The gap between rich and poor in the U.S. is bigger than at any time since the 1920s. Is that really what most Americans want?
The gap between the wealthiest Americans and the poorest is bigger than at any time since the 1920s — just before the Depression. According to an analysis this year by Edward Wolff of New York University, the top 20% of wealthy individuals own about 85% of the wealth, while the bottom 40% own very near 0%.
Many in that bottom 40% not only have No assets, they have Negative net wealth.
A gap this pronounced raises the politically divisive question of whether there is a need for wealth redistribution in the United States. This central question underlies such hot-button issues as whether the Bush tax cuts should be allowed to expire and whether the government should provide more assistance to the poor. But before those issues can be addressed, it's important to understand how Americans feel about the country's increasing economic polarity.
We recently asked a representative sample of more than 5,000 Americans (young and old, men and women, rich and poor, liberal and conservative) to answer two questions. They first were asked to estimate the current level of wealth inequality in the United States, and then they were asked about what they saw as an ideal level of wealth inequality.
In our survey, Americans drastically underestimated the current gap between the very rich and the poor. The typical respondent believed that the top 20% of Americans owned 60% of the wealth, and the bottom 40% owned 10%. They knew, in other words, that wealth in the United States was not distributed equally, but were unaware of just how unequal that distribution was....
me said:Virtually everyone will do better with Fairtax calculator because, well.. the rate is PHONY.
Independent scoring of Fairytax (WSJ/NYT/Congressional Joint committee taxes, CTJ, etc) all score the REAL NEEDED Rate at 56%-57%.
(Not including state sales taxes and state income taxes converted to sales taxes to make it work)
65%-70% anyone?
How would you do then?
Because that's what's needed to offset the loss of rev from the rich.
And the Claimed FairYtax rate is on EVERYTHING not just what state taxes are on now.
FairYtax taxes FOOD, RENT (killing the lower classes and urban dwellers), Medicine, Surgical procedures.. EVERYTHING.
That's right.. add any percent you like to rent or heart/Kidney ops and what have you got?
Disaster. Debtor Prison.
Because if you make, ie, $30 million and only spend $3 million to live... your tax rate goes from 38% of income + 15% tax on Div and cap gains, + estate tax.... goes to 10%.
And the math even gets better if you make a Billion.
Your rate goes from 38% of income to basically 0%-1% say 30% of $10 million
A loss to the Federal govt of $350,000,000.
Probably half a million people get to pay more to give Buffett alone a tax break!
So since FairtYtax is 'revenue neutral'.. who pays more?
Do ya think it's the two Texas Billionaires who designed it? Or YOU?
in fact, FairYtax basically inverts the current burden.
The poor and middle who have to spend virtually All their income to live, pay 30% (read 60%) of all the make/spend.
They become the New top Bracket.
While the rich whose current Bracket is 35% drop to single digits.
FairYtax is an obvious Scam.
You don't need a degree to figure it out.
me said:'Flattax' is better but still Impossibly Regressive.
You simply can't raise the rates on the low/middle at all. (while lowering it on the rich)
Someone who makes 26k - aka Walmart, our largest employer- simply can't pay the same, ie, 25% as someone who makes 300k, or 300M.
In past years we have had to regularly send out stimulous checks (which are progressive and mean more to the bottom) to keep the whole system running.. at all.
Yes the proof of the pudding is even the big guys and the congress they finance have to send out some goodies so their Stock portfolios don't collapse because the Bulk of consumers can't afford that computer or car.
No, what's need is to leave the rates alone.. just add a bracket 50%, for those making over $1 Mil a year. (and perhaps return the cap gains/Divs tax to what it was before the Bush Halving of those rates).
That would return us to our more traditional top marginal rates when we were a 'socialist' country.
