Tax cuts working out best for wealthier Americans
Headlines report that the number of billionaires worldwide declined by 2 percent from last year. However, in the United States, it’s a rosier situation for the well-heeled class as billionaires actually increased by 4 percent to 607, according to Forbes’ latest list released March 5.
Fourteen of the richest 20 people in the world live in the U.S., led by Amazon founder Jeff Bezos [$131 billion] and Microsoft titan Bill Gates [$96.5 billion] — both of whom saw their fortunes rise again significantly. In every other top five country, the number of billionaires declined: China by 13 percent to 324, Germany by 7 percent to 114, India by 11 percent to 106, and Russia by 4 percent to 98.
Furthermore, the U.S. has by far more millionaires than any other country, with more than 15,000. No other nation has more than 2,000.
Meanwhile, if you’re like most Americans, your financial situation is probably not great, even hanging by a few threads.
The median income of middle-class households — where 52 percent of Americans sit — increased by 6 percent between the end of the Great Recession in 2010 and 2016 to $78,400, according to a Pew Research Center report.
However, upper-income households, or 19 percent of Americans, saw their income rise by 9 percent to $187,900. Lower-income households — 29% of Americans — saw a smaller gain of 5 percent to $25,600.
And if you look at the numbers compared to 2000 — before two recessions hit — only upper income has increased.
The tax cuts passed by U.S. leaders in 2017 have mostly benefited upper-income Americans. The alternative-minimum tax and estate tax, which mostly affect the very wealthy, became easier to avoid. The top tax rate was cut. Some deductions have been phased out, affecting a number of taxpayers.
The result was that in 2018 after-tax income for the wealthiest Americans rose by 3 percent, but by less than 2 percent for everyone else. The poorest Americans saw only a 0.4 percent gain.
Meanwhile, numerous other countries are better places for the middle class than the U.S., according to Credit Suisse’s latest global wealth report. U.S. median wealth ranked 21st among some 38 countries, with Switzerland, Australia, and Belgium topping the list, each at more than $161,000.
Some 68.5 million Americans — 28.5 percent — were at the bottom of the wealth class, with net worth of less than $10,000. That percentage was higher than most industrialized countries — Australia was the lowest with just 5 percent of its citizens at the bottom.
When the wealth inequality is as great as it is in the U.S., that affects not just the earning power of the middle and lower classes but their political and social power, noted University of California at Santa Cruz sociology professor G. William Domhoff. Many Super Rich individuals may strive to be publicly apolitical or contribute to both major parties; that doesn’t mean they don’t employ well-paid lobbyists to grease the wheels to keep the money flowing to them. Some of them outright fund pols and movements.
The result is that substantial changes in helping those at the bottom gain more income and own a greater piece of the pie are practically impossible. Barack Obama tried to help lower-income Americans more than most presidents; yet the share of citizens at the bottom of the wealth class actually increased by about one percentage point between 2010 and 2017. Meanwhile, the share of wealth owned by the richest 5 percent of Americans rose from 60 percent in 2010 to 65 percent in 2017.