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Here Is The "Wealth Effect": Wealthiest 400 Americans Accounted For 16% Of All Capital Gains
Hidden deep inside the IRS' most recent annual report focusing on just the Top 400 Individual Tax returns, titled "The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992-2009" we find the definitive confirmation of just where the Fed's Wealth Effect has gone. As seen in the highlighted cell on the table below, just the top 400 individual tax returns account for a whopping 16% of the net Capital Gains tax paid in the US in all of 2009 (the most recent year recorded).
Putting this number in context, since 1992 the average percentage of the total capital gains attributable to the top 400 earners was "only" 8.69%. In 2009, or the year QE officially began, it was doulbe this or 16%.
One can't wait for the 2010 update... or the 2011, 2012, 2013 and so on - all those "other" years in which the Fed's "wealth effect" continued to benefit the capital gains of the Top 400...
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QE for the 0.01%
If you would have crawled out of the right ass when you where born you could have been one of them.
But you didn't...
safe to say none of us here did, probability-wise...
The rich get richer, the poor ge-in' poorer, the human race is becoming a disgrace!http://www.youtube.com/watch?v=Du_ouycoP1k
afrika bambata = nice!
What's the chance of one of the 400 adopting me? (sigh)
Is there an App for that?
The Omnipotent Federal Reserve.
Exhibit A: The events of 01/21/2008
On this day, markets around the world sold off whilst US markets were closed for Martin Luther King day. Two days later Société Générale announced they had just concluded unwinding several very large unapproved positions which they had discovered on their books. They believe these positions had been accrued by a single rogue trader, 31 year old Jerome Kerviel.
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Jerome Kerviel, a 31-year-old trader, has been blamed for causing $7.2 billion in losses, wiping out almost the entire annual profit at the second-largest French bank. He was on the run from police as of press time yesterday.
Société Générale found out about the fraudulent trades Saturday and was busy unwinding its enormous positions on Monday, possibly explaining the panicked sell-off in the European and Asian markets on a day when no important news was announced. The markets tumbled to historic lows.
The Fed chairman, Ben Bernanke, reacting to Monday's devastating market losses, held an emergency meeting of the Federal Open Market Committee and announced a three-quarters of a percentage cut to its key interest rate before the market opened Tuesday morning. The decision to cut rates in response to Monday's turmoil has angered some on Wall Street, who say it is outside the Fed's dual mandate to control inflation and spur economic growth.
"What Mr. Bernanke did was overreact and panic," the chief investment strategist at Raymond James, Jeffrey Saut, said.
"He clearly responded to Monday's sell-off and tried to bail out the stock market," an equity strategist for Miller Tabak + Co., Peter Boockvar, said.
On Monday, when the American markets were closed in honor of Martin Luther King Jr. Day, stock indices around the world plunged on the idea that America was headed into a recession and concerns that bond insurers were facing ratings downgrades and large write-offs.
Exacerbating Monday's sell-off, trading experts said, was the decision by Société Générale to unwind the enormous positions that Mr. Kerviel had amassed, a firesale of equity derivatives reportedly valued at as much as $74 billion.
While the American markets were closed during the global stock slide, the futures market was indicating that Tuesday would be a bleak day for American stocks, with the Dow Jones futures index falling 546 points, or 4.5%.
Prompted by the European and Asian meltdown and concern that Tuesday would result in a stock crash, the Fed hastily called a meeting Monday evening, where it decided to reduce the benchmark overnight lending rate to 3.5% from 4.25%. It announced the move before the markets opened Tuesday.
Despite the rate cut, the Dow fell 464 points, or about 5%, as soon as the markets opened, as trades that were already in the pipeline were executed. After a tumultuous day, the markets had rebounded, with the Dow down just 128 points, or about 1%.
Even though the markets didn't crash Tuesday, critics were frustrated by the rate cut, which they said interrupted the market's natural cycle.
"What Mr. Bernanke did was panic and cut rates in front of the opening, and never let the markets cleanse themselves on the downside," Mr. Saut said. "All the Fed is doing is putting off the inevitable. As sure as night follows day we are going to have a recession, and the longer they massage it and keep it from happening, the worse it will be."
