President Bush has got to be the most powerful man to ever walk the face of the earth. Kevin Drum has a long post today about the growth in inequality in income and a discussion attempting to debunk the ‘myth’ of income mobility. He has some very telling charts, and then closes with this sweeping indictment of our current President:
This is fundamentally unhealthy in a democratic society. When the rich absorb more and more of the economic growth of the nation, and the poor begin to lose hope of economic advancement, you have a potentially toxic combination. George Bush and the policies of the Republican party are making this ever worse, and someday soon the poor and middle class are going to figure out what’s going on. How about 2004?
Here are the charts- why am I laughing?
For his next trick, Bush will explain how he shot Kennedy, started WWI and WWII, and helped to craft the policies that led to the Stock Market Crash. By the way, he apologizes for starting the Aids epidemic.
Kevin Drum
Now, now, John, I said that GWB is making it worse, not that he started it.
We all know that Ronald Reagan is the guy who started it.
Heh heh.
Toren
I am agog.
What’s the quote Andrea came up with that sums up the lefties’ thinking on Bush?
“Fickle fackle Bush Bush BUSH!!”
Cool that he can time travel, though.
Emperor Misha I
Also, if one cares to look at the top graph closely, one will notice that whereas the rich HAVE, indeed, been getting richer, the poor have been… Well… Getting richer too.
Whatever will we DO?
“Income Inequality” is just so much Socialist Hogwash. Your quality of life NEVER depended on whether your neighbor was driving a Taurus or an Infinity.
Unless you’re a terminally envious socialist fuckhead, of course.
Misanthropyst
To quote Daniel Patrick Moynahan, I believe there is a kernel of truth to these allegations. And they deserve some honest inquiry, not ad hominem attack…
MonkeyPants
Why not? “Ad hominem attacks” are SOP for reactionary leftists.
Andrea Harris
Actually, it was the Blogger Formerly Known as Juan Gato* who came up with that quote. I just knicked it.
*That’s what I call him.
Dean
Huh?
So, none of this shows ANYTHING about Dubya. So, what does this have to do w/ Bush ’43?
BUT we DO see that, in the 1990s, more families stayed in the same quintile, and fewer families moved up one quintile than in decades past. Who was Prez then?
Most importantly, if this really began under Reagan, which I think Kevin Drum really DOES believe, then it’s been going on for almost thirty years. Why haven’t the poor and the middle class woken up yet? I mean, is it that they’re just stupid, or are you a believer in the Chomsky “Great Wurlitzer” biz, complete w/ media conspiracy to keep out the truth?
But then, it’s been a tenet of the Left’s faith for most of the 20th Century that the people were going to wake up, and accept first socialism, then Communism, and now some form of Leftism. Rotsa ruck, guys.
Misanthropyst
I don’t think that the realization that there has been a great transfer of wealth leads inexorably to some desire for socialism or communism.
What it may remind people is that the wealthy elite have always attempted to garner as much wealth as they can. And that a democratic capitalist system is not necessarily the same as unfettered laise faire (sp) capitalism.
Moderation, my friends. In everything…
christopher blank
Perhaps the top quintile rise in income has to do with two phenomena: the inclusion of women in the work force and the correlation of high-income women, when they do marry, to more often thatn not marry high-income men – in effect doubling the family income from the beginning of the study period. If this was the case, tehn it woudl be “reactionary” to try to reverse this trend rather than celebrate it as a product of progressive social policy. Perhaps??
james
How many times was the povertyline adjusted during these 30 yrs.?
David Perron
Just so those readers who are evidently missing it get the salient points, here:
1) The chart only goes up to ’00. GWB was elected in ’00. Therefore, nothing that actually occurs before ’00 can be blamed on him. Unless, of course, he’s enough of a diabolically evil genius/idiot to have invented time travel.
2) What in the hell does “real income” mean? What is counted as “real”?
There’s probably lots more that I missed, but what the hell, i’s just an engunir.
John Cole
THank you Dave.
Andrew Lazarus
David, sight unseen I’d say “real income” means constant dollars (as opposed to nominal income in inflated dollars).
