Glaring inequities breed distrust, resentment
You have read it here before: In America, the rich get richer and the poor poorer. However often it is said, it is difficult to imagine the degree of concentration of wealth involved and the manner in which laws work for the rich and against just about everyone else.
Nice system if you don't need to live on a salary.
If our economic system continues to ignore these trends, civil disorder cannot be far off.
Let's be honest. We live in a welfare state. But it's welfare for the rich. As for the poor, they are seemingly expendable.
Some of the latest evidence comes from Internal Revenue Service figures printed in The New York Times last month. We learn that nearly 2,400 of the Americans with highest incomes paid no federal income taxes in 1993, up from just 85 individuals and couples in 1977. And while the number of Americans who make $200,000 or more grew more than 15-fold from 1977 to 1993, the number of people in that income category who paid no income taxes grew 28-fold, or nearly twice as fast. The report also shows that another 18,000 Americans with high incomes paid less than 5 percent of their income in taxes.
Sorry that you paid your fair share?
And how did this happen? The IRS did not specify how the 2,392 individuals and couples were able to avoid paying income taxes, but you can bet that well-paid tax consultants have the answers. Too bad most ordinary folks can't afford their services -- or are not in a position to benefit from what they have to say.
The hand of government intervention is all over the map in the form of laws that decide who pays tax and in what quantities.
Economists and other experts interviewed by the Times said they believed falling audit rates were a significant factor in explaining how people making $200,000 or more could pay little or no income taxes.
In the past decade, one university-related study has shown astonishingly that the IRS has significantly reduced its audits of the highest income Americans while increasing audits of the poorest. Audits of those making more than $100,000, roughly the top 5 percent income group, have fallen to less than 3 percent in 1995 from nearly 12 percent in 1988. At the same time, audits of those making less than $25,000 increased, rising from 0.7 percent in 1994 to 1.04 percent in 1995. Figure that out.
In some other demoralizing financial news last month, Business Week, in its annual look at U.S. corporate CEO compensation, found increases at record levels as boards shifted the mix of executive pay away from cash and toward stock options, corporate profits and stock market compensations.
In 1996 the Standard & Poor's 500 stock index rose a stunning 23 percent. Corporate profits rose 11 percent. CEO pay gains, meanwhile, outstripped this growth or shareholder returns with average total compensation rising an astounding 54 percent, to $5,781,300. If that's the average, consider what the really fat cats are making: Their "packages" hover in the area of $100 million a year.
This largess came on top of a 30 percent rise in total CEO pay in 1995.
Consider that the average compensation of the top dog was 209 times that of a factory employee, who garnered a tiny 3 percent raise in 1996. White-collar workers eked out 3.2 percent.
Fairness? Justice? The words seem to have been scrubbed from our economics vocabulary. But the results of such glaring inequities remain, breeding distrust and deep resentment. The few who reap such outlandish short-term gains may well be sowing a bitter harvest.
National Catholic Reporter, May 9, 1997