California leads the way

[Michael Emrys]

"Reagan described the new debt as the "greatest disappointment" of his presidency."

One wonders why he would have been disappointed. What did he think would happen if he lowered taxes and increased spending? Was the money supposed to spontaneously appear out of a vacuum?

Michael

[gunnergoz]

One wonders at those who squirm about "deliberate redistribution of wealth" from the wealthy 1% back into the rest of the population...where were they when these same wealthy folks engineered the transfer of wealth from the middle class to them over the past 30 years? Somehow it is OK in one direction, but not the other? Just curious.

[Stalins Organ]

AFAIK the middle class is also getting richer......as is the working class....and even the poor (according to Wiki over 70% of "poor" households in the USA in 2000 had a car, 76% had aircon, 62% had cable or satellite TV, etc, and 46% of them owned their own homes) ....in fact it pretty much looks like the whole world is actually getting richer over time and so it is not a zero-sum game - the rich getting richer does not mean someone else is getting poorer.

Does anyone know of stats showing how the "poverty line" has moved over the ages?

[ASL Veteran]

ASLVeteran

What do you consider a reasonable distribution of income wealth in the US system? I say nearly a quarter to 1% is wrong. Do you consider it is right, or should be lower or higher?

I assume you would agree that 100% to 1 would be wrong so you must have some idea.

I don't believe in redistribution of wealth for the sake of redistributing it. The purpose of taxation is for the government to get the funds it needs to perform it's functions. There are other ways besides income tax for the government to get the funds it needs to operate though, and income tax is primarily an instrument of wealth redistribution. Let's consider a wealthy individual like John D Rockefeller and Andrew Carnegie though. They could be regarded as quite possibly the wealthiest two individuals in history. Good men or bad men? An argument could be made that without Andrew Carnegie or John D Rockefeller the modern world as we know it would not be possible. Andrew Carnegie made Steel a common building material and made it a lot cheaper than it had ever been made before. The price of Kerosene plummeted by something like 80% thanks to John D Rockefeller and you will notice that whale hunting is no longer the big industry that it was before Rockefeller. Rockefeller saved the whales.

On balance, I'm curious to know whether those in this thread think that Andrew Carnegie and John D Rockefeller contributed more to society by doing what they did or if they would have contributed more to society if the government had taken more from them and redistributed it to others. They both produced something of value and that's why they became wealthy. What's wrong with becoming wealthy by producing something of value?

Doesn't Steve at Battlefront deserve to keep the fruits of his labor if his business is successful? Yep, if we were to glance at Steve's bank account I have no doubt that most of us would be impressed. The thing about wealthy individuals in the US is that people are moving up and down the wealth 'strata' fairly regularly. The 'wealthy' in the US aren't a static group that society keeps separated by the state as in Medieval times with the nobility and the peasantry, or like in India with the "Untouchables" etc. Darryl Strawberry and Dwight Gooden were both wealthy individuals but they aren't doing so great now. Steve could also join the ranks of the poverty stricken if he makes a bad enough game.

[Michael Emrys]

...the rich getting richer does not mean someone else is getting poorer.

I don't know about that, but it sure looks like very time the poorer get a teensy bit richer, the rich get a LOT richer. If we were playing roulette, you'd have to wonder if the wheel was rigged.

Michael

[ASL Veteran]

AFAIK the middle class is also getting richer......as is the working class....and even the poor (according to Wiki over 70% of "poor" households in the USA in 2000 had a car, 76% had aircon, 62% had cable or satellite TV, etc, and 46% of them owned their own homes) ....in fact it pretty much looks like the whole world is actually getting richer over time and so it is not a zero-sum game - the rich getting richer does not mean someone else is getting poorer.

Does anyone know of stats showing how the "poverty line" has moved over the ages?

Yes Stalin's Organist - this is exactly what I was getting at. Perhaps the heart of a libertarian beats within you yet ..... .

[ASL Veteran]

"Reagan described the new debt as the "greatest disappointment" of his presidency."

One wonders why he would have been disappointed. What did he think would happen if he lowered taxes and increased spending? Was the money supposed to spontaneously appear out of a vacuum?

Michael

An interesting topic. As a side note I would mention that if you look at tax revenues vs tax rates historically you should find that the amount of revenue stays pretty static relative to tax increases or decreases. I only say should rather than will because it's been a while since I checked that.