Matthew
I think what Kevin is trying to say is that Bush shouldn’t repeat the disastrous policies of the Clinton administration which caused such a huge jump in inequality from 1993-2000 after the progressive first Bush administration raised taxes in 1991 and reversed the dangerous trend of inequality ever so slightly.
Right?
Gregory Markle
Hmm, I think you fellers missed the REALLY INTERESTING thing displayed by this graph.
IF you examine the peaks and valleys of the blue line (representative of rich, white conservative oppressor types aided by the vast right-wing conspiracy) you’ll notice a peculiar trend. The climb to peaks in the line ALL begin under Democratic presidencies: in the mid to late 60’s under Kennedy/Johnson, mid-70’s under Carter (with a short downward dip at the Carter/Reagan transition), and early 90’s under Clinton.) Conversely, downward trends in the accretion of wealth at the top of the heap begin exclusively under Republican administrations: 73 under Nixon, early 80’s under Reagan (very short) and late 80’s under Bush I (one can also detect what look like plateaus around presidential election years.)
Exactly how does this cretin claim that Republicans caused the rich to get richer when his data shows that their gains came almost exclusively at the hands of liberal presidents (with the Clinton years being a boom-time for the rich getting richer) and their losses occured under the guidance of conservative leaders? Can’t these people even read a damned graph?!
Robin Roberts
Uh, no, Gregory, he can’t.
David Nieporent
There are many other problems with those graphs. For one thing, dividing households into quintiles is, statistically speaking, gibberish. It’s the equivalent of adding fractions with different denominators. Households don’t all have the same numbers of people in them. Suppose you have two households, one where each spouse makes $50K and one where each spouse makes $10K. Now suppose the bottom household experiences divorce. Suddenly the gap between top and bottom household increases, without any change in economic policy or individual earnings.
Moreover, why should an increase in the gap need to be offset by an _increase_ in mobility? Mobility is a relative measure already.
Kevin Drum
OK, folks…..
1. “Real” income means adjusted for inflation.
2. The downward spikes come during recessions. The last three recessions have been during Republican administrations, that’s all.
3. I didn’t suggest GWB was responsible for the results shown in these charts. However, given that these are the trends, I *did* suggest that his policies will make things even worse. And they will.
4. No, mobility is not related to inequality. However, conservatives usually argue that inequality doesn’t matter because mobility is high. That’s why this data is relevant.
5. I know this all seems like partisan one-upsmanship to most people, but this is a serious problem. Income inequality is reaching historical highs, and in the past this has meant big trouble. I’d just as soon avoid that kind of trouble.
Steve
Why are you laughing John? Because it is clear from Kevin’s own data that there is an upward trend to the top quintile since the late 1960s. This trend has gone through 12 years of a Democratically controlled White House, and I’m not sure how many years of a Democrat controlled Congress.
The only way Bush could do this is if he had a time machine which indeed makes him extremely powerful.
This trend is so obvious you don’t need to do any fancy statistics (like a regression) to see it. Further, the downward blip in the top graph probably coincides nicely with the previous recession.
As for inequality being good or bad, interestingly enough I have blogged on this in a more thorough manner than Kevin has, i.e., I have gone and found actual articles that look at inequality, voting and growth.
Here
And here
The short answer is that the issue of inequality and growth is not anywhere near being settled.
I know this all seems like partisan one-upsmanship to most people, but this is a serious problem. Income inequality is reaching historical highs, and in the past this has meant big trouble. I’d just as soon avoid that kind of trouble.
I don’t expect Kevin to answer this, he is hit-and-run commenter, but I’d love to see what his justification for this statement is.
“It is bad”. That is his argument stripped of all the attendant silliness.
Steve
Another thing I just noticed.
The graph terminates at 2000. There is no data in there for Bush. That increase in the rate of increase for top quintile you see at the end of the data series…that was all Bubba Clinton’s!
Way to go Democrats! Increase that inequality.
Oh…wait, I bet Bush has a mind control device too and was actually making Clinton do that.
