Income Inequality

Steve Novick

Today's New York Times has an article by David Cay Johnston on recent data on income inequality. In 2005, the share of national income going to the top 1% rose to over 21% - the highest level since 1928. The article also has a chart showing that during the long postwar boom (roughly 1945 to 1973), when standards of living were rising rapidly for every group in America, the richest 1% only got about 10% of income. Kari has tried to teach me how to properly post links but apparently I cannot figure it out, but here is the link address, at least, below.

I think we know that in this economy, the rich are getting richer, but the historical stuff is important, too -- there was a time when we had a strong economy that was NOT tilted toward the rich in this way. There was a time when CEOs were satisfied with paying themselves 35 or 40 times what the average worker made, not 300 times. Oh, and rich people and corporations were paying their share of taxes, and not even complaining much. And it seemed to kinda work.

  • Bill Holmer (unverified)

    The question that I've never heard a satisfactory answer to is, "in a society that rewards innovation, hard work, personal sacrifice, and thrift, what should the gap be between the rich and the poor?"

    And before anyone starts the tired diatribe against the so-called "tax cuts for the rich," they should consult recent IRS data that shows that between 1996 and 2004, the share of income taxes paid by the top 1% increased from 31.6% to 35.6%; the top 10% increased from 62.0% to 67.6%; while the bottom 50% declined from 4.4% to 3.4%. Contrary to popular belief, the Bush tax cuts have made income taxes more progressive, not less.

  • (Show?)

    When the rich are making lots more of the money, they can pay a larger share of the total taxes even if the tax system is shifted in a regressive direction. Johnston himself pointed out in the article 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." Recall also that SOCIAL SECURITY taxes, which are regressive, are a big part of the Federal pie, and those taxes were RAISED in 1983 and Bush didn't cut them.

  • Bert Lowry (unverified)


    So the richest 1% had their income tax go from 31.6% of total taxes paid to 35.6%. That's an increase of 12%. How much did their income go up? If it went up more than 12%, then they got a tax break.

    There's a similar problem with your bottom 50% number. If the bottom 50% got substantially poorer relative to the average, then we would expect their taxes to go down.

    Your numbers, without accompanying income data, are not very useful for determining tax fairness. You may be on to something or you may not. It's impossible to tell.

  • Bill Holmer (unverified)


    You quote Johnston as saying, "...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." It appears that what he's refering to is the reduction in the top marginal tax rate from 70% before the Reagan tax cuts to 35% today. The problem is that with a top rate of 70%, there's a tremendous incentive to seek out ways to legally avoid paying the tax - remember cattle futures? Virtually nobody paid the top rate. Johnston demonstrates the fallacy of focusing on tax rates, instead of the tax revenues that the tax rates generate.

    Bert raises a good point. However, the Bush tax cuts reduced income tax rates on a percentage basis more at the lower income levels than at the higher income levels. So by definition, the Bush tax cuts were progressive. The fact that the actual share of the income taxes paid by the higher income brackets increased, confirms that the progressive cut in rates resulted in a progressive change in who actually paid the income taxes.

  • pedro (unverified)

    regarding income inequality, and tax cuts, i think nothing is more illuminating than these two number

    in 1975: the avg hourly wage was $4.61 adjusted for inflation that is ~$18.32 in today's dollars if wages had increased with productivity, today's average wage would be ~$32.68

    in 2005 (i don't think the 2006 #'s are out yet): the avg hourly wage was $15.88 adjusted for inflation that is ~$16.36 in today's dollars

    i am going to optimistically use the latter figure for my comparision:

    adjusted for inflation the avg wage has gone down from $18.32 to $16.36. that is ~$2 ($1.96) less per hour (that $2 is probably pretty close the 1983 fica increase that went to the trust fund). think about what you could do with that. but the real shocker is today's avg hourly wage of $16.36 vs $32.68; 1975's avg wage adjusted for productivity increases. think about what you could do with an extra $16.32 an hour!

    this means that the most productive workers in the world have seen all their gains, and more, go to their bosses (and their bosses bosses even moreso).

    so even if we cut taxes to zero for the average worker, they still be making less than the productivity adjusted worker even if they were being taxed at the highest marginal rate. kind of makes the whole "tax cuts put more money in your pockets" mantra of the reagan revolution seem a little silly, unless you're making well over the avg wage (duh...).

    my point is not that there is some magical solution to this by just raising taxes on the wealthy; the problem is much more complicated, including trade and budget deficits, energy bottlenecks, and so on. my point is that the conservative tax cutters have succeeded only in cutting their own wages and giving it to the rich.

  • (Show?)

