The Oligarch Tax Bracket: How The Tax Rate For The Wealthiest 400 Americans Plunged From 27% To 17%

Tyler Durden's picture

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

I never liked the saying: “We are the 99%.” While admittedly catchy and effective as a slogan, I think it is ultimately divisive and counterproductive. The reason I say this is because the statement itself alienates much needed allies for no good reason.

 

In a country with a population of 320 million, the 1% represents 3.2 million people, which is a pretty big number. While the 1% certainly have far superior material lives compared to the 99%, that doesn’t mean a particularly large percentage of them are thieves, cronies or oligarchs. In fact, it behooves people interested in transitioning to another paradigm to court as many of them as possible to the cause. It is very useful to have well meaning people with resources and connections on your side. To blithely assume there aren’t plenty of potential allies from a pool of 3.2 million is committing strategic suicide.

 

– From the post: Charting the American Oligarchy – How 0.01% of the Population Contributes 42% of All Campaign Cash

Much of my focus throughout 2015 was on the pernicious influence of the 0.01%, i.e., the American oligarchy. Indeed, nothing would please oligarchs more than to define a struggle as the 99% vs. the 1% in order to shift attention away from the real root of the problem, themselves.

As I’ve mentioned time and time again, 99% of the 1% doesn’t bribe politicians, write tax laws, or influence U.S. foreign policy. To discover the real players, the people who drive American domestic and foreign policy and make all of the important decisions, you only need to focus on a hand full of people.

Today, the New York Times published an important article that proves the point. Here are the key paragraphs in the entire lengthy article:

The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups.

 

 

From Mr. Obama’s inauguration through the end of 2012, federal income tax rates on individuals did not change (excluding payroll taxes). But the highest-earning one-thousandth of Americans went from paying an average of 20.9 percent to 17.6 percent. By contrast, the top 1 percent, excluding the very wealthy, went from paying just under 24 percent on average to just over that level.

This is merely a reflection of what I’ve been saying throughout the Obama Presidency. That he is nothing more than an oligarch-coddling puppet masquerading as a progressive.

As you can see, tax rates for the non-oligarch 1% actually went up during his Presidency, while oligarch tax rates declined substantially. This is precisely what Obama will be remembered for by history, bailing out and protecting the 0.01%, at the expense of everyone else.

We need to grow up and understand the battle lines clearly in order to win. It is demonstrably not the 99% vs. the 1%. In reality, it’s the oligarchy and the system they created vs. everyone else.

I suggest you read the entire article, but here are a few of the more compelling segments:

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means.

 

In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes, including Mr. Loeb and Mr. Cohen, who give heavily to Republicans, and the liberal billionaire George Soros, who has called for higher levies on the rich while at the same time using tax loopholes to bolster his own fortune.

 

All are among a small group providing much of the early cash for the 2016 presidential campaign.

 

Operating largely out of public view — in tax court, through arcane legislative provisions and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans.

 

The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups.

 

The ultra-wealthy “literally pay millions of dollars for these services,” said Jeffrey A. Winters, a political scientist at Northwestern University who studies economic elites, “and save in the tens or hundreds of millions in taxes.”

 

The wealthy can also avail themselves of a range of esoteric and customized tax deductions that go far beyond writing off a home office or dinner with a client. One aggressive strategy is to place income in a type of charitable trust, generating a deduction that offsets the income tax. The trust then purchases what’s known as a private placement life insurance policy, which invests the money on a tax-free basis, frequently in a number of hedge funds. The person’s heirs can inherit, also tax-free, whatever money is left after the trust pays out a percentage each year to charity, often a considerable sum.

 

Among tax lawyers and accountants, “the best and brightest get a high from figuring out how to do tricky little deals,” said Karen L. Hawkins, who until recently headed the I.R.S. office that oversees tax practitioners. “Frankly, it is almost beyond the intellectual and resource capacity of the Internal Revenue Service to catch.”

 

The combination of cost and complexity has had a profound effect, tax experts said. Whatever tax rates Congress sets, the actual rates paid by the ultra-wealthy tend to fall over time as they exploit their numerous advantages.