Some on Wall Street are arguing that the economy is now too vast — it is estimated at $14 trillion and has seen an explosion in complicated financial instruments and global players — for Mr. Bernanke and the Fed to effectively manage market forces.
"Mr. Bernanke is too academic in his experience, he doesn't have the Rolodex and command that a real banker has," a managing director at Institutional Risk Analytics, Christopher Whalen, said. "What we need right now is leadership from the Street who says we know this asset class is taking some bullets, and here is how we fix it."
There is a division emerging between Wall Street pros critical of the Fed chairman and economists who say he is just doing his job.
"I think people are looking for scapegoats in a very difficult situation," a professor of economics at New York University who is co-author of several publications with Mr. Bernanke, Mark Gertler, said. "He was put in an extremely trying situation, hit with oil price shocks, a housing correction, and the subprime crisis all at the same time."
Mr. Gertler warns that the Fed cannot prevent a slowdown, only soften its blow, and that Wall Street's expectations may be too high. "There is a slowdown coming for factors that are beyond the control of the Fed; what the Fed can do is moderate the pace of the slowdown."
Still, many on Wall Street say that Mr. Bernanke was tricked into a historic rate cut that was based on a stampede mentality of frightened traders rather than actual economic information.
"There was no other reason for him to cut rates on Tuesday — the FOMC was scheduled to meet next week and there was no new economic data that had come out," Mr. Boockvar said.
"His temptation to cut rates is driven by market forces, not what is right for the economy," a managing director at Westwood Capital, Daniel Alpert, said of Mr. Bernanke.
The Federal Reserve did not return calls for comment.
In a statement, the French bank denied its operations caused Monday's worldwide panic, saying it had limited its trades to about 10% of trading volumes to minimize the impact on the markets.
"It's not possible that our covering operations contributed to the market's fall," the head of asset management at Société Générale, Philippe Collas, said.
In response to news of the fraud, the bank's chairman and CEO, Daniel Bouton, offered to resign; the board rejected the idea. It has announced plans to raise $8.1 billion in new capital to shore up its balance sheet.
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Ben Clusterfuck Bernanke
There IS a very real "400 Club" for the wealthiest 400 families, that's been around for 100 years.
Many are now dual-citizens. It's closer to 0.0001-0.01% (1 in 10,000 to 1 in 1,000,000) who benefit from QE the most.
And whenever you hear or read the expression "National Security" used in a sentence, you need to make the quick mental translation that they're talking about the interests, profits and security (of lifestyle maintenance) of these Elite American Oligarchs. When they're not using it as a CYA card, to protect the ass(ets) of some Gov power-players, who screwed up or did something illegal per the Constitution.
That's pretty fair... if you're one of those 400...
More than 400 heads rolled in 1789+ around France. Is time for a cleansing.
We must keep the status quo !!!
Gold to launch in 3, 2, 1......
gold to launch in 3...2...1..., er 3....2....1...., dammit, 3....2....1...., FFS, 3....2....1....
For crying out loud, Bernanke, let go of the rope
We need to get congress to lower the capital gains tax again! Think of how many more man servents and tennis coaches they could hire. JOB CREATORS!!!!!!
actually taxation being regressive, cap gains hurt the less affluent more and don't forget anyone in a decent position that can afford legit accountant that isn't writing off most of their expenses is not maximizing their money.
For the rest of us who've figured out that 'playing by the rules' is for suckas, there's always black market opportunities to make a taxfree buck. For the down and out, out of sight lower classes, selling off organs and bodyparts to the highest bidder. Got to think out of the box. Cheney should be overdue for a new heart soon.
if paying full taxes is playing by the rules, then the rules need to be broken. but not too much; eg Russia has a fair 12% across the board tax rate, yet last year Russian gov hardly collected taxes...i think 12% is about right for the good ol' USSA...
If you really wanted to make a difference, I was going to suggest harvesting organs from the 400 Club families.