Top US Marginal Income Tax Rates, 1913--2003 (TruthAndPolitics.org)
Historical rates (married couples, filing jointly)
Year/ Top Rate%/ Over
1913 --- 7% 500,000
1914 --- 7% 500,000
1915 --- 7% 500,000
1916 --- 15% 2,000,000
1917 --- 67% 2,000,000
1918 --- 77% 1,000,000
1919 --- 73% 1,000,000
1920 --- 73% 1,000,000
1921 --- 73% 1,000,000
1922 --- 58% 200,000
1923 --- 43.5% 200,000
1924 --- 46% 500,000
1925 --- 25% 100,000
1926 --- 25% 100,000
1927 --- 25% 100,000
1928 --- 25% 100,000
1929 --- 24% 100,000
1930 --- 25% 100,000
1931 --- 25% 100,000
1932 --- 63% 1,000,000
1933 --- 63% 1,000,000
1934 --- 63% 1,000,000
1935 --- 63% 1,000,000
1936 --- 79% 5,000,000
1937 --- 79% 5,000,000
1938 --- 79% 5,000,000
1939 --- 79% 5,000,000
1940 --- 81% 5,000,000
1941 --- 81% 5,000,000
1942 --- 88% 200,000
1943 --- 88% 200,000
1944--- 94 200,000
1945 --- 94% 200,000
1946 --- 86% 200,000
1947 --- 86% 200,000
1948 --- 82.% 400,000
1949 --- 82% 400,000
1950 --- 84.36% 400,000
1951 --- 91% 400,000
1952 --- 92% 400,000
1953 --- 92% 400,000
1954 --- 91% 400,000
1955 --- 91% 400,000
1956 --- 91% 400,000
1957 --- 91% 400,000
1958 --- 91% 400,000
1959 --- 91% 400,000
1960 --- 91% 400,000
1961 --- 91% 400,000
1962 --- 91% 400,000
1963 --- 91% 400,000
1964 --- 77% 400,000
1965 --- 70% 200,000
1966 --- 70% 200,000
1967 --- 70% 200,000
1968 --- 75.25% 200,000
1969 --- 77% 200,000
1970 --- 71.75% 200,000
1971 --- 70% 60% 200,000
1972 --- 70% 50 200,000
1973 --- 70% 50 200,000
1974 --- 70% 50 200,000
1975 ----70% 50 200,000
1976 --- 70% 50 200,000
1977 --- 70% 50 203,200
1978 --- 70% 50 203,200
1979 --- 70% 50 215,400
1980 --- 70% 50 215,400
1981 --- 69% 50 215,400
1982 --- 50% 85,600
1983 --- 50% 109,400
1984 --- 50% 162,400
1985 --- 50 % 169,020
1986 --- 50 % 175,250
1987 --- 38.5% 90,000
1988 --- 28% <8> 29,750 <8>
1989 --- 28% <8> 30,950 <8>
1990 --- 28% <8> 32,450 <8>
1991 --- 31% 82,150
1992 --- 31% 86,500
1993 --- 39.6% 89,150
1994 --- 39.6% 250,000
1995 --- 39.6% 256,500
1996 --- 39.6% 263,750
1997 --- 39.6% 271,050
1998 --- 39.6% 278,450
1999 --- 39.6% 283,150
2000 --- 39.6% 288,350
2001 --- 39.1% 297,350
2002 --- 38.6% 307,050
2003 --- 35% 311,950
:^)<<< my pleasure... i haven't been on this forum in over a year. this was my first new post! >>>
Yes.You seem to be claiming that the problem with America, and the thing that is slowly harming the American economy is not something such as a poor workforce or low investments... but income inequality?
The reason that we had a strong middle class was not because of our tax rates, but because of our strong educational system in the past.
Inequality is not a 'disease', but it IS a natural state in a capitalist system.I see how you could find the higher income inequality today troubling, but I don't see at all how you can place the blame on changes in the income tax structure. There is coooountless articles, books ect about the problems with the American economy but income inequality is more of a symptom of the problems in America, and not the disease.
