Category Archives: Broken in the USA

guns & gas

The Population issue and how it concerns us in the near term

The Population issue and how it concerns us in the near term

Based on the estimates by the experts that study and analyze population and based on current technology the Earth’s resources have the ability to “sustain” somewhere between 3 & 5 billion people. What this means, with a population exceeding 7 billion we are using up our resources at an alarming rate. Current projections show that the world’s population will be just short of 10 billion in 2050!

In the past, we have believed that one significant measure of a country’s success is growth in the economy. When we examine this view along with population growth it becomes evident that this belief is not sustainable without creating conflict among countries. As resources dwindle countries will become more protective of the resources they have and they will be much less willing to share. Competition for resources will eventually lead to a significant increase in armed conflicts!

Currently, in the US the death rate is slightly higher than the birth rate which I view as positive. The downside is that there are fewer persons working to support the retirement funds that seniors rely on, especially when the numbers in the senior group continue to increase. You might think that the seniors have paid into Social Security and they are merely getting what they put in returned. Unfortunately, that is not the case, but that is a topic for yet another post to this blog.

Fortunately, we do have a modest growth rate in workforce availability via immigration. Looking forward we must come up with more feasible measures of success that do not rely on depleting resources. I would suggest that both productivity and quality of life are worth considering.

Who pays taxes & who should

Who pays taxes & who should

I admit that I am a bit addicted to the National Debt Clock. While the growth of our debt is alarming and our unwillingness to manage it unconscionable, that web page carries quite a bit of useful information. Anyone can access that information at: https://www.usdebtclock.org/

Before I get to that it is also alarming to know that the currently stands at over $22 trillion and is on target to add over another $trillion in the next 12 months. Putting that into perspective the taxpayers’ average potion of this debt is over $180,000!

What this page contains that pertains to this post is a general breakdown of the sources of the tax revenues: 51% comes from taxes reported on personal tax forms, 35% from payroll taxes. 7% from Companies & 7% from misc. other sources. What is interesting to me is that only 7% is being paid by companies. Prior to the recent tax code change the company portion stood at 9%. While there are those that were appalled by that redistribution of income I am not. I will not repeat what is contained in an earlier post which contends that our economy would benefit in the extreme if there were no corporate taxes, since in the long term all costs eventually are reflected in consumer pricing and become, in effect, a regressive tax.

I am much more concerned with the impact of taxation on the middle class. There are numerous financial definitions of income to describe the middle class. In 2013, Congress quoted its own definition of a middle-class income during the fiscal cliff compromise. It said the middle class is anyone making less $400,000 or couples making less than $450,000. This seems too high for me and does not define a range (no lower boundary). I prefer to be a bit more conservative and will use the range of $30,000 to $300,000 annual family income as a definition.

Family incomes above $300,000 represent only 1% of the population. Family incomes below $30,000 represent 50% of the population. By this definition the middle class represents about 49%. Also using this definition, the middle class (the primary consuming class) bears 63% of the tax burden. My contention is the middle class should be paying no more than their fair share (no more than 49%) and the rich should be paying the amount required to make up for the lack of lower and below poverty families to pay tax (currently at about 4%). This bottom group struggles just to survive.

Again, I will not regurgitate how to achieve this since my approach is contained in previous posts.

One more comment related to companies. I do not think that dividends (the reward for capital investment) should be taxed. We should encourage capital investment!

The Wealth Gap

The Wealth Gap

Recently I posted several times regarding the income gap disparity and the fact that it continues to widen. I also think it important to examine how this impacts our system of Capitalism, which I advocate. It doesn’t take a genius to realize that as the income gap widens so does the distribution of wealth. The following chart illustrates that, as a country we were making good progress in wealth distribution until the mid-80s at which point the trend takes a nosedive. This coincides with the time when inflation adjusted wages began the stagnation which continues today, despite our increase in GNP during the same period.

The share of wealth owned by the top 0.1% is almost the same as the bottom 90%

The share of wealth owned by the top 0.1% is almost the same as the share owned by the bottom 90%

The research by Emmanuel Saez and Gabriel Zucman [pdf] illustrates the evolution of wealth inequality over the last century. The chart shows how the top 0.1% of families now own roughly the same share of wealth as the bottom 90%.

What this illustrates that as our country’s wealth has grown in the past 35 years only the super-rich have benefited and the middle class has been screwed. The Capitalism playing field has been manipulated. A Capitalistic system means that capital is king. Those with wealth and excess capital control the system. In a situation where .1% control as much of the capital as the group that includes all of the “middle-class” guess who is in total control.

Next week we will examine what changed in the mid-80s that has led to this unacceptable disparity.

The growing indebtedness of most Americans is the main reason behind the erosion of the wealth share of the bottom 90%, according to the report’s authors. Many middle-class families own their homes and have pensions, but too many have higher mortgage repayments, higher credit card bills, and higher student loans to service. The average wealth of bottom 90% jumped during the stock market boom of the late 1990s and the housing bubble of the early 2000s. But it then collapsed during and after the most recent financial crisis. What about the rising cost of Healthcare and advanced education….along with the previously mentioned wage stagnation.

Since then, there has been no recovery in the wealth of the middle class and the poor, the authors say. The average wealth of the bottom 90% of families is equal to $80,000 in 2012— the same level as in 1986. In contrast, the average wealth for the top 1% more than tripled between 1980 and 2012.