The Rich Are Different from You and Me – They Pay Lower Taxes

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Employees of Rockwell Collins, Inc. gathered at an airport hangar before a rally in Cedar Rapids, Iowa. August 201. (AP /Ryan J. Foley)

Benjamin Franklin, who used his many talents to become a wealthy man, famously said that the only things certain in life are death and taxes.  But if you’re a corporate CEO in America today, even they can be put on the back burner — death held at bay by the best medical care money can buy and the latest in surgical and life extension techniques, taxes conveniently shunted aside courtesy of loopholes, overseas investment and governments that conveniently look the other way.

In a story headlined, “For Big Companies, Life Is Good,” The Wall Street Journal reports that big American companies have emerged from the deepest recession since World War II more profitable than ever: flush with cash, less burdened by debt, and with a greater share of the country’s income. But, the paper notes, “Many of the 1.1 million jobs the big companies added since 2007 were outside the U.S. So, too, was much of the $1.2 trillion added to corporate treasuries.”

To add to this embarrassment of riches, the consumer group Citizens for Tax Justice reports that more than two dozen major corporations  — including GE, Boeing, Mattel and Verizon — paid no federal taxes between 2008 and 2011. They got a corporate tax break that was broadly supported by Republicans and Democrats alike.

Corporate taxes today are at a 40-year-low — even as the executive suites at big corporations have become throne rooms where the crown jewels wind up in the personal vault of the CEO.

Then look at this report in The New York Times: Last year, among the 100 best-paid CEOs, the median income was more than $14 million, compared with the average annual American salary of $45,230. Combined, this happy hundred executives pulled down more than two billion dollars.

What’s more, according to the Times “… these CEOs might seem like pikers. Top hedge fund managers collectively earned $14.4 billion last year.”  No wonder some of them are fighting to kill a provision in the recent Dodd-Frank reform law that would require disclosing the ratio of CEO pay to the median pay of their employees. One never wishes to upset the help, you know. It can lead to unrest.

That’s Wall Street — the metaphorical bestiary of the financial universe.  But there’s nothing metaphorical about the earnings of hedge fund tigers, private equity lions, and the top dogs at those big banks that were bailed out by tax dollars after they helped chase our economy off a cliff.

So what do these big moneyed nabobs have to complain about? Why are they whining about reform? And why are they funneling cash to super PACs aimed at bringing down Barack Obama, who many of them supported four years ago?

Because, writes Alec MacGillis in The New Republic — the president wants to raise their taxes. That’s right — while ordinary Americans are taxed at a top rate of 35 percent on their income, Congress allows hedge fund and private equity tycoons to pay only pay 15 percent of their compensation. The president wants them to pay more; still at a rate below what you might pay, and for that he’s being accused of – hold onto your combat helmets –  “class warfare.”  One Wall Street Midas, once an Obama fan, now his foe, told MacGillis that by making the rich a primary target, Obama is “[expletive deleted] on people who are successful.”

And can you believe this? Two years ago, when President Obama first tried to close that gaping loophole in our tax code, Stephen Schwarzman, who runs the Blackstone Group, the world’s largest private equity fund, compared the president’s action to Hitler’s invasion of Poland.

That’s the same Stephen Schwarzman whose agents in 2006 launched a predatory raid on a travel company in Colorado. His fund bought it, laid off 841 employees, and recouped its entire investment in just seven months — one of the quickest returns on capital ever for such a deal.

To celebrate his 60th birthday Mr. Schwarzman rented the Park Avenue Armory here in New York at a cost of $3 million, including a gospel choir led by Patti LaBelle that serenaded him with “He’s Got the Whole World in His Hands.” Does he ever — his net worth is estimated at nearly $5 billion. Last year alone Schwarzman took home over $213 million in pay and dividends, a third more than 2010. Now he’s fundraising for Mitt Romney, who, like him, made his bundle on leveraged buyouts that left many American workers up the creek.

To add insult to injury, average taxpayers even help subsidize the private jet travel of the rich. On the TimesDealBook blog, mergers and acquisitions expert Steven Davidoff writes, “If an outside security consultant determines that executives need a private jet and other services for their safety, the Internal Revenue Service cuts corporate chieftains a break. In such cases, the chief executive will pay a reduced tax bill or sometimes no tax at all.”

Are the CEOs really in danger? No, says Davidoff, “It’s a common corporate tax trick.”

Talk about your friendly skies. No wonder the people with money and influence don’t feel connected to the rest of the population. It’s as if they live in a foreign country at the top of the world, like their own private Switzerland, at heights so rarefied they can’t imagine life down below.

