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Income Gap Is Widening, Data Shows
« on: 2007-03-31 01:08:04 » |
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The New York Times
March 29, 2007
Income Gap Is Widening, Data Shows
By DAVID CAY JOHNSTON
Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.
The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.
While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.
The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.
The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.
Prof. Emmanuel Saez, the University of California, Berkeley, economist who analyzed the Internal Revenue Service data with Prof. Thomas Piketty of the Paris School of Economics, said such growing disparities were significant in terms of social and political stability.
“If the economy is growing but only a few are enjoying the benefits, it goes to our sense of fairness,” Professor Saez said. “It can have important political consequences.”
Last year, according to data from other sources, incomes for average Americans increased for the first time in several years. But because those at the top rely heavily on the stock market and business profits for their income, both of which were strong last year, it is likely that the disparities in 2005 are the same or larger now, Professor Saez said.
He noted that the analysis was based on preliminary data and that the highest-income Americans were more likely than others to file their returns late, so his data might understate the growth in inequality.
The disparities may be even greater for another reason. The Internal Revenue Service estimates that it is able to accurately tax 99 percent of wage income but that it captures only about 70 percent of business and investment income, most of which flows to upper-income individuals, because not everybody accurately reports such figures.
The Bush administration argued that its tax policies, despite cuts that benefited those at the top more than others, had not added to the widening gap but “made the tax code more progressive, not less.” Brookly McLaughlin, the chief Treasury Department spokeswoman, said that this year “the share of income taxes paid by lower-income taxpayers will be lower than it would have been without the tax relief, while the share of income taxes for higher-income taxpayers will be higher.”
Treasury Secretary Henry M. Paulson Jr., she noted, has acknowledged that income disparities have increased, but, along with a “solid consensus” of experts, attributed that shift largely to “the rapid pace of technological change has been a major driver in the decades-long widening of the income gap in the United States."
Others argued that public policies had played a role in the shift. Robert Greenstein, executive director of the Center on Budget and Policy Priorities, an advocacy group for the poor, said that the data understates the widening disparity between the top 1 percent and the rest of the country.
He said that in addition to rising incomes and reduced taxes, the equation should take into account cuts in fringe benefits to workers and in government services that middle-class and poor Americans rely on more than the affluent. These include health care, child care and education spending.
“The nation faces some very tough choices in coming years,” he said. “That such a large share of the income gains are going to the very top, at a minimum, raises serious questions about continuing to provide tax cuts averaging over $150,000 a year to people making more than a million dollars a year, while saying we do not have enough money” to provide health insurance to 47 million Americans and cutting education benefits.
A major issue likely to be debated in Congress in the year ahead is whether reversing the Bush tax cuts would slow investment and, if so, how much that would cost the economy.
Mr. Greenstein’s organization will release a report today showing that for Americans in the middle, the share of income taken by federal taxes has been essentially unchanged across four decades. By comparison, it has fallen by half for those at the very top of the income ladder.
Because the incomes of those at the top have grown so much more than those below them, their share of total income tax revenue has risen despite the reduced rates.
The analysis by the two professors showed that the top 10 percent of Americans collected 48.5 percent of all reported income in 2005.
That is an increase of more than 2 percentage points over the previous year and up from roughly 33 percent in the late 1970s. The peak for this group was 49.3 percent in 1928.
The top 1 percent received 21.8 percent of all reported income in 2005, up significantly from 19.8 percent the year before and more than double their share of income in 1980. The peak was in 1928, when the top 1 percent reported 23.9 percent of all income.
The top tenth of a percent and top one-hundredth of a percent recorded even bigger gains in 2005 over the previous year. Their incomes soared by about a fifth in one year, largely because of the rising stock market and increased business profits.
The top tenth of a percent reported an average income of $5.6 million, up $908,000, while the top one-hundredth of a percent had an average income of $25.7 million, up nearly $4.4 million in one year.
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Walter Watts
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Hermit
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Re:Income Gap Is Widening, Data Shows
« Reply #1 on: 2007-04-04 23:18:49 » |
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It Didn’t End Well Last Time
Source: NY Times
Authors: Uncredited Editorial (NY Times)
Dated: 2007-04-04
Not since the Roaring Twenties have the rich been so much richer than everyone else. In 2005, the latest year for which figures are available, the top 1 percent of Americans — whose average income was $1.1 million a year — received 21.8 percent of the nation’s income, their largest share since 1929.
