Paul Wiseman wrote an interesting piece on this subject posted on the MPR News Blog earlier this week. A few excerpts appear below. Read the complete article HERE.
Postscript 2013.09.14
Please be sure to read the first two comments left by good friends.
Feel free to add your additional comments.
Please be sure to read the first two comments left by good friends.
Feel free to add your additional comments.
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Biggest Share Since '20s
September 10, 2013 by PAUL WISEMAN, AP Economics Writer
The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.
The very wealthiest Americans earned more than 19 percent of the country's household income last year -- their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.
U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.
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The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.
The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.
This thoughtful comment was sent to me by some good friends. Please read it! Thanks.
ReplyDelete- - -
The illustration betrays the article’s intended message, i.e. gluttonous, wealthy people are making money off the backs of the poor and slowly crushing them to death.
I do think we that the US has an income inequality challenge in our country, but a better understanding of income inequality and what the tax burden distribution really is would make for a better discussion.
The article quotes statistics but omits a vital one: The top 1% earn 19% of total income but pay 37% of all taxes. (Note that the article says the top 1% captured the 19% total income, like there’s some type of competition and implying the money wasn’t earned.) The top 10% pay 70% of all taxes with 90% paying 30%. About 45% pay no taxes, and many receive income supplements in the form of food stamps, earned income credit, etc.
The “wealthy” have a disproportionately positive impact on charitable contributions, e.g. Bill Gates Foundation, Warren Buffet and countless other benefactors to charities, universities, the arts, etc. The Bible calls us to take care of the widows, orphans and poor, not to give everything to the government and let them worry about it.
Income equality is not achieved through wealth transfers from rich to poor, higher taxes and more government regulation, but rather through job creation. CBO estimated that it cost $500K to $2M for every job created by the $800B stimulus. Like it or not, labor and capital will seek the most efficient/profitable returns. A wealthy businessman in Silicon Valley recently took $1.2M and invested it in a new company that employs 60 people. The government would have created 2 jobs. Do you want higher taxes or more jobs?
This year the US Treasury has taken in > $250B more in revenues over last year, in part due to higher taxes on the wealthy. Yet the labor participation rate (the true measure of unemployment) continues to drop to its lowest rates ever. More government revenue has not led to more jobs. We need the government to create conditions that lead to job creation. To paraphrase Nicholas Sarkozy, “I don’t want less rich people” (because of higher taxation), “I want less poor people” (through smaller government and tax reform).
The decrease in union jobs is bogus. Private sector union membership has been declining for decades and is 6.6% and is at its lowest level (37% for the public sector, also its nadir). If union dues were about creating jobs rather than politics and crony capitalism, participation rates would be much higher. I own a Hyundai, built in the US with non-union labor. The similar model from Government Motors would have cost me about $6,000 more (with 2 years less warranty) for the privilege of having the union build it. That’s neither good value nor good stewardship
Outsourcing is often more cost effective and profitable. Outsourcing doesn’t always mean that jobs are sent overseas. The US Government often outsources certain tasks or functions to the private sector.
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Every statistical study has shown that higher minimum wages actually result in lower employment, mainly for those who need jobs the most. High minimum wages mean fewer jobs. The minimum wage calculation also excludes the government supplements describe d above.
ReplyDeleteRemember that the livelihood of millions depend on companies being profitable. Think about the adverse impact on jobs, your retirement, public and private pension funds, etc. if companies were forced to be unprofitable. And are you willing and able to pay $50 for a US-made shirt or $5 for one from Honduras?
The article does not discuss causes of poverty. 30% of high school students don’t graduate and 50% of those who do read below level. Some 30% are functionally illiterate.
In one national demographic, 3 of 4 children are born to homes without a father, practically guarantying that these families will live in poverty. Redistribution of wealth won’t solve this.
One way to improve income equality would be for more people to take advantage of available programs like federal financial aid (rather than a free cell phone). Use the aid to go to school and learn an employable skill that will allow you to be self-supporting and a contributing member of our society. There is also a great movement to equalize the post-secondary education playing field by the creation of MOOCS (Massive Open Online Course). The formal education establishment is up in arms because it is diluting their iron fist on the hallowed halls; but these courses are available from Stanford, MIT, etc. and are free, online. Go to a public library they are open nights and weekends and learn, get trained, etc.
People have choices, and choices affect income distribution, e.g. seeking an education; what subjects to study; what careers to pursue; willingness to learn new skills; spending and saving; life style; etc. Do we really what to abdicate these to the government and let it determine how much to take from us and what our needs are?
Among the developed countries, Greece has the highest income equality. Yes Greece, with its 30% unemployment rate, bloated bureaucracy (>50% in the public sector where, until recently, one could retire at age 50 at most of his/her salary), voluntary personal income taxes, crippling public sector strikes, 2 months of vacation every year (don’t get sick during the summer months), and where an anarchist party has 5% of the popular vote. This is what an “equal outcome” mentality produces. No thank you. I believe in a society where everyone has skin in the game and personal accountability, and where people have “equal opportunity” to reach their God-given potential.
In sum, the article certainly opens the door for discussion, but the author unfortunately cherry-picks his statistics and appears to have a thinly-veiled agenda.
G & A