Regressive/Less PROgressive rates are what I allege/is demonstrably destroying the Middle Class now.I am curious where you specifically heard that "regressive rates" is what has destroyed the middle class, i would really like to see where you heard that. Seriously, if that is the issue, then just increasing taxes on the rich will not solve that. you need to solve the underlining problem, which is partially low savings.
The prebate in Fairtax is just there to obscure the Scam.If we get a tax system that REALLY starts making America stronger there will be some problem in the short run, as any good idea has. but it still will not be as bad as you say, a Fairtax would give a stipent to each individual so they would not pay any taxes for essentials. In fact, the poor would pay less percentage of federal taxes if the income tax was replaced with the fairtax.
You are correct that there is very high wealth inequality, and if the debate is on what changes with the current system should take place, then I am sure you would agree with me that the estate tax exemptions should be removed, and personal income taxes should be raised for the rich (and I think everyone else for that matter, but thats another issue)
However, when you are talking about standard of living, the real question is income equality and more importantly the real income of the poor instead of wealth. Even if lower income people had an even lower percentage of the total wealth in America, they could be very well off if their disposable income was very high.
but from your comment about the fairtax, even if there are unintended income distribution effects, this country desperately needs a higher saving rate once the economy recovers, and a sales tax instead of an income tax would do that. Regardless of what happens to wealth distribution, the real income of the poor will not rise very fast for a long time if investment and savings in America aren't increased.
If you want to do something about inequality then you should be proposing education reforms, not attacking the fairtax. We need a better tax system that is simpler (less exceptions it could still be progressive if the income tax remains).
I could even go with some income tax systems that would only tax declared consumption (if something like that is even possible). that is close enough to the Fairtax for me though
:^)
Yes.
America developed a bigger Middle class thru Income taxes aimed at the very vrich.
Disparity of income and education (which aren't divorced) were the character of America in 1900.
Ask Teddy Roosevelt.
Inequality is not a 'disease', but it IS a natural state in a capitalist system.
One that needs Mitigation .. and has it to an even greater degree in most advanced economies.
Regressive/Less PROgressive rates are what I allege/is demonstrably destroying the Middle Class now.
And Progressive rates, again, are what helped create the large Middle Class which Parralels the high top marginal rates.
The prebate in Fairtax is just there to obscure the Scam.
Fairtax is "revenue Neutral" and clearly the rich/very rich are going to pay MUCH less. They go from paying 38% of Income, + 15% Cap Gains/Divs/ + estate tax... to merely paying 30% of what they spend. Probably 3-10% of income.
A Huge loss of income to the govt.
SEE ABOVE.
So.. who pays more?
It's a complete Scam, whose real needed rate is 56/57%; SEE ABOVE.
So if you agree that it is educational inequality that is the problem, then you should see how all of this talk about higher taxes on the rich isn't very crucial. Even the middle class in America could go by with a little less for a few years when taxes are raised on everyone to pay for better education and have a higher saving rate. We need to think about the future and prepare for it.
As I said, I dont see the connection between income inequality and productivity inequality (when too much of our population is not productive as adults). If the fairtax actually helps the economy instead of putting a bandade over the plight of the middle class (which increasing taxes on the rich to give everyone else expensive tax cuts will do) then it is worth it. Before you call a certain income tax structure a scam, tell me what your ideal income tax distribution or ideal wealth distribution should be then.
I dont mean that inequality in general is not nescesarily true, but HIGH levels of inequality are not nescesary for a strong economy.
anyone who claims a small income tax on the top 1% created a strong middle class is too stupid to be allowed to vote. those who claim the confiscatory top rates supposedly imposed to pay for world wars created a middle class is ignorant of history and full of bat excrement
Another great presentation by a member of our economic elite. Thank you so much for those words of intelectual wisdom and thank (insert favorite fairytale here) for your Ivy League education that has allowed us all to be awed.
Exactly why would our savings rate rise if we had a fairtax? Whats the mechanism that would cause that to happen?
