The Gap Between The Super Rich And The Rest Of Us Has Widened A Heck Of A Lot In 50 Years

You know how they say “the rich keep getting richer”? That’s not just a handy little saying, the rich really have been getting a lot richer. The wealthy Americans have widened the money gap between them and typical families by more than double in the last 50 years. So if you didn’t know an actual Richie Rich living in a ginormous mansion with all kinds of fun gadgets back then, you might now.

Way back when in the days of yore, or 1962, the 1% had 125% the net worth of the median American household, reports CNNMoney. So where are we at now? The new report says the rich are probably 288 times richer than you are.

Meanwhile, the middle class is going in the other direction. Those of us not living in cartoon-like mega mansions have been slowly losing wealth over the decades. In 1983, the median household worth was $73,000 and now that number has taken a dive to $57,000.

As the middle class made a slide, in that same time period the top 1% saw their average wealth go from $9.6 million in to $16.4 million. If everybody had gotten richer, the median household worth would’ve been up to $119,000.

But beyond having thinner wallets, what does it all mean? The wealthiest Americans have more stock to invest, and that stock keeps growing, despite the effects of the Great Recession. Homeowners on the lower side of the wealth gap are more likely to be underwater and have no equity on their mortgages, which will continue to create a tough situation in which it’s trickier to grow richer.

The wealthy are 288 times richer than you [CNNMoney]

Comments

Edit Your Comment

  1. deathbecomesme says:

    Breaking news at 9!

  2. madmallard says:

    Any mention of wealth gap that does not contrast against a mention of the difference of standard of living in the last 50 years as well doesn’t really hold any meaning….

    Is it intellectually honest to make a link to 50-years-ago wealth makeup without making mention of the things that make up a standard of living from 1962 as well?

    • exconsumer says:

      Entirely. The point is that while our standard of living may have increased, the wealth of the very rich has grown by a disproportionate amount. It’s not that a given person is destitute, it’s how much the very rich have control over the economic landscape compared to your average worker. Unless life is all about how many baubles you happen to have, in which case, who cares about the wealth gap?

    • kataisa says:

      Stop it. The Obamabots have an anti-rich-white-people agenda to push.

      • floyd fan says:

        Well, trickle down economics is responsible for much of this situation.

        • frank64 says:

          How so? Most of the problems come from the bursting of a bubble. A bubble that trick down had nothing to do with. There are many reasons for the bubble, some of many Dems desire for everyone to own a home. Barney Frank stopped regulation of FNMA and Freddie Mac. The economic downturn is worldwide, many who have very different tax policies. There was greed on all sides, not just the banks and investment cos.

          • Lt. Coke says:

            The bubble is not the only cause of this situation. The wealthy have been getting most of the money in this country since the ’80s. This isn’t a recent explosion of money going to people who already have much of the money; this is a long, drawn out process by which the very rich have gamed the system to capture the vast majority of wealth gains over the past 3 decades.

    • Loias supports harsher punishments against corporations says:

      Umm, no. In this case the reference is fully justify and does not need to account for cost of living increases. They used percentages of how much the 1% holds – percentages don’t need to account for the cost of living.

      Further, the median household income for middle class went DOWN. I guarantee that the inflation since 1983 resulted in the effect of that lowered income to be further compounded.

      • madmallard says:

        the point is, what does that household standard of living comprise of?

        making mention only of this ‘wealth gap’ with no other metric, has no meaning unless you are someone who simply views ANY income disparity as wrong, regardless of the living standard that makes it up.

        that world view seems really, really naive to me.

        We could go live in North Korea anytime you want where the income gap is SIGNIFICANTLY more narrow than the United States. They also pay men and women the same wages too, so no gender descrimination. . . .. . .. do you see how intellectually dishonest I find articles like this yet?

        • exconsumer says:

          A wealth gap is a wealth gap, and standard of living does not enter into it. Money is economic power. It should be apportioned to you according to your contribution. . . at least that’s the old free-market trope. So the point here is that people are not getting their fair share. As we get more productive (and yes, we as a country continue to get more and more productive) the profits don’t find their way to those who made that profit possible.

          Sure, there are plenty of sparkly shiny things that even those at the lower end of the spectrum can afford, but this is supposed to be a meritocracy. No one is arguing for the elimination of all income disparity.

          • madmallard says:

            “…the profits don’t find their way to those who made that profit possible.”

            this is purely your subjective assertion, and not a fact.

            And this is a common, usually emotionally based, assertion from someone that feels they have a right to dictate what other people are allowed to earn.

            this is the reason I bring up the standard of living, because articles like this that try to make a major situation out of the wealth gap are doing so to make an emotional appeal, and not a intellectual one, that this is not the way things -should- function. When pressed to a reason why its significant, the explanations leave me….wanting.

            • RandomHookup says:

              It’s as much about the trend as everything. If the wealthy accumulate more and more of the wealth, that means less for everyone else and that means that the social fabric starts to fray. The attitude of “I have mine, you are own your own” can lead to problems when taken to the extreme.

            • sagodjur1 says:

              “‘…the profits don’t find their way to those who made that profit possible.’

              this is purely your subjective assertion, and not a fact.”

              Um, that’s the very principle that makes capitalism possible.

              • madmallard says:

                I don’t think there’s anything of substance to address in the line of thinking you’ve just offered.

                • sagodjur1 says:

                  I know there isn’t anything of substance to address in the comment you made because you didn’t actually say anything in response.

        • MarkFL says:

          So basically the middle class should shut up about bearing the cost of the increasing disparity between them and the richest Americans because, well, gee, now we have Internet access, DVRs and Madden ’13?

          If you want to bring standard of living into the equation, let’s also factor in that most middle class families now have at have at least two incomes to make ends meet. And even then one of the parents (or both) might need a second job.

    • DabNabIt says:

      A worse dishonesty is comparing household income instead of per person. Kids leave home sooner, people wait longer to be married or simply stay single, and divorced people remarry later or not at all. I’m really tired of this particular hidden flaw being ignored so much.

      • madmallard says:

        It definitely offers a few more different perspectives on possible causes, relevances, and inferrences that can be drawn.

