Taxes and Disparity in

America By Floyd SaundersAuthor of Figuring Out Wall Street

and Family Financial Freedom

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our

passions, they cannot alter the state of facts and evidence . . .”

– John Adams

If Trickle Down Economics and Tax Cuts Worked

“Job Creators” would expand jobs and the economy would grow, creating more tax revenues.

Then personal income would increase right?

Let’s see, what happened. . .

Changes in After-Tax Income

Most of the income gains occurred at the top, so where are the jobs?

Wealth and Income in America

• 83% of U.S. stocks are owned by 1 of the population

• The Top 10% earn 50% of the national income

• The Top 1% own two times of the wealth compared to 15 years ago.

• 66% of income growth between 2000 and 2007 went to the top 1%.

• The # of millionaires increased 16% in 2009 to 7.8 million This is not a bad thing by the way.

Except for wealth does not trickle down

Small Business Millionaires?

50% of the top income earners are in fact investors and hedge fund owners.

Less than 2% of small business owners have incomes over $250K

Tax Cuts and Job Creation

Job Growth After Tax Cuts

Not Fair! You could say this is not sufficient time for the tax cuts to take effect and have the job creators hire people!

The Goal of the Bush Tax Cuts was to create more jobs, how did that work out?

Employment 2003 to 2012

Unemployment stayed low until the recession of 2008

But what about the promised Job Growth?

Jobs

Eisenhower

Kennedy/Johnson

Nixon/Ford

Carter

Regan

Bush

ClintonBush

Bush created new jobs in his first term right?

Jobs under Clinton = 22.7 million new jobs. Under Bush = 1.08 million net new jobs.

Jobs Created by Small Businesses

Larger employers, hire a larger % of workers

Taxes In America

What is a fair share of taxes to pay?

So Who Pay Taxes In America?

Let’s start with who does not pay taxes, the now famous 47%

The 47% Who Don’t Pay Federal Income Tax

82 % Pay Payroll & Income Taxes

18% of Americans Pay No Tax

Who Pays Taxes?

Average Income and Taxes

Do Corporations Pay Their Share?

Profits since the ‘08 recession up Taxes paid down

The 10 most profitable U.S. companies paid an average federal tax rate of 9% in 2011.

Taxes Paid By The Most Profitable U.S. Companies

*Source: NerdWallet Study, July 2012

GE 5% tax rate, IBM 1%,ConocoPhillips 7%Wells Fargo 14%Wal-Mart 19%JPMorganChase 14%Microsoft 11%Apple 11%Chevron 4%Exxon Mobile 2%

Income Disparity in America

“Growth becomes more fragile” in countries with high levels of inequality like the United States - Jonathan D. Ostry of the International Monetary Fund

US Income Distribution Top 1% vs. 90% Average Income 1917 to 2009

Fun (or not so Fun) Facts A rising tide does not necessarily lift all ships.

• Forbes 400 richest Americans have a combined net worth is $1.7 trillion– or the combine yearly household income of

more than 64 million Americans.• Between 1979 and 2007

– the top 1% of households doubled their share of pretax income

– while the share of the bottom 80% fell. (CBO)

Inheritance and Estate Taxes

So is inheritance tax an issue for most of us?

1. Spend Less Than You Make

2. Pay Yourself First

Two Rules to Live By

Reference Material

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