Darn…
Misanthropyst
Hmmm…it is just possible that this issue has nothing to do with party affiliation. Indeed, party affiliation might just be a tool to advance this trend. The usually pointless lefty/righty arguments we’ve been seduced into wasting our time and effort on may just be a sleight of hand, some masterful misdirection…
JKC
Steve-
I was all set to take your argument under consideration when you took a gratuitous cheap shot at Kevin. He’s already said that George Bush is NOT responsible for the increase in income inequality. All he’s said is that he thinks the Bush League’s tax policies will exacerbate that gap, and that he thinks that’s a bad thing.
I’ll admit the economic theory in the paper you cited went way over my head, but it seems to me that you can get whatever results you want out of the formulae they apply.
I prefer the lessons of history: increasing economic inequality (as well as real or perceived social inequality) tends to lead to increasing social and political upheaval, sometimes with disastrous long-term results. Five examples that come to mind are:
1) The American Revolution
2) The French Revolution
Good results, democracy, freedom, etc. But how about..
3) The Russian Revolution
4) Communist China
Not so good, eh? Finally, there’s
5) the current social and political upheaval in Argentina and Brazil.
We’ll see how that turns out. The question here that none of my conservative friends seem willing to address here is whether we should gamble with that sort of upheaval here in the US.
Dean
JKC:
Surely you’re not about to argue that the United States is anywhere comparable to pre-1949 China or pre-1917 Russia? (BTW, I’d actually place the French Rev. in their company, both for leading to the Terror, and b/c they were all starting from peasant-based, non-democratic societies).
You’re a little closer w/ Argentina (I’d venture that Brazil suffers from similar flaws), although decades of Peronist-type rule has led as much to an economic illiteracy as anything else.
Look, we’ve been hearing, at least since the Reagan admin, about how the middle class is disappearing. How the heck could it still be around? Why hasn’t there been the outrage in the streets that gets predicted every time a Republican gets elected?
Moe Lane
“The question here that none of my conservative friends seem willing to address here is whether we should gamble with that sort of upheaval here in the US.”
Considering how low-probability the scenario is, I see no reason why I should especially worry about it. I don’t worry about being hit with a meteorite, eith… OWW!
Dammit, that stung.
But I’m -still- not going to worry too much about a income-inequity revolution in this country. People /will/ riot on a full stomach – just ask any sports fan – but Aactually trying to topple a government requires that you have some long-term fire in your belly. From what I’ve seen and read, regular meals are not condusive to keeping that fire alive.
Moe
David Perron
I’ve seen something else odd about those charts. I’m wondering how the ’90s bubble actually had fewer households moving up one quintile or more than the previous couple of decades. The largest peacetime expansion in history had fewer people moving up or down in quintile than the previous couple of decades? I don’t see how that could be the case. You’d have to show me. Does the chart mean the households moved up or down within the decade, or just between the beginning and the end? Hopefully these are not the same families in the 70s,80s and 90s; that would make for some skewed data.
The source for the data is given as “Author’s calculations from data collected by the Panel Study of Income Dynamics”. It’s difficult to assess the validity of these charts without knowing exactly what data manipulations were involved.
Still, the same conclusions apply. This study has absolutely zero to do with anything GWB has done or will do as president. Not to beat that Drum too much, but while Kevin did finally admit that Bush can’t be held responsible for events preceding his swearing-in, he did claim (sans any support in fact whatever) that Bush will make things worse.
Still, this is several steps above Guy Cabot’s insane claims that the end of the 90’s bubble was in anticipation of Bush taking office, and that the economic peak of 2001 anticipated implementation of Bush economic policy.
JKC
Moe-
I’m not so much concerned about rioting in the streets as I am with a feeling of disconnect from the government. Voting participation keeps going down: is it because of apathy or because increasing numbers of people feel they no longer have a voice in the government? If the game seems rigged so that the “elite” (however you choose to define it) can play by a different set rules from the rest of us, then why bother to participate? THAT, IMHO, is one of the problems with the growing gaps between the top income groups and everyone else.