  3. Coffee says:

    Just any FYI…125 times and 288 times are 12,500% and 28,800%, respectively, not 125% and 288%.

    • Geekybiker says:

      Yah. The source has it right at least. I was reading it thinking “Hmm 288% is a downright good ratio.”

    • longfeltwant says:

      “It’s at 288% as of 2010, says a new report. Which yes, means the rich are probably 288 times richer than you are.”

      Seriously. That is an enormous and fundamental example of innumeracy.

    • hawaii2000 says:

      Exactly. Will someone please correct those percentages? If someone is 288% richer than me, then that someone is 2.88 times richer than me, not 288. That’s a difference in two orders of magnitude!

  4. JustJayce says:

    Let the class warfare comments commence!

  5. Oink343 says:

    “It’s at 288% as of 2010, says a new report. Which yes, means the rich are probably 288 times richer than you are.”

    Your math is bad and you should feel bad.

  6. kataisa says:

    The Gap Between The Super Rich And The Rest Of Us Has Widened A Heck Of A Lot In 50 Years

    So? Try being pro-active with your life and working smarter instead of waiting for the US government to give you hand-outs and then complaining bitterly about the lack of entitlements you thought you deserved.

    • crispyduck13 says:

      Wow, way to miss the point. Maybe you were rushing because you’re late for today’s tinfoil hat meeting?

    • hansolo247 says:

      Agree here mostly.

      A household of median earnings can grow its net worth to a substantial amount with prudent planning and restraint.

      Key is prudent planning and restraint.

      • who? says:

        Sorry, prudent planning and restraint ain’t gonna get you into the 1%.

        Screwing over a bunch of people who are using prudent planning and restraint? Yeah, that’s the ticket!

        • aaronx says:

          That’s the problem – you’ve all been programmed to focus on that 1% and why you’re not part of it instead of your actual quality of life.

          Stop worrying about what other have. You’ll be soooo much happier.

          • hansolo247 says:

            Exactly. Breaking into the 1% is a biiig stretch, but breaking into the 3% or 5% is actually not that hard.

            Ten years into my career and I’m pretty close, and my income for most of those years was pretty middling. I have several hundred thousand in net worth and drive a paid-off car that is 11 years old that I maintain myself.

            Is that not enough?

            People are not always going to have equal amounts. As long as there are people that will work hard, and people that won’t, that will be the case. Even the most socialist of socialist republics had inequality and a 1% class that had much more than everyone else…and even more overt power over the 99%. Careful what you wish for.

            • exconsumer says:

              ‘Is that not enough?’

              Well, not really. The point here is that we’ve become far more productive as a society and country but the wealth is not being properly distributed among those who created it. While your story is admirable, someone like you should have been able to get more for yourself than you did. When people point to the wealth gap and shake their heads, they’re bummed about meritocracy, they are bummed about the LACK of it.

              • exconsumer says:

                erp: They’re NOT bummed about meritocracy, they are bummed about the lack of it.

                – there, that’s what I meant to say

              • Anubis says:

                “distributed among those who created it.”

                There’s the underlying assumption that many disagree with. Who created Disney? Who created Apple or Microsoft or Home Depot? Are these the guys who create the wealth, or John Doe down the street who mops the floor or flips hamburgers?

                When you read the stories about how most companies were made, it was all risk taken by the founders and they risked everything. Now people want to say the people these guys created jobs for create the wealth. I don’t create wealth, I do a job that helps a company keep running smoothly, but almost no risk. The moment the company doesn’t need my job anymore, I’m gone. That’s life. Things have changed since most big companies were founded and that’s a fair debate, but if you didn’t create something that fills a need/want and never took any risk to make a business, you don’t create wealth.

        • madmallard says:

          does getting into the 1% matter enough to you to live like and make choices like they do? or are you one of those people that believes everyone in the 1% is a Paris Hilton?

    • exconsumer says:

      I always wonder about comments like this. Are you really a member of the group who’s income is soaring, or do you not realize that the powers that be have your income under their thumb as well? Your income is, in all likelihood, one of those that should have been growing but has not.

      • madmallard says:

        That is a viewpoint that basically, to agree with and embrace, you must absolve the individual of ANY meaningful authority over their self determination when it comes to producing income. Furthermore, it must assert that there is absolutely no merit based income distribution of any kind at play, that there is a ‘master of money.’

        I’m sorry, but thats too far a stretch for me to start from. It makes for an interesting novel, tho.

    • deathbecomesme says:

      troll much?

    • dolemite says:

      Yes, yes…everyone in the entire united states are lazy bums that has seen their wealth drop in the past 50 years except for a few thousand ultra rich that work their butts off like madmen. When a CEO today makes 315X more than the average employee of his company, it’s totally because he works 315X harder than that code monkey downstairs putting in 80 hour weeks.

      • optimobusinessman says:

        It’s not that they work 315x harder, it’s that the skillsets and number of people capable of being CEOs or code monkeys is vastly different. Way more people with the ability of being code monkeys.

        You think CEOs don’t work 80 hour weeks? You’re right, they don’t. Every major company CEO I’ve ever met (and that’s quite a few, I worked at a business school) is on the clock for 168 hours per week.

      • madmallard says:

        the implication of what you’re saying is that absent this 315x CEO, the codemonkey would/could/should be pulling down millions of dollars for their work.

        That the ceo is only an obstruction to their income.

    • Jevia says:

      Oh please. Like the government “hand-outs” people get from unemployment, welfare and social security are so totally going to make up for the huge wealth the 1% now have. I’d love to hear from someone who made millions out of these government “hand outs.”

      • Anubis says:

        Nobody gets rich from handouts, but they sure do create tons of envy and covetousness. Many studies show that when people are receiving unemployment, they stay unemployed until their money is about to disappear. We destroy people’s character by telling them they are entitled to other people’s money, and those other people didn’t earn it anyway so it must be yours. Look at Greece if you need a real world example.

