Thread: Social Engineering - Spreading the Wealth Around.

Worked out well for Dukakis...Willie Horton STILL haunts him.

Originally Posted by Dick Martin

I can give an answer. We could look at other countries and try to figure out what is about America that makes us the outlier.

Did you know that in Europe, many prisoners are routinely released for the weekend to be with their families? No anklets, no police cars, no checks. Just sign out of prison Friday afternoon and come back on Sunday.

Also interesting is the fact that in the year 1980, the top income tax rate was 70% and the share of total tax revenues for the top 1% of wage earners was 19%.

So, in 1980 the richest 1% of the population were taxed at 70% and contributed 19% of total tax revenue.


In 2008, the top income tax rate was 35%, exactly half the top rate in 1980. But, in 2008 the share of total tax revenue of the top 1% of wage earners was almost exactly twice what it was in 1980--38%.

So, in 2008, the richest 1% were taxed at 35% and contributed 38% of total tax revenue.

Originally Posted by Zydo

It is appropriate actually. Let's say I make $40,000 per year and I'm in my mid-20's. At that income I am probably in the upper half of the lower 50%. At $40K per year and at the beginning of my working life I probably have zero or little accumulated wealth. I will likely live paycheck-to-paycheck until I gain enough experience to earn more later in my career. But, I do make a sustainable income and I am above the poverty line. Should I pay at least some taxes even though I don't have any real wealth? Absolutely, because I still make a sustainable living wage.

Got to knock more than ten grand off that to get under the 50% mark, but I agree. You should pay taxes on everything you make above the poverty level (scaled for the number of people you support). I would, in fact, be happy with a flat tax on everything above the poverty level. My big issue is actually that capital gains should be taxed the same as working income. Someone earning $100,000 will pay $12,000 more in taxes (counting FICA) than someone being given the same amount from a trust fund. I take issue with that.

Further to my argument here is the historical trend. The perception is that the rich pay less of their share of the tax burden now than they have in the past. This is factually incorrect. The link below contains a nifty little chart that shows the trends. According to this, the percentage tax burden of the bottom 50% of wage earners is less than half today tan it was 30 years ago (from 7.05% to 2.7%). Conversely the percentage tax burden of the top 1% has doubled in the same period (from 19.05% in 1980 to 38.02% in 2008).

Does that account for the money the people in these groups were bringing in?

Originally Posted by Zydo

Also interesting is the fact that in the year 1980, the top income tax rate was 70% and the share of total tax revenues for the top 1% of wage earners was 19%.

So, in 1980 the richest 1% of the population were taxed at 70% and contributed 19% of total tax revenue.


In 2008, the top income tax rate was 35%, exactly half the top rate in 1980. But, in 2008 the share of total tax revenue of the top 1% of wage earners was almost exactly twice what it was in 1980--38%.

So, in 2008, the richest 1% were taxed at 35% and contributed 38% of total tax revenue.

So? It's called "income inequality".
One of the most destructive things to any democracy.

Average income of the top 1% was $500.000 in 1980 but in 2005 it was $1.550.000 Dollar.

This isn't relevant if you don't look at the developement for other parts of the population. For this purpose the housholds are grouped into 5 equaly sized income groups.
[The numbers are inn 2005 Dollars. But consider that prices went up on many essential goods.]

Pre-Tax household income:

The poorest Quintile had $15,700 (in 1979) and 15,900 (in2005), that's a change of +1,3%.

The second Quintile had $34,000 (in 1979) and $37,400 (in 2005) that's a change of +10%.

The third Quintile had $51,000 (in 1979) and $58,500 (in 2005) that's a change of +14,7%.

The fourth Quintile had $69,000 (in 1979) and $85,200 (in 2005) that's a change of +23,5%.

The richest Quintile had $132,100 (in 1979) and $231,300 (in 2005) that's a change of +75,1%.

====================

The share of income Statistic also is a clear indicator that the US Tax system is pumping wealth reallocating wealth up to the top 20% income group.

While the share of income declined for the first 4 quintile it rose by almost 10% for the richest quintile. From 1979 to 2005 it changed like this:

Poorest Quintile: 5.8% -> 4.0%
Second Quintile: 11.1% -> 8.5%
Third Quintile: 15.8% -> 13.3%
Fourth Quintile: 22.0% -> 19.8%
Richest Quintile: 45.5% -> 55.1%

=====================

Conclusion:

What is happening in the US is a rather radical re-allocation of wealth upwards towards the richer parts of the US population.
It's the absolute opposite of what is so often discussed here and on the US news media, which is privatly owned by the top 1-5%.

Where is the discussion about a transfer of 10% income share from 80% of the population to the top 20%?

