Uncovering the Riches

...In other words, the top 20 per cent took in more than 40 per cent in 1957 and has stepped up its percentage slightly since then...

...Then there is the business investment loophole that allows special tax advantage to the man whose company buys new equipment...

...Local taxes bite the bottom...

...if one earns $3,336 a year, one is affluent...

...According to an off-the-record estimate by one knowledgeable official in the Treasury Department, the total yield if every loophole was closed—undoubtedly including all or some of the funds now going into foundations—would come to about $40 billion a year...

...the poor cannot be expected to unearth the facts...

...And it has worked: In 1959, the U.S...

...In short, taxes do not really change relative positions much...

...If capital gains and options were reflected, the income of the top, and still more the top-top, would go up—especially after taxes...

...After Federal taxes, there is little change...

...But what is generally believed about owner-ship-by-a-few cannot be proved beyond question...

...The present tax system does not really help correct this imbalance...

...For years, commercial banks have been allowed an automatic deduction equal to 2.4 per cent of their outstanding debts on the theory that this was a "bad debt" reserve...

...Last year Congress passed laws for truth in packaging and truth in lending—after hard-fought battles...

...Actually, too, these figures understate the taxation of the poor and the true income of the rich...

...But they are not...

...American policies in taxation and pricing and planned waste—plus other practices such as subsidies to the rich, utility rate setting, quasi-public authority monopolies—constitute the overt and covert mechanism of the maldistribution of wealth in this country...

...One study, for instance, shows that in 1958 local levies took 11.3 per cent of the income of persons earning less than $2,000 a year...

...This is real bookkeeping magic, whereby increased corporate income appears as decreased profits for purposes of taxation...

...it was enlarged for all...

...the depletion allowance for oil and other natural resources...

...In 1962, a tax credit for new equipment was granted at 7 per cent...

...Even the meager facts we have explode the fantasy that the rich are taxed to provide welfare state financing for the poor...

...Wealth was not redistributed...

...Only one bid was turned in at rates the city considered exorbitant—but it was the only bid, submitted by a syndicate of lending institutions...

...Nobody really knows how much the Federal government could pick up annually if tax holes were closed—again a painful commentary on the information gap...

...There are few statistics about the economy, curiously, that are more constant than the distribution of income among the nation's "fifths...

...the nontaxability of capital gains on property held until death (which is the single biggest loophole...

...The stepped-up allowance automatically ads to the costs of a corporation, thereby reducing its declared profits, although its actual cash income has increased...

...The occasionally poor, the near poor, the recent poor, and the just-making-it are lumped with the prosperous...

...A private study mad...

...If there were no restrictions on [oil's] domestic production or importation from other countries," the Times went on, "the United States consumers' annual bill for petroleum products would be lower by about $5 billion...

...When these advances are fully reflected in higher retail prices," observed the New York Times two weeks ago, "the American consumers' total bill for gasoline, heating oil and other petroleum products is likely to increase by some $400 million...

...Consider these 1960 figures: The lowest fifth, with 4.6 per cent of the income before Federal taxes, was left with only 4.9 per cent of the income after Federal taxes...

...is contained in the works of Robert Lamp-man of Wisconsin, including an article he did for Business Week in 1961...

...A poor city, wrestling with the problems of poor people, was made a bit poorer by lenders who publicly proclaim they do give a damn for the poor...

...Without a program of research and reform, the Federal tax must continue to fall most burdensomely on the great majority who are not really affluent—with potentially tragic political consequences...

...Some hint as to the way wealth is distributed in the U.S...

...Government...

...He can deduct the huge sums he pays in interest, and then he can get a second big deduction through rapid amortization...

...In 1954 and again in 1962, depreciation allowances were accelerated...

...The slice for the poor must be enlarged, at the expense of the "affluent...

...by 1967, we had only 25.9 million (13.3 per cent...

...The end result is forseeable: a revolt against all the costs of government that, in effect, becomes a revolt against the most needy in the nation...

...From 1947 to 1967—during two decades of "liberal" reform—the top fifth remained frozen between 40-43 per cent of the national income...

...Loose talk divides America into the poor and the affluent...

...This means that if one's annual income is under $3,335 for a family of four, one is poor...

...and taxes on hobby farming and on municipal bonds would bring the total that this study estimates to $14 billion a year...

...Unfortunately, no similar body of studies has dissected the affluent...

...Liberal scholars should long ago have begun digging into the hidden truth about concentrated wealth and power in America, even if—as a result—some foundations might shut them out...

...Government...

...For they indicate income after Federal taxes, omitting the local taxes that fall most heavily on the lowest income categories...

...The rich cannot be expected to reveal their riches...

