Noting the recent and dramatic rise of citizen participation in our democracy here in the United States, it is interesting to look back to the beginning of the IceSave crisis. Is this perhaps a taste of what's to come in the US? Iceland's meltdown began in 2008 and the country has been a cauldron of political participation ever since. This article by Deena Stryker, writing for the Daily Kos, "Iceland's On-Going Revolution," is an excellent brief summary of the lesson of IceSave.
It was the so-called IceSave accounts, offered by private banks based in Iceland, that precipitated bankruptcy for the small European nation. Many of these accounts were held by citizens of Great Britain and other countries, and were covered by questionable levels of deposit insurance. When the private Icelandic banks folded, and non-Icelandic account holders were at risk of losing their money, the British government and others promised their citizens reimbursement. How did these governments propose to pay for this reimbursement? They came after the government of Iceland to make good the bill. The government of Iceland took it to the voters, and the voters of Iceland said "Nei" by a whopping 93%.
It wasn't quite that simple, though... along the way, Iceland had what Stryker and others call a revolution. The country went through bankruptcy, change of government, referendum, criminalization of the bankers involved, and a revision of the country's consitution complete with citizen participation over the internet. As Stryker writes, the original deal would have required "each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back."
"What happened next," Stryker continues, "was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions."
The fallout from the IceSave crisis continues today. Just last month Johanna Sigurdardottir, Iceland's Prime Minister, announced that the new constitution will be voted on when the next Presidential elections take place in June 2012. And just yesterday a Reykjavik court ordered a former bank executive to repay EUR 16,624,415.12 to the now-defunct bank that used to employ him, which it will presumably use to help pay off its debts.
As I watch the daily Occupy updates posted to websites across our own country and observe ordinary US citizens become more and more emboldened to act, I wonder if we, too could go the way of Iceland's extraordinary populace and institute real, meaningful, citizen-driven reform.
Friday, November 4, 2011
Tuesday, October 11, 2011
So what about that 99%? The CBO's tables don't distinguish between the 1% and "the rest." It is simple, however, to create a new column in the table to represent that category.
At the bottom of this post is the CBO data for Average Pretax Household Income in 2007 Dollars and Average After-Tax Household Income in 2007 Dollars. A new column is added on the right for the "Bottom 99%." This figure is calculated by multiplying the Average Income for all American Households by 100 to get the Total Income for all American Households, then subtracting the Income for the top 1% to get the Total Income for the Bottom 99% of American Households, then dividing the result by 99 to get the Average Income for the Bottom 99% of American Households. Again, if your eyes are bugging, here's a chart.
The average pretax income for the bottom 99% of American Households in 2007 was $78,051. That's nothing to sneeze at, but it's certainly not excessive. Most people can relate to a figure like that. It's a figure attainable through hard work and ethical standards of conduct. It's a figure you can send your kids to college on. It's a figure that can sustain a modest retirement fund.
After paying Uncle Sam, that same household had $63,841 left over. That household's tax burden was 18% of household income in 2007, down from 21% in 1979. Again, the bottom 99% might feel fortunate that its tax burden went down by 3% during this period, but recall that the tax burden for the top 1% went down by 7% during the same period. In other words, while its income was soaring, the tax burden for the top 1% went down two and a third times more steeply than the tax burden for the bottom 99%, whose income trend remained relatively flat.
How flat is that income trendline for the 99%? Flat enough you could sail a boat on it... a boat that's going through some choppy water at the moment and when you do the math it looks like we really are - all 99% of us - in that boat together.
At the bottom of this post is the CBO data for Average Pretax Household Income in 2007 Dollars and Average After-Tax Household Income in 2007 Dollars. A new column is added on the right for the "Bottom 99%." This figure is calculated by multiplying the Average Income for all American Households by 100 to get the Total Income for all American Households, then subtracting the Income for the top 1% to get the Total Income for the Bottom 99% of American Households, then dividing the result by 99 to get the Average Income for the Bottom 99% of American Households. Again, if your eyes are bugging, here's a chart.
The average pretax income for the bottom 99% of American Households in 2007 was $78,051. That's nothing to sneeze at, but it's certainly not excessive. Most people can relate to a figure like that. It's a figure attainable through hard work and ethical standards of conduct. It's a figure you can send your kids to college on. It's a figure that can sustain a modest retirement fund.
After paying Uncle Sam, that same household had $63,841 left over. That household's tax burden was 18% of household income in 2007, down from 21% in 1979. Again, the bottom 99% might feel fortunate that its tax burden went down by 3% during this period, but recall that the tax burden for the top 1% went down by 7% during the same period. In other words, while its income was soaring, the tax burden for the top 1% went down two and a third times more steeply than the tax burden for the bottom 99%, whose income trend remained relatively flat.
How flat is that income trendline for the 99%? Flat enough you could sail a boat on it... a boat that's going through some choppy water at the moment and when you do the math it looks like we really are - all 99% of us - in that boat together.
Monday, October 10, 2011
Where did this division between the 1% and the 99% come from, anyway? Turns out it originates from our government itself. The Congressional Budget Office (CBO) is a governmental agency charged with providing "objective, nonpartisan, and timely" economic analyses to Congress. It is staffed primarily by economists and public policy analysts, about 75% of whom have advanced degrees in their fields. This and other information about the CBO can be found on its website at www.cbo.gov.