=====================

I based these numbers on this statistic:
U.S. Congressional Budget Office. "Historical Effective Federal Tax Rates: 1979 to 2005"

I guess it got alot worse since the financial crisis, because a crisis always increases income inequality.
Also be ashured that this income structure is NOT normal for a democratic societies that embrace free market capitalism.
That's why the US is on par with 3rd World nations when it comes to Income-Equality (GINI Index).

Originally Posted by El_Zoido

Conclusion:

What is happening in the US is a rather radical re-allocation of wealth upwards towards the richer parts of the US population.
It's the absolute opposite of what is so often discussed here and on the US news media, which is privatly owned by the top 1-5%.

Where is the discussion about a transfer of 10% income share from 80% of the population to the top 20%?

Like I've said repeatedly; no one is actually bothered by the idea of re-allocating wealth, they just dont like the proposed change of direction.

[QUOTE=Porras;1920723] I would, in fact, be happy with a flat tax on everything above the poverty level. QUOTE]

If so, then you would be in favor of a gargantuan tax cut for the rich and tax increase for the lower incomes. That's what a flat tax would result in. If you tax everyone at, say 20%, then the rich are getting a giant tax cut and the lower income groups are getting a tax increase. If you think the income gap is too large now, a flat tax will accelerate it. This is why I don't support a flat tax. I support a progressive tax structure. My argument is simply that our current tax structure is plenty progressive enough when 49% of US households pay no tax at all.

I think a fundamental basis for my opinion is that I believe the creation of wealth by individuals should not be denigrated as long as they play within the rules, which most do. Their creation of wealth creates downstream opportunities for others. That's called job creation. Some of those people who benefit from that job creation will go on to create further wealth and and more jobs and opportunities.

We should NOT seeek an equal "allocation" of wealth because that would stop the gears of the economy (unless, of course, you support a command economy, in which case, I've got no time for that). We should support the safety nets (within reason) and programs/policies that give everyone the greatest possible OPPORTUNITY to succeed. But, we can never gift out "success." Some people work harder and smarter than others. Some people choose to pursue fulfilling opportunities that don't pay much. Everyone is different. In order for our economic system to thrive, success has to be achieved in a competitive environment, not dolled out equally.

Comparing our income gap to that of Europe is, in my view, misguided. Look at the terrible public debt issues Europe is dealing with right now. Look at the chronic sustained unemployment issues many European countries are dealing with. Look at the fact that people in France rioted because the government wanted to increase the retirement age from 62 to 65. Many of the people in Europe have succumbed to the mindset that their governments exist to provide for them rather than they to provide for themselves. I don't want my country to go any farther down that path because we can see what it leads to.

Originally Posted by Porras

I would, in fact, be happy with a flat tax on everything above the poverty level

The problem with that is 20% of $25,000 a year is FAR more of a hit than 20% of $200,000 a year.

A flat tax screws poor people.

Originally Posted by JustDee

This statement explicitly placed the blame on Obama, and the leadership, whom had absolutely nothing to do with the actual crime which took place. Once again criminals are criminals irrelevant of social standing and don't tend to care what Washington is doing.

I do believe social standing does impact crimes but putting the blame solely on the the current crop of clowns in Washington is a bit much, Washington has been selling the poor short for generations now.

Originally Posted by Hoplite

The problem with that is 20% of $25,000 a year is FAR more of a hit than 20% of $200,000 a year.

A flat tax screws poor people.

Do poor people still get standard deductions under a flat tax? Did medicare and other programs disappear? If they didn't the poor folk are doing fine and dandy. If those programs did disappear, what the hell are we paying taxes for?

Originally Posted by El_Zoido

So? It's called "income inequality".
One of the most destructive things to any democracy.

Average income of the top 1% was $500.000 in 1980 but in 2005 it was $1.550.000 Dollar.

This isn't relevant if you don't look at the developement for other parts of the population. For this purpose the housholds are grouped into 5 equaly sized income groups.
[The numbers are inn 2005 Dollars. But consider that prices went up on many essential goods.]

Pre-Tax household income:

The poorest Quintile had $15,700 (in 1979) and 15,900 (in2005), that's a change of +1,3%.

The second Quintile had $34,000 (in 1979) and $37,400 (in 2005) that's a change of +10%.

The third Quintile had $51,000 (in 1979) and $58,500 (in 2005) that's a change of +14,7%.

The fourth Quintile had $69,000 (in 1979) and $85,200 (in 2005) that's a change of +23,5%.

The richest Quintile had $132,100 (in 1979) and $231,300 (in 2005) that's a change of +75,1%.

====================

The share of income Statistic also is a clear indicator that the US Tax system is pumping wealth reallocating wealth up to the top 20% income group.