...the next lowest fifth between 23.1-23.8 per cent...

...The great conglomerates that are rapidly rising to dominate the economy, creating huge new monopolies that somehow escape the legal restraints on monopolies, suggest a further concentration of concentrations in wealth holdings...

...Because great loopholes in the tax structure make a mockery of the myth that it is the rich who pay...

...in 1964, the corporate tax rate on declared profit was reduced by 7.7 per cent...

...and the top fifth from 45.5 per cent before down to 43.8 per cent after...

...The liberal consensus is that it is not enough merely to make a bigger pie...

...Furthermore, the coincidence of bottom class with bottom color has put a cutting edge on protest, converting economic combat into racial war...

...Second, the figures do not include expense account living...

...Although the Federal income tax is the fairest form of taxation, as compared with a tax on purchases, homes, or wages, in practice it is so inequitable to the average wage and salaried earner that he rejects it out of hand...

...For the cognoscenti there are more tax shelters than ever come to public view...

...The pecking order seems almost ordained by Hell—or Heaven, depending on the plight or power of the pecker...

...The income of the rich is also understated for three other reasons...

...We have discovered poverty...

...the next lowest fifth between 17-18.1 per cent...

...There is the capital gains tax with its maximum (not minimum) of 25 per cent on profit from stock transactions...

...the second fifth moved from 11 per cent before to 11.5 per cent after...

...And for the housewife who buys a hi-fi, how much protection is it to know the true rate of interest in a small print contract that compels her, in default of installment payments, to surrender not only the hi-fi but all the other items she ever bought from the same seller, right down to and including the kitchen sink...

...in 1967 notes that putting an end to the investment tax credit would secure more than $2 billion a year...

...For "aspirations have outrun performance," continues Tobin...

...The top 5 per cent does even better, with 15.3 per cent of the income in 1967...

...the fourth fifth from 22.6 per cent before to 23 per cent after...

...It can be subtle...

...There is a double loophole in real estate deals, where a man buys property with a small down payment and a big mortgage...

...One of the subtlest taxes imposed by mighty economic empires on the American Republic is embedded in the repeated decisions to build roads instead of railroads, to subsidize mass congestion instead of mass transportation...

...The power of monopoly, of course, is not always as blatant as in the above cases...

...If the Gross National Product (gnp) keeps growing, there can be more for everybody-top to bottom...

...Although there is evidence that the trend has continued into the 1960s, the hard facts about personal wealth are difficult to come by because the eyes of scholarship in academia and government have been fascinated by the lack of, rather than the surfeit of, wealth...

...While the figures on income suffer from many of the imperfections marring those on wealth, what does come through is that neither the pressure of unions for higher wages nor the allegedly progressive tax structure has redistributed income in America...

...had 38.9 million poor (22.1 per cent of the population...

...C. Wright Mills had to confess frustration in The Power Elite: "To list the names of the richest people of three generations, I have had to do the best I could with such unsystematic sources as are available...

...Moreover, the companies which build these systems earn an average of 12.5 per cent more than top American industry as a whole...

...Since he is also rising in rebellion against property taxes-the big base of educational funds in America—he is increasingly stuck with the innocent appearing sales tax that is, in reality, the most inequitable form of levy...

...Recently, Assistant Secretary of the Treasury Stanley Surrey decided to close the hole a bit by an administrative ruling that forbade the banks to apply the "bad debt" excuse on loans to the U.S...

...Now let's uncover riches...

...a decade later, in 1967, the top fifth took in 41.2 per cent...

...His first article, "1970: Year of Decision" (NL, February 17), focused on the next crucial national election...

...Planned obsolescence is still another aspect of monopoly levy on the consumer society, as are the sale and manufacture of underachieving, overpriced defense systems to the U.S...

...Corporations have been the benefactors of legislation and regulations written in the 1950s and 1960s to ease their tax "burdens...

...What was not predicted," however, argues James Tobin in the Brookings Institution study of current American problems and policies, entitled Agenda for the Nation, was that "after this performance poverty and economic inequality would be more acute and divisive social problems than at any time in this century save the depths of the Great Depression...

...and the bottom fifth between 4.5-5 per cent...

...the tax on securities held until death would add another $3 billion a year (using a 1963 calculation of the Senate Finance Committee...

...Third, they do not include the corporate income that enlarges the real power and wealth of the men who control the corporation, but is not listed as personal income because the title is in the legal entity not its true owner...

...He revealed that in 1953, when the top 1 per cent possessed 24.2 per cent of the country's personal wealth, they alone owned 32 per cent of U.S...

...First, the "before" and "after" Commerce Department figures cited above do not include income from capital gains, and many top corporation executives get stock options in lieu of salary...

