From Laurie
I am going to stick to the topic about jobs and wages with a K Drum link about wages:
Chart of the Day: Middle Class Incomes vs. the Rich, 1946-2014
I believe the median income should go up and the super rich should pay more taxes. We could use some tax revenue for infrastructure which would help middle class jobs.
Can't decide what to add about education subtopic except educating low income ELL (learning English) students is very difficult.
from NYT piece Drum Links:
Our Broken Economy, in One Simple Chart
"It’s true that the country can’t magically return to the 1950s and 1960s (nor would we want to, all things considered). Economic growth was faster in those decades than we can reasonably expect today. Yet there is nothing natural about the distribution of today’s growth — the fact that our economic bounty flows overwhelmingly to a small share of the population.
Different policies could produce a different outcome. My list would start with a tax code that does less to favor the affluent, a better-functioning education system, more bargaining power for workers and less tolerance for corporate consolidation.
Remarkably, President Trump and the Republican leaders in Congress are trying to go in the other direction. They spent months trying to take away health insurance from millions of middle-class and poor families. Their initial tax-reform plans would reduce taxes for the rich much more than for everyone else. And they want to cut spending on schools, even though education is the single best way to improve middle-class living standards over the long term.
Most Americans would look at these charts and conclude that inequality is out of control. The president, on the other hand, seems to think that inequality isn’t big enough."
I am going to stick to the topic about jobs and wages with a K Drum link about wages:
Chart of the Day: Middle Class Incomes vs. the Rich, 1946-2014
I believe the median income should go up and the super rich should pay more taxes. We could use some tax revenue for infrastructure which would help middle class jobs.
Can't decide what to add about education subtopic except educating low income ELL (learning English) students is very difficult.
from NYT piece Drum Links:
Our Broken Economy, in One Simple Chart
"It’s true that the country can’t magically return to the 1950s and 1960s (nor would we want to, all things considered). Economic growth was faster in those decades than we can reasonably expect today. Yet there is nothing natural about the distribution of today’s growth — the fact that our economic bounty flows overwhelmingly to a small share of the population.
Different policies could produce a different outcome. My list would start with a tax code that does less to favor the affluent, a better-functioning education system, more bargaining power for workers and less tolerance for corporate consolidation.
Remarkably, President Trump and the Republican leaders in Congress are trying to go in the other direction. They spent months trying to take away health insurance from millions of middle-class and poor families. Their initial tax-reform plans would reduce taxes for the rich much more than for everyone else. And they want to cut spending on schools, even though education is the single best way to improve middle-class living standards over the long term.
Most Americans would look at these charts and conclude that inequality is out of control. The president, on the other hand, seems to think that inequality isn’t big enough."
39 comments:
I think Kevin is way off base again. The current shift seems very natural to me as you know. Kevin doesn't even try to explain why the shift occurred with regard to:
- the preferences of the US Consumer
- the reality of intense Global Competition
- the huge increase in Single Parent Households
I mean the jobs flowed out of the USA because that is what our consumers bought. And single income households make much less than dual income households.
So he proposes the usual Liberal solutions:
Tax the Rich: Since the decisions of our consumers really did not hurt people with capital that can be invested globally, we should take more of their gains and redistribute them to those who were harmed by the consumer choices. May make sense in Dem Socialist sort of way.
More Bargaining Power for Workers: Of course this is a part of what caused the problem in the first place, and he wants to double down on it. Pre-1980: the big 3 and UAW colluded to pad their nests and passed the costs on to the American consumers. Please note that the American Consumers are buying their products from non/weak union States more and more.
Better Functioning Education System: He really needs to make up his mind. The Union Public Workers and Bureaucrats are a large part of why the US Education system is so rigid and expensive.
Less Tolerance for Corporate Consolidation: Not sure what he means... And since we only control US firms, how do we ensure our firms are big and diverse enough to compete globally? Not sure.
Over the last 35 years, we've seen massive cuts in the marginal tax rates for the wealthiest Americans. We've also seen wages for most workers stagnate, job growth since the Clinton years sputter, and income inequality explode. That's not a coincidence. Low marginal tax rates on the wealthy have caused a massive restructure in how American companies do business. Executives (and their boards of directors, made up of other executives) are taking a much larger share of the pie than they used to. The share of corporate income going to paying executives and shareholders has dramatically increased in the last 40 years, while wages and investment have dropped.