        At least, that’s what I think kataisa is referring to. If you come up with an idea/product that people need, and then risk everything in your life to create a business around it, then you deserve the payout from that risk. If you sit back and declare the world owes you a living, then you are not as deserving as those evil rich guys who made their money. Yes, there are many people in-between those extremes and there are evil, corrupt rich people. That doesn’t make it right to paint them all that way or assume that because they are rich they must have stolen it.

        • LadyTL says:

          They don’t stay unemployed because of free money, they stay unemployed because the jobs they can get are so awful they get more by being on unemployment.

          Which would you chose: stay on unemployment and be able to pay most of your bills or have a junk job that might pay a single expense?

    • LabGnome says:

      Or better yet, get rich and buy politicians to pass laws to systematically keep others from doing so.

    • MarkFL says:

      Dude, my last job I was working my ass off 45 hours a week (sometimes more, but god forbid I get any overtime) and nobody in our store had a raise for three year. The execs at the top were still getting their raises, though, as well as bonuses, not to mention paid holidays while we were working every holiday except Christmas (yes, we were open on Thanksgiving).

      This whole “get to work and stop asking for entitlements” nonsense” from the nobility is 100 percent bullshit. It’s just a convenient distraction for the fact that over the past 30 years we have been evolving into a serf system. And don’t start with the “class warfare crap. The class warfare started when we started letting the wealthy have more, and more, and more, and more, all at the expense of the working class.

      • Anubis says:

        What does this “letting the wealthy have more and more…” mean? Are you saying that people who have ideas and take risks to make them reality don’t deserve that money? People who risk everything to start a business don’t deserve the fruit of that labor? When people invent things like the iPad, everyone gets poorer because Apple gets richer? The concept makes no sense to me. People don’t get rich because we throw money at them, it’s because they have something we want and we give them money for it.

        Nobody is “allowed” to be rich, unless you live in North Korea. People get rich because they earn it and enough people believe in them enough to give them money. The idea that it’s not their money will never make sense to me, because that means that your money isn’t yours either and anybody has a right to MarkFL’s money as he has, regardless of the fact that he earned it.

        Yeah, I’m sure you work hard, but you’re nothing special. Same with me. If I had created the iPad, or founded Facebook, or Disney, or something like that, then I’d deserve to be rich because I’d have done something nobody else did. So it’s false to tell people they aren’t working hard enough. You have to work hard, and have something that enough people want that they will give you money for it.

  7. TuxthePenguin says:

    “Homeowners on the lower side of the wealth gap are more likely to be underwater and have no equity on their mortgages, which will continue to create a tough situation in which it’s trickier to grow richer.”

    I think its more than just home values collapsed. I think the main problem is that its become accepted to try and use credit to get ahead. Heck, I admit I use it – my wife and I are about to go on a cruise, so instead of paying out of pocket, I got a new CC with 18-month 0% intro rate and will pay it off over that period. Granted, I have the cash to pay it off today, but its letting me make a little bit more interest by borrowing their money for free.

    In my experience in my practice, people use credit far too much and don’t save enough. Every dollar of interest you pay reduces your ability to spend now. You’re basically making yourself poorer in the future so you can have something nicer than you’d otherwise have now (buying a new car rather than an older one, etc).

    I’d also expect the wealth gap to increase to some extent – it takes money to make money. I pay my auto insurance in full every six months and save 5% (actually a bit more, since I dodge a fee as well). But not everyone can do that. So I’m going to be getting a bit richer over time compared to someone who can’t do that. Add that fact to the debt above and you have a recipe for developing two distinct classes…

    And I have no clue how we could prevent it either.

    • mad.anthony says:

      The extent of easy credit is probably a big part of the reason for this – in 1962, consumer credit was rare and pretty much limited to short term loans for things like cars. Nowdays credit cards, student loans, 7 year car loans and the like have made having a large amount of debt common. Since net worth is determined by assets – liabilities, a huge increase in liabilities by people at the bottom – often in excess of assets – is probably as much a function of the gap as an increase in income/wealth at the top.

      The crash of home prices, along with mortgages that allowed people to borrow all of the inflated value of their homes, is also going to cause a giant liability increase/asset decrease in the net worth.

  8. STXJK says:

    And the comments on this post jump the shark in 3….2….1….

  9. crispyduck13 says:

    In 1983, the median household worth was $73,000 and now that number has taken a dive to $57,000.

    Maybe I’m out of the loop, but this is the most interesting figure I’ve seen in this conversation. I’m also at a loss of how to correct it. I could be wrong but don’t we have more 2 income families now than in 1983? That makes the dive in median household value even more confusing.

    Additionally I don’t understand why so many commenters are making this into a political conversation or implying that all us ‘normal’ people need to stop our bitching and just “work harder.” Because really, that’s the opposite of a useful thought on this topic.

    • mad.anthony says:

      because net worth does not equal household income. Net worth is assets (house, car, cash, investments) – liabilities (outstanding mortgage, loan, credit card bills, ect). People are borrowing a lot more, which increases the liability side, and house values took a crap, which which decreases the asset side.

      Households are probably earning more, but they are spending/borrowing more than at an even faster pace.

      • Jevia says:

        But that’s also the point. More women went into the work force so families could afford more things, a house, 2 cars, college tuition. But it wasn’t enough. Home prices soared, college tuition and medical expenses increased exponentially, car prices increased. It wasn’t enough to have two incomes, families needed even more money to get those assets and the only means left to them was credit, which then lowered their net worth and subsequently made those assets even more expensive due to the interest to repay the credit.

        • madmallard says:

          seems like the spending habits of the individual are highly at risk to end up like the spending habits of the federal government.

          being able to ‘afford things’ doesn’t mean you should have them. of the things you listed, they all have rolling costs. House has taxes as well as maintenance, cars in some states are taxed as assets and have maintenance, college tuition is non-defaultable if you took debt for it. Medical costs accumulate all of your life.

          personal wealth management is a skill. Skills are taught more than learned. we do not teach people how to manager their wealth, and this is the result: and expectation of credit to cover current lifestyle instead of withdrawing the lifestyle. it doesn’t matter if women add their power to the income pool of the house if the spending habits dont change.

    • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

      I’d like to expand on that. “Working harder” doesn’t automatically translate into “more money in my paycheck”. I bust my butt at my job. I make exactly $1.06 more per hour now than in 2008, but less money since insurance copays have gone up more than that, not to mention food and gas prices nearly doubling. And don’t get me started on oil for my furnace.

      On paper, I make $42.40 more per week than 4 years ago. But my spending power has been cut, severely.

      I guess you could say I choose to be in this situation because I won’t move from Central PA to another area where I could get a higher paying job. But I need to be wary of my parent’s situation and who is taking care of them.

      • tlvx says:

        When you add inflation, the buying power gets even worse.

      • RenegadePlatypus says:

        I don’t think you can measure someone’s value to the economy (their work-worth) by their willingness to “work hard”. To go to extreme to illustrate point – does working hard to dig a ditch make you more valuable than someone you perceive to be working more comfortably at programming? Or executive decision making by reviewing charts? I don’t think your monetary value to the economy is determined by working hard, it is instead determined by the value of your contribution. This can be intangible, such as a charismatic person’s influence.

    • tlvx says:

      It’s very disturbing when you factor in more workers, and still come up with less household earnings… and that doesn’t even take inflation into account.

      The wealth gap is so disproportionate, that whether or not the average citizen had no debt, it would not mean anything in comparison to those that are worth tens or hundreds of millions of dollars. You need to do quite a bit better than simply paying off your mortgage to get into the top 1%. That is a complete red herring.

    • frank64 says:

      I think two income households have increased consumer spending, also increased the cost of homes and allowed for bigger homes. This would not necessarily increase our wealth, it would mostly increase our quality of life though, as long as quality of life means more things and more spending.

  10. lupis42 says:

    A median over a range this large and diverse seems highly dubious.
    http://en.wikipedia.org/wiki/Simpson%27s_paradox

  11. Bsamm09 says:

    It looks like the rest of us have a better return on net assets (RONA) than the super rich though. Way to use that capital effectively.

  12. Loias supports harsher punishments against corporations says:

    Ah, information Republicans repeatedly choose to ignore.

    • Anubis says:

      Not ignore, per se. It’s the idea that there’s no real solution. Sure, you could take all their money, but who is in charge of taking their money? How do you trust this person who takes their money and know he won’t keep it like most Communist nations? Even if this person or group is a perfect angel and doesn’t use to money to enrich himself, does the money actually get used well?

      Real republicans are supposed to believe people use their own money better than the goverment can use it. They are more efficient and generous too. Shame there aren’t many real ones out there in politics.

  13. dolemite says:

    IMO, it all boils down to corporate control of our government. They pay our legislators. Lobbyists write the legislation. They arrange for these tax breaks and subsidies. Even in industries turning record profits, our government *gives them money* for things like R&D or development. When 1%rs say “Hey, I pay 13% in taxes and that’s what the law requires.”, they conveniently leave out they’ve lobbied like madmen a few years ago to prevent that 15% rate from going up. Until America takes back control of their own government from corporate interests, this trend will accelerate until we simply end up like many 2nd and 3rd world countries: rich and poor classes with no in-between.

    • BurtReynolds says:

      Yup. The fact government is totally at the mercy of donors and lobbyists means there is no end in sight. As long as the richest are interested in paying to maintain their ownership of the country, there is little we can do.

      The fact many miss on this topic is the implications for the future. History tells us that a large gap between haves and have nots isn’t sustainable.

  14. Akuma Matata says:

    The stock is growing because Wall Street and the Fed are in it together. Just look at the reports around when the Fed is meeting, or Bernake is saying anything. Most people on the lower end of the income scale have most of their net worth tied up in their house. Stocks go up, housing goes down, and that explains a lot of the drop.

  15. frank64 says:

    I don’t think we are actually harmed by this though. I bet if they made less it wouldn’t mean we would get more. One reason this is happening is there are more people, but there are less companies. There is more of a winner take all situation. We have companies like Apple, Amazon, Netflix that have few competitors. All this trickles UP. Even sports figures and actors make out because there are more people in the country to watch, buy tickets, and sell products too as endorsements.

    I don’t see that much suffering by most people. We can afford SUV’s, Iphones, Ipads, laptops, 100 cable bills, internet bills, expensive cell phone/data plans, Starbucks, microbrew beer, and our homes have grown in size. Many children have the Ipods even Ipads, laptops, computers, gaming machines with $60. If you listen to the politicians we are hurting, and some are due to the economy, but there are many mid class and even near poor people that are able to make these choices. There are going to be 8 million new Iphones sold, and that means 8 million people spending thousands of dollars over the next few years for a toy.

    • frank64 says:

      Should read with $60 games.

    • dolemite says:

      The problem is…50 years ago, a middle class family could do very very well with 1 parent working. Good benefits, pay, pension. Eventually you started to need 2 parents working to get the same results. You’d be able to retire at a good age, bills paid off. Now, it’s basically a given that both parents have to work, AND they are loaded up with debt. Instead of massive retirement savings, they are scrimping by because their healthcare premiums are $1000 a month. Their pay is the same as it was 10 years ago, but every bill has gone up 5-10% in the mean time. True, people have more Xboxes and 42″ TVs, but that’s mostly because those things are CHEAP now. $99 for an Xbox. $299 for a 42″ TV. When I was a kid, an Atari was $500 in 1980 dollars. A microwave was $500, and so was a VCR. To measure our “wealth” by our cheap toys is disingenuous.

      • TuxthePenguin says:

        To solely measure wealth by possesses is meaningless, but its foolish to look at net wealth and not see what that wealth actually consists of. The average person now has a host of entertainment and knowledge at their fingertips that fifty years ago would have meant a ride down to the library and even then that’s a fraction of the knowledge. Learning about some things was darn near impossible.

        That’s why you have to compare net worth with standard of living. Yes, those cheap toys aren’t the whole measure, but they do matter. Quite a bit. Would you give up the internet for the rest of your life for $10k? $100k?

      • frank64 says:

        It means that we are choosing to spend on things, sometimes by accumulating debt, that is some of the reason we have less assets. The two income families have increased the size and costs of housing. There are many reasons the cost of healthcare has gone up, but one is the quality has gone up too. Many people are alive today because of these expensive procedures, but presumably this is something we want. The lack of pensions, and changes in retirement costs have arisen also in part due to the increased life span. Not to dismiss what you have said, just putting more things into the mix.