...The sacred right to privacy is used to screen the dimensions of great wealth...

...Meanwhile top wealth in America, particularly in its corporate form, is dodging its tax and simultaneously imposing a private tax on the people through monopoly pricing...

...This successful battle against poverty was won without any attack on riches...

...His second piece, "Puncturing the Liberal Illusion," (NL, March 3), dealt with the failure of Democratic liberals to take control in Washington during the "Liberal Era...

...The profits on which corporations are taxed have only a random relation to the true income...

...Edwin Dale, writing in The New Republic, estimates that the reforms proposed by the Treasury of the last Administration would bring in about $3 billion...

...Yet, who are the affluent...

...Yet for the consumer of an item like a pill, how much protection does this represent against a drug monopoly with a 200 or 500 per cent markup on its product...

...But during the 1950s the share of this top 1 per cent rose steadily: to 24.2 per cent in 1953, 26 per cent in 1956, 28 per cent in 1961...

...Tyler is Assistant President of the International Ladies Garment Workers Union, and a veteran political analyst whose most recent book is The Political Imperative (Macmillan...

...and only 5.9 per cent of the incomes of those making $15,000 a year or more...

...And a social policy that intends to fund its programs by treating the nonaffluent as affluent is bound to be rejected by that 75-80 per cent of the population who are the victims of a misnomer...

...This is the third in a series of articles by Gus Tyler on the problems and prospects facing the Democratic parry following last fall's Nixon victory...

...A first item on the agenda for reform is—the facts...

...But that is only a beginning, since these reforms do not plug all holes...

...As a result, "The revolt against poverty has made the distribution of income, wealth and economic power a live social and political issue in the United States once again...

...A study of defense spending for complex electronic systems," reported the Miami Herald last month, "came to the shocking conclusion that they typically cost 200 to 300 per cent more than expected, are delivered two years late, and rarely perform as promised...

...The key question, as Tobin sees it, is: "Will the affluent majority explicitly tax itself to improve the lot of the poorest fifth of the population...

...Some of the attempts to protect the American consumer from monopoly practices appear laughable when measured against the assault...

...If family, instead of personal, ownership were the criterion, the concentration would be still greater, since a smaller percentage of families own an even larger percentage of the wealth...

...Why do the facts destroy the fantasy...

...the third fifth from 16.3 per cent before to 16.8 per cent after...

...The latest hike in crude oil prices, in amounts ranging from five to 20 cents a barrel, illustrates the point...

...restoration of the old corporate tax rate would add about $2.7 billion a year (using 1967 corporate profits...

...A few more facts might fan a useful political fury for future liberal campaigns...

...Consequently, the truly affluent—hiding within the vague, vast majority of "the affluent"—have not only been avoiding their share of the tax for the poor but have actually been increasing their share of both the income and the wealth of America...

...In 1966, New York City turned to lending institutions to borrow money under a law that calls for competitive bidding...

...Indeed, that has been the American way for the last generation...

...9.4 per cent of those earning $2,000-$4,000 a year...

...This alone, it is estimated, will bring an additional $100 million a year to Uncle Sam...

...In 1957, the top one-fifth of the families reaped 40.5 per cent of the national income...

...The political power of oil has made it possible for this industry to tax the American people while refusing to pay its share of the taxes to the American people...

...In fact, bad debts are under 1 per cent...

...the expense account income that does not appear as income...

...For a while, there was a trend toward redistribution of income and wealth in the United States: from 1929 to 1949, when the ownings of the top 1 per cent declined from 36.3 per cent of the country's total personal wealth to 20.8 per cent...

...government bonds, 76 per cent of corporate stocks, and 100 per cent of all state and local (tax-free, of course) bonds...

...The scarcity of hard, piercing and continuing material on income and wealth in America represents an information gap for which the liberals are largely responsible...

...the next lowest between 11.7-12.6 per cent...

...In his more recent work, The Rich and the Super-Rich, Ferdinand Lundberg has had to make a similar confession: "For precise figures it would be necessary to get certified copies of net worth, which (not being voluntarily proffered) could be obtained only in the unlikely event of a congressional subpoena with the acquiescence of the Supreme Court...

...The oil companies can do this because they operate in a protected market...

...These decisions, with their high cost in money and health, are political decisions urged on by the economic influence of the auto, oil, and construction industries...

...Accordingly, we are 13 per cent poor and 87 per cent affluent...

...Liberals in government should long ago have demanded a well-financed congressional investigation into the same terra incognita, and should have insisted that appropriate government agencies report regularly on income and wealth...

...Ever since Michael Harrington opened the eyes of America to the poor in its midst, the nation has been deluged with poverty studies: how many, who, where, why...