Simply put, a non communist government doesn't produce anything of value and the only way it gets 'revenue' is to take it from someone else in society who is productive. How many employees could Battlefront have if Steve and Charles didn't have to pay any taxes and how much more quickly could we have the next game in our hot little hands if that were the case?

[ASL Veteran]

One wonders at those who squirm about "deliberate redistribution of wealth" from the wealthy 1% back into the rest of the population...where were they when these same wealthy folks engineered the transfer of wealth from the middle class to them over the past 30 years? Somehow it is OK in one direction, but not the other? Just curious.

I'm not in favor of any wealth distribution in any direction. I have to admit though that I'm at a loss as to what you are referring to.

[JonS]

How many employees could Battlefront have if Steve and Charles didn't have to pay any taxes and how much more quickly could we have the next game in our hot little hands if that were the case?

Probably very quickly. Except, of course, there'd be no way to actually get it, because all that pesky govt-funded infrastructure wouldn't exist.

Doesn't Steve at Battlefront deserve to keep the fruits of his labor if his business is successful?

Some of it? Absolutely. Most of it? Probably. All of it? No, not really. That's because all the other people in the country have - to a greater or lesser extent - assisted him to get to the position he's in now. Through education, infrastructure, law and order, R&D, health, you name it. Steve paying taxes is a way of 'paying it forward' to the next person who finds themselves in the position Steve was in 10-15 years ago.

Also, Steve absolutely deserves to keep some or most of the fruits of his labour. A related question is whether his kids deserve to keep the fruits of Steves labour? What about his kid's kids? And his kid's kid's kids? &c. What about some random stranger he met on the street and took a shine to?

[Stalins Organ]

Sorry ASL - I'm a reasonable person - not a libertarian at all.

Without taxes BFC probably wouldn't exist either - rival companies would have machinegunned Steve & Charles long ago - or just kidnapped them to work as slaves in the bowels of Redm...er....somewhere

alternatively they might have paid "fees" to local "Security Providers" in order to be able to do business "peaceably"......

[gunnergoz]

I'm not in favor of any wealth distribution in any direction. I have to admit though that I'm at a loss as to what you are referring to.

This phenomenon, friend:

http://www.cbpp.org/cms/index.cfm?fa=view&id=2908

Made possible by years of politicians' tinkering with economic policy, tax policy, corporate favoritism and special congressional bills to allow the top 1% to have any number of means to increase their wealth, while simultaneously exporting jobs, selling off businesses and similar tactics to remove earning power from the middle class.

[Stalins Organ]

Much as I think ASL's "libertarianism" is bollocks, Gunner I think you also show a lamentable blindness to information that doesn't suit your purpose.

For example in table 1 in that article it says that the bottom 90% of income earners had their incomes increase by an average of 3.9% per annum 2002-2007, and gives much higher figures for the richer sections of society.

For me, being part of the 90% albeit not in the USA, the question is not whether that figure is higher or lower than that for others.

The question is whether those people are better off or not in 2007 than they were in 2002.

What was the average rate of inflation in that same time span? If it was <3.9% then the bottom 90% are actually better off - despite the "depredations" of the top 0.1%.

If inflation has been greater than 3.9% then you have a case.

But to simply stand there and scream "they got 100% and I only got 4% - it's not fair!" smacks of nothing more than jealousy, and that's not a basis for any sort of regulation at all!

[dieseltaylor]

Anytime any one reaches for percentages I know there is something else to look at. : )

I don't get excited by a few thousand dollars but someones income rising $3m is interesting. Looky here:

http://www.visualizingeconomics.com/2007/02/15/2005-us-income-distribution-part-3/

Blimey those hard working hedge fund managers do well. And given they have worked hard I am sure we will all agree with ASLVeteran they well deserve their pay

[dieseltaylor]

I don't believe in redistribution of wealth for the sake of redistributing it. The purpose of taxation is for the government to get the funds it needs to perform it's functions. There are other ways besides income tax for the government to get the funds it needs to operate though, and income tax is primarily an instrument of wealth redistribution. Let's consider a wealthy individual like John D Rockefeller and Andrew Carnegie though. They could be regarded as quite possibly the wealthiest two individuals in history. Good men or bad men? An argument could be made that without Andrew Carnegie or John D Rockefeller the modern world as we know it would not be possible. Andrew Carnegie made Steel a common building material and made it a lot cheaper than it had ever been made before. The price of Kerosene plummeted by something like 80% thanks to John D Rockefeller and you will notice that whale hunting is no longer the big industry that it was before Rockefeller. Rockefeller saved the whales.

