It is my contention that there is increasing income inequality in the United States of America, just as this article infers, and I further contend that this inequality is caused by the fiscal policy of the U.S. Government. The U.S. Government's fiscal policy, which I have named USAPonzi, is Favoring the Rich and Cheating the Common Man.
How can Fiscal Policy cause Income Inequality?
The U.S. Government is undertaxing the U.S. citizens and businesses with its GAAP basis Deficit Spending ($6.94 Trillion in FY2015) and most of that benefit is realized by the wealthy.
The Government of the United States of America is operating a massive Ponzi scheme (USAPonzi) by committing to pay significant social benefits to residents of the United States but choosing to not tax the current U.S. citizens and businesses sufficiently to finance these social benefit commitments (or even to pay our current bills) and instead passing these financial responsibilities to the future taxpayers. The U.S. Government is covering up this Ponzi scheme by using Cash Accounting rather than the appropriate GAAP Accounting that would report the level of taxation that would be required pay our current bills and to adequately finance the social benefit commitments to the residents that are eligible for these benefits (see Introduction to USAPonzi for more details on this Ponzi scheme).
The U.S. Government has been doing this for 46 years (since FY1969) and as a result has undertaxed the current and previous U.S. citizens and businesses by a total of $98.7 Trillion (our GAAP Obligation as of Nov 1, 2014) making many U.S. citizens and businesses appear to be very, very rich and making many U.S. businesses appear to be very, very successful, profitable, and valuable.
Chart 1: U.S. GAAP Deficit and GDP
Actuals thru FY2013 then USAPonzi Projections
See USAPonzi Fiscal Model
Chart 1 above; shows how much the U.S. Government is undertaxing U.S. citizens and businesses on a GAAP basis, $6.4 Trillion in FY2014 and $6.9 Trillion in FY2015 etc. and this GAAP Deficit is increasing exponentially. Our GAAP Obligation ($98.7 Trillion as of Nov 1, 2014), which is the cumulative effect of our GAAP Deficit and the amount owed by future taxpayers, is increasing by this GAAP Deficit each year and since the current U.S. citizens and businesses do not have to pay these taxes, U.S. citizens and businesses appear to become richer each year by this amount.
Chart 2: U.S. GAAP Deficit as a percent of GDP
Chart 2 above; shows our GAAP Deficit as a percent of GDP, which as this chart indicates is on an upward trend and in fact the USAPonzi Long Term Projection demonstrates that if we continue with current fiscal policy (USAPonzi), our GAAP Deficit will EXCEED GDP by FY2052.
But let's get back to the topic at hand; how does our current fiscal policy (USAPonzi) cause income inequality? By using Cash Accounting the U.S. Government has made the decision to not collect the taxes ($6.94 Trillion in FY2015) from the U.S. citizens and businesses that are required to balance the GAAP basis budget. By default it is the wealthy that get the benefit of this undertaxing since they are the only one's that would have the money to pay the bills if the U.S. Government chose to stay current with their finances.
That is why the wealthy appear to be $98.7 Trillion richer than they really are and every year they get even more counterfeit money stuffed in their pockets, since the GAAP Deficit is growing exponentially. At the same time, the people that are expecting to receive social benefits get nothing put into the social benefit trust funds. In fact, the Government has already spent all of the money that has been paid in to fund these trust funds and every year the Government spends all of the "trust fund" money that is collected from taxpayers that year.
The current fiscal policy of the U.S. Government (USAPonzi), makes the Rich get richer and the Poor get poorer.
Cash Accounting is just a coverup for the real problem!
While this website seems to focus on the undertaxing of the U.S. Government by using Cash Accounting rather than the appropriate GAAP Accounting, the real problem is that the U.S. Government is overspending and overcommitting. Using corrupt and fraudulent Cash Accounting is just an attempt to coverup for this overspending and overcommitting. We must make dramatic cuts to both our spending and committing to resolve this crisis, but knowing how much we need to cut can only be determined with proper accounting. That is the first thing we must fix. We must begin using a proper accounting system.
USAPonzi is creating massive private net worth for U.S. citizens and businesses ($112.8 Trillion) by incurring massive public liabilities ($98.7 Trillion). This is why we have so many HNW and UHNW individuals in the world and this is why 49% of them are in the United States. This is why we have "the perception that the very wealthy have benefitted most in this favorable economic climate".
But the "favorable economic climate" is an illusion created by a Ponzi scheme and the "wealth" is created with counterfeit money.
Next Page: High Profits-A Byproduct of USAPonzi