I suspect (but can’t say for certain) that many of the people enjoying these spiraling incomes are upper-level corporate executives. How many of them actually earned the money they got? Is it healthy for the US in the long term to have more and more of a finite resource (capital) controlled and held by a smaller group of Americans? That, I think, is the essence of Kevin’s question, and mine.
Dean
Capital as a finite resource??
That beats even Ehrlich’s position. At least he was focused on natural resources….
JKC
My bad, Dean. “Relatively finite” at best. I hope the rest of my point still stands.
David Perron
JKC, I don’t see how you can make a case for decreasing voter turnout. Certainly there has been higher turnout than in the last election, but there’s also been a lot lower. Typically, turnout is 50-60% for Presidential elections, and 30-40% for Congressional.
But you might have access to more historical data than I do; mine only goes back forty years or so.
Steve
First off Kevin deserves every cheap shot he gets on that shit screed. He blames the Republicans for all of it. Ignore the fact that the Democrats had the White House for 12 of those years, the last 8 when the rate of increase in the mean income for the top quintile increased were under Cliton!
Forget that the Democrats also controlled one or both houses of the Congress for part of that time as well.
Blaming this just on the Republicans is either idiotic or dishonesty. I know Kevin isn’t an idiot.
There are many, many things wrong with that post.
I have posted a response here.
Moe Lane
“Voting participation keeps going down: is it because of apathy or because increasing numbers of people feel they no longer have a voice in the government?”
Depends: would you put ain’t-broke-syndrome under apathy? I know more than one person who doesn’t vote mostly because everything’s fine, from their point of view, and they don’t want to jinx things. I think that’s inane, myself – but the practice does exist.
Back to the matter at hand… in the end, I don’t really much care if some people get richer at a faster rate than I do (full disclosure: between the two of us, my girlfriend and I make up a 2nd quintile household). I’d feel differently if we had systematic, Third-World levels of starvation in this country – but we don’t, and I don’t think that we’re won’t to any time soon.
Moe Lane
Replace
“and I don’t think that we’re won’t to any time soon.”
with
“and I don’t think that we will any time soon.”
M. Scott Eiland
Another amusing side point regarding Kevin’s apparent inability to read a calendar. . .since the upper two quintiles almost certainly have a much larger percentage of their wealth in stocks than the lower three, I’d be willing to bet that they trended strongly downward in 2001 and 2002, with the lowest quintile staying pretty much the same, since most of them don’t have a huge stake in equities to drop in value. Of course, I’m sure that Kevin would have posted this data if he’d had it, even though it would have kind of messed up his point. . .
A bridge? Why, I’d love to buy a bridge–do you have one closer than Brooklyn?
Stentor
Can someone quote for me where in Kevin’s post he blames the Republicans for the trend he identifies? He certainly blames them for misunderstanding it (and judging from this thread they’re happy to return the favor). The best I can do is that he partially blames the tax structure, and there’s a relatively high correlation between “tax policies Kevin Drum doesn’t like” and “tax policies advocated by Republicans.”
David Perron
George Bush and the policies of the Republican party are making this ever worse, and someday soon the poor and middle class are going to figure out what’s going on. How about 2004?
There. That should satisfy.
Steve
Yep David nailed it. That last quote indicates that Kevin thinks this is “ever” the Republicans fault. His own data shows that at best neither party gives a crap about it, but he doesn’t let this stop him from putting forward his claim.
Peter
Government has very little to do with who (except government workers) earns what. It does have much to do with who keeps how much of their income. The latest round of ‘tax cuts for the rich’ removed many lower income people from the income tax rolls entirely.
The last year for which there is finished data as to who paid what percentage of the income tax was 2000.
The top five percent income bracket paid 56.47%
The top ten percent bracket paid 67.5%
The top 50 percent paid 96.09%
The vast majority of Federal Spending is in saleries and domestic programs. There is a vast, ongoing transfer of wealth from that top half of income earners to the bottom half.Some of it is highly visible, social security, medicar, your postman’s salery, that sort of thing, including the programs we lump under the term ‘welfare’.