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  • Anonymous

    In Switzerland I was picking up a small catered order at a deli. It was a cash only operation. I underestimated the cost and had only about 250 of the 310 Swiss Francs needed. It would have taken too long for me to get more money. I began to wheedle and bargain. The caterer  became offended, enraged even. Then I happened to mention the well connected lady at whose home we were having my theater gathering. I walked away with a dolley to transport the food and 3 “free” bottles of red wine. 

  • http://www.facebook.com/people/J-Michael-Schell/750352545 J. Michael Schell

    I really don’t see how every man, woman and cognizant child can fail to see what the great divide of 2012 is.  We have a President who is dedicated to re-organizing the system so that we’re all in this together — in an ecosystem that is sustainable and gives sustenance to all, not just those strong enough to take it.  And then we have a member of the latter group, the powerful who want a clear field to be able to take what they want and what they can, leaving the vast, vast majority (the 99%) to fend for themselves.  There is no choice.  We must help President Obama secure a second term.

  • Bennett Schneider

     Rome. Plus ca change, plus c’est le meme. Like our forefathers we must work extra hard to ensure the revival of the American Proposition, that “All men are created equal …. with liberty and Justice for all”.

  • Larryphxaz

    Come over to Scottsdale AZ… Watch the privite jets land all day long… Occupy Wall Street needs a new place to protest…. Come see them in lawless Arizona.

  • Altstock

    When Americans start shooting other Americans because they are considered “too rich” we can thank President Obama for starting this class warfare nonsense.

  • http://www.facebook.com/people/Richard-Smith/1320798224 Richard Smith

    That is the stoooopidist think I have ever hear.  Bite me

  • Max Robespierre

    Class warfare is the result of the facts about the ever-growing income gap being laid out by those who are paying attention … not because our presisdent discusses it as we try to addres the nation’s financial woes for those who have lost more than gold-plated bathroom fixtures, genius!

  • Zippy2102

    At least CEO’s work for their money, hire people, and produce valuable goods and services. Complain about that and it would drive you nuts to consider the money received by star athletes,  actors,  and anyone named Kardashian! 

  • maggie

    I never miss Moyers on PBS. in his gentle way he brings out the fact.
    he’s truly one of my hero’s.

  • maggie

     class warfare was started about 20 yrs. ago.
    and the rich did win.
    they did this by buying congress.

  • Johnettecoker

    Too bad you never learned grammer .You,my dear sir,are the stupid one.

  • Dockelly1954

    How does it feel to be a tool.

  • Revbilly

    The war has been going on for decades. You only notice now because the 99% are beginning to fire back. 

  • Leolady2

    He’s long been my hero too, but he’s now tust a bit too gentle. I’d like some suggestions/admonitions with some real teeth. For example, standing outside a federal building chanting with 10,000 other 99%ers on Tax Day may make you feel good, but hundreds of thousands standing outside the Post Office, tearing uptax returns (like Thoreau) might actually have some effect. The day is past when marches and shouting crowds have any effect on our supposed representatives.

  • Steve

    Wake up and watch the free video on http://www.thrivemovement.com   It’ll knock your socks off and hopefully motivate action.  The future is coming faster than we might like.  be sure to watch the entire video, it takes a few hours but you can start and stop it.

  • JonThomas

     Here’s what I’m curious of…

    I recognize that political rhetoric is often  the bait of a mine laden trap, but where is the fear of this “class warfare.”

    More and more often, as soon as someone broaches the topic of unfair
    economic, social, or intra-cultural disparity (ie…the differences in
    economic experience and perspective among various races within our
    nation) between the haves and have nots, the class warfare accusations
    start to fly.

    This past week’s episode, with the Angela Blackwell interview, followed by
    Mr. Moyers essay, expanded on with a tribute to a man who set a good example of “capitalism with a conscience,” presents a good opportunity to discuss the
    possible minefield that lies between the trenches.

    Are the warnings that the well to do and “want to be well to do” keep
    shouting…”Class warfare!! Class warfare…!!” a real danger, or are
    they just the growlings of toothless dogs?

    What if there was “class warfare?” Where is the danger?

    Is it in just admitting such a thing does, and has existed for even longer than our country been around?

    Does it demand, in this case,  that President Obama alienate many potential donors and supporters?

    Does it force the “Hope People” into the long awaited tossing away of
    that carrot on a  stick called the American Dream (I hereby coin the
    terms “American Illusion/Delusion”,) and then have themselves be blamed
    for crushing the spirit of all those sad eyed young people never able to
    reach that goal of economic security for their progeny?

    Truly I ask, where is this danger? The less-than privileged in this
    country have been the target of barrage upon barrage of crippling
    political and economic policies for decades. Corporate subsides, tax
    break incentives, bailouts, lower tariffs, corporate person-hood,  superpacs…the
    list goes on, I’m just tired of thinking of them(made the point.)

