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Thread: Income Inequality

  1. #1
    Havakasha is offline

    Income Inequality
    Click on link and scroll down to see the essential CHARTS.

    WED NOV 23, 2011 AT 05:15 PM PST
    Income inequality and tax fairness in three charts
    byJoan McCarter
    Occupy Wall Street has made a difference in the public narrative to the extent that the traditional media is at least now aware of the idea of income inequality. You don't need more proof of that than this "Reality Check" from the Washington Post.

    It’s true that the share of the tax burden paid by the rich has grown. The first chart shows that the share of the overall tax burden paid by the top one percent has risen some 12 percentage points since 1986:

    But here’s the rub: The overall income of the top 1 percent has risen significanly faster than that over the same time period. The second chart shows that the percentage change of the overall average income of the top one percent has risen by 119 percent. That’s more than twice the amount of the change in their income tax, which grew by 54 percent in that time:

    And finally, the third chart shows clearly what this means: The share of adjusted gross income paid by the top one percent dropped by 10 percentage points over that time period. The bottom line is that the amount of after tax income has risen at a much faster pace than the amount they pay out of it:

    So, look, here’s the disagreement in a nutshell. Conservatives say we should not raise taxes on the rich because wealthy people are already paying a disproportionate share of the tax burden. Liberals respond that the wealthy’s after tax income has exploded at a far greater rate than their rate of taxation has risen. Liberals are proposing only a tiny adjustment in that trend, as part of a broader solution to reduce the deficit that would also involve those of much more modest means making sacrifices.
    There's a finer point to put on this, though. Liberals aren't just arguing over the fairness of the tax burden. The tax issue is basically highlighted now because the Bush tax cuts have been the primary driver of the deficit that the powers that be in Washington want us to think is the country's biggest problem.

    It's not. The country's biggest problem is in chart 2, above. The big problem isn't that the rich are getting richer and not paying their share. It's the fact that income has remained stagnant for 90 percent of Americans for three decades. Most of the 90 percent don't begrudge the wealthy their wealth, though in poll after poll it's clear that the 90 percent think the 10 percent should pay more in taxes. It's not about them getting richer, it's about us getting poorer.

  2. #2
    Havakasha is offline
    1) Income inequality is breaking America's political system, writes Peter Orszag: "It is striking that both income inequality and political polarization began to rise sharply in the U.S. in the mid- to late 1970s. Yet many pundits airily dismiss this connection, arguing that because blue states are, on average, higher-income than red states, the link between income and partisanship must be weak. Instead, they attribute increasing political polarization to the gerrymandering of legislative districts. Both of these assertions are empirically false...Residential segregation by income has been increasing markedly, and since income is strongly related to voting patterns, this phenomenon may help explain the rise in residential segregation by political party. As we surround ourselves with people like us, we reinforce our own views, and the result is a more polarized population."

  3. #3
    SiriuslyLong is offline
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    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    "Liberals are proposing only a tiny adjustment in that trend, as part of a broader solution to reduce the deficit that would also involve those of much more modest means making sacrifices"

    Plain BS! Liberals are proposing only a tiny adjustment in that trend TO APPEASE THEIR CONSTITUENTS TO GET ELECTED AND TO STAY IN POWER. It is class warfare. It is demogogeury. That's the democratic party - pitting one against another in order to gain power. Union vs. Corporation. Poor vs. Rich. Entitlement vs. Earned Success. Private Sector vs. Public Sector....

  4. #4
    Havakasha is offline
    2011 AT 05:45 PM PST
    Millionaire's surtax no 'job killer,' would hit just one percent of small businesses
    byJoan McCarter
    Speaker John Boehner has a sad for America's "small" businesses, like Starbucks.
    So far, House Speaker John Boehner is still resisting the idea that the continued payroll tax cut for middle-class America should be paid for by the 1 percent. Actually, as it turns out, the proposed 3.25 percent tax on millionaires would be paid by about one-tenth of the 1 percent, but that won't keep Boehner from bleating about "job creators." Which he's done in this case, with his spokesman telling reporters that the idea is a "job-killing tax hike on small businesses."
    Except, as Suzy Khimm explains, it's not.

    The millionaire’s tax would indeed affect about 30 to 40 percent of business income that’s reported on individual tax returns, rather than on corporate tax returns. But that income is concentrated among a very small group of small businesses. The tax would only affect about 1 percent of those the Treasury Department classifies as "small business owners."
    Just 2 percent of all business owners who file taxes through individual returns—including sole proprietorships, limited liability corporations, S corporations, and partnerships—have taxable income that’s more than $1 million, according to an August 2011 Treasury report. And just about 1 percent of those Treasury categorizes as "small businesses owners" would be affected by the Democrats' proposed millionaire's tax —about 273,000 in total. That number drops even further—to 51,000—if you define "small business owners" as those earning at least 25 percent of income through their firm.

    Of course, it all depends on how you define "small business," and we know that Boehner's definition doesn't really correspond to reality as most of us know it, since he calls the world's largest coffee purveyor a small business.

  5. #5
    SiriuslyLong is offline
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    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    The Daily Kos,, Huffington Post......

    You guys are pieces of work.

  6. #6
    SiriuslyLong is offline
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    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Municipal 'millionaires'
    Tax hikes to fund gov’t 1%-ers

    Gov. Cuomo, under enormous pressure from public-employee unions and Democrats in the Legislature to extend New York’s “millionaires’ tax,” is considering at least some higher taxes on higher incomes. The big irony here is that much of the money raised from any “millionaire” tax hikes would go to fund the growing phenomenon of public-sector millionaires.