Some of it is less visible, the payments to the guy cranking out 5.56 ammo at an ammunition plant that devotes 30% of it’s production to a military contract, for instance. Grants to cities that pay part of the saleries of some cops, for another.
The stagnation of the bottom quintile has nothing to do with Federal policy or who is in Washington, DC. It has everything to do with a permenent subculture of illiteracy, illigitimacy, substance abuse and crime. Anyone who thinks that a change in that will depend on who is elected to what office is living in a dream world.
JKC
And of course Peter tries the old Republican three-card monte of dealing only with income taxes paid, as opposed to all taxes – like payroll, sales and property taxes.
Try again, Peter. We’re on to this one. Tom DeLay at his most rabid and incoherent could do better than that.
JKC
And while I’m dissecting pathetic arguments… quoth Misha:
“”Income Inequality” is just so much Socialist Hogwash. Your quality of life NEVER depended on whether your neighbor was driving a Taurus or an Infinity.”
That is true. It does, however, depend on your ability to afford decent housing, feed your kids and save for your retirement, especially when the CEO of your Fortune 500 company spent your pension fund on his mistress and bail money.
Unless, of course, you are a dumb-ass inbred fascist cretin whose parents were related before marriage, too.
See, Emperor Misha I, I can call names too. Must mean my arguments are even better than yours.
Sheesh, John. You usually attract better posters than this drivel.
David Perron
Actually, the top 40% pay 95% of all income taxes, JKC. If you count payroll taxes, the answer will probably slide back a bit, due to the Social Security cap. But you have to remember that SS is essentially a flat tax until you hit the cap, so the 1st and 2nd quintiles are going to pay more to payroll taxes than are lower quintiles.
It’s actually a regressive tax, if you want to call it a tax, in the sense that the upper quintile pays a lower percentage of income to SS than does the middle quintile.
amy
The rich are getting richer, according to these graphs…. but so are the poor. Moreover the poor have gotten fabulously more wealthy since all those horrible capitalists started oppressing the poor downtrodden masses during the industrial revolution.
The Organization for Economic Cooperation and Development estimates that world per capita GDP rose from $565 in 1500 to $651 in 1820. from 1820 to 1990 per capita income rose from $651 to $5,145. Capitalism has caused a bounty of good things along with relative wealth. People are living longer and infant mortality rates have dropped in this century because of that increase in wealth and the resultant spending on health issues. (and, as P.J. O’Rourke pointed out, no matter how much income disparity there is in any given society… the oligarchs don’t get to be 225 years old thus wildly skewing the average life span).
Everyone is better off in modern society because capitalism harnesses mans’ striving for his own gain to benefit everyone (that invisible hand, don’t ya know). That your average rapacious investment banker on the make does intend the good he does is his problem and not societies because the benefit is there all the same.
Moreover, and since I’m mid-rant, there is a biblical injunction against the “fairness” that socialists want to force on the world. With only ten really BIG rules, God used one of them to warn against coveting stuff that’s your neighbor’s. Right in there with “you can’t just kill any damn one you want” and “keep your trouser snake away from other people’s wives”, God found the time to tell humans “don’t envy your buddy’s rider mower with the double bag attachment… get off your lazy ass and earn one of your own”
Also JKC, capital is not finite, not even relatively so. Monetary Policy aims to have growth in the money supply roughly match growth in productivity. And productivity is extremely expandable.
JKC
David- I don’t have the link, but I recently saw an article in the WSJ that said if you add in other taxes (including payroll taxes) the tax rate in total is almost flat. The argument about income taxes being paid in large part by a small number of people would only hold water if those other taxes did not exist.
JKC
Amy-
The Bible is not an economics text. You can talk about the Ten Commandments and I could refer you right back to the entire New Testament. It’d be more or less a draw, but I suspect I’d come out ahead.
The argument Kevin is advancing is not that “the poor” aren’t doing better; it’s that a small percentage of people are gaining wealth at a much faster rate than most others.
