Editorial: Rich people, corporations raking it in
The world’s richest people and corporations have a problem.
It is honestly a problem 99 percent of the rest of us cannot relate to.
“Too much money (and too few places to invest it),” is how the political news website Axios sums it up in a recent headline. Its figures show the growing gap in economic inequality between the “haves” and the rest of the planet and tell a story to which we all need to pay attention.
A couple of highlights:
• The top-earning households in the U.S. are sitting on nearly $304 billion in cash, up from the $15 billion they held just before the Great Recession. By sitting on, we mean money that is not being invested anywhere, just held.
• U.S. companies made $2.3 trillion in profit in 2018 — a record. The same year, companies made $1.1 trillion in so-called stock buybacks, a balance-sheet maneuver that corporations use to give more money to shareholders and executives in lieu of say, hiring people, paying larger salaries or otherwise making new investments in a company.
What is happening in the U.S. is part of a worldwide trend, where globalization is allowing companies to lay off more workers and reap savings, reports Axios.
A glaring example of the differing economic fortunes of the world’s people is the stat that the 26 richest people in the world have greater wealth than the poorest 3.8 billion people, according to a report by Oxfam, a confederation of charities focused on poverty.
While some may dismiss what is happening as “just capitalism,” it’s important to note that we arrived at this point through government policy. An irony is that many of these pro-rich policies are supported, especially in this country, by middle-class voters who are by no means the chief beneficiaries of such policies.
The Republican-passed tax cut in 2017, signed by President Donald Trump and considered one of his landmark achievements, is widely viewed by economists as accelerating the trend of wealth concentration — with more to come. As Axios notes, it cut the share of taxes companies pay to its lowest level in at least 50 years.
Although changes in the tax code did put some extra money in the pockets of most middle-class voters, financial website Bloomberg notes the rich made out better thanks to new ways to avoid taxes that affect them, like the alternative-minimum and the estate tax. Also, the website adds: “The cuts for middle-class wage earners fade over time. By 2026, changes to individual tax rules expire, while corporate changes are permanent.” What it means is that, unless Congress acts further, by 2027, 7 in 10 Americans will be paying more in taxes.”
In North Carolina, too, 2013 changes in the tax code have had the effect — whether by design or not — of being overly generous to the wealthy. Chief among them is the flat tax rate. It’s an idea that seems fair on its face but in reality means the richest North Carolinians pay a smaller fraction of their income relative to the rest of us. The GOP-dominant General Assembly also eliminated the estate tax, which affected only families with estates worth more than $5 million.
Increasing inequality only leads one way, which is greater discontent and disruption and an economy that leaves too many behind. Government needs to hit a reset button and back policies that truly help the little man and little woman and workers.
It’s notable that North Carolina voters in 2018 approved an amendment that would have embedded in the state Constitution a permanent income tax cap, i.e., a permanent gift to the rich, but a judge blocked its implementation.
It’s a reminder that voters have a responsibility, too: To pay attention and dig beneath the political rhetoric.
— The Fayetteville Observer