    How’s that? Well, most dictionaries define a millionaire as someone with wealth (i.e., assets) of $1 million. By that definition, many New York teachers and the vast majority of police and firefighters are millionaires, because the “net present value” of their retirement benefits is well in excess of $1 million.

    That is, if they had to fund their retirements from their own savings, they’d have to set aside seven figures today.

    Few who don’t work for the government sector have comparable assets. Over the last several decades, the private sector has moved increasingly to the 401(k)-style “defined contribution” model, which yields a retirement nest egg based on what both employers and employees have contributed to individual accounts.

    Public-sector workers, on the other hand, still rely on “defined benefit” pensions, which provide a guaranteed stream of income based on career longevity and late-career peak salaries.

    A New York City public-school teacher earning $100,000 can retire at 55 with a pension of $60,000. A private-sector worker would need $1.2 million to buy an annuity with the same yield and starting at the same (relatively young) age, according to the online pension calculator developed by the Manhattan Institute’s Empire Center.

    Read it all here:

  7. #7
    Havakasha is offline

    DEC 01, 2011 AT 08:10 AM PST
    Mike Johanns: There's a 'change in mood' on tax increases in GOP
    byJoan McCarter

    Sen. Mike Johanns (R-NE)
    Yesterday, Republican Sens. Susan Collins and Pat Roberts suggested that they just might be open to the Democrats' pay-for for the payroll tax cut extension, a small surtax on millionaires. They're joined today by fellow GOP Senator Mike Johanns (NE), who says he sees a "change in mood" among Republicans.
    "I sense a change in mood," Senator Mike Johanns, Republican of Nebraska, said Wednesday. "It's a little more bipartisan. My position has always been, 'Let's not raise taxes,' but on the other hand, I don't want our country to collapse under a mountain of debt. If that means compromise, I am going to do everything to get that done."
    Three cheers for the recognition that higher taxes could reduce that "mountain of debt." That's a connection that very few Republicans seem keen to acknowledge. But this is another case of "I'll believe it when I see it." Note that no House Republicans have shown any bending toward this solution. But here's where a relentless focus on the GOP's allegiance to Grover Norquist and protecting the rich has paid some dividends: these Republicans see the need to at least pretend like they'd consider increasing taxes.

  8. #8
    SiriuslyLong is offline
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    Joined: Jan 2009 Location: Ann Arbor, MI Posts: 3,560
    Income inequality myths: No, the rich didn’t steal all the money

    By James Pethokoukis
    November 28, 2011, 11:52 am

    The core argument of the Occupy movement and its Obamacrat friends is this: The rich stole all the money. That explains why over the past four decades, the income of the broad American middle class supposedly has stagnated even as the economy expanded. Why? Did you forget already? The rich stole all the money. And now it’s time to take it back.

    And here are the numbers behind that claim, as calculated by the University of Chicago’s Tino Sanandaji (an absolute must-follow blogger, too): Between 1970 and 2008, real per capita GDP increased by 108 percent (based on national accounts data calculated by the Bureau of Economic Analysis). But according to economists Thomas Piketty and Emanuel Saez — favorites of inequality alarmists — the taxable income of the bottom 99 percent increased by just 12 percent. So the real GDP per person doubled but middle class incomes barely budged? Income inequality must be the culprit. The rich stole (nearly) all the money.

    But, as Sanandaji points, Piketty and Saez dramatically underestimate income growth during the period, finding that real average taxable income for everyone grows by just 29 percent. His solution:

    My simple method is combining the best income-distribution estimate (from Pickety&Saez) with the best income-growth estimates (from GDP numbers). This method shows that that between 1970-2008 the real per capita income of the “Bottom 99 Percent” grew by 80%, and the income of the “Bottom 90 Percent” grew by 60%.

    This will get you to the top of the first graph:

  9. #9
    Havakasha is offline
    The movement to raise taxes on the wealthiest Americans has gained an ally at the top of one of the United States' largest banks. Ruth Porat, executive vice president and chief financial officer at Morgan Stanley, said on Saturday at the Economist's World in 2012 summit that the government needs to raise taxes on the rich to address its budget deficit.

    "The wealthiest can afford to pay more in taxes. That's a part of the deal. That makes sense. I don't know anyone that doesn't agree with that," Porat said. "The wealth disparity between the lowest and the highest continues to expand, and that's inappropriate."

    "We cannot cut our way to greatness," she added.

    President Obama has said he would like to raise taxes on millionaires, but many Republicans oppose such a tax. Most millionaires, on the other hand, say that they would like to pay more in taxes.

    Porat said that the global markets are more stressed now than they have been since the financial crisis in 2008. She said bank debt is now less trusted than other corporate debt, borrowing costs for European countries such as Italy have reached record highs, and banks have become less confident lending to one another. Since banks around the world now are focused on paying down their debt, they are less likely to lend to businesses and consumers, she said.

  10. #10
    Havakasha is offline
    Going back to pre-Reagan-type higher-income taxation would yield about $1.1 trillion over the next decade.
    That would not by itself close the budget gap– but no one thing would. And, you know, $1.1 trillion here, $1.1 trillion there, and soon you’re talking about real money.

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