      • RandomHookup says:

        Does the report take retirement “wealth” into account? 50 years ago, my Dad was covered by a pension to which he contributed little to nothing. It wasn’t considered part of his wealth, at least by most accounting standards. Now, I have only a very tiny pension from years ago and a bunch of money invested in 401k/IRA programs that have replaced pensions. Those are part of my net wealth. Since the retirement weight has shifted to our shoulders, we could really be in deep trouble.

    • tlvx says:

      The fleecing of America is able to work so well, precisely because of the reasons you’ve alluded to. As long as the populace is kept pacified with toys, they ignore the wolves in sheep’s clothing, thieving all of their potential.

      The fundamentals – commerce, industry, currency… are all disappearing in favor of debt, and nothingness.

      What exactly is it, that the populace of the USA “DO” anymore? What do we produce? Less and less.

      We’re all just living off past generations, past plundering, and past wars.

      Eventually the music will stop. Maybe not in our lifetime… but, there exists nothing left for the USA, other than the full force of our militaristic might, bullying other countries into keeping our “dollars” afloat. But, think about it… even our military is in debt.

      • dolemite says:

        We really need to heavily invest in education and the middle class. If the middle class is gone, why bother getting into debt and going to school 4 years? If you have a middle class but continue to only put 4% of your total budget towards education, not many people will be able to succeed in those fields. We keep talking about “job creators” needing help and tax cuts. No, no they don’t. Very small businesses need help, but these corporations are doing beyond fine.

        • TuxthePenguin says:

          We’re beyond needing to “invest” more in “education”. We spend more, inflation adjusted, now than we ever had. Are the outcomes better? How much more do we need to spend? If we made college free, would having more college graduates make things better? Probably not – we have plenty now. Too many, it seems, for the jobs available. And many of them have near worthless degrees associated with a mountain of debt.

          The problems with the middle class, I believe, have far more to do with debt and cultural shifts that influence education, spending, and general decision-making. We have utterly denigrated manual labor to the point that if someone doesn’t go to college, we frown on them. I have a plumber who owns his own business and he clears MUCH more than me and mine. He’s never gone to college but his son will be able to go anywhere he wants. But he’s going to get an accounting and finance degree… so he can take over his father’s business.

        • frank64 says:

          I don’t know if money is the problem in education. People can go to state schools and get a good education fairly cheap. Most anyone can, and end up with minimal loans. Much of the problem with education is that many children don’t graduate high school, and that is not a money problem.

          • MarkFL says:

            “People can go to state schools and get a good education fairly cheap.”

            Where the hell do you live? My friend is sending his second daughter to the same public university he and I graduated from. Tuition is about 10 times what it was when we were there 30 years ago. But that’s just tuition — room and board is way more, too.

        • JustJayce says:

          Invest (The People’s Definition): Save for your future

          Invest (The Government Definition): Tax the hell out of the people so they have a lot less to invest for themselves. And when you can’t do that print money and bury future generations in insurmountable debt.

          • tlvx says:

            Taxes have been going down the past few generations. The problem is that the spending is being directed at the sole benefit of multinational corporations, and their cronies.

            • JustJayce says:

              Apparently you don’t read or know what you are talking about.

              In general when tax rates go down taxable revenue to the government has gone up. Because lower rates spur small businesses. Many small businesses report their revenues as income on their 1040’s. Been there done that. Plus it does encourage weather people to invest more.

              Most of the government’s money goes to pay entitlements. Not the sole benefit of multinationals. Get a clue.

              • exconsumer says:

                “In general when tax rates go down taxable revenue to the government has gone up. Because lower rates spur small businesses.”

                Only to a degree. In my estimation we are far to the left on the Laffer curve.

              • PunditGuy says:

                No. Revenue to the government goes up when the economy improves. Reagan lowered taxes and more money came in to government coffers. Clinton raised taxes and more money came in to government coffers.

                I don’t think there’s correlation, much less causation, linking tax rates to treasury. If you disagree, let me ask a limit question: As the tax rate approaches zero, does the government collect an infinite amount of money? Otherwise, Laffer was full of crap.

                • JustJayce says:

                  You only ask one side of the question… so why not tax everyone at 100%? There is causation between revenue and the tax burden the government places on individuals and businesses. It also goes beyond taxation to regulation and entitlements. I would argue that goodness from tax rates and government regulatory burden take a while to move through the economy. The tax reductions that Reagan did helped move money into the government because it improved the economy. Clinton raised taxes, got more revenue in the short term but helped cause the economy stalling out prior to 9-11-01.

                  There will always be a need for some taxation – but unfortunately with projections of 25 trillion in debt in less than 10 years we are all in trouble. Europe is just the warm up act.

                  • PunditGuy says:

                    Oh, I’m pretty sure that if you tax at 100%, you’ll get $0 in your treasury. But I’m equally sure that taxing at 0% doesn’t give you all the monies there are. The low tax rates we’ve had for past decade (so — how long does that “goodness” really take?) have done nothing but make corporations more money than they’ve ever seen. They’re not spending it in ways that are benefiting most Americans, so we really should rethink the efficacy of these low taxes. As for your rose-colored history glasses, pick any objective measure of economic activity and tell me what was better X years after Reagan’s cuts and Clinton’s hikes that is solely dependent on tax rates.

  16. Foot_Note says:

    but the romneys need more tax breaks,. how else will they be able to afford to feed the horse?

    • frank64 says:

      There are very few Romney’s, most of the rich pay about 25% of their income in taxes, while the middle class it is around 15%. He gets the break because mostly it is investment income and there are good reasons why investment income is lower, although I think some people like hedge fund managers who aren’t risking their own should not get these breaks.

      • JustJayce says:

        To paraphrase someone else,

        Why do you worry more about what Romney does with his money vs what Obama does with all of our money.