    We, the less- than privileged, really have little left to lose.

    If we don’t go, or send our children, to college we are then stuck in servitude positions.

    If we do go to college, we are soon strapped with debt and the
    highest tax rate burdens.  We gain middle level positions where both
    parents are forced to work just to meet basic bills with little relief
    to hope for except squirreling away every dime to save for our
    children’s education.

    There are the 1 or 2 out of a thousand exceptions to the rule that
    are able to succeed…those are thrown in our faces as examples of what
    we are hoping and slaving toward.

    So what is the down side of admitting the class war?

    Are the dogs ready with water balloon bombs of “Socialist!!! Socialist!! Grab your pitchforks!!”

    (Actually, for full disclosure, personally I’m closer to libertarian with a Jeffersonian- ban all corporations and allow only those/us capitalists who take the financial and personal responsibility of owning their/our own companies…leaning.)

    Is there something else I’m missing…some all destroying danger?

    Or does it really come down to the two sides of the same 1% coin. Both afraid to have the less-than privileged see behind the curtain of
    power at what levers are being pulled and by whom?

    I say admit it, fight it, and get it over with…get the war out in the open. The privileged will
    control the police, but I doubt it will go that far. People in our time do not seem ready to throw the tea into the ocean. They/we, lol, are
    sufficiently enthralled by “The Bachelor.” “Survivor,” and one or all of
    the “CSI’s.”

  • Jdevelder1

    How can a society control an educated population? In the past workers, “Owed their soul to the company store” and this insured that they and their families remained, in a sense slaves to the corporations.  Present day…how do we get a middle-class to owe their souls to the company store? I believe it has already been done by: 1. High cost of college educations. 2. Credit Card Debt (both individual greed and corporate greed here). 3. High cost of health care and no universal health care or public options offered.  So, now we have educated people afraid to lose their jobs because they won’t be able to pay their college loans, credit card debt and they can’t be without health coverage provided by their jobs! They are often underpaid or underemployed but fear the loss of their jobs. And I am just addressing the middle-class…not the poor!  MLKjr tried to tell us in the 1960s to march together for social and economic justice.  Perhaps now we will be able to do that.  Perhaps we will be able to have an honest conversation about institutional racism; economic inequality; and social engineering by the wealthy who live in a world that can escape the fall out of unbelievable greed and disregard for society and democracy.  

  • Anonymous

    How do you continue to keep faith with a figurehead who has betrayed the common interests at every fork in the road? The only probable explanation I can muster is that you’re comfortable thanks to your elite connections and your liveried service to them. I can agree that there may be a small, even miniscule, difference in rhetoric; and a tiny slowing in the updraft of means with Obama rather than Romney…..      but nowhere do I see an Obama who is reorganizing the apportionment of the Ecosystem. That is truly a self-delusion. Look, you have no obligation to explain such a divergence of perception to a reprobate opportunist like me, but at some point circumstance will demand you explain to yourself and succeeding generations. The fall elections are like a bowl game with an invisible football, just a pantomime for Believers. We can vote, but would be fools to hope.

  • Anonymous

    Or in Jackson Hole, or in Banner Elk, or at hundreds of general aviation airports across our nation. Business class jets jump borders with no documentation, no customs, no contraband inspections; without a care or worry, confident in the  reciprocal network that insulates. Laws are for the poor only. One of the marvels of the human emotionality is the enormous burden of contradictions we can carry; like a tiny ant with a boulder crumb.

  • Anonymous

    The Buffet Rule is thin soup; weaker than a deplorable flat tax.
    You can read the wealth gap graph right through it.

  • Anonymous

    The latest offensive started with Reagan but  classism has always been an impediment of the United States. It is rooted and institutionalized in the private property focus (without limits) of our Constitution. Now that there is no frontier remaining in land, resources or intellectual property, extraction from the working  people seems much more harsh and immediate. Most people obtain all they get by serving the income stream of the wealthy, and then their usury and chichanery takes back more than one can earn. These are the end times of this economic system, but the rich are keeping it on life support. Profit motive permeates farther and farther as we go (education, medicine, reproduction) and life grows chaotic.

    To recalibrate we’d need to clarify human rights, make justice transparent and switch to sustainable energy and food production. No margin would remain for a profit-interest concept.

  • Anonymous

    Are you really rich or just fantasizing?
    How c

  • Anonymous

    My study indicates that both  celebrity and business leadership are based upon pre-existing wealth and elite acquaintance networks. To think any human being “works” enough to earn more than 200K is delusional. Income above that is a collusion against the millions of people doing the vital and necessary work. The high sports and show business paydays are an outgrowth of the same perversions and not a separate phenomenon.

