My New Book Has Been Published! Just in Time for the Holidays…

Letter to the One PercentAvailable in hardcover from Lulu Press, Inc:

Support independent publishing: Buy this book on Lulu.

Available in e-book format from Lulu Press, Inc:

Support independent publishing: Buy this e-book on Lulu.

Available in Kindle format at Amazon.com:

Buy from Amazon.com!

 What It’s All About…

Letter to the One Percent is exactly what it sounds like: a letter to the richest one percent of American households. It is a call to action, a plea for compassion, and a manifesto for the future. It tells the story of their extraordinary success — and how the other 99 percent of Americans missed out. It explains how this divergence caused household income to stagnate, forced millions of Americans into poverty, and triggered the worst financial crisis since the Great Depression. It appeals to the better angels of their nature to bear a higher burden — by paying higher taxes, empowering labor, and cracking down on white-collar crime — in order to reverse the damage done in the past three decades.

No other writer has dared to speak these truths directly to power. Every other mainstream book preaches to the choir. Only Letter to the One Percent is brave enough to challenge the rich to do what the country needs them to do. It is not an attack. It is not class warfare. On the contrary: It is a challenge to end the class war that the One Percent has been winning and the 99 Percent has been losing.

No other political subject is as timely as this one. No other economic trend is as pivotal. From the financial crisis in 2008, to Occupy Wall Street in 2010, to the presidential election in 2012, the divergence between the One Percent and the 99 Percent has been the most talked-about issue in American current events. And yet, no one has synthesized the causes and consequences of it in a succinct, yet comprehensive, book. No one has translated the protests and the politics into the simple pocketbook impact that it has had on the average American household. This is the biggest story of our time, and Letter to the One Percent is the first book to tell it fully, accurately, and unflinchingly.

Advance Praise for Letter to the One Percent

“In just 85 pages, the brilliant young economist Anthony W. Orlando analyzes the events of the past thirty-five years and thoroughly explores the rise of the One Percent at the expense of the rest of us. It is truly a manifesto for the 99 Percent and should be read by every one of us.”

— Reese Schonfeld, founding President and CEO of CNN

Letter to the One Percent is an excellent primer and refresher course on macroeconomics. It helped me understand why the U.S. is experiencing the current economic state of affairs. It is also a compassionate call to action. At first, one may not agree with the basic thesis, but it makes complete sense. I am now a believer and highly recommend this read.”

— Mark Itkin, Co-Head of Worldwide Television at William Morris Endeavor

“Anthony W. Orlando has written a short dossier and critique of America’s descent into a very troubled and vulnerable society. He presents it in the original form of a letter chastising the One Percent for these policy failures and urging them to get hold of themselves and opt for decency and long-run survival. But he also provides a small storehouse of ammunition for the 99 Percent to use in their self-defense.”

— Edward S. Herman, Professor Emeritus of Finance at the Wharton School of the University of Pennsylvania, bestselling co-author of Manufacturing Consent: The Political Economy of the Mass Media

“Anthony W. Orlando has the unique ability to translate complex economic phenomena into everyday, nuts-and-bolts language. He speaks for a brave new generation with a voice that deserves to be heard.”

— Susan M. Wachter, Professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania, former Assistant Secretary of the U.S. Department of Housing and Urban Development

“…this well-researched, carefully cited book is a valuable resource for understanding how the country got in such a perilous position and what can be done about it. Using a clear, authoritative writing style,…Orlando…manages to present an impressive number of facts without overwhelming readers. In particular, the statistics he presents are startling, even for those who closely follow the state of the economy.”

— Kirkus Reviews

Why President Obama Is Right to Focus on Inequality

Real Household Income, 1967 to 2012

In his recent speech at Knox College, President Obama renewed the nation’s focus on income inequality, drawing criticism from the right for pandering to the usual Democratic interest groups instead of addressing real economic issues like jobs and growth. This reaction stems from a misunderstanding of recent history that is sadly prevalent among the American public. To set the record straight, let’s take a trip back in time…

Three decades ago, we awoke to Ronald Reagan’s “Morning in America.”

It was 1983, and our economy had been through the deepest recession since the Great Depression. Reagan had slashed tax rates and broken the unions. In return, we were promised a bright future with faster economic growth for all.

At first glance, it looks like the Gipper delivered on his promise.

From 1983 to 2013, our economy’s output more than doubled, even after adjusting for inflation. The average worker today is 85 percent more productive than their predecessors were when Reagan took office. Taxes take a much smaller bite out of our income than they did in Reagan’s day, and American businesses are more profitable than ever before.

