Entries in Wealthy (12)


Thousands of Millionaires Collect Unemployment

Brand X Pictures/Thinkstock(WASHINGTON) -- A new report shows that some 2,400 millionaires received unemployment insurance benefits during the economic downturn, a number that has caught the attention of politicians who funded extensions of benefits for up to 99 weeks as the economy crumbled.

In 2009, 2,362 millionaires received unemployment benefits, down from 2,840 the year prior, according to a study from the Congressional Research Service, a non-partisan arm of U.S. Congress that provides policy and legal analysis. Of the 2,362, more than 1,000 receiving unemployment benefits had a household adjusted gross income of $1.5 million in 2009.

The report titled “Receipt of Unemployment Insurance by Higher-Income Unemployed Workers” found that 0.02 percent of tax filers that received unemployment benefits in 2009 were millionaires. A total of $20.8 million in unemployment benefits went to this group.

“It sounds scandalous when you hear that millionaires are going to collect unemployment insurance,” Bill Frenzel, guest scholar at the Brookings Institute and former Republican member of Congress, told ABC News.  “On the other hand, millionaires get unemployed too and have made payments into the unemployment insurance.”

In 2010, 4.6 million people were kept out of poverty due to unemployment benefits, according to the Center on the Budget and Policy Priorities.

Frenzel says if they made a million dollars in income the year prior, “they could probably stand being barred from unemployment this year.”

And, apparently one member of Congress agrees.

“Sending millionaires unemployment checks is a case study in out-of-control spending.  Providing welfare to the wealthy undermines the program for those who need it most while burdening future generations with senseless debt,”  Republican Senator Tom Coburn, M.D. of Oklahoma said in a statement to ABC News.  Based on the report from the senator’s office, millionaires received $74 million in unemployment insurance from 2005 to 2009.

According to the Center on Budget and Policy Priorities, the average individual collects about $300 per week from unemployment compensation.

Early last year, Sen. Coburn introduced “Ending Unemployment to Jobless Millionaires Act of 2011,” which is currently languishing in the House of Representatives, a bill which sought to halt payment of federal funds for unemployment compensation to individuals whose “resources in the preceding year” was $1 million or more.

But millionaires aren’t the only individuals to benefit from unemployment benefits. A few other high-income brackets receive compensation from the government. More than 8,000 tax filers making $500,000 to $1,000,000 received unemployment benefit income in 2009 and more than 900,000 tax filers that made $100,000 to $500,000 received unemployment benefit income.

Copyright 2012 ABC News Radio


Super-Rich Hide $21 Trillion in Secret Tax Havens, Says Tax Justice Network

Adam Gault/Thinkstock(NEW YORK) -- The super-rich are hiding at least $21 trillion in accounts outside their home countries, according to a report by an activist group called the Tax Justice Network.

The wealth hidden in these tax shelters is the equivalent of the United States and Japanese economies combined, according to the report titled “The Price of Offshore Revisited.”

“The hidden offshore sector is large enough to make a significant difference to all or conventional measures of inequality, ” wrote the lead author, James S. Henry, a former McKinsey & Co. chief economist.

“Since most of the missing financial wealth belongs to a tiny elite, the impact is staggering. For most countries, global financial inequality is not only much greater than we suspected, but it has been growing much faster,” he said.

Daniel N. Shaviro, a professor of taxation at New York University, told ABC News a lot of what’s happening is tax fraud.  He said the report highlights that there are wealthy people who don’t want to pay taxes -- and their home countries don’t have enforcement mechanisms in place, so they can get away with it.

In a list of the top 20 countries experiencing “global flight wealth,” China ranks as number one with $1.19 trillion. It is followed by Russia, Korea, Brazil, and Kuwait.

“Often these countries in general have not been rich for as long as the U.S. or England so they may not have both the rule of law and their enforcements may not be as well developed,” said Shaviro.

Using data from the World Bank, the IMF, the United Nations, central banks, the Bank for International Settlements and other sources,  the report said 100,000 people worldwide were responsible for $9.8 trillion in wealth held offshore.

And who managed the money?

According to the study, UBS, Credit Suisse and Goldman Sachs are the top three private banks handling offshore accounts for the super-rich.

“It turns out that this offshore sector -- which specializes in tax dodging -- is basically designed and operated, not by shady no-name banks located in sultry islands, but by the world’s largest private banks, law firms, accounting firms, headquartered in First World capitals like London, New York and Geneva,” wrote Henry.

