Household Wealth Falls by Trillions - Wealthy Really Retreating. Don't Raise Taxes.

Mr. President, the job you have is unenviable, but raising taxes on the wealthy, by essentially letting the Bush tax cuts expire, at this moment in history is like a body blow to the beleaguered upper 10% of the income ladder, who will just go further on a buying strike, if it keeps piling up. They've already been decimated - final figures may show they lost as much as 34%, ON AVERAGE, of their wealth in 2008 and 2009.

All the claims about 'but we'd just go back to the Clinton-era rates, under which we saw prosperity' are erroneous, as we didn't see such massive wealth destruction when Clinton was in office.

Apples and Oranges, Mr. President; Apples and Oranges.



http://www.nytimes.com/2009/03/13/business/economy/13wealth.html



Household Wealth Falls by Trillions

By VIKAS BAJAJ
Published: March 12, 2009

In the last few months, most Americans have felt poorer. Now they have the numbers to prove it.

The Federal Reserve reported Thursday that households lost $5.1 trillion, or 9 percent, of their wealth in the last three months of 2008, the most ever in a single quarter in the 57-year history of recordkeeping by the central bank.


The net worth of Warren E. Buffett, left, fell by $25 billion last year.

For the full year, household wealth dropped $11.1 trillion, or about 18 percent. Though the numbers do not yet reflect it, the decline in the stock market so far this year has probably erased trillions more in the country’s collective net worth.

The next biggest annual decline in wealth came in 2002, when household net worth fell 3 percent after the collapse of the technology bubble. The most recent loss of wealth is staggering and will probably put further pressure on the economy because many people will have to spend less and save more.


The fortune of Bill Gates fell by $18 billion, but he regained the top spot on the Forbes list of richest people.

Most of the wealth was lost in financial assets like stocks, which tumbled at the end of last year. The Standard & Poor’s 500-stock index, for instance, fell 23 percent in the fourth quarter. The value of residential real estate, the biggest asset for most families, fell much less — $870 billion, or about 4 percent.

Even the richest among us have become a lot poorer. This week, Forbes magazine published its list of the richest people in the world. At No. 1, Bill Gates, the founder of Microsoft, still had $40 billion to his name, but that was down $18 billion. The wealth of Warren E. Buffett, the investor whose company Berkshire Hathaway had a rare bad year, tumbled $25 billion, to $37 billion.

The loss of wealth is concentrated among the most affluent Americans, in large part because they own more stocks and bonds than the rest of the country. Only about 50 percent of households own stock, and many of them own relatively small sums in retirement accounts.

As a result of their greater wealth and higher incomes, the affluent tend to spend a lot more than their share of the population would imply. The top 20 percent of income earners spend more than the bottom 60 percent of income earners, according to calculations by Tobias Levkovich, the chief United States equity strategist at Citigroup.

“When their wealth is mauled, they are not particularly interested in spending,” Mr. Levkovich said.

The Fed report released on Thursday also showed that total borrowing and lending increased at an annual rate of 6.3 percent in the fourth quarter, mostly as a result of increased borrowing by the federal government to finance its operations and various bailouts of the financial system. The government’s borrowing increased at an annual rate of 37 percent.

But borrowing by households dropped 2 percent. Lending to businesses was up 1.7 percent. Recent surveys of loan officers by the Fed have shown that companies have been drawing down lines of credit that were established in the past, and that only a small fraction of the lending to the private sector is through new loans, which are much harder to obtain than in recent years.

 

Wow, first the rich get tax cuts during the GOOD years. Then we can't remove those tax cuts because the rich didn't bother to prepare for the BAD years. LOL.

Talk about socialism for the rich:eek:

 

Yeah, this is nothing but politics. When every form of tax goes down except income taxes, what is that called? It's called having higher taxes for the bottom 95% that depend on their income to make it!

Is that ever reported? Lamented? No.

 

Taxes on lower incomes were dropped dramatically under Bush. In fact, that's a big part of the problem. Nearly half of voters don't pay any federal income taxes, giving them little incentive to vote for responsible policies.

 

The only ones who CAN get a tax cut are the rich... they are the only ones who PAY income tax [significant and unfair amounts, anyway].

Does your handle indicate that you are still in college? If so, suggest you take an economics class. If not, get a book.

Then, become a Capitalist instead of looking for social hand outs. Your life will be richer.

 

Not quite.
Can't cite the source, but I distinctly remember reading that 37% of the populace currently don't pay income tax, and Obama's plan would change that to 48%.
How's that for insuring a voter base?

 

Not only that, but the top 20% of American income earners fuels 44% of domestic consumption.

Now, Obama does claim, correctly so, that in terms of income tax, only those making more than $250,000 per year will see a marginal rate income tax increase (from 35% to 39.6%) on ordinary income, but the capital gains tax and tax on dividends is also scheduled to rise (from 15% each under Bush to 20%), the federal government is levying a whole bevy of new fees and consumption taxes, and local units of governments keep raising property taxes and other rates to keep their inefficient enterprises going.

 

Is this a serious post?

Maybe we should go back to feudal times when the poor paid all the taxes and the rich paid none?

It's just tax breaks expiring, there is no real tax hike. Even without the breaks, taxes on the rich are less than they were 20-30 years ago.

Wow, you are a greedy pig.

 

If the cap on FICA is raised that will be an immense tax hike on folks making just 106k a year.

 

The rich have caused education in the US to become Third-World Country rated with their lobbying

The US has become stupid due to their greed, no wonder people want to remove Bush tax cuts.

People like you who think the rich earned their money are ignorant.