<p>BLY,</p>
<p>Some economists (and a good number of us aging leftys) believe the rise in billionaires is due largely to two things:</p>
<ul>
<li> changes in US tax code that allow people subject to US tax to keep a largely unprecedented portion of their “earnings”. Indeed, the effective tax rate of most capitalists, factoring in all taxes, is often lower than that of middle class wage earners. This is largely due to the fact that economic rents (i.e. the return on capital invested) is taxed at most at 15%, if it is taxed at all. Wage earners pay 15.3% of their wage income up to $102,000 for Social Security. Half is paid directly by the wage earner and deducted from gross, half indirectly by the employer, but is still a tax on the wage earner. And this is before income taxes!</li>
</ul>
<p>So a wealthy person, if all their income is through capital gains and dividends, actually keeps a higher percentage of their income than a working person like myself. Even a person getting paid minimum wage keeps a lower percentage.</p>
<p>But wait, there’s more. These folks get to watch their wealth build without any tax as long as they let the returns accrue. So they don’t even pay any tax at all until they cash some capital in to spend.</p>
<ul>
<li> Outside the US, much of these wealth gains, especially in Russia and the Middle East, have resulted from the run up in prices for basic commodities such as oil and minerals. It is widely perceived that Russia allowed a few chosen insiders to capture most of the wealth from the privatization of state assets after the Soviet Union collapse around 1990. The ordinary citizens starve.<br></li>
</ul>
<p>Income inequality both in the US and worldwide (especially if one excludes India and China for technical reasons. See here: [International</a> Political Economy Zone: Is Global Inequality Rising or Falling?](<a href=“http://ipezone.blogspot.com/2007/03/is-income-inequality-rising-or-falling.html]International”>Is Global Inequality Rising or Falling? | International Political Economy Zone)) has been rising for many years, as measured by the Gini Index. And in the US, the rate of change has also been growing the past few years.</p>