This is crazy!!! Entire state budgets are dependent upon the droppings from the table of just a handful of royal barons. Even in the depths of the Middle Ages it never got this crazy. How long can American society continue to function with this level of inequality?
Connecticut tax officials track quarterly estimated payments of 100 high net-worth taxpayers and can tell when payments are down. Of that number, about a half-dozen taxpayers have an effect on revenue that's noticed in the legislature and Department of Revenue Services.Connecticut to super-rich residents: Please don't leave us (AP)
"There are probably a handful of people, five to seven people, who if they just picked up and went, you would see that in the revenue stream," said Kevin Sullivan, the state's commissioner of the Department of Revenue Services.
With one exception, he said, state officials don't actually approach the super-rich. He said: "There isn't friendly visiting or anything like that, how are you feeling? Doing all right? Doing OK?"
Two years ago, tax officials were alarmed that a super-rich hedge fund owner might leave and reduce the state's income tax revenue. They set up a meeting and urged the unidentified taxpayer to stay. The effort was partly successful, with the taxpayer leaving Connecticut but agreeing to keep the hedge fund here.
Many movers and shakers in and around New York City, the capital of the banking and hedge-fund world, work in or populate the verdant suburbs next door in Connecticut. They include names like hedge fund owner Steven Cohen; Thomas Peterffy, of Interactive Brokers; Ray Dalio, of Bridgewater Associates; and Paul Tudor Jones, of Tudor Investment Corp. Combined, their net worth is more than $40 billion, according to Forbes.
Those four declined to discuss their experiences, if any, with Connecticut tax officials. But if they or other big-moneyed individuals or their businesses decide to leave, the danger is real.
In April 2014, super-rich taxpayers in Connecticut and elsewhere shielded their income through charitable donations or other means to avoid a tax hit following the expiration of federal tax cuts.
The result: Connecticut income tax revenue plunged by nearly $281 million, more than 14 percent, compared with the same month a year before. In the 2014 budget year, state income tax revenue was $8.7 billion, more than half the $16.4 billion in total revenue from taxes and fees.
Related, this article is long and difficult to read, but basically it says that the downturn in the economy was caused by more than just the loss of housing wealth. Because consumption by the super-rich drives so much of the economy now, the loss in stock prices had a disproportionate impact. Similar to the above story - because most of America is now so poor, it is dependent on the spending of a tiny sliver of ultra-rich people to keep it going:
Our results suggest that the standard narrative of the Great Recession may need to be adjusted. Housing played a role, but so did financial assets, which actually accounted for the bulk of the loss in wealth. The middle class played a role, but so did the rich. In fact, the rich now account for such a large share of the economy, and their wealth has become so large and volatile, that wealth effects on their consumption have started to have a significant impact on the macroeconomy. Indeed, the rich may have accounted for the bulk of the swings in aggregate consumption during the boom-bust.The rich and the Great Recession (Vox EU)
Even the aristocratic Middle Ages wealth was not this concentrated! How much longer can this continue? Meanwhile, in the rest of America:
- Between 2007 and 2013 median wealth dropped a shocking 40 percent, leaving the poorest half with negative wealth (because of debt), and a full 60% of households owning, in total, about as much as the nation’s 94 richest individuals.
- Official poverty measures are based largely on the food costs of the 1950s. But food costs have doubled since 1978, housing has more than tripled, and college tuition is eleven times higher. The cost of raising a child increased by 40 percent between 2000 and 2010. And despite the gains from Obamacare, health care expenses continue to grow.
- Over half of public school students are poor enough to qualify for lunch subsidies. There’s been a stunning70 percent increase since the recession in the number of children on food stamps.
And that's not the only way the world is starting to look more medieval:
After more than a decade of war in Iraq and Afghanistan, America’s most profound legacy could be that it set the world order back to the Middle Ages.
“Now that the United States has opened the Pandora’s Box of mercenarianism,” [Sean] McFate writes in The Modern Mercenary: Private Armies and What they Mean for World Order, “private warriors of all stripes are coming out of the shadows to engage in for-profit warfare.”...McFate said this coincides with what he and others have called a current shift from global dominance by nation-state power to a “polycentric” environment in which state authority competes with transnational corporations, global governing bodies, non-governmental organizations (NGO’s), regional and ethnic interests, and terror organizations in the chess game of international relations. New access to professional private arms, McFate further argues, has cut into the traditional states’ monopoly on force, and hastened the dawn of this new era.A Blackwater World Order (The American Conservative) I expect that these private armies will soon be defending the estates of the super-rich in Connecticut. Perhaps the rest of us can get jobs digging up beets in the farmland they own. Oh wait, never mind, those jobs will be done by robots. Progress!
McFate calls it neomedievalism, the “non-state-centric and multipolar world order characterized by overlapping authorities and allegiances.” States will not disappear, “but they will matter less than they did a century ago.” He compares this coming environment to the order that prevailed in Europe before the domination of nation-states with their requisite standing armies.
In this period, before the Peace of Westphalia of 1648 ended decades of war and established for the first time territorially defined sovereign states, political authority in Europe was split among competing power brokers that rendered the monarchs equal players, if not weaker ones. The Holy Roman Emperor, the papacy, bishoprics, city-states, dukedoms, principalities, chivalric orders–all fought for their piece with hired free companies, or mercenary enterprises of knights-turned profiteers.
As progenitors of today’s private military companies (PMCs), free companies were “organized as legal corporations, selling their services to the highest or most powerful bidder for profit,” McFate writes. Their ranks “swelled with men from every corner of Europe” and beyond, going where the fighting was until it wasn’t clear whether these private armies were simply meeting the demand or creating it.
In an interview with TAC, McFate said the parallels between that period in history and today’s global proliferation of PMCs cannot be ignored. He traces their modern origins to the post-Cold War embrace of privatization in both Washington and London, both pioneers in military outsourcing, which began in earnest in the 1980s.