Because the incentives now reward enriching individuals instead of doing broader good, the oft-stated goals of tax cuts aren't achieved. For instance, despite the huge tax cuts passed under George W. Bush, private sector investment actually lagged the Clinton years where taxes were increased.
As such, it may actually make more sense to raise taxes on the wealthy to reduce those incentives and restore a more traditional distribution of the pie.
Sources?
Please remember that Corp profits are good and executive expenses are in the calculation.
you got a few things wrong John, the graph shows wages have stagnated for individual workers and has nothing to do with single parent house holds. Don't believe me- here is another link:
For most workers, real wages have barely budged for decades
also, the suggestions of how to slight decrease income inequality that you disagree with are for D Leonhardt, not Drum.
lastly overpaid unionized Teachers are not what needs to be fixed in the American education system. My school is non union and full of underpaid teacher and our pass rate on the MCAs is about 20%. What do you suggest that my school do differently?
And yes exec comp is a bit high
oops:
For most workers, real wages have barely budged for decades
Well you know my belief...
"Other factors that have been suggested include continued labor-market slack; lagging educational attainment relative to other countries; and a broad decline in better-paying jobs and consequent shift toward job growth in low-wage industries."
American consumer choices sent many many millions of high paying machining, assembly and other high paying Union jobs over seas... Due to this low academic and low skilled workers were left with a bunch lower paying retail and service jobs.
Then it got worse when many Americans decided that challenging dirty jobs were beneath them.
Then came the automation, internet, etc even put more downward pressure on the median wages.
Then we had environmentalists make it ever harder and more expensive to mine, do forestry, process metal, process chemicals, etc
I am actually amazed the purchasing power has stayed about the same during this period.
In summary,
- the typical American job is now requiring less knowledge, fewer skills, is less physically demanding and people are earning about the same in current dollars.
- Whereas the jobs requiring a lot of knowledge, special skills, work across borders, invest across borders are doing good...
Makes sense to me.
Laurie,
"a better-functioning education system"
Sorry but I think that the status quo Education Bureaucrats and the Teacher Unions are some of the biggest obstacles to changing and improving the system. The folks with seniority are serious about protecting their power, money and positions.
Now I do agree that dysfunctional parents and communities are 65% of the problem, but unfortunately Liberals don't want to do anything about them either...
Oh well... The world needs ditch diggers too... Well maybe we won't when the robots take those jobs... :-)
Sean,
I find the Average Effective Tax Rate more useful
First of all, "tax the rich" doesn't make sense. The "lower tax rates" have actually caused the "rich" to pay a HIGHER percent of the total taxes. Lower taxes mean less tax avoidance among the rich, who can afford to lobby for and use "loopholes," while the middle class cannot. The rich pay a higher PERCENT tax rate (on paper at least) than does the middle class. Social Security and sales taxes are regressive as currently structured and hit the poor the hardest.
Since the lowest income, we assume, is zero, but the highest income can grow without limit, inequality will always, as a mathematical certainty, increase. So long as people are economically free (and get a good, "equal" education), to move up and down the ladder (as 80% did before Obama), there is absolutely nothing wrong with income inequality-- it in fact drives the economy and standard of living upwards.
Finally, realize that when the economy grows, inequality decreases, but in Obama economies of stagnation, inequality between income from capital and income from labor increases.
"I find the Average Effective Tax Rate more useful"
OK. What's the point?
I'll wait for the answer to Sean, but I'm wondering, what does tax equality have to do with income inequality? The purpose of the tax system should not be to create equality. And I didn't see anywhere in your cite that total effective tax rate was listed.
Jerry,
"The "lower tax rates" have actually caused the "rich" to pay a HIGHER percent of the total taxes."
I was going to ask for a source, but I guess it makes sense... If it impoverishes the majority, it will leave those with the money to pick up the tab.
Sean,
Per the source it looks like the rate has been pretty consistent for a long time. As Jerry notes, just because the highest marginal rate was high previously, it does not mean that people were paying it.