 

From Mr. Obama’s inauguration through the end of 2012, federal income tax rates on individuals did not change (excluding payroll taxes). But the highest-earning one-thousandth of Americans went from paying an average of 20.9 percent to 17.6 percent. By contrast, the top 1 percent, excluding the very wealthy, went from paying just under 24 percent on average to just over that level.

There you have it.

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froze25's picture

Looking like a straight line down right now.

stocktivity's picture

Can someone wake up Janet & the boys and tell them it's 3:40 and the dow is down 100.

LowerSlowerDelaware_LSD's picture

Flat tax of 10%.  Make EVERYONE pay "their FAIR SHARE."  No more 50% of tax filers paying ZERO.  Everyone should have to pay for the shit that they vote for. No tax for corporations as it simply passes the cost on to consumers.  In theory, it is NOT the gubmint's money.

SHRINK the gubmint by 90% to its constitutionally mandated size and purpose.

Mayer Amschel Rothschild's picture

If one is subject to taxation, then they aren't the rich you're looking for. Think tax-free foundations per World Order by E. Mullins.

Yes We Can. But Lets Not.'s picture

Uncle Warren wants to pay higher taxes, so this news of lower tax rates for oligarchs will bum him out.

847328_3527's picture

"Affluenza"?

 

During Ethan Couch's trial in juvenile court, a psychologist testifying on his behalf said the teenager was afflicted with "affluenza," a condition where he was so spoiled by his wealth that he could not tell the difference between right and wrong.

 

http://www.msn.com/en-us/news/crime/texas-affluenza-teen-and-his-mother-...

 

Well, at least he's not blaming the bad weather or climate change.

RaceToTheBottom's picture

Does his lawyer have a "Briefcase indicator"?

 

Cognitive Dissonance's picture

What use is power if you don't actually use it? The 0.01% are just addicted to power as the average consumer is to.....well, consumerism.

While money and power can't buy happiness, it sure does kill a lot of pain.

Soul Glow's picture

Money makes the soul complacent.

froze25's picture

Big Pharma has a pill for that. Only catch is that it might make you have a psychotic break and do a mass shooting or commit suicide or both.

Cognitive Dissonance's picture

And this is a problem?  /sarc

The health sickcare 'industry' increasingly rationalizes it's invasive procedures and drug protocols as a necessary but difficult compromise and an ultimate good. After all, with a population conditioned to believe one MUST remain alive regardless of how poor their standing of living has become, it is totally acceptable to grasp at any hope offered not to die.....an outcome as natural as birth and breathing.

Someone is mentally ill when they have declined to the point where they are taking drugs to counter the side effects from the side effects from the side effects of drugs.

<Not to mention the opportunities afforded the CIA et al to induce people into actions clearly not in their best interest. Can you say SSRI?>

chunga's picture

The pharma marketers are real pigs too.

Their wonder drugs have 2 names...one of them just rolls off the tongue and sounds healing and soothing.

The other name they always include is the chemical name like aluminmuglab cyclate that reminds oh yeah, this shit is super expensive.

motorollin's picture

I like how this article completely skips over Bush 2. Look at the chart for fuck's sake. When was the first time the tax rate on these .0001%'ers fell below 20?

surf0766's picture

But Bush.. there ya feel better now

swamp's picture

He will be remembered for funding his Islam brithers, Obamacare disaster, his illegal alien status, his transexual 'wife', his adopted daughters, his far reaching executive dictatorship style executive orders, for his Iran deal, for rightfully cowering to the witld on an about face re Syria, for his IRS blunders and targeting, E T C.

Yes We Can. But Lets Not.'s picture

I hope you are right and that he is instead not remembered for what happens in the next 12 months....

surf0766's picture

FLAT TAX everyone and every corp

aliki's picture

did we just slap fresh sanctions on iran?

surf0766's picture

They can now only build 6 nukes per year

aliki's picture

U.S. Said to Plan Sanctions Tied to Iran's Missile Program - Bloomberg
http://www.bloomberg.com/news/articles/2015-12-30/u-s-said-to-plan-sanctions-tied-to-iran-s-missile-program

brown_hornet's picture

Overlay that chart on who had control of congress. Why is the POTUS always blamed?

chunga's picture

All politicians blow.

