The Rich Gets 99% Of The Tax Breaks, While Deficit Is Everyone's Problem

By Ilene

F. Scott Fitzgerald once said: "The rich are different than you and me - they have more money." As Bill Domhoff pointed out, when we talk about the rich, we don't mean the top 1% - people who "only" make $1.6M a year or more.

Sure those of us in that group may have a "get out of jail free" card for when we speed. But when you move up to the top 0.1% ($36M or higher per year income) or the top 0.01% ($450M or higher annual income)--where Rupert Murdoch lives--not only do you get both national and international laws rewritten to suit your needs, but the other laws don't even apply to you.

This lack of accountability leads to increasing bad behavior, as evidenced by our own financial crisis, where God's Workers screwed their own clients and yet not a single arrest has been made other than finally shutting down one Ponzi scheme so that the rest of Wall Street can point to Madoff and say - "See, people were arrested" - even though he had NOTHING to do with the sub-prime lending or CDS fiascos that destroyed the US economy and cost the taxpayers (so far) $9 Trillion Dollars or 180 times more than the size of Madoff's entire fund, much of which has now been recovered.

Unlike Madoff victims, the victims of the Banksters will never have a special prosecutor on their side with the power to recover our money.

That's because just 10 banks, most in the famous international "Gang of 12" which includes both Murdoch and GE (both of whom control the media - especially the Financial Media) own 77% of our nation's banking assets. That's 40% up from 55% back in 2002, when deregulation let these banks go totally wild. GS, MS , JPM, C, BAC and WFC are the 6 top US banks with $10 Trillion in assets between them.

Others in our Gang of 12 are the EU powerhouses of CS, DB, BCS and Nomura in Japan - they are the masters of the financial universe and the expression applies to any of the majors who use their assets to influence the Global Economy in pursuit of (what else?) more wealth.

Our current tax structure does not simply allow but ENCOURAGES wealth to pool into the hands of the relatively few. $10 Trillion (Tn) in the hands of 6 US banks represents a 40% increase ($4Tn) over 2002. If we work that backwards then we see that there USED to be $4Tn in the bottom 99% that has now been transferred to the top 1%.

Chart Courtesy of Jesse's Cafe American (Added by EconMatters)



Chart Courtesy of Jesse's Cafe American

So the poor banks (and the poor people who bank there) used to have 45% of the nation's assets just 9 years ago. But look on the bright side - they STILL have 23%.

As you can see from the charts here, the US already taxes our Corporations and Citizens FAR less than almost any other nation on Earth. That, of course, had led us to run up TREMENDOUS deficits, to the point where we had to borrow $15 Trillion - just to keep pretending we could run our Government without collecting the taxes to pay for it. That's BRILLIANT though because the rich people get 99% of the tax breaks while the deficit is EVERYONE's problem.

In fact, for the past few years, our Federal Reserve has placed a stealth tax on ALL of the American people by devaluing our Dollar by 15%. The cool thing about taxing the population by devaluing the currency is it's not just a tax on one year's earnings but a tax on everything they have worked to accumulate over their entire lives! That's right - through inflation, the Fed is able to reach into your bank account and under your mattress and, of course, into your home equity and take 15% of EVERYTHING you have - whether you declare it or not.

Chart Courtesy of Jesse's Cafe American

There are no loopholes (which are now over $1Tn a year for the top 1%) to escape from inflation unless, of course, you are a Member of the investing class and you own stocks or commodities or collectibles that rise against inflation.

At this point, as Charles Hugh Smith points out, the bottom 80% have just 7% of the Financial Wealth left and own just 8.9% of all stocks so these engineered market rallies are not helping those who need help the most. Then they are on TV telling us that we can pay off the deficit (the one we built up because the rich people didn't pay their taxes) by gutting the retirement accounts of the bottom 80%.

Forgetting the fact that a person who worked for 40 years and had 10% of his income (call it an inflation-adjusted $25,000 since we're talking bottom 80%) removed every year - even at just 4% interest, should have $259,068 coming to them (10 years of full Social Security checks) - forgetting the great crime we are all planning on perpetrating against these people who have been counting on this money (THEIR MONEY) coming back to them in their old age - what is the actual end game planned for when we do stop giving 40M people their retirement checks?

Do I have a solution for this? No, I do not (not one that would be politically acceptable anyway). All we can do is to get as rich as possible before this whole mess comes unglued so we can be one of "THEM" ourselves! Along those lines, we went long on the S&P on July 18 as the market bottomed out in the afternoon with aggressive bullish plays on both SSO and SPY and those should be helping us get closer to goal with a combination of positive earnings reports and much improved housing starts.

We'll see how our lines hold up and may actually have a reason to make some more bullish picks but, for now, we remain cashy and cautious.

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