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Rich Get Richer

All of the papers, including the NYT, report a rise in tax revenues that will reduce the budget deficit. It looks like the wealthy are getting wealthier.

The NYT reports:

Corporate tax payments are expected to exceed $300 billion, up from $131 billion three years ago. The other big increase is an extraordinary jump in individual taxes that were not withheld from paychecks, usually a reflection of taxes on investment income and executive bonuses.

So, the taxes are being paid by rich people who do not get paychecks, but get dividends, stock options, live off of their investments, etc.

We know that Bush’s tax cuts predominately went to wealthy taxpayers; therefore, the tax revenues would have been even higher without the tax cuts. Bush, of course, claims that the increased income of rich people is due to his policies, but that’s not clear. The fact that wage earners’ incomes have not increased indicates that wages have not increased in sync with the dividends and capital gains received by the wealthy. Unemployment is around 4 percent, which is pretty close to full employment. With a booming economy at full employment, why is there no wage inflation? It’s because of globalization. Manufacturing and services jobs are both being outsourced for much lower wages than those prevailing in the US. In addition, illegal immigrants tend to depress American wages even further for those jobs still remaining in the US. Because lower end wages are being kept so low, the upper end CEOs , other senior executives, and investors are reaping even greater profits, and thus paying more taxes. It is not because they are investing in America, creating new jobs, etc. They are profiting from the selling of America.

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