When the democratic nomination for President began, many pundits and strategists saw it as a mere formality for Hillary Clinton, while others believed it would be a sort of coronation as the Democratic Party unified behind her. The truth has been far from what was predicted as Senator Bernie Sanders, from Vermont, has rallied young and old over the structural flaws with the American economy. Specifically, Sanders has spoken out against the corporate interests that have corrupted the political system, and have rigged the economy to their benefit.
In his speeches, Sanders has passionately argued the injustice of a system where “the top 1/10th of 1 percent — not 1 percent — the top 1/10th of 1 percent today in America owns almost as much wealth as the bottom 90 percent.” In light of the popularity of the Sanders Campaign and his message, we decided it was relevant to take a look at some facts about the super rich you might not be aware of.
While the term “1 percent” is thrown around a lot, the actual figures are not very well known. The small portion of the American population accounts for forty percent of the nation’s wealth. Each state has varying income levels that set thresholds for the top 1 percent income levels. The state with the worst inequality, Connecticut, also happens to have the highest level of income for the 1 percent: $677,608. In Connecticut, the top 1 percent earns, on average, 51 times as much as the bottom 99 percent of earners.
Other states with extremely high thresholds for inclusion in the 1 percent are: California (438k), North Dakota (502k), and New York (506k). And while those numbers might seem staggering for annual income, the top 0.1 percent that Senator Sanders has been referencing makes the previous figures appear like peanuts. The top 0.1 percent, which consists of 160,000 families, has an average wealth of $72.8 million. In comparison, the bottom 90 percent – 144 million families – has an average wealth of $84,000. That means that 160,000 families have virtually the same amount of wealth as 144 million American families.
9. Things are Getting Worse
Another reason that has seemed to propel Senator Sanders upward in the democratic primary race is the growing feeling that things are not getting better. Many Americans feel that the great bullish run in the stock market has not “trickled” down to the rest of us. However, the truth is a little more startling. In 81 percent of American counties, the median income which is about $52,000, is less than it was 15 years ago. That’s right: adjusted to inflation, middle class Americans are making less today than they did 15 years ago.
What makes this even more upsetting is that the economy has grown 83 percent in the past quarter-century with corporate profits doubling. Despite the fact that American workers produce twice the amount of goods and services as 25 years ago, we get less of the pie. To drive home the point, since 1979, national income going to the top 1% of Americans has doubled.
8. Above the Law
The Walmart heirs are so rich they cannot be considered a part of the 1 percent; the six Waltons have a net worth of $144.7 billion; more wealth than the bottom 40% of Americans. They are the super rich and their status comes with rights that seem to include being above the law. One of the heirs of Sam Walton, Alice Walton, has a personal net worth of 30 billion dollars. In 2011, Alice Walton had an arrest for suspected drunken driving cleared from her record after prosecutors declined to press formal charges. According to a Texas official, the officer who arrested Walton was suspended and was unable to testify in the Walton case.
A single drunk driving incident, that happened to be expunged, is not enough to claim that a person is above the law. However, a series of drunken driving cases surely is. Walton had previously been convicted in 1998 of drunken driving in Springdale, Arkansas, which resulted in a single car accident. Again, in 1989, Alice Walton was involved in another accident where her vehicle struck and killed a woman. The police concluded that Walton was not responsible for the fatal accident and she was not cited for the collision. It is hard to imagine that the average American would manage to escape untouched like Ms. Walton.
A major point of contention in the Sanders Campaign is the Supreme Court’s ruling in the Citizens United case. Sanders has argued that as a result of the ruling, big money has been able to buy members of Congress and have an even greater effect on legislation and policy. And while the added money has certainly further corrupted our representatives, in truth, it is unlikely that they ever truly represented the interests of middle class or lower class citizens. We make this claim because most members are already rich, top 1 percent rich.
As mentioned earlier, the recent Recession devastated millions of Americans with families still struggling to recover; however, members of Congress have seen their wealth increase. Since 2007, the onset of the recession, the median net worth of Americans has dropped by almost one third (28%) while members of Congress’ median worth has increased by a staggering 43%. The median net worth of a member of Congress was $1.03 million in 2013. The net worth of the average American? Just $56,355.
Warren Buffett has famously said that he pays a lower tax rate than his secretary, which has led to a lot of talk about the effectiveness of the American tax system. The truth is that the biggest problem with the tax system is the definition of “income.” Salon outlines it as such: “for the very wealthy, salary is trivial—if they earn one at all. That’s not where their riches come from. Instead, their money comes from ‘carried interest.'” Many of the members of the 1 percent in America are hedge fund, private equity, or investment managers that typically receive a very small salary, with most of their compensation coming in the form of a share of the fund or project they manage.
