This headline may not directly deal with illegal aliens, but there are links as well we know, such as the richest of the rich benefit the most from massive illegal aliens while the middle class and poor suffer as taxpayers and through jobs being taken away and wages stagnating or being reduced, and job benefits reduced or cut because of the unfair competition, not to mention losses suffered in public education, health care and in other ways.

The richest of the rich may hire illegal aliens cheaply as gardeners, housekeepers or nannies, and/or as low-wage workers at companies they head as CEO's. I'm sure there are more ways members here can link this story to illegal immigration.


http://newsobserver.com/nation_world/st ... 9176c.html

Tax cuts help richest of the rich

By DAVID CAY JOHNSTON, The New York Times

When F. Scott Fitzgerald pronounced that the very rich "are different from you and me," Ernest Hemingway's famously dismissive response was, "Yes, they have more money." Today he might well add: much, much, much more money.
The people at the top of the money pyramid have so prospered in recent years that they have pulled far ahead of the rest of Americans, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year.

Call them the hyper-rich.

The Bush administration tax cuts stand to widen the gap even more between the hyper-rich and the rest of America. The merely rich, making hundreds of thousands of dollars a year, will shoulder a disproportionate share of the tax burden.

Not-so-exclusive club

The hyper-rich are not just a few Croesus-like rarities. Draw a line under the top 0.1 percent of income earners the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more.

The average income for the top 0.1 percent was $3 million in 2002, the latest year for which averages are available. That number is two and a half times the $1.2 million, adjusted for inflation, that group made in 1980. No other income group rose nearly as fast.

The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. The share of income earned by the rest of the top 10 percent rose far less, and the share earned by the bottom 90 percent fell.

Next, examine the net worth of American households. The group with homes, investments and other assets worth more than $10 million comprised 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent.

The tax advantage

President Bush said during the third election debate last October that most of his tax cuts went to low- and middle-income Americans. In fact, most 53 percent will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. More than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers.

The Times set out to create a financial portrait of the very richest Americans, how their incomes have changed over the decades and how the tax cuts will affect them.

The Treasury Department uses a computer model to examine the effects of tax cuts on income groups but does not look in detail fine enough to differentiate among those within the top 1 percent.

To determine those differences, The Times relied on a computer model based on the Treasury's. Experts at organizations representing a range of views, including the Heritage Foundation, the Cato Institute and Citizens for Tax Justice, said the projections were reasonable. The Treasury Department said through a spokesman that the model was reliable.

The analysis found the following:

* Under the Bush tax cuts, the 400 taxpayers with the highest incomes a minimum of $87 million in 2000, the last year for which the government will release such data now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.

* Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000.

* The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by this tax.

The analysis examined only income reported on tax returns. The Treasury Department says that the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes. So the gap between the very richest and everyone else is probably much larger.

President Reagan signed tax bills that benefited the wealthiest Americans and also gave tax breaks to the working poor. President Clinton raised income taxes for the wealthiest, cut taxes on investment gains and expanded breaks for the working poor.

Bush eliminated income taxes for families making under $40,000, but his tax cuts have also benefited the wealthiest Americans far more than his predecessors' did.

The Bush administration says that the tax cuts have made the tax system more progressive, shifting the burden slightly more to those with higher incomes. Still, an IRS study found that the only taxpayers whose share of taxes declined in 2001 and 2002 were those in the top 0.1 percent.

But a Treasury spokesman, Taylor Griffin, said the tax system is more progressive if the measurement is the share borne by the top 40 percent of Americans rather than the top 0.1 percent.

The Times analysis also shows that over the next decade, the tax cuts Bush wants to extend indefinitely would shift the burden further from the richest Americans. With incomes of more than $1 million or so, they would get the biggest share of the breaks, in total amounts and in the drop in their share of federal taxes paid.

What it all means

Although most economists recognize that the richest are pulling away, they disagree on what this means. Those who contend that the extraordinary accumulation of wealth is a good thing say that while the rich are indeed getting richer, so are most people who work hard and save. They say that the tax cuts encourage the investment and the innovation that will make everyone better off.

But some of the wealthiest Americans, including Warren Buffett, George Soros and Ted Turner, have warned that such a concentration of wealth can turn a meritocracy into an aristocracy. That would stifle economic growth by putting too much capital in the hands of inheritors rather than strivers and innovators.

Speaking of the increasing concentration of incomes, Federal Reserve Chairman Alan Greenspan warned in congressional testimony a year ago, "For the democratic society, that is not a very desirable thing to allow it to happen."