        • JustJayce says:

          This Comment is for Foot_Note – sorry Frank64

        • Jevia says:

          Because what Romney does with his money is a clue as to what he’ll do with our money. Maybe he’ll use the ‘blind trust’ excuse for our money too. “I don’t know what our trustee does with our money.”

          • frank64 says:

            Really?

          • JustJayce says:

            So being successful is not something you look for in a leader. Well you sure got your money’s worth right now. Obama! Obama! Obama!

            • frank64 says:

              I think Romney was successful. He graduated from good schools, got a law degree from a top school, passed the bar, and became a senator fairly young, and won the Presidency of the United States. I didn’t even get the good school part, and certainly not the law school. I respect him for what he has accomplished, and he appear to me to be very smart.

              • Jevia says:

                Yup, Romney became successful despite no odds and will all opportunities granted to him. Heck, even a prior screw-up like GWB can be President with the right family and friends.

                • frank64 says:

                  I actually meant to say Obama when I typed in Romney, sorry. I think both are successful.

                  As for Romney, there are many children of rich that do not go to school get a dual MBA/Law degree and go on to start a company. Obama did get breaks due to race, including becoming Pres. You really can’t dismiss any success people have due to where they came from, it helps, but you still have to be pretty good to make anything of it, just trying to make something of it is commendable.There are thousands of children of the rich, and famous that could get a leg up. Lets call them both smart, successful people and go from there?

                  • Jevia says:

                    But the rich have those opportunities and most of the time, the poor do not. For the poor to be successful, they do need smarts, which isn’t necessarily needed for a rich person to be successful (again, GWB is a good example).

                    I don’t think Obama got “a break” due to his race in winning the Presidency. Sure, it helped win the non-white vote, but that was also due to his understanding them better than McCain, plus Obama still needed a lot of white voters to win. Somehow, I doubt that say, Clarence Thomas or even Herman Cain would win the Presidency.

                    • madmallard says:

                      so. your world view is stupid people can be rich, so whats the point…

                    • frank64 says:

                      And the poor do get breaks and help. They have an education nearly complete paid for. Many don’t even take us up on the offer, they drop out of high school and don’t graduate, many have children out of wedlock. Then if they can’t make it on their own their whole life gets subsidized. We actually benefit from people who have a leg up. They are able to accomplish things that are helpful. Look at the Kennedy’s. They used thier money for public service. Someone like Ted Turner(from my recollection) and Donald Trump all started with help from thier parents. They made much more of the money by taking starting thier own businesses and growing. I think many of the policies you promote would have real negative consequences, and not help the poor, because money isn’t the reason they drop out of school and have children before they can support them.

                      As for Obama, I think it helped him. His race was part of his appeal, just as being rich helped Romney in life. I still respect both because there are tons of sons of rich people who do nothing. As for Obama, it was a factor, but there were other factors and he used all of them. That is what life is about. Both are people to be respected.

            • tlvx says:

              The current president became a millionaire through education and hard work. That’s the American Dream.

              Being good at mergers and acquisitions, where many people lose their jobs, is great on a CEO resume, but not at all indicative of someone that is on the side of the masses.

              That said, regardless of either’s intentions… the lobbying cannot be stopped, because the top 1% have far more influence, than the bottom 99% combined.

              • JustJayce says:

                Oh no.. there was noooooo cronyism there. And that education.. lets see those Harvard transcripts… what! They are sealed… NOOOO!

            • lanman04 says:

              Hitler was wildly successful as well.

      • Jevia says:

        Why should wall street gambling have lower income. Yeah, you call it ‘investment income’ to make it sound like its all by people “investing in companies.” But you know that half of those “investments” take the other side of the bet, they bet against the company. That’s what “shorting” is, betting that a stock or bond price will go down, that the company will fail. Sounds hardly like an “investment” to me. So tell me again why that should be taxed lower than someone who teaches our children or repairs our roads?

        • voiceofreason says:

          Because it is typically much more risky and you have to hold the investment for a year. If your “bet” doesn’t work out, you lose it. Unless of course you are one that walked away from a mortgage.

          • Jevia says:

            I still don’t see how rewarding people for betting against companies in lower taxes is better than people who teach our children.

            Speaking of which, however, when one gets to remove income from a 401k, isn’t that taxed at the usual rate, as opposed to 15%? Aren’t we taking a risk of losing that money and certainly we hold that investment more than a year.

            • JustJayce says:

              It’s because that money came from your income. You got a tax break on the input at your income tax level. Not an investment level.

              Plus when you remove income from a 401K prior to retirement you have to put it back plus interest.

            • frank64 says:

              As far as the 401K money. I don’t know the official reason it doesn’t keeps its gain charterer. But the overall idea is that you are taxed based on lower rates due to the income drop. For the middle income taxpayers, it will often be at a 15% rate anyway. If they are more wealthy they will pay a higher tax on it. This is progressive and what you want anyway. The rich actually lose many benefits. most credits and deductions are phased out, and the AMT kicks in many times. SS is taxed above a certain income level also. The people who benefit most from the tax breaks are lower income people.

          • frank64 says:

            Yes, I think all shorting is short term, meaning you are taxed at normal income. The lower rates come from over 1 year. This is the heart of your argument,and it is factually wrong.

        • frank64 says:

          Besides the other reasons I and others have mentioned for different treatment of investment income: Double taxation of dividends, the income has already been taxed at the corporate level. Inflation when you have owned an investment for many years, some of the increase in value is due to inflation. You have not really made as much as the dollars indicate. The risk is huge, often people lose money in investments. When that happens, you can only deduct it against gains, or are limited to 3,000. Many people now will never, ever be able to write off these losses. The gov shouldn’t be there just for the gains, but not help you out on the losses. The value of encouraging people to invest. With the risks involved, many might chose not to invest, there are safer things to do.This helps provide the capital to start and grow business. If we eliminated the favorable treatment, there would be unintended consequences.

          The lower two tax brackets do not get charged cap gain rates at all.

          • Jevia says:

            If you want to get picky, all money is taxed numerous times. My income is paid by people who buy products and services with their income that was previously taxed. I buy good and pay sales tax with my dollars which were previously taxed. Just because money is taxed once, doesn’t stop it from being taxed again in numerous ways, so again, I find fault with taxing capital gains at a lower rate than regular income.