  • Anonymous

    I love Mr. Bill and I could not agree more with what you are saying.
    It may be that M&C would be cancelled if they went one iota farther in their recommendations. In the old show they brought forth the concepts of Tyranny and Oligarchy (Plutonomy was leaked from a bank document.) and were booted from PBS. Last week they toyed with Anarchism, so maybe the salsa is already too spicy for our powerful Overlords.

  • Anonymous

    Miss Pancake Rankin, a radical southern theologian, calls the convention you describe “wealth etiquette.”  We are brainwashed to be deferential to wealth, and respectful of a privacy zone surrounding it, in all we do. How can justice and fairness be called rude? Well, a poor person’s dissident is a rich person’s terrorist, and a commoner’s creative genius is the elitists unproductive fool. It’s a matter of  (self deceiving) loyalty or financial perspective. Pink slime can be thought of as a “finely textured protein additive” until your stomach starts growling.

  • Anonymous

    The kind of education offered now mortgages the mind.
    The toxic content is worse than the inflated costs.
    You are correct that paychecks resemble leashes more than recompense.
    But, it is worse than you estimate, worse than in simpler times, because the 
    Elite owned and controlled media bombards our brains 24/7.
    While Assad’s shells decimate Homs, bandwidth is used to shred our peaceful resistance. And yet I have to share your aspirations in believing that the “Vietnam speech at Riverside” is far more important to us than “I Have a Dream.”
    But you are correct that  the Oligarchy is usurping our mind power and labor to construct a segregated existence. If we don’t prevent  that we can only blame our own selfishness.

  • JonThomas

     I may be wrong, or even misunderstanding what you were saying here, but I think Dock was replying to Altstock and asking him how it feels to be a tool of the elite. :)   Any other use of the term tool in his question is most likely impurely coincidental. =))

  • Leolady2

    Good point, but very scary.

  • GradyLeeHoward

    And despite moderator protestations this “booting” remains a matter of opinion. Moyers is protected by the 5th amendment. I was an actor and I was fired twice, and following those disputes I was unable to get work, and I had what I consider an unjustified bad name in the business. I can see where our inside/outside difference of opinion leads, but my opinion is harmless because I’m not an intimate. It’s kind of like Jimmy Stewart and Ray Burr in “Rear Window.” I thank  all parties for their indulgence but am not ready to concede.

  • GradyLeeHoward

    I’m not the naive one. When the dissident voice is smeared for doing the right thing “a tool of terrorism” or “a tool of communism” is the most frequent dispersion. I was illustrating the reflexive case. But the truth is not binary, and people possess an infinite complement of tools.

  • JonThomas

    :)   Good point. :)

  • gift economy

    THE ONLY WEAPON against their profit based system :  FREE STUFF – use linux instead microsoft – plant free wiki-trees, wiki-vegis…SHARE & GIFT – free food = first step towards SOVEREIGNTY, ABUNDANCE TO ALL – learn on youtube how to germinate your tomato/apple / avocado seeds – google: GUERRILLA PLANTING – create free food – enjoy free food – don’t buy their proceed poisoned taxed food!
    Create & use FREE STUFF – bring their system down!

  • http://myspace.com/jrmurphypoetmusician JR Murphy

    Not just the American congress, New Zealand’s politicians have been bought out and brain-washed by the sleezy rich corporates and their lobbyists.  We win accolades for our human rights and lack of corruption in this country but really we are just better at hiding the corruption and cruelty from the rest of the world.  I know am currently out on bail for wilful trespass of parliament for standing up to corrupt government mental health services (I am trying to get myself and thousands of other abused people the care I know they are entitled to) and politicians.

  • GradyLeeHoward

    Your posts reveal a powerful mind and a wise heart Jon. I did reply to the wrong party. I see what you meant now. We learn from our Disqus mistakes.

  • http://www.facebook.com/aidenf77 Aron Filbert

     Cool story, bro.

  • Thomas Jon94

     Ty Grady, I’ve enjoyed reading your comments. I’m fairly new here but I’ve always enjoyed Mr. Moyers shows through the years.  It’s good to have his shows back on the air, and an accompanying forum as this one. Open minded, civil discourse is sorely lacking in our society, especially since passions run high on issues that matter so greatly both to our present, and our futures. Besides, we all make mistakes, it’s how we handle them that shows character. :)
    I expect correction from you when the time comes lol, hopefully I’ll handle it as gracefully. :)

  • Robber Baron von Richtofen

    The oligarchs of America complaining about class warfare in 2012 sound very much like the fascists of 1942 complaining about occupied Europe’s resistance movements, partisan rebels, and freedom fighters. The overlords fear consequences in the approach of justice.