...and are getting richer faster:
New government data indicate that the concentration of corporate wealth among the highest-income Americans grew significantly in 2003, as a trend that began in 1991 accelerated in the first year that President Bush and Congress cut taxes on capital.
In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data. The top group's share of corporate wealth has grown by half since 1991, when it was 38.7 percent.
In 2003, incomes in the top 1 percent of households ranged from $237,000 to several billion dollars.
For every group below the top 1 percent, shares of corporate wealth have declined since 1991. These declines ranged from 12.7 percent for those on the 96th to 99th rungs on the income ladder to 57 percent for the poorest fifth of Americans, who made less than $16,300 and together owned 0.6 percent of corporate wealth in 2003, down from 1.4 percent in 1991.
Given that this article appears in the NYT, we are not surprised to see even David Cay Johnston (author of Perfectly Legal: The Covert Campaign to Rig our Tax System to Benefit the Super Rich -- and Cheat Everybody Else) devoting (under what sort of pressure, one wonders?) the requisite bulk of the article to a crazed capitalist and an administration shill. Hence:
The analysis did not measure wealth directly. It looked at taxes on capital gains, dividends, interest and rents. Income from securities owned by retirement plans and endowments was excluded, as were gains from noncorporate assets such as personal residences.
This technique for measuring wealth has long been used in standard economic studies, though critics have challenged that tradition.
Among them is Stephen J. Entin, president of the Institute for Research on the Economics of Taxation in Washington, which favors eliminating most taxes on capital and teaches that an unintended consequence of the corporate income tax is depressed wage rates. Mr. Entin said the report's approach was so flawed that the data were useless.
Was it you, Johnston, who used the word "teaches"---a verb whose default reading is factive (it's hard to teach something false, now, isn't it?)---or did your editor just slide that on in? In either case you here perpetuate, and insinuate the truth of, the right-wing trope that the present depressed (indeed, falling) wage rates (including minimum wage rates) are due to burdensome corporate taxes. You know this trope is false, for thanks to off-shore tax sheltering and expansive corporate tax breaks, profitable U.S. corporations have been paying little, no and even negative federal corporate income tax:
Eighty-two of the [most profitable] 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003. Many of them enjoyed multiple no-tax years. In the years they paid no income tax, these companies earned $102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion. These companies’ “negative tax rates” meant that they made more after taxes than before taxes in those no-tax years.
Over the 2001-03 period, the 275 companies in the survey earned almost $1.1 trillion in pretax profits in the United States. Had all of those profits been reported to the IRS and taxed at the statutory 35 percent corporate tax rate, the 275 companies would have paid $370 billion in income taxes over the three years. But instead, the companies reported only about half of their profits — $557 billion — to the IRS. Over the three years, the effective tax rate on the companies as a group was only about half the ostensibly required 35 percent rate.
Similarly for state corporate income taxes:
A new analysis of the state corporate income taxes paid by 252 of America’s largest and most profitable corporations finds that by 2003, these companies on average failed to include two-thirds of their actual U.S. pretax profits on their state tax returns.
By 2003, these 252 companies had slashed their state income tax payments to an average of only 2.3 percent of their U.S. profits. Since the average statutory state corporate tax rate is about 6.8 percent (weighted by gross state product), that means that in 2003, two-thirds of their profits escaped state taxes entirely.
A shocking 71 of the 252 companies managed to pay no state income tax at all in at least one year from 2001 through 2003—despite telling their shareholders they made $86 billion in pretax U.S. profits in those no-tax years. Twenty-five of these companies enjoyed multiple no-tax years.
As further evidence against what Entin and his fellow capitalist crazies "teach", the decrease in corporate taxes has been accompanied by a massive increase in profits:
[C]orporate income taxes in fiscal 2002 and 2003 fell to their lowest sustained share of the economy since World War II. (Only a single year during the early Reagan administration was lower.) From 2001 to 2003, the Commerce Department reports that pretax corporate profits grew by 26 percent. But over that same period, corporate income tax payments to the federal government fell by 21 percent.
By some incomprehensible failure of the benevolent hand of the market, these non-taxed massive profits have failed to translate into wage increases. But no need to let such facts sully the steady flow of disinformation through the river Times.
Anyway, to return to the corporate wealth among top income-earners study. Why does Entin think the study is so flawed as to be "useless"?
[Entin] said reduced tax rates on long-term capital gains may have prompted wealthy investors to sell profitable investments. That would show up in tax data as increased wealth that year, even though the increase may have built up over decades.
Suppose that some of the apparent acceleration in wealth inequality can be explained by this factor. Would that render the study "useless"? God forbid that Johnston figure this out (or ask Isaac Shapiro of the Center on Budget and Policy Priorities) and tell us. Anyway, suppose that the increase in wealth occurred over some years. Are we supposed to feel better if the corporate wealthy are not nouveau riche?
And now let's hear from the White House:
The White House said it did not believe that the 2003 tax cuts had much influence on wealth shares. It also said that since wealth is transitory for many people, a more important issue is how incomes and wealth are influenced by the quality of education.
"We want to lift all incomes and wealth," said Trent Duffy, a White House spokesman. "We are starting to see that the income gap is largely an education gap."
"The president thinks we need to close the income gap, and he has talked about ways in which we can do that," especially through education, Mr. Duffy said.
Is it at all plausible that the 2003 tax cuts did not have much influence on income or wealth shares? Well, no, as Johnston himself earlier told us (check out the graphic on the LHS: The Wealthiest Benefit More from Tax Cuts). Evidently these facts are now non grata.
How about the claim that the present disparities are just a matter of "quality of education"? That's ludicrous. What differential in quality of education is supposed to explain the massive discrepancy between wealth of the top 1% of income-earners and everyone else? Did the top 1% all go to Harvard? Of course not.
The rich get richer, and the reporters get shut up. No doubt there's a connection.