The fact that you are taxed 'later' on FairYtax is completely academic if you have to spend all of your income to live.good question, thank you for asking.
under the income tax you are first taxed, and then you decide how much money you would like to spend and how much you want to save. This means that you are taxed when you save.
However, with a sales tax (as the fairtax is) you recieve your paycheck and decide how much of that you want to save. So there is no tax on that saving. you are only then taxed on what you spend your paycheck on.
good question, thank you for asking.
under the income tax you are first taxed, and then you decide how much money you would like to spend and how much you want to save. This means that you are taxed when you save.
However, with a sales tax (as the fairtax is) you recieve your paycheck and decide how much of that you want to save. So there is no tax on that saving. you are only then taxed on what you spend your paycheck on.
if so many people cannot "afford" to pay more taxes than they should stop voting for more goverment spending
the current system is designed to allow the many to spend the money of others and that is a recipe for disaster
A "disaster" for who exactly?
Your statement ignores the reality than many people can indeed afford to pay more and currently enjoy some of the lowest tax rates in sixty years time.
those being the people who pay less a percent of the income tax than their share of the income-ie the bottom90%
any group that pays more of the income tax burden or the death tax burden than their share of the income or estate value is overtaxed
You missed the whole point of the string... or rather are in denial about and Never addressed it.... (ie, post #1)those being the people who pay less a percent of the income tax than their share of the income-ie the bottom90%
any group that pays more of the income tax burden or the death tax burden than their share of the income or estate value is overtaxed
I think that a lot of people get confused about the "47% dont pay any income tax" thing. They assume tha means that 47% of our population is not productive. Paying income tax has little to do with productivity.
First, some of those who dont pay income tax are retired people living off of their savings, maybe they are not currenly productive, but do we really expect a 92 year old to be that productive? Isn't it ok that they are living off of their previous productivity?
Who pays income tax and who doesnt is determined by how much income from work that people have. There is not really that more correlation between income and production though. There are lots of very producive people who have low incomes, and lots of very high income folk who are not productive at all.
A bankrobber can become quite wealthy, but are bankrobbers productive?
A street sweaper can be the best streat sweaper in the world and sweep more streets than anyone else, and thus can be quite productive, but never have a large income or become wealthy.
The most famous plastic surgion to the stars may become rich from doing just a few nose jobs, another plastic surgion may have to do thousands of nose jobs to make the same income.
A rich brat who has never held a job in his/her life may instantly become rich at the time of his/her parents death. The transfer of wealth from one person to another does in no way indicate production.
There is simply not a lot of correlation between income and producivity.
Increasing productivity is certainly a good thing, but it has very little to do with income distribution. Its actually possible that we could significantly improve production, and overall become a much wealthier society, but still have that "47 percent dont pay income taxes" thing going on, despite the fact that that same 47 percent contributed significantly to the increase in overall wealth and productivity.
Its also possible that our overall production could go down and our overall wealth could decrease, but we would have nobody who didn't pay income taxes. Lets say that for some reason lower level wages increased, maybe a larger minimum wage or full unionazation of all workers - this could theoretically increase the earnings of that 47% to the point that they all paid income taxes. Just because they were all paying income tax wouldn't mean that our productivy increased any, it would just mean that there was a more equal distribution of income.
The fact that 47% dont pay income taxes is not a indicator that they are not productive, its simply a measure of the disparity of wealth. Same with debt. A lot of people have suggested that this financial crises has been created by too much overall debt. That may even be true. But the reason we have so much debt has little to do with productivity. For every dollar in debt there is a dollar lent. Every dollar lent represents a dollar of "excess" wealth that someone has. If it wasnt excess wealth, then he wouldn't have it available to lend. At any one given point in time there is a fixed amount of wealth to be distributed. Thus wealth distributation is a zero sum game.