Over all, the top 10 percent of Americans — those making more than about $100,000 a year — collected 48.5 percent, also a share last seen before the Great Depression.
Those findings are no fluke. They follow a disturbing rise in income concentration in 2003, and a sharp increase in 2004. And the trend almost certainly continues, spurred now as then by the largess of top-tier compensation, and investment gains that also flow mainly to the top. For the bottom 90 percent of Americans who are left with half the pie, average income actually dipped in 2005. The group’s wages picked up in 2006, but not enough to make up for the lean years of this decade.
Sensing a political problem, administration officials from President Bush on down have begun acknowledging income inequality. But in their remarks, they invariably say it has been around for decades and is largely driven by technological change. Translation: “We didn’t cause it, and trying to do something about it would be silly.”
Let’s get a few things straight: First, the economic gains of the last few years have been exceptionally skewed. From the 1970s to the mid-1990s, the gap between rich and poor widened considerably, but produced nothing like today’s intense concentration of income at the very top. And from 1995 to 2000, the long trend toward inequality was interrupted by general prosperity. The richest Americans did best, propelled by stock market gains. But the lower rungs also advanced.
Second, government policies do matter. Part of the reason for the shared prosperity of the late 1990s was an increase in the minimum wage and a big expansion of the earned income tax credit. During the same period, a strong economy coupled with fiscal discipline — including tax increases, spending cuts and binding budget rules — conquered budget deficits and furthered job growth while providing a foundation for reasonably adequate social spending.
In contrast, the economic policies of the Bush years have failed to benefit most Americans. The tax cuts have overwhelmingly benefited the richest. As a result, the tax code does less to narrow the income gap now than it did as recently as 2000. At the same time, important social spending has been cut. That exacerbates disparities, because middle-class and poor Americans use government services more than affluent Americans.
The nation needs an administration that will offer solutions for the scourge of income inequality.
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With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
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Blunderov
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Re:Income Gap Is Widening, Data Shows
« Reply #2 on: 2007-04-05 02:34:55 » |
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[Blunderov] Liberté, égalité, fraternité, ou la mort!
These disparities are a recipe for revolution. Long overdue. If it is not now clear that the Democratic party is not a meaningful alternative then it never will be.
The peaceful way out would be to implement proportional representation IMO. Short of that... well it's easy to see why Haliburton have been preparing concentration camps in the USA.
http://www.thenation.com/doc/20070416/von_hoffman
Rich Get Richer, Poor Get Powerless
Nicholas von Hoffman
The latest figures are out on income distribution in the United States, and they are lulus. To say the spread is top-heavy is putting it mildly.
A mere 300,000 people had incomes equal to the total income of the bottom earning half of the entire population. That's 150 million people. Put another way, those 300,000 had incomes 440 times greater than the average income in the United States. Stated yet another way, the golden 300,000 sopped up more than 20 percent of all incomes.
The last time the income imbalance was so large, Calvin Coolidge was President and people were thrilled by the first talking motion pictures. In the 1930s and '40s the gaps between wealth and income were lessened thanks to war, the income tax, pro-employee legislation and labor organizations that forced a mild redistribution of the profits. That's all gone now. We're back to the good old days, and let's hope everybody, including the frayed white-collar classes, are having a good old time.
As the years pass and the imbalances grow, so also does a background wailing about the unfairness of it all. Defining "unfair" is like trying to catch a trout in a stream with your bare hands. Very slippery. Would it be fair if the rich averaged only 390 times the income of the average wage earner? 325? 250? You name it. How does one decide when one has arrived at the fair number? Or must all incomes be equal? There's an idea that leaves a lot to be desired.
You cannot successfully make public policy on the basis of fairness. The criterion must be justice, but let's leave how we decide what is just for another time and cut to one, very important form of justice: the equal distribution of power and our conviction that elections should be conducted on a one-man-one-vote basis.
You will not find many people who will defend the idea that a few people should be accorded 440 votes and the rest of the electorate only one vote each. That is an idea to be found in the original, unamended version of the Constitution in which some people (the black ones) were considered to be worth only 60 percent of a white man's vote.
