January 15, 2007
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In this week's Too Much, we highlight, in Dr. King's honor, a new resource that can inform and enrich every King holiday celebration.
Over half the CEOs at America's 100 biggest companies — 55 to be exact, according to Equilar, a California business research company — have “employment contracts” along the lines of the deal that, earlier this month, handed Home Depot CEO Bob Nardelli a severance package worth $210 million. Nardelli walked away with what amounted to 568 weeks of salary for each year he worked at Home Depot. That’s par for the big-time CEO course. Former Disney CEO Michael Eisner last year exited with a goodbye-package that equaled about 536 weeks of salary for every year he spent at Disney. By contrast, New York pay consultant James Reda noted last week, typical American workers, if they receive severance at all, average just two weeks of salary for every year worked . . .
The billionaire that Fortune magazine once tagged the “greediest executive” in the United States has a new trophy for his international business empire, the world’s most famous athlete. Soccer superstar David Beckham last week agreed to a five-year, $250-million deal with the Los Angeles Galaxy, a team that, up to now, hasn't added much to the $7.8 fortune of its owner, the 68-year-old Philip Anschutz. Originally an oilman, Anschutz helped pump up the late 1990s telecom bubble. He bailed out, with a $1.85 billion personal profit, just before the bubble burst, earning himself, in 2002, the Fortune “greediest” tag. His newest acquisition, the 31-year-old Beckham, will earn over 500 times more per year than the average player in the U.S. pro soccer league that will shortly showcase his fading talents . . .
Here’s another reason for not repealing the federal estate tax: Without the estate tax, we’d have no way of knowing how much our richest dear departed have had earmarked for their funerals. In the 2005 tax year, according to new IRS data, estates worth at least $20 million deducted off their estate tax bill an average $24,053 each for funeral expenses. That’s nearly triple the $8,301 average funeral cost deducted by estates worth $1.5 million to $2.5 million. In all, the federal government netted $21.5 billion in 2005 revenue from the estate tax. Over a third of that — $7.8 billion — came from estates worth at least $20 million. These estates, all 498 of them, averaged $74.9 million in gross net worth . . .
The Dana Corp., a Toledo-based auto parts maker, filed for bankruptcy last March and, ever since, has been doing all the things firms in bankruptcy typically do, from closing plants to ending health benefits for retirees. Add one more element to the Dana bankruptcy reorganization: overpaying executives. Last month, a federal judge okayed a pay plan that could hand Dana CEO Mike Burns $5.5 million in bonuses on top of his $1 million annual salary. The 2005 federal bankruptcy law, interestingly enough, includes a provision intended to ban executive bonus windfalls. Under this provision, no company in bankruptcy can award executives any retention bonus or severance that runs over ten times the bonus or severance awarded to average employees. How is Dana sidestepping this ten times limit? The company is terming the bonus plan for CEO Burns a performance incentive . . .
Bankruptcies can be beautiful, and you don’t have to be a top executive to realize that inner beauty. Top-drawer national firms, the National Law Journal reported last week, have also been supping at the bankruptcy table. Five firms stand to pocket at least $23.3 million in legal fees from bankruptcies completed in 2006. Topping the list: the Chicago-based Kirkland & Ellis, with $90.7 in billings for handling the United Airlines restructuring. New York’s Skadden, Arps, Slate, Meagher & Flom will be picking up $34.8 million for cleaning up the mess at Refco Inc., a commodities broker. The Skadden legal beavers certainly appear to gone the extra mile for their fee dollars. The firm’s bankruptcy team, Skadden spokesperson Greg St. Claire points out, actually had to spend four hours the day after Thanksgiving in a courthouse.
“I heard [Dr. Martin Luther King Jr.] say there would never be a major breakthrough in racism until there was a fair distribution of wealth.”
Rev. Wyatt Tee Walker, former chief of staff
for Dr. King, Richmond Times-Dispatch,
January 15, 2007
New Wisdom
on Wealth
Citizens for Tax Justice, Who Paid the Federal Estate Tax in 2005? January 10, 2007
Charles Wheelan, Why Income Inequality Matters, The Naked Economist, January 10, 2007
Rachel Johnson, My Cure for Affluenza, Sunday Times of London, January 14, 2007
Here today in 2007, three decades into America’s second Gilded Age, the United States still hosts a small cohort of “experts” who contend, via breathless jeremiads widely circulated in right-wing circles, that the United States has not in any way become significantly more unequal.
These inequality deniers storm down a variety of statistical alleys. Add in government benefits like food stamps or take household size into consideration, they typically argue, and the income distribution picture doesn’t look nearly so dire.
A few years ago, the Congressional Budget Office began calculating income distribution breakdowns that take these denier critiques into account — and then some.
The nonpartisan CBO researchers now count, for instance, every prime source of income that Americans tap, not just the income that gets reported on tax returns. They tally everything from social safety-net dollars to employer-paid health insurance premiums.
The CBO has just released its latest figures from all these calculations, and the new data — covering 1979 through 2004 — paint what has become a familiar picture: America’s rich are grabbing an ever-greater share of the nation’s income.
Back in 1979, the new CBO figures show, the most affluent 1 percent of American households averaged $498,000, in inflation-adjusted dollars. To make 1979's top 1 percent, you needed to make at least $151,000. Together, in 1979, top 1 percenters pulled in 9.3 percent of the nation’s income.
A quarter-century later, in 2004, America’s top 1 percent — those households with over $266,800 in income — averaged $1,259,700 and boasted a 16.3 percent income share.
Meanwhile, America’s federal tax system, over these years, did next to nothing to narrow the nation's growing income gap.
Top 1 percent households actually saw their share of the nation's income increase after taxes. Before taxes, the income share of America’s very richest climbed 75 percent in the quarter-century after 1979. After taxes, their share rose 87 percent.
Dr. Martin Luther King Jr. devoted his life to the struggle against white supremacy, a struggle, headlines remind us, still not fully won.
Our current white supremacists, like their counterparts in Dr. King's day, consider people of color fundamentally inferior. How do they “prove” this inferiority? They sometimes point to wealth — or rather, contemporary America’s racially unequal distribution of it.
In the United States today, people of color hold considerably less household wealth than whites. The typical black household, for instance, holds $120,300 less wealth than the typical white. But slavery, racist ideologues smirk, ended generations ago. Clearly, the racist mind reasons, people of color simply do not have the smarts to “make it.”
Speeches celebrating Dr. King's birthday, unfortunately, seldom confront — head on — this racist undercurrent to America’s political discourse. Fortunately, we have a new addition to this discourse that does: The Color of Wealth.
This important new book, a team effort by five veteran activists and academics, tells a story few Americans have ever heard, a story that relates how conscious political decisions — some made years ago, some just yesterday — have denied millions of people of color the opportunity to accumulate assets and live the American dream.
Just how? Read our complete Too Much review.
America's top corporations have begun filing their 2006 CEO pay data. The latest out of the gate: Walt Disney, the world's second-largest media company. Disney's new CEO, Robert Iger, took home $24.9 million in 2006. His predecessor, Michael Eisner, collected $10.3 million in his last year at the Disney summit.
Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954.
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