When the wealthy become wealthier at a level faster than the non-rich become wealthier (which is a trend during the past 10 years), every dollar of wealth that they gain is neccesarally at the expense of the non-wealthy. People with excess money are going to want to lend that money out so that they can collect a ren on it. With the wealthy having more and more excess money, they have a larger and larger supply of money to lend. Naturally with the non-wealthy not aquiring an increase in income at the same rate of the wealthy, the non-wealthy are quite willing to borrow that wealth and to pay the rent.
Now if the wealthy were not quite as good at aquiring wealth, and if the non-wealthy were a little better at aquiring wealth, then the wealthy wouldn't have as much money to lend, and the non-wealthy wouldn't need to borrow the wealthies money quite as much - thus with a smaller disparity in income and wealth we would have less lending and thus less debt.
Debt is a fairly good measure of disparity of income and wealth.
Distribution of wealth does matter, but it is in no way a measure of productivitTy.
This is utterly fallacious debate.Trying to use your logic, let's look at Google. The co-founders are multi-billionaires and they have made at least a thoudand workers of the company millionaires. Hoe did these tweo guys who created a company worth tens of billions make anyone else poorer???
Another completely fallacious segment.Another problem with the above. In your reference about a street sweeper who does more than his peers but makes no more money. That is due to him/her being in a union where you get paid the same whether you are the best or worst street cleaner. What usually happens in this case is that the best sweeper figures out it serves no purpose to clean more than his peers so he slows to the average.
What does this have to do with someone's Ability to pay an 'ostensibe' 'fair' 'same' rate?Another fallacy in your arguements is where capital to lend has come from. The largest holder of US debt are foreign nations, not individuals with a lot of income. Pensions also hold trillions of dollars that are invested in debt securities. Also try not to forget that we have a fractional banking system. That means for every dollar of capital a bank may lend out 8 dollars. Pre-crash some firms were leveraged 20:1 Fannie and Freddie were leveraged nearly 100:1.
And why someone gets paid $3000 an hour at Goldman Sachs vs a math teacher of the same ability who makes $30 an hour in a High School and contributes more to society. (perhaps several of those very GS traders)What I find interesting is that people are fixated on income disparity in the U.S. but fail to question why a factory worker here deserves to be paid $30 per hour while someone in Asia is paid $2 per hour and is just productive.
See post #1.It seems that a common error is to try and equate working hard and doing a good job as creating X amount of value. A clerk in an office may be great at their job and make $40K because that is what the market is willing to pay a very good clerk. A middle of the road lawyer may make $100K per year. Laws of supply and demand decide what people earn. Unions take away the incentive to be the best as there is no payoff. The auto industry is a great example of what happens when unions get too stong.
Trying to use your logic, let's look at Google. The co-founders are multi-billionaires and they have made at least a thoudand workers of the company millionaires. Hoe did these tweo guys who created a company worth tens of billions make anyone else poorer???
Another problem with the above. In your reference about a street sweeper who does more than his peers but makes no more money. That is due to him/her being in a union where you get paid the same whether you are the best or worst street cleaner. What usually happens in this case is that the best sweeper figures out it serves no purpose to clean more than his peers so he slows to the average.
Another fallacy in your arguements is where capital to lend has come from. The largest holder of US debt are foreign nations, not individuals with a lot of income. Pensions also hold trillions of dollars that are invested in debt securities. Also try not to forget that we have a fractional banking system. That means for every dollar of capital a bank may lend out 8 dollars. Pre-crash some firms were leveraged 20:1 Fannie and Freddie were leveraged nearly 100:1.
What I find interesting is that people are fixated on income disparity in the U.S. but fail to question why a factory worker here deserves to be paid $30 per hour while someone in Asia is paid $2 per hour and is just productive.
It seems that a common error is to try and equate working hard and doing a good job as creating X amount of value. A clerk in an office may be great at their job and make $40K because that is what the market is willing to pay a very good clerk. A middle of the road lawyer may make $100K per year. Laws of supply and demand decide what people earn. Unions take away the incentive to be the best as there is no payoff. The auto industry is a great example of what happens when unions get too stong.
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