But seeing that they don't have any hearts, but only "going concerns" for their reptilian brood/offspring, you wouldn't do so well -- given that the demand for Rectal Sphincters isn't keeping up with the supply.
"Cheney should be overdue for a new heart soon."
I nominate this guy as Doctor to the Elites
http://jafrianews.files.wordpress.com/2013/05/syrian-fsa-terrorist-eats-...
Coin clipping was great for the Roman Empire too, right?
The talking point from the party that wants to raise taxes will be -
Rich people got all these benefits - so it is only "fair" that they pay higher taxes.
So anyone making more than $200,000 should pay at least an extra 10%.
Then we can spend the money on stuff that helps buy votes and get us reelected.
the 400 ultra-high net worth referenced in above article hardly pay taxes at end of day. please don't let the liberty-wealth repression IRS thugs and taxation issues confuse you.
How did you determine this?
it's called 'business expenses'. the alleged 16% paid as per above is what actual percent of total tax paid by said 400? i'd say they paid no more than 18% of 'income' taxes adjusted. they are all in corps, llc's and trusts.
Really?
So the average had $92 million in capital gains - give me an example of how "business expenses" would reduce this in a significant way?
Do you even know what a capital gain is?
yes you're absolutely correct. i dont know what cap gains are. thank you for reminding me.
yet having typed that, if you adjust the cap gains paid (both over 1 year and short term gains) to the entire income tax paid...nevermind...
The 16% is the % of capital gains reported by the top 400 - it has nothing to do with the tax rate.
Maybe it would be a good idea to try and figure out what the table represents before you comment on it.
Give me a few examples of "business expenses" that can be used to offset long term capital gains?
Where do I put that on my schedule D.
i am not contesting the actual 16%. i am suggesting that that is relatively large slice of taxes paid pie by above 400.
Then you would be WRONG. It is right in the table. Maybe try looking at the headings and see what each represents.
If the top 400 had 92,644 in capital gains and this is 45.77% of their AGI
Then their total AGI is $202.4 million
So AGI subject to "regular tax rates" would be (202-92) $110 million.
Tax rate for 2009 = 35% on the income over $372,950; plus $100,894.50
So taxes on the amount not considered a capital gain would be $38 million.
Taxes on the capital gain would be $14 million
38 + 14 = 52 million in taxes paid.
Do you think paying $52 million dollars in taxes is a small amount?
That is over 25% in INCOME TAXES
I bet that is a HIGHER % than you paid - unless you made over $850,000 that is -
So they not only paid MORE than you in income taxes - but also paid a higher % of their income than you (and me too).
But they didn't pay enough? That's not fair?
Total Taxes as a Percentage of Income in 2011
Middle 20% (average income $42,000) paid 25.2% in taxes
Top 1% (average income $1.371 million) paid 29% in taxes
Good information - they really should include government transfer payments as "income"
The sad thing is - not only have "we" accepted the fact that the government TAKES 25-30% of our income - but instead of being mad about this - some fuck heads think that they should take more from someone else than they do now. TAX that other guy more and give me more fee shit has now become an acceptable social policy.
Sure it was always out there - but it was always sort of implied not stated directly.
The issue is - is it OK to build a country on higher taxes on the "rich" and more free shit for everyone else - and then try and say it is FAIR.
Who is the greedy person?
The guy that makes $10 million (built a business) and doesn't like paying 40% of his income in taxes -
or
The person that is too lazy to even hold down a job and demands the government give him more free stuff and doesn't think it is wrong to take it from someone else?
Nice try. We all know what guys like Buffet and Romney paid, or what Buffet's secretary paid.
The MLM (Multi-Level Marketing) Amway meeting is next door. Those people will lap up whatever dream or snake-oil you're peddling. Cause... They "WANT to believe".
29% in taxes on taxable income, not inclusive of write-offs, biz expenses and proper accounting (tricks).
they paid too much! as most do! at least Obama paid something like 22% for 2009 total taxes, if memory serves right.
