Have the Super-Rich Seceded From the United States?
Tuesday 10 January 2012
by: Mike Lofgren, Truthout | News Analysis

It was in 1993 during Congressional deliberation over the North American Free Trade Agreement. I was having lunch with a staffer for one of the rare Republican members of Congress who opposed the policy of so-called free trade. I distinctly remember something my colleague said: "The rich elites of this country have far more in common with their counterparts in London, Paris and Tokyo than with their own fellow American citizens."

That was just the beginning of the period when the realities of outsourced manufacturing, financialization of the economy and growing income disparity started to seep into the public consciousness, so at the time it seemed like a striking and novel statement.

At the end of the cold war, many writers predicted the decline of the traditional nation state. Some looked at the demise of the Soviet Union and foresaw the territorial state breaking up into statelets of different ethnic, religious or economic compositions. This happened in the Balkans, former Czechoslovakia and Sudan. Others, like Chuck Spinney, predicted a weakening of the state due to the rise of fourth-generation warfare and the inability of national armies to adapt to it. The quagmires of Iraq and Afghanistan lend credence to that theory. There have been hundreds of books about globalization and how it would break down borders. But I am unaware of a well-developed theory from that time about how the super-rich and the corporations they run would secede from the nation state.

I do not mean secession in terms of physical withdrawal from the territory of the state, although that happens occasionally.(i) It means a withdrawal into enclaves, a sort of internal immigration, whereby the rich disconnect themselves from the civic life of the nation and from any concern about its well-being except as a place to extract loot. Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it. If one can afford private security, public safety is of no concern; if one owns a Gulfstream jet, crumbling bridges cause less apprehension - and viable public transportation doesn't even show up on the radar screen. With private doctors on call, who cares about Medicare?

To some degree, the rich have always secluded themselves from the gaze of the common herd; for example, their habit for centuries has been to send their offspring to private schools. But now this habit is exacerbated by the plutocracy's palpable animosity toward public education and public educators, as Michael Bloomberg has demonstrated. To the extent public education "reform" is popular among billionaires and their tax-exempt foundations, one suspects it is as a lever to divert the more than one-half trillion dollars in federal, state and local education dollars into private hands, meaning themselves and their friends.(ii) A century ago, at least we got some attractive public libraries out of Andrew Carnegie. Noblesse oblige like Carnegie's is presently lacking among our seceding plutocracy.

In both world wars, even a Harvard man or a New York socialite might know the weight of an Army pack. Now, the military is for suckers from the laboring classes, whose subprime mortgages you just sliced into CDOs and sold to gullible investors in order to buy your second Bentley or rustle up the cash to employ Rod Stewart to perform at your birthday party. Courtesy of Matt Taibbi, we learn that the sentiment among the super-rich toward the rest of America is often one of contempt rather than noblesse; Bernard Marcus, co-founder of Home Depot, says about the views of the 99 percent: "Who gives a crap about some imbecile?"

Steven Schwarzman, the hedge fund billionaire CEO of the Blackstone Group who hired Rod Stewart for his $5 million birthday party, believes it is the rabble who are socially irresponsible. Speaking about low-income citizens who pay no income tax, he says: "You have to have skin in the game. I'm not saying how much people should do. But we should all be part of the system." But millions of Americans who do not pay federal income taxes pay federal payroll taxes. These taxes are regressive and the dirty little secret is that over the last several decades they have made up a greater and greater share of federal revenues. In 1950, payroll and other federal retirement contributions constituted 10.9 percent of all federal revenues; by 2007, the last "normal" economic year before federal revenues began falling, they made up 33.9 percent. By contrast, corporate income taxes were 26.4 percent of federal revenues in 1950; by 2007, they had fallen to 14.4 percent. Who has skin in the game now?