You know, only Moe and David have even attempted to answer Kevin’s argument (which I agree with.) Everyone else here seems to be either misreading what Kevin said, or completely ignoring the azrgument.
Amy
JKC… it is amazing how much good common sense is in the Bible even though it is not an economics text.
Interestingly enough, Milton Friedman and Fredrick Hayek agree with God on this point… income disparity is an assinine thing to focus on since I don’t get poorer when someone else gets richer. I might even get richer myself because, barring rich people deciding mason jars buried in their (oppressed lawncare worker kept) lawns are the preferred method of keeping their wealth, money will be invested back into the economy and will create jobs.
And no one here seems to have missed “the argument” that is being made. “The argument” is just eminently mockable and so mock we must.
JKC
Yes, Amy, the Bible is full of wisdom. You might try reading the parts that aren’t about smiting sometime, although I’m sure you wouldn’t find that as much fun.
Let me use small words so you can understand. The problem with increasing income inequality is NOT that the “poor are getting poorer.” That’s obviously debatable and irrelevant. My point is that a society in which the majority of people feel that they’re living under a different set of rules than the elites is a society that is in danger of becoming unstable and making some really dangerous political choices.
Peter
The poor that keep getting poorer are doing so because of their actions. I’m sorry that people are having children they cannot raise but it’s not my fault. The poorest quintile share certain common things they do. They drop out of school. They have too many children, too young. Substance abuse and crime.Refusal to even attempt to get into the mainstream of society.
The rich are not getting rich stealing from the poor, it doesn’t work, the poor haven’t any effing money.
I’ll ammend that some, the Ken Lays, the Terry Mcauliffes that got wealthy off pyrimid schemes like Ennron and Worldcom (hint, never invest in a company that you can’t figure out what they do from the name of the company)got a bunch of money from folks who had considerably less. Of course, you will try to blame that on Bush, since their schemes were hatched during the Clinton years and exposed under Bush.
The income taxes fund the government, the sales taxes are, to an extent, reletively flat. My state doesn’t tax groceries and medicine. The poorer people spend a higher portion of their income on groceries than most wealthy folks do. Sales taxes are most often on discretionary purchases. Since the wealthy make more of those (or should, if you want to stop being poor spend less than you make)so they pay more sales tax. There’s a helluva lot more sales tax on a CEO’s Armani suit than on my blue jeans and chambrey shirt.
Social security payroll taxes? Since damned near everyone will get back more than they paid in, until the whole Ponzi Scheme collapes anyway, that doesn’t transfer money from the poor to the wealthy.
Sorry, the only wealthy people getting rich off the poor in this country are those owning businesses where the poor piss their money away.
The argument is much like that some years back where Crack was a plot by the evil white people to keep the black community in chains. It was real popular until somebody asked the embarrassing question…if you know it’s a plot, why do you step into the trap?
There IS a transfer of wealth. With the exception of trust fund Democrats it’s from the rich to the poor.
There are some other ways to transfer money from the poor to the wealthy. The poor go to movies more than the wealthy. People with lower incomes tend to buy more compact discs. The wealthy tend to buy more of that other kind of CD, the ones that pay interest.
I can’t predict wether someone will be middle class or Bill Gates rich. I can predict wether someone will be one of the poor. All I have to do is look over their school attendance, see if they can read an comprehend a newspaper, ask them to do some simple arithmetic in their head, ask them to write a one page memo and talk to them for five minutes. Oh, and run a quick urinalysis. If they can’t do those things and pass a UA they damned well better be able to play sports or sing, becuase they damned sure aren’t going to make it in the workaday world.
Amy
No nede tu yous smaal wurds, JKC, cuz huked un fonniks werkt fer me;-)
You have not been arguing the point that wealth changes the level of justice one can expect in society. You have seemed above to be arguing decent housing, food for the children
Amy
Amended last sentence to my 10:44 pm post.
