A pity party for America’s rich and powerful

Summary:   Brad DeLong often nominates people for the “stupidest man alive” award (e.g., here).  Here is a new nominee. The underlying issue is important and little-known: the US has a flat tax system, with the rich and poor paying taxes at the same percent of income.

Second Quarter 2010 Investor Letter, Daniel S. Loeb, Third Point Partners LP, 27 August 2010 — Excerpt:

As every student of American history knows, this country’s core founding principles included non-punitive taxation, Constitutionally guaranteed protections against persecution of the minority, and an inexorable right of self-determination. Washington has taken actions over the past months like the Goldman suit that seem designed to fracture the populace by pulling capital and power from the hands of some and putting it in the hands of others. … Laws and regulations such as these justifiably raise questions about this government’s commitment to free-market capitalism and the articulated rule of law.

This is astonishing.  It would be insane if he actually believed what he said.

  • With income and wealth inequality at 80 year highs, he describes the wealthy and powerful as a persecuted minority.
  • With tax rates on households — especially wealthy households — near post-depression lows, he speaks of “punitive taxation.”  It’s an especially odd claim given our flat tax system (including all taxes).  Really nuts is a hedge fund manager complaining about high taxes, with their fantastic tax breaks.
  • He complains about the “Goldman suit”, with its quick slap on the wrist settlement — as if one of the most powerful firms in the world (aka “government sachs”, with its alumni in key positions in the Treasury Departments of a dozen nations) suffers from the tame puppies of the SEC and DoJ.

Update:  Much of the rest is even more bizarre, part of a sustained propaganda campaign to convince us that white is black.  Tens of millions unemployed while corporate profits are at a record high (up 4x since 1993, 9%.year) — so corporations need even more tax breaks.  With inequality at multi-generational highs, the rich need even more tax breaks.   With the financial sector larger and more powerful than at any time since the days of Andrew Mellon, they portray themselves as sheep chased by wolves.

Below are links to resources describing America’s tax system and growing wealth inequality.

About the author

Daniel Seth Loeb is an American hedge fund manager and founder of Third Point LLC, managing over $5.5 billion in assets.  Loeb reportedly enjoys art collecting, yoga and surfing.  Loeb’s compensation was $150 million in 2005, $200 million in 2006 and $270 million om 2007.  (Source:  Wikipedia}

For more information about taxes in America (a flat tax system in disguise)

Following years of propaganda, most Americans are clueless about the operation of our tax system.  Here is an excellent introduction to the issue:

Other studies:

For more information about inequality of wealth and income

Excellent intros:

Other articles and studies:

Posts on the FM website about these matters

About our tax system

About increasing inequality in America

1 thought on “A pity party for America’s rich and powerful”

  1. Paul Krugman: "We Are the 99.9%"

    We Are the 99.9%“, Paul Krugman, op-ed at the New York Times, 24 November 2011 — Opening:

    “We are the 99 percent” is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.

    If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.

    And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite’s taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline.

    Before I get to those policy disputes, here are a few numbers. The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. …

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