Naturally the slaves did not get to cast their depreciated 60 percent vote. Their masters did. Under the modern system we are allowed to cast our own vote, which is worth about 1/440th of a rich person's vote, since money is political power in America.
If you doubt that, consider the competition we have been watching as to which candidate can collect the most campaign money. The candidates who cannot get the big money lose. The selection of the two major parties' nominees is primarily in the hands of the Golden 300,000. They more or less decide who gets on the ballot: Remember the old political apothegm to the effect he (or she) who controls ballot access controls all.
Under our present political arrangement the two major-party nominees represent little more than disagreeing factions within the Golden 300,000, and we get to help choose which one is elevated to the ultimate power in the White House. Some choice, but that is what we are left with and will continue to be stuck with unless the income gap is chopped down, way down, so that the top people are hauling in only 150 times the average income of the rest of us.
Some people would call such a change Bolshevism. Others might say it is a step in the direction of democracy.
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David Lucifer
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Re:Income Gap Is Widening, Data Shows
« Reply #3 on: 2007-04-05 11:06:43 » |
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Who here sees a widening income gap as a problem? Perhaps it is time to question the underlying assumptions.
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Blunderov
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Re:Income Gap Is Widening, Data Shows
« Reply #4 on: 2007-04-05 13:15:47 » |
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Quote from: David Lucifer on 2007-04-05 11:06:43
Who here sees a widening income gap as a problem? Perhaps it is time to question the underlying assumptions.
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[Blunderov] Good call to examine the assumptions! Perhaps I am wrong but I see this kind of disparity as an economic problem.
Firstly, from the normative point of view. This sort of gross imbalance is widely perceived as an obvious social injustice.Such wealth can never be 'deserved'. Furthermore, this kind of wealth is inevitably used to buy disproportionate political influence creating in effect a new aristocracy which is antithetical to democratic precepts.
Secondly, from the classical point of view. These massive holdings take value out of the economy and impoverish everyone else. Trickle-down is not so much a theory as an outright lie as far as I can see.
As I see it, the solution is in progressive taxation and progressive social programs. And free education. And free medicine. This is not so radical I think. We are already used to free law enforcement and free defense.
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Hermit
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Re:Income Gap Is Widening, Data Shows
« Reply #5 on: 2007-04-05 14:43:36 » |
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Historically it is one of the principle leading indicators of social instability. Why should this have changed?
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With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
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Blunderov
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Re:Income Gap Is Widening, Data Shows
« Reply #6 on: 2007-04-06 13:40:47 » |
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[Blunderov] An example of how rich people get to make laws that keep them rich at the expense of the poor.
The people that passed this law; I wonder whether they claim to be "Christians"? I'm fairly certain they're not Muslims.
It seems clear that this law is obviously immoral in the Kantian sense of treating persons as means to ends rather than ends in themselves, an accusation to which the 'Capitalist System' as a whole is vulnerable ISTM.
http://www.tomdispatch.com/index.mhtml?pid=182214
In Orlando, Charity Can Be a Crime
06 April 2007, 09:03:00 AM
A 21-year-old Floridian was arrested in Orlando for feeding a group of 30 homeless people. It is illegal in Orlando to feed more than 25 destitute people without a permit, which can be obtained only twice a year. As if to drive home the absurdity of the law, authorities took a sample of Eric Montanez’s illegal stew for evidence.
Reuters via Yahoo!:
Montanez was filmed by undercover officers on Wednesday as he served “30 unidentified persons food from a large pot utilizing a ladle,” according to an arrest affidavit. The Orlando area is home to Disney World and Universal Studios Florida.
The Orlando law, which is supported by local business owners who say the homeless drive away customers but has been challenged in court by civil rights groups, allows charities to feed more than 25 people at a time within two miles of Orlando city hall only if they have a special permit. They can get two permits a year.
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Walter Watts
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Re:Income Gap Is Widening, Data Shows
« Reply #7 on: 2007-04-06 15:39:14 » |
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Quote from: David Lucifer on 2007-04-05 11:06:43
Who here sees a widening income gap as a problem? Perhaps it is time to question the underlying assumptions.
