's ten wealthiest men and women. Russia, 
16 years after the collapse of the Soviet Union, is now home to 87 
billionaires, second only to the US. Germany comes in third, with 59 
billionaires.
Of the 226 newcomers to the list, 77 come from the US, "half of whom made their 
fortunes in finance and investments, including John Paulson and Philip Falcone, 
both of whom became wealthy shorting subprime debt."
In countries where millions go to sleep hungry every night, a handful is 
enriching itself. According to Forbes' Luisa Kroll, "Another third of the new 
billionaires comes from Russia (35), China (28) and India (19). Two of the most 
noteworthy new entrants are South Africa's Patrice Motsepe and Nigeria's Aliko 
Dangote, the first black Africans to make their debut among the world's 
richest. Dangote is also the first-ever Nigerian billionaire."
The social type is revealing. Of Motsepe, Forbes writes: "Over 15 years 
Motsepe, preaching free market capitalism, turned a low-level mining services 
business into the country's first black-owned mining company, African Rainbow 
Minerals, with 2007 revenue of $875 million. Driven by the Asian commodities 
boom, ARM's share price has rocketed in the past year from $12 to $24, pushing 
the value of Motsepe's net worth to $2.4 billion."
The magazine feels obliged to acknowledge: "But for all the adulation, in South 
Africa such success comes with a price: being labeled an oligarch. Even many 
blacks have complained that the country's 1994 transformation from apartheid to 
democracy has benefited only the elite few. The criticism stems from laws that 
require substantial black ownership in certain industries, including mining. A 
handful of politically connected individuals have grown enormously wealthy as a 
result. One of Motsepe's sisters, Bridgette Radebe, who's married to transport 
minister Jeffrey Radebe, heads a mining company and is said to be among the 
wealthiest black women in the country."
Overall, Forbes notes that not all is "rosy," pointing out that economic 
volatility "has been wreaking havoc on these fortunes on a daily basis for 
months." Hong Kong billionaire Li Ka-shing lost $5.5 billion of his net worth 
over a span of 37 days in January and February. China's richest person, Yang 
Huiyan, lost some $10 billion over the past year. Others fell off the list 
entirely, including Lehman Brothers chief Richard Fuld and Bear Stearns 
ex-chief James Cayne (who lost his job), "both victims of the world's credit 
crunch," and William Pulte of Pulte Homes, "whose stock collapsed along with 
the housing market."
The various reports underscore the state of world capitalism in 2008: 
unrestrained growth of social inequality, economic instability-and the 
inevitability of social upheaval.

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