As is well known by now, Schwarzman benefits from the "Buffett Rule": financial sharks typically take their compensation in the form of capital gains rather than salaries, thus knocking down their income tax rate from 35 percent to 15 percent. But that's not the only way Mr. Skin-in-the-Game benefits: the 6.2-percent Social Security tax and the 1.45-percent Medicare tax apply only to wages and salaries, not capital gains distributions. Accordingly, Schwarzman is stiffing the system in two ways: not only is his income tax rate less than half the top marginal rate, he is shorting the Social Security system that others of his billionaire colleagues like Pete Peterson say is unsustainable and needs to be cut.

This lack of skin in the game may explain why Willard Mitt Romney is so coy about releasing his income tax returns. It would also make sense for someone with $264 million in net worth to joke that he is "unemployed," as if he were some jobless sheet metal worker in Youngstown, when he is really saying in code that his income stream is not a salary subject to payroll deduction. The chances are good that his effective rate for both federal income and payroll taxes is lower than that of many a wage slave.

The real joke is on the rest of us. After the biggest financial meltdown in 80 years - a meltdown caused by the type of rogue financial manipulation that Romney embodies - and a consequent long, steep drop in the American standard of living, who is the putative front-runner for one of the only two parties allowed to be competitive in American politics? None other than Romney, the man who says corporations are people. Opposing him, or someone like him, will be the incumbent President Barack Obama, who will raise up to a billion dollars to compete in the campaign. Much of that loot will come from the same corporations, hedge fund managers, merger and acquisition specialists and leveraged buyout artists the president will denounce in pro forma fashion during the campaign.

The super-rich have seceded from America even as their grip on its control mechanisms has tightened.

Footnotes:

i. Erik Prince, who was born into a fortune, is related to the even bigger Amway fortune and made yet another fortune as CEO of the mercenary-for-hire firm Blackwater, moved to the United Arab Emirates in 2011.

ii. This stratagem follows the template of Halliburton's privatized military logistics activities as well as George Bush's proposed Social Security "reform": funneling public dollars into corporate hands.

Mike Lofgren retired on June 17 after 28 years as a Congressional staffer. He served 16 years as a professional staff member on the Republican side of both the House and Senate Budget Committees.

God forbid a rich person does what they want with their money!

If I had the dough, I'd hire a cook, a maid, a driver, a security guard, and a toy wrangler!

What the article fails to dwell on is that these rich people are creating jobs for the security companies, landscapers, drivers, pilots, and so on. Oh, and who builds those amazing mansions they live in? Carpenters, Drywallers, Electricians, Plumbers, Masons, etc.

I've never gotten a job from a poor guy, but I've had quite a few from rich ones.

LOL!

I love your responses, Shell!

Personally, I think it's fine if somebody is stupid enough to pay Rod Stewart to sing at his birthday party. Is he so insecure that he has to get Rod to make sure his "friends" will show up?

Pathetic...

What I don't like is the fact that guys like Steve (can I call you Steve?) Schwarzman doesn't pay his fair share but says poor people don't have skin in the game. Guys like Steve are scum, I don't care how much money they have.

Yeah, he only donated $100 Million to the NY library. What an ass.

Yep, he's STILL an ass.

GOP Candidates' Tax Cuts for the Rich Are Up to 270 Times Larger Than Their Tax Cuts for the Middle Class
Wednesday 11 January 2012
by: Pat Garofalo , ThinkProgress | News Analysis


The 2012 Republican candidates are largely in lockstep when it comes to economic policy, wanting to give huge tax cuts to the rich and corporations while doing next to nothing to boost consumer demand or help the middle class and the unemployed who have been battered by the Great Recession. In fact, according to an analysis by Citizens for Tax Justice, the average tax cuts received by the richest 1 percent of Americans under the Republican plans would be 270 times as large as the cut received by the middle class:

The share of tax cuts going to the richest one percent of Americans under these plans would range from over a third to almost half. The average tax cuts received by the richest one percent would be up to 270 times as large as the average tax cut received by middle-income Americans.

Perry wins the award with a tax cut for the richest 1 percent that is 270 times larger than his middle class tax cut, while Gingrich’s is 190 times larger. Santorum and Romney pull up the rear with tax cuts for the rich that are 100 times larger than the cuts for the middle class, while CTJ did not analyze Jon Huntsman or Ron Paul’s plans. (CTJ uses a current law baseline, rather than a current policy baseline, to calculate its cuts. Using a current policy baseline, millions of middle class families would see a tax increase under Romney’s plan.)