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Here is some food for thought concerning Lucifer's proposed reevaluation of whether a widening income gap is a problem:
http://www.churchofvirus.org/bbs/index.php?board=69;action=display;threadid=38972
Walter
PS--My guess is that the science of catching the "slosh" has become so sophisticated that its methods are being clutched ever more tightly to the bosoms of those that have learned its secrets, and have the existing resources to apply those secrets to.
If that is capitalism at its core, then what if anything, can, or should be done to make its opportunities available to everyone in a fairer fashion.
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David Lucifer
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Re:Income Gap Is Widening, Data Shows
« Reply #8 on: 2007-04-08 17:13:44 » |
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Quote from: Blunderov on 2007-04-05 13:15:47
Firstly, from the normative point of view. This sort of gross imbalance is widely perceived as an obvious social injustice.Such wealth can never be 'deserved'. Furthermore, this kind of wealth is inevitably used to buy disproportionate political influence creating in effect a new aristocracy which is antithetical to democratic precepts. |
Why do you say such wealth can never be deserved? Doesn't it depend on how it was acquired? Sergey Brin is currently the President of Technology at Google and has a net worth estimated at $16.6 billion as of March 9, 2007, making him the 26th richest person in the world and 9th richest person in the United States. He is enormously wealthy because he was instrumental in creating something that literally millions of people value a great deal. Who are you to say he doesn't deserve it?
Quote:
Secondly, from the classical point of view. These massive holdings take value out of the economy and impoverish everyone else. Trickle-down is not so much a theory as an outright lie as far as I can see.
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This claim seems to be predicated on two false assumptions:
1) Rich people hoard their money in cash (instead of, say, spending it or investing it).
2) There is a finite amount of wealth to be allocated (instead of wealth being continuously created).
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David Lucifer
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Re:Income Gap Is Widening, Data Shows
« Reply #9 on: 2007-04-08 17:17:52 » |
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Quote from: Hermit on 2007-04-05 14:43:36
Historically it is one of the principle leading indicators of social instability. Why should this have changed? |
This has changed because the extremely rich generally got that way through commerce, not conquest or force.
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Walter Watts
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Re:Income Gap Is Widening, Data Shows
« Reply #10 on: 2007-04-09 16:36:00 » |
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Where this thread has ended up on the BBS kinda saddened me.
It started as an informational post with no judgement on my part.
A couple of more informational posts followed, interspersed with their respective authors' comments and/or attempts to stimulate more discussion.
The next poster poses a VERY insightful question about some long-held assumptions.
Next, the challenge to the long-held assumptions are commented on.
The comments are challenged, and quite well.
Now, just as I thought I was going to see cogent, rational discourse on the subject, and possibly learn something I didn't know about the subject, a period is put on the whole thread by, guess who?
A FUCKING SPAMMER!
nonplussed in Tulsa town
Walter
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Walter Watts
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Re:Income Gap Is Widening, Data Shows
« Reply #11 on: 2007-04-09 16:42:41 » |
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Actually this shows a remarkable lack of comprehension of historic wealth gathering. With few brutal, but notable exceptions (Danes in England, Goths in Rome, Spaniards in the New World, all wars of pillage rather than meaningful occupation), wars of conquest and defence relied on massive taxation to raise revenue to pay for them. Life in the Feudal era was a never ending struggle to raise taxes and levies to fight battles. Force as applied by the Feudal hierarchy and states ancient and modern was and is expensive, and comparatively speaking, neither the Feudal system nor the early states were nearly as efficient at extracting money, nor were they nearly as expensive, as the immense forces deployed today against the individual and lower and middle classes by the modern state.
Which I think leaves this putative response in tatters.
Kindest regards
Hermit
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With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
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Re:Income Gap Is Widening, Data Shows
« Reply #12 on: 2007-04-09 18:12:43 » |
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Quote from: David Lucifer on 2007-04-08 17:13:44
Quote from: Blunderov on 2007-04-05 13:15:47
Firstly, from the normative point of view. This sort of gross imbalance is widely perceived as an obvious social injustice.Such wealth can never be 'deserved'. Furthermore, this kind of wealth is inevitably used to buy disproportionate political influence creating in effect a new aristocracy which is antithetical to democratic precepts. |
Why do you say such wealth can never be deserved? Doesn't it depend on how it was acquired? Sergey Brin is currently the President of Technology at Google and has a net worth estimated at $16.6 billion as of March 9, 2007, making him the 26th richest person in the world and 9th richest person in the United States. He is enormously wealthy because he was instrumental in creating something that literally millions of people value a great deal. Who are you to say he doesn't deserve it?