The CBO tracks a variety of economic trends over time and presents the data in tabulated and report format for anyone to ponder. You don't even have to be a citizen of the United States to have access to this vast collection of economic and social data. For the purposes of dividing household income and tax information into meaningful categories, the CBO divides all American households into quintiles, or fifths, and then further divides the top quintile (i.e. the top 20%) into the top 10%, the top 5% and, you guessed it, the top 1%.
In its 2010 collection of tables, located at http://www.cbo.gov/publications/collections/tax/2010/all_tables.pdf, the CBO presents a summary of Average Pretax Household Income from 1979 to 2007 in 2007 Dollars. While the average pretax household income for all American households went from $63,400 to $96,000 during this period, an increase of 51%, the average pretax household income for the top 1% of American households went from $550,000 to $1,873,000 during the same period, an increase of 240%. In other words, although everyone's income increased to some degree, the income of the top 1% increased much more steeply.
If your eyeballs are twitching from reading too many numbers, these graphs presented by Forbes columnist E.D. Kain in America's Vanishing Middle Class, and originally appearing in Dave Gilson and Carolyn Perot's article It's the Inequality, Stupid: Eleven charts that explain what's wrong with America in the March/April 2011 issue of Mother Jones, provide an elegant visual. Income trends for 80% of America's families are virtually flat. Even the top 20%, taken as a whole, shows only a modest increase, something most Americans can easily stomach... the potential for prosperity is, after all, one element of the American Dream. What's harder to stomach is the trendline for the top 1%, which is so out of balance with the rest that it skews the scale.
The graph on the right shows the same numbers in terms of shares of the pie... the top 1% got massively bigger pieces of the pie during this period, while the bottom 80% saw their slices decrease in size.
At the same time, the balance of the tax burden as a percentage of household income also shifted. The average tax burden for all American households went from 22% in 1979 to 20% in 2007, an overall decrease of 2%. Sounds great - all Americans are paying less in tax as a percentage of their household income. But the tax burden for the top 1% went from 37% to 30% during the same period, an overall decrease of 7%. In other words, the tax burden on the top 1% decreased three and a half times more steeply than the tax burden on the average Joe. Not only are the so-called super-rich taking a greater share of the pie, they're getting better at keeping every crumb they can. The average American household, on the other hand, continues to contribute its fair share of crumbs to the common good. That's what pisses people off.
The CBO's numbers don't distinguish between the 1% and the 99%. Does that mean the Occupy protesters should really be chanting "We are the 80%"? That just doesn't have the same ring to it... stay tuned.
The CBO tracks a variety of economic trends over time and presents the data in tabulated and report format for anyone to ponder. You don't even have to be a citizen of the United States to have access to this vast collection of economic and social data. For the purposes of dividing household income and tax information into meaningful categories, the CBO divides all American households into quintiles, or fifths, and then further divides the top quintile (i.e. the top 20%) into the top 10%, the top 5% and, you guessed it, the top 1%.
In its 2010 collection of tables, located at http://www.cbo.gov/publications/collections/tax/2010/all_tables.pdf, the CBO presents a summary of Average Pretax Household Income from 1979 to 2007 in 2007 Dollars. While the average pretax household income for all American households went from $63,400 to $96,000 during this period, an increase of 51%, the average pretax household income for the top 1% of American households went from $550,000 to $1,873,000 during the same period, an increase of 240%. In other words, although everyone's income increased to some degree, the income of the top 1% increased much more steeply.
If your eyeballs are twitching from reading too many numbers, these graphs presented by Forbes columnist E.D. Kain in America's Vanishing Middle Class, and originally appearing in Dave Gilson and Carolyn Perot's article It's the Inequality, Stupid: Eleven charts that explain what's wrong with America in the March/April 2011 issue of Mother Jones, provide an elegant visual. Income trends for 80% of America's families are virtually flat. Even the top 20%, taken as a whole, shows only a modest increase, something most Americans can easily stomach... the potential for prosperity is, after all, one element of the American Dream. What's harder to stomach is the trendline for the top 1%, which is so out of balance with the rest that it skews the scale.
The graph on the right shows the same numbers in terms of shares of the pie... the top 1% got massively bigger pieces of the pie during this period, while the bottom 80% saw their slices decrease in size.
At the same time, the balance of the tax burden as a percentage of household income also shifted. The average tax burden for all American households went from 22% in 1979 to 20% in 2007, an overall decrease of 2%. Sounds great - all Americans are paying less in tax as a percentage of their household income. But the tax burden for the top 1% went from 37% to 30% during the same period, an overall decrease of 7%. In other words, the tax burden on the top 1% decreased three and a half times more steeply than the tax burden on the average Joe. Not only are the so-called super-rich taking a greater share of the pie, they're getting better at keeping every crumb they can. The average American household, on the other hand, continues to contribute its fair share of crumbs to the common good. That's what pisses people off.
The CBO's numbers don't distinguish between the 1% and the 99%. Does that mean the Occupy protesters should really be chanting "We are the 80%"? That just doesn't have the same ring to it... stay tuned.
Subscribe to:
Comments (Atom)