I can assure you the poor
Dean
JKC:
Your earlier comment about capital as a finite resource does not, of course, necessarily automatically invalidate all of your arguments, but it does, I suspect, reveal quite a bit about your perspective on economic affairs, much as Ehrlich’s bet w/ Simon revealed much about each person’s perspective on the impact of markets on resource pricing.
As for the taxes issue, I would suggest that it is hardly Peter that is playing three-card monte.
If the issue is whether the current tax cut makes any sense, then the discussion is about income taxes. If you want to argue that FEDERAL TAXES IN TOTO are too high, then the issue rests at least as much w/ the structure of non-income taxes, since the income tax system is, in fact, progressive.
What that has to THEN do w/ Kevin’s (and your) argument about supposedly expanding differences between the rich and the poor is still unclear.
Are you suggesting that the tax system should aim at decreasing the gap between rich and poor, a gap, as you yourself note, rooted in a slower rate of growth of poor income? Are you suggesting that somehow, the purpose of the tax system is therefore to retard the growth of income of people in the top quintile?
If that’s what you believe, then you should say so, in as many words. And you should explain what kind of tax rate (I suspect confiscatory levels) would achieve this, and why you think the American people would (much less should) buy into this?
JKC
Dean-
I already retracted the line about capital being finite; much as I hate to admit it, I was wrong about that. I’m not so sure I’m wrong about *available* capital being finite, though. Maybe I’ve spent too much time listening to the Concord Coalition, but the projected deficits scare the hell out of me. What happens when the rest of the world decides they no longer want to fund our deficits?
I most certainly am NOT in favor of “confiscatory” tax rates, nor do I think that income redistribution *in either direction* is a sound policy. I guess if you held a gun to my head, I’d say keep the estate and dividend taxes in place for starters, and stop gunning for the earned income credit. At the same time, politicians on both sides of the aisle need to develop the balls to say “You want program X? It’s gonna cost you this many dollars. How do you want to pay for it?”
Hope that clarifies my position. I’m afraid my late night, after-the-kids-are-in-bed posts aren’t always my most lucid.
JKC
Peter and Amy-
If you’ve ever bothered to read my other posts here, you’d know I don’t believe the rich are inherently evil. On the other hand, I don’t believe that everyone (or even most people) who are less well-off have some sort of moral defect.
Re-read upthread, kids. My concern about income inequality ain’t Marxist: it’s based on my (admittedly amateur) reading of history. Disagree if you want; I certainly don’t post here ’cause it’s an echo chamber. I do, though, tend to tune out people who throw the Marxist epithet about and who like to substitute smarminess for reasoned argument.
David Perron
So, JKC, do you have any solution to the perceived problem of inequality?
I’ve belonged to nearly every income quintile (‘cept the top, which I hope to break into), and I’ve never had a problem with people making more or less than me. Other than when it was artificially so, as in when the guy that swept the floor made more money than me because it was a union shop.
JKC
David- short answer to your question is no. I’m just a humble health-care practitioner. My suggestions above mainly amount to keeping taxes progressive without being confiscatory. Other than that, I don’t know what the answer is. My gut-level guess is that technology has left us in uncharted territory economically.
I don’t know what’s going to happen next.
Dean
JKC:
I think you’re being a tad bit disingenuous. After all, not only do you want to keep taxes progressive w/o being confiscatory, but by your own comments, you clearly believe that:
CURRENT income taxes are not sufficiently progressive; AND
CURRENT taxes in toto are too flat.
Moreover, as I suggested earlier, your comments at least imply that taxes should be used to even out the disparities between the quintiles. What you haven’t addressed is whether they should retard the highest quintile’s accumulation of capital, or whether they should somehow accelerate the lowest quintile’s accumulation.
That’s actually a fair bit to conclude, don’t you think?
David Perron
I’m a little baffled as to why it’s a given for JKC that taxes ought to be progressive. Is there a reason behind that opinion?
JKC
I’d say that under the Bush tax plan taxes aren’t progressive enough. I’d also say that between Clinton and the GOP congress in the 90’s, the blend was about right. God knows getting the balance right is a walk on the edge of a volcano.