On balance, I'm curious to know whether those in this thread think that Andrew Carnegie and John D Rockefeller contributed more to society by doing what they did or if they would have contributed more to society if the government had taken more from them and redistributed it to others. They both produced something of value and that's why they became wealthy. What's wrong with becoming wealthy by producing something of value?

Doesn't Steve at Battlefront deserve to keep the fruits of his labor if his business is successful? Yep, if we were to glance at Steve's bank account I have no doubt that most of us would be impressed. The thing about wealthy individuals in the US is that people are moving up and down the wealth 'strata' fairly regularly. The 'wealthy' in the US aren't a static group that society keeps separated by the state as in Medieval times with the nobility and the peasantry, or like in India with the "Untouchables" etc. Darryl Strawberry and Dwight Gooden were both wealthy individuals but they aren't doing so great now. Steve could also join the ranks of the poverty stricken if he makes a bad enough game.

Asl Veteran -

You talk of them - Carnegie and Rockefeller as though nothing would have happened without them existing. Your viewpoint made me think of this piece from Wikipedia

In 1901, Carnegie was 66 years of age and considering retirement. He reformed his enterprises into conventional joint stock corporations as preparation to this end. John Pierpont Morgan was a banker and perhaps America's most important financial deal maker. He had observed how efficiently Carnegie produced profit. He envisioned an integrated steel industry that would cut costs, lower prices to consumers, produce in greater quantities and raise wages to workers. To this end, he needed to buy out Carnegie and several other major producers and integrate them into one company, thereby eliminating duplication and waste. He concluded negotiations on 2 March 1901, and formed the United States Steel Corporation. It was the first corporation in the world with a market capitalization over $1 billion.

Does it occur to you that building monopolies and driving opposition from the marketplace was actually largely responsible for the wealth of those men? That they gave away vast amounts towards the end of their lives might be a reflection on their mortality and wishing to look good. I expect we will have benevolence from thos nice Hedge men also -- in 30 years time

As for the assertion that Rockefeller saved the whale! You really know how to insult peoples intelligence. The use of oil/gas as a lighting source pre-dates Jesus in Persia and China at least so its not like that was his doing. Once the resource was found many companies got involved and competition drove down the price not splendid benevolence.

You refer to the wealthy and point to two sportsmen done on their luck - neither have anything to do with the super wealthy. One per cent of the US population say 3 million people had 23% of the income. So a mere millionnaire just does not cut it.

[dieseltaylor]

As this thread has turned into one about wealth/people influencing democracy I found this at one site whilst looking at the asset richness of some Americans.

I’d be curious to know how much “foreign aid” we’re giving to some of these same countries that own a piece of us.

Well, fasten your seat belt…

Approximately 1/3 of the total foreign aid budget of the United States is annually sent to Israel even though they comprise less than 0.001 of the world’s population and has one of the world’s highest per capita incomes.

“Israel gets approximately $15 billion a year from the American taxpayers. That $15 billion is $30,000 for every man, woman and child in Israel.”

Meanwhile, (February 2010 data), the number of unemployed persons in the U.S. is 14.9 million! Source: Bureau of Labor Statistics.

[dieseltaylor]

AH paydirt of the very best kind:

And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to an analysis by David Cay Johnston -- recently retired from reporting on tax issues at the New York Times -- the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier (Johnston, 2010). (For another recent revealing study by Johnston, check out "Is Our Tax System Helping Us Create Wealth?").

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

The Wealth Distribution

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2010).

and as for inheritance taxes:

Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever -- for generations and generations -- thanks to bankers. After Congress passed a reform in 1986 making it impossible for a "trust" to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their "rules against perpetuities," which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these "dynasty trusts" (which could be the basis for an even more solidified "American aristocracy") in a New York Times opinion piece published in July 2010 by Boston College law professor Roy Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).

And just so you know of roughly 300 billionaires in the world one third inherited their wealth.

