From: Adam Rifkin (adam@KnowNow.com)
Date: Sun Sep 17 2000 - 03:22:49 PDT
Sounds like it's good to be the king...
> On a New Map, the Income Gap Grows
> September 17, 2000
> By DAVID CAY JOHNSTON
> DESPITE all the talk about prosperity in this digital age, tax return
> data indicates that the rising tide of bits and bytes is lifting
> the yachts much more than the rowboats.
> From 1986 through 1997, the latest year for which detailed figures
> are available from the Internal Revenue Service, the average income
> of the richest 1 percent of Americans soared 89 percent, to
> $517,713 from $273,562.
> Those figures are after federal income taxes have been paid, and
> are expressed in constant 1997 dollars to eliminate the effects of
> inflation. To be counted among the top 1 percent in 1997 required
> an after-tax income of at least $268,889, suggesting a pretax
> income of at least $440,000.
> But the incomes of those at the top did not rise steadily over
> those 12 years. The average declined from 1989 to 1991 because of a
> mild recession. And it dropped again in 1993, but that is probably
> a fluke, attributable to significant numbers of wealthy people who
> cashed in deferred income in 1992, in anticipation of an increase
> in the top income tax rate to 39.6 percent, a rate paid only by the
> top 1 percent of taxpayers.
> During those same 12 years, the bottom 90 percent of Americans,
> meaning everyone who took home less than $80,000 after paying
> federal income taxes, did not fare nearly as well.
> In 1997, the average income for the bottom 90 percent was $23,815,
> up a scant $364, or 1.6 percent, from 1986. This average also
> fluctuated during the 12 years, but the changes, up or down, were
> less than 2 percent in 11 of those years. The fluctuations were so
> tiny that in the chart accompanying this article they disappear,
> and the line appears flat.
> The figures were computed from an I.R.S. statistics-of-income
> report by the Center on Budget and Policy Priorities, a nonprofit
> Washington group that advocates policies that it says will benefit
> the poor.
> The center's report did not include one fact that illustrates the
> sharp divergence between the fortunes of the economic elite and the
> rest of America: From 1996 to 1997, the increase in average income
> for the top 1 percent of Americans -- a gain of $69,009 -- was nearly
> triple the total average income of the bottom 90 percent.
> Over nine years of economic expansion, the question of whether the
> fruits of the boom are being distributed fairly has become central
> in American politics. Competing policy proposals from Democrats and
> Republicans on issues ranging from taxation to health care to
> retirement savings are often based on fundamentally different
> interpretations of the available data. And the quality and
> reliability of the data itself is often hotly disputed by advocates
> in each camp.
> There are many ways to measure income, none of them perfect. Tax-
> return data like that examined by the center has the advantage of
> coming from documents that all taxpayers sign under penalty of
> perjury, and of being subject to comparison with W- 2 and Form 1099
> reports from third parties listing payments of wages, dividends,
> interest and royalties. Rent and capital-gain income, which goes
> mostly to the affluent, depends on the reporting of those who
> receive the income.
> Edward N. Wolff, an economist at New York University who studies
> the wealthy, said tax-return data gave a reliable picture of those
> with the highest incomes. But for the bottom 90 percent, he said,
> "the figures are biased downward," because a substantial amount of
> Social Security and other income is not picked up on tax returns.
> Income from tax-free bonds and the like is also omitted from tax
> returns, but it goes almost entirely to the wealthy.
> ANOTHER widely used measure of income, the Census Bureau survey
> data on median household income, also showed little change in
> overall income from 1986 to 1997.
> Adjusted for inflation, the median income rose just 1.5 percent
> during those years, to $37,005 in 1997 dollars. Unlike the tax
> data, the Census Bureau's survey figures tend to understate incomes
> at the high end, because of the methodology used to record large
> incomes. The bureau puts a cap on all income components -- salaries,
> for example, are capped at $999,999 -- so that a few extremely high
> incomes do not distort the survey averages.
> Those who report the greatest share of the nation's income also
> pay the greatest share of income taxes. In 1997, the I.R.S. data
> shows, people with incomes of $100,000 or more, about 5.9 percent
> of all taxpayers, made 34.5 percent of all the money and paid 53.7
> percent of the income taxes collected that year.
September 15 -- Sun Microsystems chief executive Scott McNealy received a salary and compensation package in the company's most recent fiscal year that could be worth up to $68.6 million, according to regulatory documents filed today.
The company gave McNealy a package that included a $103,846 base salary, a $4.8 million bonus and 500,000 stock options, according to a preliminary proxy statement filed with the Securities and Exchange Commission.
The packager covered Sun's fiscal year 2000, which ended June 30.
The stock options could be valued at $63.7 million if Sun's shares appreciate 10 percent each year until the options expire on April 12, 2010. The options have an exercise price of $80 a share. In fiscal year 1999, McNealy earned a salary, bonus and other compensation totaling $3.7 million and 200,000 stock options.
McNealy has been chairman since 1984 at the Palo Alto, Calif.-based maker of computer servers and workstations.
The company said McNealy's bonus was based on the company's performance, which included 33 percent revenue growth and earnings per share of $1.02 for 2000, compared with 70 cents in the previous fiscal year.
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