As for why taxes should be progressive, I guess because progressive taxation has worked in every Western country for the better part of the last 100 years. Flat taxes sound good in theory, but in reality, while people as fortunate as I can take (for the sake of argument) 20% off the top in taxes, the same rate on a minimum wage worker barely scraping by might push them onto the wrong side of the poverty line.
JKC
And as an aside, if I were in charge, there’d be a big-time crackdown on corporate tax loopholes.
David Perron
The sure way to fewer loopholes is a less complex tax code. The more detail you put in the tax code, the more opportunities there will be to work around those details. And, the more progressive you make taxes, the harder the wealthier folks will work to ensure that personal income tax loopholes exist.
BTW, JKC, I don’t believe there are many flat-tax advocates recommending taxing down below the poverty line.
JKC
“I don’t believe there are many flat-tax advocates recommending taxing down below the poverty line.
”
Agreed. But as many a conservative would say, it’s those unintended consequences that’ll getcha every time…
Steve
“As for why taxes should be progressive, I guess because progressive taxation has worked in every Western country for the better part of the last 100 years.”
Worked how precisely? Your views seem to be informed more by seat of your pants thinking than a serious and in depth thought process.
“Flat taxes sound good in theory, but in reality, while people as fortunate as I can take (for the sake of argument) 20% off the top in taxes, the same rate on a minimum wage worker barely scraping by might push them onto the wrong side of the poverty line.”
A flat tax with a sizable deduction IS progressive. Do the math. You have a $30,000 deduction and after that all income is taxed at say 20%.
Steve
“The sure way to fewer loopholes is a less complex tax code. The more detail you put in the tax code, the more opportunities there will be to work around those details. And, the more progressive you make taxes, the harder the wealthier folks will work to ensure that personal income tax loopholes exist.”
David,
Good point. Public finance economists look at three things with regards to taxes: equity, simplicity, and efficiency.
Kevin Drum on the other hand argues these guys are wrong and that only equity needs to be addressed. Gee, who should be more knowledgable of taxes a V.P. of marketing or public finance economists…? Hmmm, that’s a tough one.
JKC
Steve; given that your only expertise seems to be quoting arcane economic theory, I won’t give your arguments a whole lot of weight either.
I am not a slave to ideology; I’m a pragmatist. You show me one free, well-functioning society in the modern world that does not have a progressive tax system. Just one.
M. Scott Eiland
“You show me one free, well-functioning society in the modern world that does not have a progressive tax system. Just one.”
OK.
Monaco.
*waits for the punch line*
JKC
You may have me, M. Scott. Are you suggesting we convert to a casino-dependant economy?
M. Scott Eiland
“You may have me, M. Scott. Are you suggesting we convert to a casino-dependant economy?”
In the absence of evidence on your part that a casino-run economy is uniquely suited to surviving without a progressive income tax, I will decline to make such a recommendation. However, Lichtenstein also appears to lack a progressive income tax (apparently it has a flat 18% rate–the source didn’t indicate whether there was a standard deduction). They have a flat 1% wealth tax, though–which I am against on principle but which probably in practice doesn’t amount to much more than a property tax would.
Dean
How about Hong Kong? It seems to have a low rate of income tax (apparently ~15%, possibly a flat rate above a certain level of income), no capital gains tax, no withholding, etc.
http://www.bkrlewbarr.com/taxfacts/hongkong.htm
Certainly, HK would count as a thriving economy, even under the PRC. This might explain why it’s generally rated one of the freest markets out there. (Even their mass transit system makes money—unique, I believe, in the world in that regard.)
M. Scott Eiland
“How about Hong Kong?”
I thought of Hong Kong, but as it has always been either a colony under the UK’s control or a province under the PRC’s direct control, it doesn’t really qualify as a nation state. However, as John Stossel once demonstrated gleefully on an ABC special, it is a rather shining example of the power of unfettered (mostly) capitalism to lift people out of poverty (he contrasted HK’s economic practices to those of India, much to the irritation of the Indian bureaucrat Stossel was interviewing, and the comparison was not flattering to India).