AGI is difference of biz expenses, write-offs, etc.: adjusted, with help from acounting firm, it is nowhere near 35% of total $$$ for that fiscal year. but i'm wrong and you're right....
do you know the tax rate when you take 'profits' from your very own corp(s)? that's after you 'payroll' yourself for fiscal year...and that is just but one of many methods....don't ask how i know...
edit: also, think about what %age of AGI is undeclared in those offshore accounts, etc etc etc would you like a nice cold pitcher of IRS-kool-aide?
edit: i guess i need to be extra clear and not use any /s...do you think the wealthiest 400 don't offshore? do you think they don't expense their entire lives on their biz accounts? do you think the AGI reported is the real total #? put another way: i've never known an affluent person to pay more than 20% income tax, adjusted for accounting adjustments ;p
Sucka. They didn't earn that money fair and square to begin with.
Don't give me the fairness bullshit. I don't care what's fair. They have way more than the rest of the population and they're overdue for a culling. That's how it's done. Our kids, grandkids and so on will be better off and at some point nobody will even remember it happened. In the meantime, give peace a chance. The elite had it good for a long time. They're at a cyclical peak and the cards need to be reshuffled. Otherwise, no progression.
"Wealthiest 400 Americans Accounted For 16% Of All Capital Gains"
...so that means it's a solid recovery, right?
it means "recovery as intended" ... one for you, one for me ... two for you, one, two for me ... a thousand for you, one, two, three ...
In 1982 when the first edition of the Forbes 400 list was printed there were only 13 billionaires. Today's Forbes 400 is 100 percent Billionaires. There are many Billionaires left off the list because there is more than 400 of them. There is more than 1000 of them in America , so now you get the Billionaire issue to try to list them all.
NO WONDER BERNANKE COULD RETIRE...
HIS 400 FRIENDS WILL TAKE CARE OF HIS OLD DAYS EXTRA INCOME...
One of the major problems with this analysis is that the super rich don't usually have taxable income. They implement strategies like pledging capital holdings as collateral for large, low-interest loans to use for living expenses. They don't liquidate the investments that made them rich and thus rarely have a taxable event. This IRS studiy is part of the smoke-and-mirrors that politicians use to convince people that all you have to do to tax the rich is raise the upper rate a bit. The rich DO NOT have taxable income so raising the rate does nothing.
SO THE 400.. ARE... WHO ARE THEY?
THE 400 LUCKIEST GUYS IN THE STOCK MARKET !!
MUST BE. SURELY.
LOL
BS. If you assume that to be true, Congress would go along and pretend to raise taxes on the very wealthiest, but no--they throw a fit and go ballistic any time 'raising taxes on the rich is even mentioned.'
The Elite have a veritable army of SMEs (Subject-Matter Experts) in Taxation, Trusts and (offshore) LLC structures. Not to mention all those weird & whacky tax codes that their K-Street lobbyists got put in.
If they're not paying 40% in tax, they're getting a free ride. And I would NOT differentiate between Earned Income and Investment Income. If anything, I'd jack up the taxes on Speculation (holding for <6 months) to 50%. Then they might actually have an incentive for job creation, not job cutting.
They're selling Mortimer!
How much was actually income and not capital? Lets hope SOMEBODY points this stat out when they claim the rich pay way more tax than the general population. (Hint: Thats because they're making ALL the money)
In 2007, the rich received $500 billion in tax credits. Even during the last budget negotiations, the minuscule tax increase on the wealthiest was offset by so much pork tax credits that Obama should take credit for cutting taxes on the rich instead of claiming of raising them.
comment deleted. Oops, wrong site! No one cares here. What are you trying to sell.
All that free credit and only a 16% return? Com'on guys! your brokers can do better.
They will also take the biggest hits when the bubble eventually bursts.
warren?......Warren!.......WARREN?!?.........WAAARRENNN!!!
93% of the weath, income, bonds, stocks, properties, fine art, annuities, foundations, yachts, slaves, bunkers, saferooms, security services, media companies AND 16% of capital gains for which THEY DON'T Pay taxes, gosh I feel so fucking sad for them.