"Per the source it looks like the rate has been pretty consistent for a long time."
OK. What do you take from that, then?
Here's what I take from it: the modest sorts of tax increases on the wealthy offered by Democratic politicians in recent years are not the economy-busting boondoggles that you and others say they are. In fact, the strongest economic performance occurred in the years on your chart where taxes on the wealthiest were the highest.
Sean, John is right in talking about the effective tax rate. As the nominal tax rates get jacked up by Congress, they create more "loopholes" that the rich can afford to exploit, and the effective tax rate falls below the nominal, sometimes quite drastically. Reduce the rates and the incentives for tax avoidance fall, and revenues go up and the percentage of total taxes paid by the rich goes up relative to the total.
And again, the tax system is not the proper "tool" to reduce income inequality NOR to promote the economic growth that would reduce income inequality.
And I tire of the notion that taxes are a zero sum game. Just because the rich guy pays less does not mean that YOU have to pay more. You pay what you pay, he pays what he pays, and the politicians squander both equally, all while claiming the moral high ground. It's ridiculous, and just getting rid of that byzantine tax code would make us all richer.
Sean,
You seem to have forgotten that I am a deficit hawk... I would have been fine if they had eliminated all of the Bush tax cuts. But the DEMs decided to leave them in place for most of us, and only punish the really successful folks... Therefore we still have deficits and a growing national debt.
Jerry,
Since the vast majority of the government collection and spending is just moving money around, so of course anything that impacts government revenues impacts hundreds of millions of people.
Just think of all the checks and services that are provided daily. (ie SS, SS Disability, Medicare, Medicaid, Welfare, Farm Program, Childcare, etc)
So if Peter does pay less it does mean that Paul will pay more or get less.
Daily Kos View Of Bar Stool Economics
But things that "impact government revenues" happen all the time. What you are overlooking is that most spending is entitlements-- money given to people because they are somehow "entitled" to receive it. It cannot, apparently, be cut back unless the law is changed and the qualifications altered. The same is actually true of taxes. The tax laws are written, and assuming everybody complies as closely as they are able, there will be X amount of revenue that cannot be changed unless the law is changed to raise rates or lower deductions. Because of the complexity of the tax code, neither of those may produce the desired result and most certainly not in any short time frame. Thankfully.
No, the only thing flexible here is the deficit, and that is why we have such a huge deficit and accumulated national debt. We have been handing out goodies much faster than we can pay for them, and attempts to tax our way to prosperity simply haven't worked. We're beyond the peak on the Laffer curve and it doesn't matter WHO is taxed more, all tax increases seem to create far less revenue than expected (e.g. tobacco taxes).
The bar stool analogy is flawed in several ways, but as a model of taxation it proves something that needs to be proven, which is that our tax code is OVERLY progressive (or at least intended to be). The solution is to vastly simplify the tax code and make it "perfectly progressive." That is, we should be taxing /disposable/ income, or spending, not the total. Both the Flat Tax and FAIR Tax do this by simply offering a poverty-level or "cost of necessities" exemption to a single-rate tax. The first four men, making less than that (say $35,000) number, continue to pay no taxes. The fifth man, making slightly more than that, pays, say, 23% of that (let us say $1000) excess, for a tax of $230 on an income of $36,000, for an /effective/ tax rate of 0.6%. The tenth man, who makes $1M, pays 23% of $965,000, or $221,500, for an effective rate of 22.15%-- perfectly progressive under a single rate.
Oh, and if you want to end the debt, you could simply confiscate the income of the top 1%, and be about $17 trillion short. And be assured you would not get ANYTHING out of them the following year.
So tell me again, what any of this has to do with income inequality? I suppose if you want to argue that taking everything from some and nothing from another somehow creates "equality" you can do so. But equality and fairness seem mutually exclusive, here.
I think your comment needs some rewording...
We as a society have chosen to hand out goodies much faster than we as a society have chosen to pay for them...
That does tend to be a problem when citizens want more and want to pay less. :-)
It is a problem that Congress is only too happy to make worse rather than solve. We "hire" these politicians to solve these problems, and that not only do not solve them, they seem to not know what the solutions are, or even that there is a problem. Until election time.