[gunnergoz]

S.O.- Any "blindness" I may suffer is in part due to being battered for the past 30 years while watching my nation's economy being systematically pillaged for the benefit of the very few at the top...resulting in the first American middle class generation since the '30's Depression that probably can't offer its children better economic conditions than the parents had.

[Stalins Organ]

Gunner that post illustrates my point - if the lower & middle classes have been increasing their relative wealth then I don't believe you can say that it is the uppoer classes that have been "pillaging".

Relative wealth has been increasing since hte 1930's for everyone....and if the middle classes cannot offer their children better economic conditions then that seems to me to be a result of a fairly massive depression/recession over the last few years......which should not be a great surprise.

[Michael Emrys]

...if the middle classes cannot offer their children better economic conditions then that seems to me to be a result of a fairly massive depression/recession over the last few years......which should not be a great surprise.

It's not been just the last few years, but almost four decades. I hear stories from my retired friends about how their children—who are now approaching middle aged—are struggling harder and making less than their parents did.

The problem isn't just that the rich are hogging the wealth, but that they decline to invest it in ways that would really benefit the whole populace. For instance, instead of upgrading and modernizing factories twenty years ago to make them more economical and efficient, they built them overseas to take advantage of cheap labor. And that's just one example of what I am talking about. The Reagan administration let it be known that it was open season on unions and that has hindered efforts to improve the lot of the working class. (Which is not to deny that in many cases labor leadership was corrupt and indifferent to the interests of the rank and file.)

Michael

[Stalins Organ]

Ah - yes good ol' anecdotal evidence and confirmation bias....and then moving the goal posts - it's not HOW the wealth is being used, not that it exists....

Sorry guys......all too flakey for me to consider it a rational hypothesis.

Which doesn't make it false of course......just to confuse you even further!

[dumrox]

You refer to the wealthy and point to two sportsmen done on their luck - neither have anything to do with the super wealthy. One per cent of the US population say 3 million people had 23% of the income. So a mere millionnaire just does not cut it.

In regards to your statement above, wiki states that a household income of $350k in 2005 would place a family in top 1%. The two athletes mentioned made 10-15 times that per year 15 years earlier (Strawberry maxed out just over $4m/year, Gooden almost $6m, not counting endorsements), so they were well into the top 1% in incomes during the late 80's - early 90's.

[gunnergoz]

One more interesting article related to the topic of redistribution of wealth by creation of an oligarchy at the expense of the middle class:

http://www.thenation.com/article/37889/no-oligarchy

[JonS]

Dumrox, you're talking about something that's a little different. $350k is in the top 1% of household annual incomes, not net wealth.

[dumrox]

I understand the distinction, Jon. However, since diesel's statement that I quoted dealt with income statistics and this thread has dipped into income tax discussions at times, my clarification stands.

[dieseltaylor]

Yes you were quite right dumrox - an income millionnaire would make it into the the top 1%. Excluding children that uis roughly 2.5m people.

This from unnergoz;s link is fun

The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. Four hundred families! During the last fifteen years, while these enormously rich people became much richer their effective tax rates were slashed almost in half. While the highest-paid 400 Americans had an average income of $345 million in 2007, as a result of Bush tax policy they now pay an effective tax rate of 16.6 percent, the lowest on record.

Last year, the top twenty-five hedge fund managers made a combined $25 billion but because of tax policy their lobbyists helped write, they pay a lower effective tax rate than many teachers, nurses and police officers. As a result of tax havens in the Cayman Islands, Bermuda and elsewhere, the wealthy and large corporations are evading some $100 billion a year in U.S. taxes. Warren Buffett, one of the richest people on earth, has often commented that he pays a lower effective tax rate than his secretary.

But it's not just wealthy individuals who grotesquely manipulate the system for their benefit. It's the multinational corporations they own and control. In 2009, Exxon Mobil, the most profitable corporation in history made $19 billion in profits and not only paid no federal income tax—they actually received a $156 million refund from the government. In 2005, one out of every four large corporations in the United States paid no federal income taxes while earning $1.1 trillion in revenue.

It seems even barmier that even corporations seem to be very favourably treated compared to the normal joe.. I wonder how a family spends $345M a year. I suppose the answer is they cannot so simply increase being richer.