A frequently quoted statistic by those trying to justify the huge disparity in U.S. wealth is that the top 10 percent pays 70 percent of federal income taxes. This is a classic example of a true but meaningless statistic because this situation can happen with all sorts of income and tax rate scenarios. These include some with huge income inequities – and also with flat tax rates currently popular with Republican presidential candidates.
Some really meaningful statistics are: (1) The top income tax bracket rate, 1936 through 1980, was at least 70 percent (90 percent under Republican President Dwight Eisenhower), but now is only 35 percent; (2) chief executive officers made 40 times the average wage of their workers in 1980, compared to 400 times today; (3) after-tax income growth, 1979 to 2007, was 275 percent for the top 1 percent, 65 percent for the next 19 percent, 40 percent for the middle 60 percent, and 18 percent for the bottom 20 percent.
Shockingly, in 2007 the top 1 percent owned 42 percent of the country’s financial wealth (total net worth minus value of one’s home), compared with only 7 percent for the bottom 80 percent.
Occupy Wall Street is indeed right on!