This represents a “carried interest” and is taxed differently than the tax rates that apply to ordinary Americans. The “carried interest” loophole allows hedge fund managers and others to pay 20% on income that is far above $250,000, while ordinary Americans pay nearly double. What makes the rule so reprehensible is that many are able to get away without paying taxes at all. The reason for this is that “carried interest” only counts as “income” when shares are sold. Individuals could continue to borrow against their assets and never pay taxes.
5. Job Creators?
While this list may seem to generalize the 1 percent into one bag, there are many who acknowledge that their status as wealthy does not entitle them to rights and benefits that most Americans do not have. One of them is Nick Hanauer, an entrepreneur and venture capitalist, who argues that the rich are not job creators. Hanauer has had great success as chairman of a family-owned manufacturing company in Seattle while also making hundreds of millions of dollars through smart investments. One of his earliest investments, Amazon, he argues did not create, but killed jobs in the American economy.
Hanauer also makes a compelling point that while businesses hire workers they will fire them immediately if they do not have enough demand by consumers. He concludes that business owners do not actually create jobs but that it is the result of a “circle-of-life-like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring.”
4. Any Debt?
Despite the United States being the richest country in the world, a vast majority of Americans live in debt. According to the Pew Charitable Trusts, most of the debt comes from what many people would call a good thing — home ownership: of the 80% of Americans with debt, 44% have mortgage debt. Overall, the median burden of debt among Americans is $67,900, with a median home loan balance of $103,000. And while this might not appear as a bad thing, what it does guarantee is that Americans will not question the status quo or take risks to pursue occupations and ideas that they have a genuine interest in. The need to make mortgage payments guarantees an obedient population. A 2015 Gallup Poll has revealed that 70% of Americans feel unhappy, uninspired, and less engaged at their jobs.
Many Americans have a lot of non-mortgage debt, too, particularly young Americans. Millions of young Americans are struggling with college debt, with the average graduate accruing more than 25,000 dollars of loans. Some suggest it could be the next bubble in our economy. On the other hand, the top members of society are not riddled with any debt that they cannot generally handle by selling off assets or demonstrating future growth or income.
3. More Involved in Politics
Americans have a notion that because they live in a “democracy” that, even if the rich are greatly involved in politics, they can’t make too great of an impact. One vote for one American, right? But if one American knows his representative on a first name basis, do you really believe you’re on equal footing? While the United States rarely gets more than 42% participation in Presidential elections, and much less in mid-term elections, the 1 percent take politics extremely seriously. Polls show that 99% of them vote, and two-thirds contribute money to political campaigns. In general, the 1 percent are able to get into contact with their representatives and their conversations are very specific, studies have shown, and reflect laws or impending legislation that could affect wealth creation.
Many members of the 1 percent have advocated for and believe in principles opposed to the majority of American people. Examples include: only 43 percent agreed that “government must see that no one is without food, clothing, or shelter,” compared to 68 percent of the general public. Another poll shows only 40 percent support a living minimum wage, “so that no family with a full-time worker falls below official poverty line,” compared to 78 percent of the general public. Lastly, only 19 percent agree that “the government in Washington ought to see to it that everyone who wants to work can find a job,” compared to 68 percent of the general public. It is not hard to believe that the positions of the 1 percent are the ones that have become the law of the land.
2. Different Lifestyles
Most Americans spend a majority of their income on the essentials for life: housing, food, utilities, and healthcare. However, once one becomes wealthy priorities tend to change and the worries about other costs fade. And while all Americans pay an average of a third of their incomes for housing, the great difference in spending becomes quickly apparent.
The second highest expense of top earners in America is transportation (vacation expenses). The 1 percent spends about 17 percent of their income traveling for business and pleasure. On the other hand, the middle and lower class spend about 17 percent of their income on feeding their families. A stark contrast to say the least.
1. Wall Street
Wall Street not only represents the wealth of the 1 percent but their status as above ordinary citizens. After the 2008 financial crisis, when it was proven that financial impropriety, fraud, and greed by bankers caused the crisis, it did not stop members of Congress and the President for agreeing to a bailout that recouped their losses. While millions of Americans lost their homes and their jobs, members of the 1 percent, including hedge fund and investment managers, were paying themselves bonuses for a job well done. For example, Citigroup, which received a bailout amounting to essentially being one-third owned by the government, gave 738 of its employee’s bonuses of at least $1 million, even after it lost $18.7 billion during the year. In addition, Bank of America, which also received $45 billion in bailout money money, paid $3.3 billion in bonuses, with 172 employees receiving at least $1 million.
As the country has recovered, at least on the surface, during Obama’s presidency, even he has come to admit that 95% of income gains have gone to those at the top. That means that while the stocks have roared back, the millions of Americans who lost everything during the crisis are still struggling to get back on their two feet.