As for income inequality, that is actually the reverse. It's only BECOMES a problem around election time, and normally does not need a solution. It's tailor-made for Congress. They can rant and rave about it and never have to offer a solution. So other than the noise, I like what they are "doing about it." Unless they are tinkering with the tax code trying to fix it.
Please remember that in 2008 the people voted for more wealth transfer when they elected the Democrats.
Thus we got ACA and the Bush tax cuts not renewed for the wealthy folks. And I am guessing the DEMs would have stayed in power if they were not so obsessed with abortion rights, LGBTQ rights, stifling Religious freedoms, protesting police officers, protecting Public employee union members, enabling irresponsible citizens, etc.
What religious freedoms have been stifled under Democrats?
Oh come now, I am sure you remember all of our discussions where Liberals insisted that florists, photographers and caterers should be forced to associate with and take part in ceremonies that went against their religious beliefs.
Those provisions have consistently been found by judges as being constitutional.
I think I would say that the whole topic is still contentious and sways the votes of many...
"I think I would say that the whole topic is still contentious and sways the votes of many..."
It's also consistently polled as a minority position. Check out pollingreport.com, and you can see polling history going back years.
Here is another source
For new readers... My view is that though being LGBTQ is likely a physiological condition kind of like being a man, woman, Black, White, etc. However there is minimal scientific proof that this is certain. In essence, there is no gay test...
Therefore to me this is still an area where other citizens should be free to consider it a chosen lifestyle, which means they should be free to not associate and/or do business with them until the scientific aspects are resolved.
Just as I would not expect an animal rights loving caterer to be forced to cater a mink farmer convention.
And of course there is that obvious question...
Who would want to hire and associate with a caterer, florist, doctor, photographer,e tc who is absolutely certain that you are headed to hell for your sins... Definitely would not be my first choice...
If it was a minority positions we would not have had to have 1 justice on the SCOTUS make LGBT legal in the USA... There are still a lot of people still on both sides.
"If it was a minority positions we would not have had to have 1 justice on the SCOTUS make LGBT legal in the USA... "
Who is on the Supreme Court isn't decided by popular vote. That's why Merrick Garland isn't there today.
Kind of off topic, aren't we? Question: should LGBT folks get $15/hour as a cure for income inequality? What do you think about a legally mandated MAXIMUM wage?
You know my view... Minimum wages are like sales taxes are regressive taxes. They punish the poor most.
Taxing the rich as they make more and focusing the funds on helping the poor improve their knowledge and capabilities would be much more logical.
Unfortunately the Liberals don't believe in base expectations for citizens. They are scared we will hurt the feelings of that welfare Mom with 3 kids, no husband, no education and no good job... Or that dead beat baby Daddy...
So you agree that government-mandated "income equality" is a BAD idea. Artificially raising the incomes at the bottom of the scale, and punitively lowering them at the top of the scale creates perverse incentives and helps nobody. Now I'm OK taxing the rich proportionately, it's simple math they have more disposable income. I'm even OK increasing government spending, supported by those taxes on the rich, if it actually goes to help the poor "improve." Too bad that isn't what we do now, because that WOULD improve income equality.
Unfortunately the Conservatives also limit the improvement opportunities for the poor and immature...
Keeping birth control too expensive, allowing irresponsible baby mamas/papas to keep kids, etc...
Now you are really stretching. Pills are $4/month at Walmart, and abstinence is even cheaper. Are people's lives "improved" by having government snatch their kids away, to have them raised by The State? Is the State any better at raising educated, responsible kids than they seem to be at raising educated, responsible adults? You cannot possibly say that the conservatives are responsible, here, because conservative approaches have not been tried except in very successful small doses here and there. Clear out the government mess is the starting point, and not adding to the mess with arbitrary "equality."
Well actual the Conservative approaches were in place for the first ~150 year of this country's existence. Then people found them lacking and they were changed.
Prove that "people found them lacking." Isn't it more a case of politicians deciding that they should "do something" and they picked "something" that cost a lot but didn't really help the situation in the long run?
I'll also point out that this country grew economically and socially much stronger in those 150 years. Nothing wrong with that.
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