Trump in 2008: Hillary Clinton would make a "great" president

http://www.cbsnews.com/news/trump-in-2008-hillary-clinton-would-make-a-g...

Hillary is smart, tough and a very nice person, so is her husband. Bill Clinton was a great president. They are fine people.

surf0766's picture

Shit all the Trumpbots will be on your ass now. Just like they were when someone went after Barry.

 

chunga's picture

Who cares. Increasingly, I find that voters really annoy me. They are a big part of the problem.

Lumberjack's picture

I too have found numerous examples of Trump working with Soros and others. I do not trust him or for that matter anyone else runnning.

RaceToTheBottom's picture

The mere act of running for presidents provides enough data that they are the wrong person for the job.

falak pema's picture

Obama is just following the Neo-con neo-liberal red/blue mandate to the T...in terms of Oligarchy rule.

"I didn't make it; but I'll not betray it."

Thats entertainment!

Seasmoke's picture

Warrens Secretary Is going to be pissed off after reading this. Give that man a Coke in Yeman. 

Schroedingers Cat's picture

He'll be remembered as the "Cosby" President.  He promised hope and change, instead he brought wars, bailouts, boondoggles, drones, bulk surveilance and LIES.  Obama RAPED the country.

BarnacleBill's picture

This sort of article usually prompts some criticism of "offshore" tax havens, whose facilities are usually used by rich people to minimise taxs in their homelands. As a former "offshore" professional, as well as a former Manager and Director of the Cayman Islands Chamber of Commerce, I like to try to keep the criticism in perspective by diverting the blame to where it belongs - namely, the legislators elected by the taxpayers in those same homelands.

One of my most-read posts on the topic is a short piece written in August 2012, when Mitt Romney was running for President of the US. God forbid that I should defend the man from anything at all, and I didn't do that. But I did defend the tax-havens themselves. The defence still holds good.

http://barlowscayman.blogspot.com/2012/08/in-defence-of-offshore-tax-hav...

Bill of Rights's picture

Who cares it's not like we're gonna do anything about it.

And they know it

InnVestuhrr's picture

ALL taxes based upon a % of income, value, earnings, assets, etc are IMMORAL, INEQUITABLE, and UNCONSTITUTIONAL, so I salute EVERYONE who manages to escape plunder by the regime lords - HURRAH for them !!

ZangotheMagnificent1's picture

The rich pay 15% at most sometimes next to nothing. I used to be a banker and saw the tax returns. The Democrats are fools.

Chris88's picture

Oh no! Wealthy people keep more of their money?  If only the government got it instead, so they could piss through it all in 3 days for another welfare program or a stupid ass war.  Oh the humanity!  Damn successful people, such a terrible thing.

SMC's picture

Minimize income, maximize wealth.

darteaus's picture

Flat tax + no deductions = Equality of taxation.

Burticus's picture

What part of (Article 1, Section 9) "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken" do people not understand.

You cannot have federalism (balance of power with the states) when FedGov can tax individuals and use their money to puppeteer their state legislatures.

SHED the FED, repeal the 16th & 17th amendments, eliminate the income tax & IRS and shut down FedGov!

GhostOfDiogenes's picture

"SHED the FED, repeal the 16th & 17th amendments, eliminate the income tax & IRS and shut down FedGov!"

Pretty sure you can shred 11-15 too boy yo.

gcjohns1971's picture

When, by the article's own statement, exclusive deals with government are the method oligarchs favor to accelerate their wealth accumulation relative to the rest of us....

...why would anyone think that a resort to that same exclusive-double-dealing government would earn the little guy a better outcome????

RiverRoad's picture

"The rich don't pay taxes; the little people pay taxes."

     Leona Helmsley

    She went to jail for saying that.

zerohedgeJUNKIE's picture

FLAT TAX 10% and NO INDIVIDUAL INCOME TAX return to SOUND MONEY.