If the story ends there, it’s not hard to see why Republicans still believe in the power of Reaganomics.

But, as in every good story, there’s a twist. In this case, the twist is inequality, a politically charged word that Republicans rarely speak of. And for good reason: It invalidates their entire belief system.

The aggregate data leads you to believe that everyone’s income doubled, but that’s so far from the truth that it’s nearly criminal to foist that story on the public.

In fact, since 1983, the only incomes that have doubled after inflation are the incomes of the richest 0.1 percent of Americans. That’s one-tenth of the infamous “One Percent.” For the other 99.9 percent of Americans, inflation-adjusted incomes have grown by less than 20 percent.

But that’s a high threshold. In order to be a member of the top 0.1 percent, you have to earn over $1.5 million. What if we set the bar at a more reasonable level? Let’s exclude everyone making over $110,000. That’s a pretty good cutoff for what we consider to be “rich,” and it still leaves us with 90 percent of Americans earning less than that. These are the people who were supposed to enjoy the benefits of Reagan’s “trickle-down economics.” How much didthey gain since 1983?

Nothing.

For the 90 percent of Americans earning less than six figures, there has been absolutely zero income growth after inflation in the last three decades.

Sit back and contemplate that fact for a moment. During a period when the economy doubled in size, the total income earned by 90 percent of Americans didn’t increase by a single penny. All the gains went to the richest 10 percent.

Of course, the size of the economy is not directly comparable to the incomes of individual households. The economy grows when the population grows, even if individual incomes don’t grow. Also, the individual statistics don’t include taxes and transfers like Social Security and unemployment insurance. However, none of these facts change the big picture: After three decades of strong economic growth, the average American’s paycheck has barely budged.

You have to ask yourself: What’s the point? Why do we work so hard to make the economy grow if none of it is going into our pockets?

It hardly seems fair, but that’s not the only problem. Inequality isn’t just the by-product of a broken system; it’s a cause of the brokenness as well.

A growing economy is like a growing child. It needs to be fed often and well. The more an economy produces, the more its citizens must consume. If most Americans aren’t earning more money, they can’t afford all that extra consumption. So they borrow more than they should, but all that borrowing requires growing paychecks to repay the loans. When debt outstrips income, they default, and the economy comes crashing down.

That’s what President Obama meant when he said this crisis has been three decades in the making. That’s why it has become his highest priority. All our economic problems — high unemployment, weak economic growth, excessive debt and financial instability — have the same root cause: Most people aren’t earning enough money — and it’s not because the economy isn’t producing it. It’s because a tiny portion of the population is siphoning too much of it for themselves.

It’s not just a matter of politics, as the President’s critics would have you believe. It’s a matter of basic economics. “Morning in America” has only been bright for a select few. For most Americans, it’s been as dark as night.

The Reaganomics experiment has failed. It’s time for all of us to see the light.

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This op-ed was originally published in today’s Huffington Post.

Reader Requests: How Do Corporations Do-Do That Voodoo?

A reader asks: You claimed that the United States has an average corporate tax rate of 13.4 percent, despite a statutory tax rate of 35 percent. How did you calculate the “average” corporate tax rate?

Actually, I didn’t calculate it. The Bush Treasury did. They divided corporate taxes by corporate capital income.

Another reader asks: Do small corporations pay the same “average” or “effective” tax rate as bigger corporations?

Technically, small corporations are supposed to pay less in taxes. Like individual income tax rates, statutory corporate tax rates are progressive: 15 percent on the first $50,000 of income, 25 percent on income from $50,001 to $75,000, 34 percent on income from $75,001 to $10 million, and 35 percent on income above $10 million. (It gets way more complicated, but the details aren’t relevant here.)   Continue reading “Reader Requests: How Do Corporations Do-Do That Voodoo?”

Chandra Mishra Rides Astride a Trojan Horse

When Professor Mishra and I debated the Bush tax cuts a few weeks ago, we agreed to limit the debate to income taxes, but the Professor went a bit off-topic. He spent half his op-ed talking about corporate taxes, and I didn’t get a chance to respond.

Until now.

First, let’s see what I’m responding to:

A high corporate tax rate moves jobs overseas. Currently American companies are sitting on more than $2 trillion of cash overseas, which is used for hiring and investments in foreign operations.

The United States has the second highest corporate tax rate in the world. Two things we must do to spur job growth and expand the taxpayer base in the America: Cut the corporate tax rate from 35 percent to 20 percent, the median tax rate for the developed countries, and eliminate the taxes on repatriation of foreign earnings.

Wow. Every sentence there is either wrong or very misleading.   Continue reading “Chandra Mishra Rides Astride a Trojan Horse”