Copyright 2012 ABC News Radio


Report: Number of Millionaires in Asia Tops Those in North America

iStockphoto/Thinkstock(TORONTO) -- For the first time ever, the number of millionaires in the Asia-Pacific region surpassed those in North America last year, according to a new report by Capgemini and Royal Bank of Canada Wealth Management.

The World Wealth Report 2012 found that in 2011, there were 3.37 million high net worth individuals -- defined as those with having $1 million or more to invest -- in the Asia-Pacific region, a 1.6 percent increase from the year before.

In comparison, North America had 3.35 million, putting the region in second place.

North America, however, remained the largest region of wealth last year, with $11.4 trillion, according to the report.  The Asia-Pacific region followed with $10.7 trillion.


Copyright 2012 ABC News Radio


Wells Fargo Announces New Business for Super Rich

Scott Eells/Bloomberg via Getty Images(SAN FRANCISCO) -- Banks across the country are trying to attract wealthy clients as economic and regulatory factors weaken traditional banking businesses and the wealth gap increases.

Wells Fargo is one of many companies beefing up its wealth management business, announcing the launch of a new company serving individuals and families with $50 million or more in assets.

Sandy Deem, spokeswoman for Wells Fargo, said the new business is a "natural next step" in combining Wells Fargo with Wachovia, which it acquired in 2008.

Headquartered in San Francisco, Wells Fargo announced last week that the combined company will have a staff of about 300 and $27.5 billion in client assets.  Named Abbot Downing, the boutique will be a combination of its private asset management firm, Lowry Hill, and Wells Fargo Family Wealth.

Deem said Wells Fargo announced within the company last January the intent to combine the two businesses, and the latest announcement is not related to its cancellation of its debit card pilot program.

Large banks, such as Bank of America and Chase, announced in recent weeks they will not charge customers for using their debit card as a result of the Durbin amendment of the Dodd-Frank Act.  The amendment caps fees banks charge merchants when customers make debit card purchases to about 21 cents.  Before the amendment was implemented on Oct. 1, the average fee banks charged merchants was 44 cents per transaction.

On Oct. 28, Wells Fargo announced it is canceling its test program of $3 monthly debit card fees in five states, which began on Oct. 14.

Abbot Downing will serve wealthy clients nationwide through offices in San Francisco, Los Angeles, Scottsdale, Ariz., Denver, Houston, Minneapolis, Chicago, Philadelphia, Charlotte, N.C., Winston-Salem, N.C., Raleigh, N.C., Naples, Fla., Jacksonville, Fla., Washington, D.C., and Palm Beach, Fla..

Copyright 2011 ABC News Radio


Poll: Six in 10 Support Policies Addressing Income Inequality

Adam Gault/Thinkstock(NEW YORK) -- Six in 10 Americans say the federal government should pursue policies to reduce the gap between the wealthy and less-well-off Americans, although fewer express support for the Occupy Wall Street movement that’s been protesting U.S. income inequality.

Sixty-one percent of respondents in the latest ABC News/Washington Post poll think the wealth gap is larger than it’s been historically.  And despite longstanding public concerns about activist government, six in 10 also say the federal government should seek to reduce that differential.

The public’s concern is buttressed by a recent Congressional Budget Office estimate that the wealthiest 1 percent of Americans have nearly tripled their incomes since 1979, while the bottom 80 percent of earners have seen their share of the nation’s total income slightly decline.

The poll, produced for ABC by Langer Research Associates, finds that 37 percent perceive the wealth gap as “much larger” than it’s been; just 5 percent think it’s smaller.  And 43 percent feel “strongly” that the government should pursue policies to address it, versus 24 percent who are strongly opposed.

Overall support for such policies is linked to perceptions of a widening wealth gap.  Among those who think the gap is much larger than it’s been historically, 84 percent say the government should pursue policies to address it.  That declines to 54 percent among people who think the gap is just somewhat larger than in the past, and 41 percent of those who think it’s about the same.

But while 60 percent support polices to address wealth distribution, substantially fewer -- 44 percent -- identify themselves as supporters of the Occupy Wall Street movement, and just 18 percent strongly so.  About as many, 41 percent, say they oppose the movement.

Copyright 2011 ABC News Radio


Age Gap Widens Dramatically in Economic Well-Being, Study Finds

Adam Gault/Thinkstock(WASHINGTON) -- The rich aren’t just getting richer, but wealthy older Americans are noticeably better off than their counterparts from three decades ago in several areas like income, employment, home ownership and housing values.