CTJ also noted that “the cost of the tax plans proposed by Republican presidential candidates would range from $6.6 trillion to $18 trillion over a decade.” Therefore, “even the meager tax cuts that would go to low-income and middle-income taxpayers under these plans would almost surely be offset by the huge cuts in public services that would become necessary as a result.”



Pat Garofalo is Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

The rich pay WAY more then their fair share and that is a FACT my friend. The Democrats know that playing supposed "champion to the poor" and blaming the rich guy for your failures gets them votes. Votes win elections btw.

How can anyone not see that?

Taken from the nonpartisan Tax Policy Center who crunched the numbers.

FACT:

Those earning over 1 Million a year will pay on average 29.1% in federal taxes.
Those earning $50-75,000 will pay on average 15% in federal taxes.

FACT:

In 2009 there were 236,883 taxpayers who earned over $1 Million.
In 2009, only 1,470 of them paid ZERO in federal taxes.

That represents less then 1% of all Millionaires that paid no federal taxes. Again I will remind you they pay on average 29.1%

FACT:

The top 400 filers do pay on average a lower tax rate of 18.11% but that is because most of them are hedge fund managers and people like Warren Buffet who make the bulk of their income through investment funds and is taxed at a much lower 15% rate as a capital gain.

Warren Buffet wouldn't get hurt at all most likely with the new Buffet Rule. He makes all of his $$ or the bulk of it from capital gains.

If Obama suggested (and he has) to raise the taxes on capital gains you can BET Buffet's stance would change real fast.

Obama is lieing to us all and people are too stupid to see it. These are the facts. The rich on average pay WAY more tax/income then the middle class, near double.

If I was Super-rich I for sure would getting my $$ out of here any way I could. What the Government is doing is wrong.

29.1% to 15%. You good with understand percentages or just copying and pasting other people's articles?

I hate all the finger pointing that goes on in any discourse about politics. I don't ever divulge my political affiliation, because it's more important for me to maintain a friendship, than waste precious oxygen trying to prove to you why my partisanship can kick your partisanship's ass. No one is ever satisfied, regardless of which party is in power. Yet I've NEVER heard anyone lay out a plan that's truly beneficial to all.... NEVER in 38 years.

All the more reason I stay clear of these discussions.

Ian doesn't know what the bongdoozle he's talking about, and he's so far off the mark that he's not worth any effort. Also, once again, Thomas Jefferson did not say the quote in his sig.

Yeah, no one ever wins them because no one will ever concede anyone's point. There are problems on both sides of the fence.

I see alot of the the "Liar, liar pants on fire" defense. Typical response when one has no facts to back up their argument.

Can't we all just get along?




Gotta go with Cal and Ian, both sides in general suck. Politicians in general suck. Where have all the Statesmen gone?

We haven't had a great President since Reagan. And that's a shame.

Tax rates need to be different because whereas a poorer person may require 99 percent of their income for basic necessities, the exact opposite would be
true for a wealthier individual. So even
if multi-millionaire pays 50 percent in taxes,that still leaves a whole lot to play with. If we want to maintain a strong and just nation, we must be taxed this way. There is no doubt that there are super-rich, better known as "Globalists", who don't care about anything except for their own wealth and power and have and are moving their wealth abroad. But I don't believe all super-rich are Globalists. I believe there are some Nationalists among them and hopefully, together with ordinary Americans, we can slow down and reverse this creeping decline in our nation.

That's why I believe a flat tax with, say, the first 20K exempt from sales tax would be a good option.

The truly poor get a break, but they still have skin in the game.

It's easy to raise other people's taxes, but not so much when you're raising your own.

Im one for getting rid of income tax entirely and going to a pure VAT-- hell the government will probably make more off me as much crap as I buy...Of course the problem is then deciding what does and does get the VAT added...

I could get behind that. Usage taxes appeal to me. The more you use, the more you pay.