            Risk is risk. I take risks in my job, that people won’t buy my services and products. People who make hundreds of thousands of dollars a year from capital gains are not taking a significant more risk with their money percentage wise, if they are so good they keep making hundreds of thousands a year. So tax those at a regular rate if they make more than X amount, just like normal income.

            • frank64 says:

              As for the double taxation. The Treasury Department and IRS recognize it as an issue. There are a few entities that they allow it to be passed directly through and not be taxed because it is the same owner. There is no real transaction that takes place like the other ways money moves. This is just an owner account transfer. If you own a business, think about paying the tax in the business, and then paying the profits to yourself and paying taxes again. The reason you don’t is the special tax treatment smaller type business gets(without getting to deep in the code). The corps don’t get that special treatment and this mitigates it a bit. That is all.

              As for risk. There are more direct deductions a business takes on losses, that are now allowed for investments and when a business is sold, they do get the cap gain treatment too. An investor has that risks too, because he is often buying based on the income of a company. They are taking a significant risk, and they often lose money. sometimes a huge amount.

        • Bsamm09 says:

          Half of investments are not shorted. A simple look at the biggest short positions around will show you that.

          Look at BAC with a market cap of almost 10.78bln had a max short position of 250mil over the last year.

          Also, most short positions are held for a couple of days on average. That is short term capital gain which is taxed at Ordinary income levels.

          • Jevia says:

            If you read Michael Lewis’ book, The Big Short, you’ll see that those investments, betting against the housing market with those credit default swaps, were all held for more than a year.

            • frank64 says:

              Credit default swaps are not shorts. They also actually serve a purpose of reducing risk for banks. They sell them as insurance. This allowed for more mortgages to be sold. This points out what I said before about risk though, those who bought those lost a ton of money, and they are going to be real limited on writing off these losses.

              Tax law on swaps is complicated, there are a few types and I do know some of them are considered to be normal income. I don’t know exactly how credit default swaps are calculated though. You were also talking about general investment income. If there were an issue with the swaps, it wouldn’t change the broader tax handling of normal investment. You are looking for exceptions, which could be changed without throwing out the whole baby.

            • frank64 says:

              I just looked it up credit default swaps are taxed as ordinary income. There is no “special break”. I can provide backup if you want, but you could look it up pretty easily.

    • BurtReynolds says:

      Don’t worry, I think the horse itself was a write off. It’s upkeep might be too. Medical expense.

  17. voiceofreason says:

    Because so many people don’t even know:
    Top 1%: $380,354
    Top 5%: $159,619
    Top 10%: $113,799
    Top 25%: $67,280
    Top 50%: >$33,048
    $380k is hardly wealthy anymore…

    • dolemite says:

      I’m confused by the logic. If only 1% of a population can achieve 380k, how is 380k not wealthy? To 75% of the population (the 33-66k people), that is 5-10x more than they make, and no matter what they do, they will not achieve anything close to that. It’s not like a hard-working plumber is going to go from 55k a year to 380k by doing…what?

      • voiceofreason says:

        You are reading it wrong. 75% is not the $33k and $66k people. It is 25% make more than $67k. 50% of the people make $33k or more. 50% make less than $33k. $380k in Silicon Valley does not equal $380k in the wheat fields of Kansas. A good first step is to have a geographical cost of living basis built in to the tax code.

      • aaronx says:

        “no matter what they do, they will not achieve anything close to that.”

        My, what a broad stroke you have.

    • Jevia says:

      Is that gross income or adjusted net income or taxable income?

      • voiceofreason says:

        Adjusted Gross Income from 2010 Federal Income Tax data.

        • Jevia says:

          There are certain reductions to gross income that reach adjusted gross income. Its not unusual that someone with an AGI of $380,000 could have a gross income double that, or more.

          • Bsamm09 says:

            False. Please elaborate. Most above the line deductions actually are phased out for high earners. 50% of SE tax doesn’t and is usually the biggest but that is a 100% valid deduction.

            • Jevia says:

              Ok, alimony for one. Someone who makes $800,000 a year and has to pay half of that in alimony has an AGI of $400,000.

              • frank64 says:

                Because the wife who actually received the money is taxed on it. Child support is not deductible though The IRS taxes the person who actually gets to use the money. Alimony it is the receiver, but child support the person is normally responsible for taking care of a child anyway.

    • tlvx says:

      $16.4 million doesn’t jibe with $380k. Methinks this article is referring to the gap from $16.4 million, in comparison to the average citizen… that is unlikely & less likely to achieve the top values… due to the gap continuously widening.

      • voiceofreason says:

        My point is that people love to throw around the “1%” card and most don’t even know what the “1%” actually is.

  18. radio1 says:

    Your math is slightly incorrect. You are referring to percentages when you should times or multiples…

    125% = 1.25X = (125%/100%)

    288% = 2.88X = (288%/100%)

    You need another factor of 100 added to both percentages: 12500% and 28800%, respectively.

  19. keith4298 says:

    The FAA is used to this happening once in awhile, as airplane toilets leak, the waste freezes at high altitudes and then breaks off in chunks that are known by a decidedly less gross name than “frozen airplane waste” — “blue ice.”

    “I don’t know what’s scarier, losing nuclear weapons, or that it happens so often there’s actually a term for it.” – Broken Arrow

  20. Press1forDialTone says:

    Is Consumerist just finding this out??
    DUH.
    Vote for Obama and maybe we change shave a bit off
    that ginormous difference.
    Our election is a perfect example. Romney has less than 10 major donors
    and Obama and other democratic races are relying on the actual electorate
    for funds by millions of contributions. Yes, there are some large donors, me
    included, but we are vastly outnumbered by the $20, $50 donations.
    VOTE for a future, not a past that failed. Vote Obama/Biden.

  21. PBallRaven says:

    Camel Cookies.

  22. Obtruder says:

    Yeah, that happens when asshat politicians change the rules in their favor while screwing everyone else.

    I was ejected from the credit system after I lost my job and couldnt repay my loans and cards, so now I only spend what I earn, which for an IT management position isn’t much though decent for my area. I suppose that is the most enraging thing about this wealth gap.