A new study from Pew Research Center analyzed the economic well-being of current older and younger adults to those in the past and found that the age-based wealth gap sky-rocketed 47:1 in 2009 compared to 10:1 in 1984.

In 2009, the median net worth of households headed by adults aged 65 and older was 42 percent more than the same age group in 1984.  In contrast, the net worth of households headed by an adult under 35 in 2009 was 68 percent less than the same age group in 1984.

“These age-based gaps widened significantly during the sour economy of recent years, but all key trends are several decades old, indicating that they are also linked to long-term demographic, social and economic changes that have affected different age groups in different ways,” Pew said in a statement.

These changes include structural changes in the labor and housing markets, delayed marriage and retirement, and the changing racial and ethnic composition of the population.

Copyright 2011 ABC News Radio


Top 1 Percent's Income Soared Since '79

John Foxx/Stockbyte(WASHINGTON) -- The income of the richest 1 percent in the U.S. soared 275 percent from 1979 to 2007, but the bottom 20 percent grew by just 18 percent, new government data shows.

The Congressional Budget Office (CBO) released a study this week that compared real after-tax household income between 1979 and 2007, which were both after recessions and had similar overall economic activity.

While the income of the richest 1 percent nearly tripled, increases were smaller down the economic ladder. After the 1 percent, income for the next highest 20 percent grew by 65 percent, much faster than it did for the remaining 80 percent of the population but still lagging well behind the top percentile.

The changes illustrate how the better off have captured the bulk of income gains over the past three decades. The top quintile has seen its share of income rise while the other four quintiles have suffered declines in their shares, according to John Bowler, director of country risk service with the Economist Intelligence Unit.

The report states that without the growth of the top percentile, income inequality still would have increased, "but not by nearly as much." The study was prepared at the request of Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa.

The CBO said the reasons for the rapid growth at the top are "not well understood," though some possibilities include technical innovations that have changed the labor market for superstars, "such as actors, athletes, and musicians," changes in executive compensation, and increasing scale of financial-sector activities.  

Copyright 2011 ABC News Radio


Warren Buffett Rule: Class Warfare or Tax Fairness?

Pixland/Thinkstock(WASHINGTON) -- In proposing the "Buffett Rule," President Obama is invoking a name synonymous with success to raise taxes for the wealthy in what political analysts are saying will be a tough sell to Congress.

The chairman and chief executive of investment company Berkshire Hathaway is widely known to have friends on both sides of the aisle, including former Treasury Secretary Henry Paulsen and Federal Reserve chairman Ben Bernanke -- both Republicans.  Of course, he is known for being a billionaire businessman who lives rather modestly in Omaha, Nebraska.

In opposition to the Buffett Rule, Republicans have attacked the president's proposed tax hikes, crying "class warfare."

"Class warfare will simply divide this country more.  It will attack job creators, divide people and it doesn't grow the economy," Rep. Paul Ryan said on FOX News Sunday.  "Class warfare may make for really good politics, but it makes for rotten economics."

Joseph Stiglitz, Nobel Prize winner in economics and professor at Columbia University, said he disagrees.

"It's not class warfare to ask everyone in the country to pay their fair share.  To say the wealthy have taken advantage of their political position and have not paid their share of taxes is not class warfare.  It's a statement of fact," Stiglitz told ABC News.  "The fact is they are paying lower taxes and most Americans think this is unjust and unfair.  Tax loopholes don't just appear out of thin air.  They are the result of big political investments that rich people have particularly made to get tax preferences."

In an ABC/Washington Post poll in July, 72 percent of those surveyed supported raising taxes on people with incomes of more than $250,000 a year to help reduce the national debt, while 55 percent supported it strongly.  That was the most popular of nine different debt-reduction approaches tested and the only one to win majority "strong" support.  The next closest was raising the amount of income taxable for Social Security purposes.

Stiglitz said there is "no justification" why hedge funds should be taxed at a lower rate than workers.  He said it is possible that raising taxes by 0.5 percent, particularly with millionaires, could raise gross domestic product (GDP) by 1 to 1.5 percentage points.

"This could make a significant contribution to the country, especially if we spend it well," he said.  "So from an economic point of view, the current tax system is a distortion and this is a partial fix for that distortion."

Buffett and billionaire George Soros have also said if the wealthy make certain sacrifices, it could be a sign of national solidarity.

Copyright 2011 ABC News Radio


For Super Rich, Taxes Keep Falling

Comstock Images/Thinkstock(WASHINGTON) -- With Monday the last day for Americans to file their tax returns, the super wealthy can look forward to paying significantly less than they would have two decades ago.

