AFSCME 3357-HOF'S BLOG

Paul Krugman on the top .1%

Paul Krugman, writing for the New York Times today, goes off on the favorable tax treatment given to the top 1/1000th of the income earners, the top .1%. For the period ending in 2005, income for the bottom 99.9% went up 21%. Income for the top .1% went up 400%. The top .1% takes home 50% of all of the capital gains, which are, of course, taxed at a much lower rate than regular income. As to the Republicans' "job creator" argument on why rich people shouldn't be taxed more, here's what Krugman has to say:

For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.

Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door.

Meanwhile, the economic crisis showed that much of the apparent value created by modern finance was a mirage. As the Bank of England’s director for financial stability recently put it, seemingly high returns before the crisis simply reflected increased risk-taking — risk that was mostly borne not by the wheeler-dealers themselves but either by naïve investors or by taxpayers, who ended up holding the bag when it all went wrong. And as he waspishly noted, “If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare.”

I couldn't have said it better myself. (Okay, I couldn't have said it that well, that's why I quoted it. Happy now?) For a marignally-related video, how about a trailer for a movie about another wise guy named Paul?