    50 years ago an average American family could afford to purchase a brand new car, with CASH. Thanks to the fake wealth that is credit that is not an option for someone like me now. A new car is equivalent to a years salary, probably because the CEO of my company apparently deserves 288% more money than I do, despite being one of the people actually making sure our systems work on a daily basis.

    • frank64 says:

      Cars have gotten more an more sophisticated too, and mechanically they last a lot longer. The only reason we have such high car payments is we trade our car in way before we need to.

      Only spending what you earn is the old norm. If we all did that we would have higher net worth instead of more debt. I am concerned with the income disparity, but really think it doesn’t have a huge impact on what we middle class actually have. I think it is more about our choices, and the other changes in our economy. Also we expect a higher standard of living.

  23. kingdom2000 says:

    You know what we need to fix this situation? More tax cuts for the rich. After all some paid a way to high average of around 15% while everyone else was in the 22%-28% range. I think with proper support of Romney, we can get that 15% down to zero! 288x richer is just an unacceptable number and we must show our love for the “job creators” by doing everything we can to make that number higher. If sacrifices must be made, so be it. After all I might win the lottery one day and join them. Why plan for the present when can plan for the hypothetical.

    • frank64 says:

      You are just talking crap. Romney’s rate is not typical of rich. Rich pay about 24% on average while middle class is about 15%. He is not proposing anything to lower the rates to anything below the middle class rate. He does want to keep the marginal rate for upper incomes at 35% instead of 39%, with this he also is keeping the middle class tax cuts which account for 2/3 of the Bush tax cuts In a nutshell he is advocating tax cuts for all that mostly hit the middle class. Obama want to keep the low rate for the middle class but increase only the rich’s rates. To my mind he is singling only the rich to pay for nearly all of our spending.

      • Jevia says:

        But people keep saying that tax increases on the rich won’t pay for all our spending.

        If tax cuts are handed out to the rich, how will that stop our deficit from increasing? Oh right, cut all the services to the middle and poor classes, which they now have to pay more out of pocket. Ok, not a tax increase on the middle and poor classes per se….

        • frank64 says:

          People keep saying it because it is true!

          Much of the reason for the deficit is the economic downturn, as our economy improves tax revenue will increase. There are no tax cuts being handed to the rich, the Bush tax went 2/3 to the middle and below. Now the rich pay an even higher percentage of all taxes. You must have heard many times 47% pay no taxes. Many of those should. You also have to think what happens when money is not taxed, that money gets spent and enters our economy. That means that we may be better off if the money that would be taxed is used to buy things and provide jobs naturally, it means that someone able to earn money instead of receiving aid, or struggle

          You seem also seem to have an us vs them mentality, you will always look to the rich to pay whatever they are paying + whatever is needed. Why is 39% thier fair share and 34% isn’t? Especially when on average they pay about 10% more than us as a percentage of income. I don’t really like being an apologist for the rich, I am middle class and see the income disparity as a problem. It is just that it is overplayed, mostly because I question if taking from them is fair, and I also don’t think they are the problem. You take away the rich, and we won’t be making more, we probably would be making less. There would be less jobs. The middle class looking for the gov to take care of things then stops making the adjustments that would normally take place, these adjustments we make effect the market. Gov help has also increased the costs of these things, thus making gov help more and more necessary, it is a self fulfilling prophesy.

          • RandomHookup says:

            I think this article highlights why we do look to the rich to pay more taxes. They are doing much better in a down economy than the average person and so it is incumbent upon them to kick in a little more to keep the lights on. There is a point when it appears they are gaming the system (especially in light of the power that the Citizens United decision gives them) for their own advantage.

            Remember, under Eisenhower, top marginal tax rates were 90%, and we did fine. We, as a society, should share the overall funding of our infrastructure in a way that we get an equal sharing of overall wealth.

            We can certainly do a better job of spending money at all levels of government, but taking *any* increased taxation off the table just seems to be a ludicrous way of doing it.

            • frank64 says:

              As far as the 1950’s are concerned, the marginal rates were for those that made about 3 million or so in today’s dollars. There were many more deductions. The rich invested in tax shelters no longer allowed. The effective rates were much, much different. We also were also were still booming after the war and Europe was buying everything we could produce. Commodities and energy were dirt cheap. It doesn’t mean real, higher rates would be good for us now. I still think it is better for the companies/rich to have the money than the gov. give it to people, the rich spend or invest it making for a more natural way for jobs to be produced.

  24. Baka-no-Kami says:

    Three points

    1. Medium net worth was over $125,000 in 2007. It dropped over 40% in the past 3 years.

    2. Most families net worth is based almost entirely off the value of their home. If something like a, to pick a random example, housing market crash happens then you would expect a dramatic change in net worth. As you move up the wealth ladder less of your networth is likely to be concentrated into your home and spread out into stocks.

    3. The methods use for calculating net worth in 1983 and 2010 were different. They are not directly comparable.

  25. PhilipCohen says:

    125% and 288% ???

    Yes, why didn’t you simply cut and paste the correct text from the original story?

  26. Easter Love says:

    Come on, who here among us doesn’t love getting screwed by the super-rich? The job-owners want a bunch of workers too poor to take any time off work, and too poor to afford the kind of education that might get them a better job. So let’s give it to them! This is America – if we can’t be wealthy, we can at least kiss the asses of the wealthy!

  27. f5alcon says:

    Some of this is because the rich invest their money and the return rate is higher than what the average person gets in raises.

  28. Timmah says:

    Sometimes thinking about the economic structure of this nation is quite depressing…

    Myself, I make more than enough to just “get by” but I live at home, due to the cost of living. Better to split expenses between myself and my mother.

    I drive a 32 year old car with over 400,000 miles that has been maintained by myself since I was 16 years old… I still trust it to get me anywhere and everywhere these days.

    I have no idea if we are even considered “Middle Class” I figure one of these days I’ll be in the 5% but I don’t count on it.

    I know I’d barely be getting by even with my 35k a year job if I went out on my own. Didn’t use to be this way. :(