Since 1992, the average federal income tax actually paid by the wealthiest 400 households in the country has fallen from 26 percent to 17 percent.

But why, if the top income tax rate in the U.S. is 35 percent, are the very, very wealthy paying such a small percent of their income into taxes?  The short answer is tax breaks.

There are built-in tax breaks in every bracket that everyone can take advantage of, including breaks for having children, paying a mortgage and furthering education.

According to Washington, D.C.-based think tank Tax Policy Center, the number of tax breaks is so high that this year it is estimated that 45 percent of households won't pay any taxes whatsoever.

This has led to efforts to overhaul the tax laws on both sides of the political aisle.  Sunday on This Week with Christiane Amanpour, Treasury Secretary Timothy Geithner accepted that disagreements remain with Republicans on the scope of how to reform the tax.

"We have very big disagreements on what the right balance is," Geithner said.  "The things we're going to disagree on for some time, we can take more time to resolve."

However, he said he does not believe fundamental deficit reduction can happen without ending the Bush-era tax cuts for the wealthiest Americans, which were extended in a temporary agreement last Decembe, and remain in place in House Budget Committee chairman Paul Ryan's budget plan, passed Friday by the House.

Geithner said he thinks the deficit can be reduced without raising taxes on the middle class, specifically by ending tax loopholes and deductions that primarily go to wealthier Americans who itemize their tax returns.

"Those benefits, even like the mortgage interest deduction that lets people have two homes, pretty expensive homes…if you target them on the most fortunate Americans, they can afford to take a little bit larger share of the burden," Geithner said.  “They can afford to do that, and it's the responsible thing to do for the economy."

Copyright 2011 ABC News Radio


Tax Brackets: Who Should Pay What to Fix the National Debt?

Comstock/Thinkstock(NEW YORK) -- Taxes are in the air. Tax day is approaching next week and one of the main sticking points of the entitlement reform debate that has been in the news this week comes down to taxes.

President Obama vowed Wednesday that he would not again extend Bush-era tax cuts for the wealthy. Americans generally support higher taxes for the wealthy. But when the argument is re-framed as higher taxes on small businesses and the middle class, the attitudes change. Many Republicans like House Speaker John Boehner have vowed that a deficit reduction plan cannot raise taxes.

Others, like Sen. Dan Coats, R-Ind., and Sen. Mike Johanns, R-Neb., have said everything must be on the table.

Turns out its been a pretty good couple of decades for the wealthy. A new analysis by the left-of-center Economic Policy Institute analyzes tax rates for the wealth over the past 22 years and finds that the tax rate for the wealthy have fallen much more than they have for average Americans.

The top one percent of American households paid about a 37-percent annual tax rate in 1979. By 1992 that rate was down to 30.6 percent. And by 2007, it was down to 29.7 percent.

The super-wealthy have done even better, according to EPI. They paid an average 26.4-percent tax rate in 1992 and a mere 16.6-percent tax rate by 2007. That means that the wealthiest Americans pay a lower tax rate than the average American. Why? The average American might make less money from traditional income -- salary from a job, say -- whereas the wealthiest make much of their income from investments. The top tax rate for long-held investments is much lower -- 15 percent -- than it is for regular income -- 35 percent.

President Obama and a Democratically controlled Congress voted to extend Bush-era tax cuts last December, arguing along with Republicans that the tax cuts should not expire amidst a recession.

The wealthy did better in the deal than did regular Americans. The average tax rate in 1972 was about 22 percent. It was slightly lower, 21.5 percent in 1992 and 20.4 percent in 2007 after all the Bush-era tax cuts were first enacted.

That’s why, argue the study authors, the federal government is in such dire economic state with the federal deficit.

“This diminished tax burden on the wealthiest has contributed to the historically low federal revenue levels we are seeing today, and in turn, to higher deficits. The Congressional Budget Office projects federal revenue in 2011 will total 14.8% of GDP -- the lowest level since 1950. At the same time that the tax burden has shifted away from the wealthy, this same top income group has enjoyed  massively disproportionate income gains,” according to the post by EPI analysts Ethan Pollack and Rebecca Theiss.

The top one percent of income earners earn 22 percent of all income and pay 40 percent of all income taxes, according to Chris Dubay, a tax policy analyst at the right-of-center Heritage Foundation. And taking money from the wealthy means they’ll take their money elsewhere, he said.

Copyright 2011 ABC News Radio

ABC News Radio