Quote:
Secondly, from the classical point of view. These massive holdings take value out of the economy and impoverish everyone else. Trickle-down is not so much a theory as an outright lie as far as I can see.
|
This claim seems to be predicated on two false assumptions:
1) Rich people hoard their money in cash (instead of, say, spending it or investing it).
2) There is a finite amount of wealth to be allocated (instead of wealth being continuously created).
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[Blunderov] I had hoped to indicate with the shriek marks that I personally have reservations about the various meanings that might attach to 'deserved'. I can understand that this may not have come across. I was trying to say that the popular perception is usually that such incomes are unfair even though, I agree, much depends on just how the wealth is created.
The Google chap might very well be earning his crust in an entirely fair way but what is one to make of cases like for instance the GM of Ford who is being paid $7,000,000 a month to liquidate 30,000 jobs? There is something very weird about that.
The problem of envy is real. Some current thinking about the very violent crime we have in South Africa is that it is in large measure to do with a sense of making up for lost time.
I'm not yet conviced that my assumptions are false. Whilst rich people may not hoard cash they divert massive amounts of money into currency transactions which syphon money out of the economy without adding a whit of value to anything at all. It's a private rich peoples' club for making money amongst themseves
by taking it away from the people who work for it.
I'm not at all convinced that wealth can be continuously created. The global warming emergency seems, if it turns out to be true, to suggest exactly this. We have very nearly reached the limit of wealth creation in terms of the planets carrying capacity.
Perhaps the innovative genius of the free market will find us a way out of this enormous pickle but I do not think we can simply be content to hope that this will be the case. Markets must be controlled for the greater good IMV, and to suggest (as some do) that the 'greater good' will derive from assuring the maximum possible benefit for a privileged few seems very counter-intuitive to me.
That said, I certainly do think there plenty of room for the free market but leavened with sensible socialism. When I'm Supreme Dictator things will be run very differently I can tell you. For one thing I will take the view that economies are for the benefit of people, not the other way round.
Best regards.
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David Lucifer
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Re:Income Gap Is Widening, Data Shows
« Reply #13 on: 2007-04-09 18:29:48 » |
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Quote from: Hermit on 2007-04-09 16:42:41
Which I think leaves this putative response in tatters. |
I'm not sure which response is supposed to be in tatters or what your response has to do with the income gap. Could you be more specific?
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David Lucifer
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Re:Income Gap Is Widening, Data Shows
« Reply #14 on: 2007-04-09 18:44:38 » |
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Quote from: Blunderov on 2007-04-09 18:12:43
The Google chap might very well be earning his crust in an entirely fair way but what is one to make of cases like for instance the GM of Ford who is being paid $7,000,000 a month to liquidate 30,000 jobs? There is something very weird about that. |
And I find it weird that other organizations pay their employees huge sums to throw balls through hoops. But shouldn't private companies be allowed to pay their employees whatever they negotiate?
Quote:| The problem of envy is real. Some current thinking about the very violent crime we have in South Africa is that it is in large measure to do with a sense of making up for lost time. |
I agree envy is a big problem, but it makes a very poor foundation for social policy.
Quote:| I'm not yet conviced that my assumptions are false. Whilst rich people may not hoard cash they divert massive amounts of money into currency transactions which syphon money out of the economy without adding a whit of value to anything at all. It's a private rich peoples' club for making money amongst themseves by taking it away from the people who work for it. |
What are you referring to here? Do you have links to any articles I could read to learn more?
Quote:| I'm not at all convinced that wealth can be continuously created. The global warming emergency seems, if it turns out to be true, to suggest exactly this. We have very nearly reached the limit of wealth creation in terms of the planets carrying capacity. |
Yes, maybe a 100,000 year trend in wealth creation is about to end...
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