While the share of income declined for the first 4 quintile it rose by almost 10% for the richest quintile. From 1979 to 2005 it changed like this:

Poorest Quintile: 5.8% -> 4.0%
Second Quintile: 11.1% -> 8.5%
Third Quintile: 15.8% -> 13.3%
Fourth Quintile: 22.0% -> 19.8%
Richest Quintile: 45.5% -> 55.1%

=====================

Conclusion:

What is happening in the US is a rather radical re-allocation of wealth upwards towards the richer parts of the US population.

Back in the good old days of 90-08 my household went from the poorest quintile to fourth quintile. I don't recall any mystical force holding us back.

Of course it's proving to be a real bastard getting into that highest quintile the past couple years. It's almost as if something has changed, I hope we can figure out what it was...

Originally Posted by JDJarvis

Do poor people still get standard deductions under a flat tax? Did medicare and other programs disappear? If they didn't the poor folk are doing fine and dandy. If those programs did disappear, what the hell are we paying taxes for?

You'd have to ask someone who advances the idea of a flat tax seriously.

Originally Posted by Zydo

I think a fundamental basis for my opinion is that I believe the creation of wealth by individuals should not be denigrated as long as they play within the rules, which most do. Their creation of wealth creates downstream opportunities for others. That's called job creation. Some of those people who benefit from that job creation will go on to create further wealth and and more jobs and opportunities.

We should NOT seeek an equal "allocation" of wealth because that would stop the gears of the economy (unless, of course, you support a command economy, in which case, I've got no time for that). We should support the safety nets (within reason) and programs/policies that give everyone the greatest possible OPPORTUNITY to succeed. But, we can never gift out "success." Some people work harder and smarter than others. Some people choose to pursue fulfilling opportunities that don't pay much. Everyone is different. In order for our economic system to thrive, success has to be achieved in a competitive environment, not dolled out equally.

Comparing our income gap to that of Europe is, in my view, misguided. Look at the terrible public debt issues Europe is dealing with right now. Look at the chronic sustained unemployment issues many European countries are dealing with. Look at the fact that people in France rioted because the government wanted to increase the retirement age from 62 to 65. Many of the people in Europe have succumbed to the mindset that their governments exist to provide for them rather than they to provide for themselves. I don't want my country to go any farther down that path because we can see what it leads to.

I think you have a misguided opinion on Europe, which prevents you from the wonderful oportunity to learn from others. The economic systems in Europe are not elementary different from the US. It's merly a rather similar system with different executions and forms of a a mixed economy.

You should also look beyound the stereotyps that are spread by the privatly owned US media, about how Europeans "tick". Europeans do have a different relationship toward their government. We consider our government as "By the people (all of them), for the people (all of them)". Therefor we expect our governments to fulfill the job of keeping society in a certain balance, ensuring social peace & justice. Besides that we are just as "capitalist" as you Americans, with the rich, poor and the middleclass.

Sure people in France protest against cuts of their pensions, but that's their right and good for a democratic society. If huge parts of the populus have to endure cuts to their future income, they should demand that it's done in a transparent and fair way. If you harm 80% of the population, while 20% benefit, that is not the idea behind a democracy. Sure there is a little rioting, but I suspect that's blown way out of proportion in the US media to deflect from the issues. (How much did you hear about the reasons behind protests compared to pictures of a few burning cars?)

As for the debt crisis and other Issues in Europe lets look at the facts, shall we? Because you make it sound as if the whole EU or Eurozone is in the same mess as Greece.

Today the Eurozone consists of 17 Countries with a total of about 330 million people. In 2010 the Eurozone GDP is at about pre-crisis levels of 9.204 bln Euro ($13.345 billion Dollar). As you can see the US and the Eurozone can be compared quite well, since the US has 310 million citizens and a GDP of $14.660 bln Dollar.

Greece is a tiny country with huge problems... but those problems don't change the fact that it makes up 3% of the Eurozone population and 2,6% of Eurozone GDP. Their Problem is the fact that they had a double digit deficits of 13,6% in 2009 and 10.6% in 2010.

However when we look at the overall Eurozone deficit numbers compared to the U.S. Deficit in % of GDP for the last few years it looks like this:

United States: -1.3% (2007), -3.1% (2008), -9.9% (2009), -10.6% (2010)
Eurozone: -0.7% (2007), -2.0% (2008), -6.3% (2009), -6.0% (2010)

So how are we in a similar (bad) state as the US?

Originally Posted by Hoplite

The problem with that is 20% of $25,000 a year is FAR more of a hit than 20% of $200,000 a year.

A flat tax screws poor people.

Oh I realize this. That's why I include the poverty level adjusted for family size. And that's what noone would pay taxes on, not just those people whose income was below the poverty level. I also don't really support a flat tax, but when people argue for a regressive tax, that's as far as I'm willing to go.