    The fact that the actual share of the income taxes paid by the higher income brackets increased, confirms that the progressive cut in rates resulted in a progressive change in who actually paid the income taxes.

    That is completely untrue.

    If you have a decrease in your taxes, but your income increases at an even higher rate, you're still going to see an increase in the actual number of dollars you pay. Therefore, your percentage of the total pool of tax dollars can increase even though your tax rate decreased.

    Also, if the poor are getting poorer, and paying less taxes, that means there is a smaller "pool" of taxes. Therefore, those at the top income brackets are going to pay a bigger share of the pool.

  • (Show?)

    As to effective rates, as opposed to marginal rates, this is what the Center on Budget study released today says: "In 1970, the top 1 percent of households paid an average of 47 percent of their income in federal taxes; under 2004 law, Piketty and Saez estimate they faced an average tax rate of just 30 percent, a difference of 17 percentage points."

  • Sill Bizemore (unverified)

    My question to Stevey and the rest of you is:


    "Well Sill, people who make lots of money are selfish and not helping their fellow man. People who make lots of money tend to be republicans, and we don't like republicans, so we should penalize people for being republicans by taxing them more."

    "The bottom line is that they have a bunch of money and that is just not fair!"

    So what if someone makes a bunch of money? Who cares? What difference is it to you. How many of you make more than the poverty level or the working poor? How many of you give money to people who need it more than you?

    It isn't a crime to be wealthy, but you all act as if the wealthy are nothing more than criminals.

    "Well Sill, the wealthy have money and they can afford more taxes so we should just tax them more and give their money to people who don't make as much as wealthy people do."

    BS. I am in the top 10% income. I work my ass off for every penny I make. Why should I have to pay because there are people out there who aren't willing to work as hard as I have to get where I have in life?

    So I ask you, what is wrong with someone being wealthy?

  • (Show?)

    BS. I am in the top 10% income. I work my ass off for every penny I make. Why should I have to pay because there are people out there who aren't willing to work as hard as I have to get where I have in life?

    Not everyone who doesn't work does so by choice.

    Stroke, cancer, catastrophic injury are facts of life for millions of Americans every year. Are you suggesting that as a society, we have no obligation to protect the weakest among us?

    If so, then my assumption is that you don't agree with the preamble to our Constitution:

    "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

    Either you believe in that or you don't.

  • Bill Holmer (unverified)

    The Piketty and Saez study that Steve refers to is a joke. According to Piketty and Saez "economists generally assess whether a tax system is progressive based on whether the distribution of after-tax income is more equal than the distribution of pre-tax income." But then they don't follow their own definition. In order to arrive at their conclusions, they have to apply 2004 tax rates to 2000 income, apparently believing in the fiction that humans don't respond to incentives.

    So in response to the challenge laid down by Bert, I have decided to follow Steve's maxim, and "look it up." According to the most recent IRS statistics, in 2000, total Adjusted Gross Income was $6.42 trillion, of which $834 billion (13.0%) was earned by the bottom 50% of taxpayers. By 2004, total Adjusted Gross Income was $6.88 trillion, of which $923 billion (13.4%) was earned by the bottom 50% of taxpayers. So much for the poor getting poorer.

    Meanwhile for the lucky top 1%, total Adjusted Gross Income in 2000 was $1.34 trillion (20.9% of the total). By 2004, total Adjusted Gross Income for the top 1% had declined to $1.31 trillion (19.0% of the total). So much for the rich getting richer.

    During this period, the Bush tax cuts reduced the income taxes paid by the bottom 50% of taxpayers from $38.4 billion to $27.5 billion, a decline of 28.4%. At the same time, the income taxes paid by the top 1% declined from $367.0 billion to $306.9 billion, a decline of 16.4%.

    So back to the Piketty and Saez definition of tax progressivity. In 2000, the bottom 50% earned 13.0% of the total pre-tax income, which increased to 13.4% of the total pre-tax income by 2004. On an after-tax basis, the bottom 50% earned 14.6% of the total after-tax income in 2000 and 14.8% of the total after-tax income in 2004. On the other hand, the top 1% earned 20.9% of the total pre-tax income in 2000, which declined to 19.0% of the total pre-tax income in 2004. On an after-tax basis, the top 1% earned 17.8% of the total after-tax income in 2000, which declined to 16.5% of the total after-tax income in 2004. So by any measure, the Bush tax cuts have been progressive.

    You can try to play the class warfare game, but the facts are that the poor have not been getting poorer, the rich have not been getting richer (at least through 2004), and the rich haven't benefited from the Bush tax cuts at the expense of the poor.

  • (Show?)

    So what about that CEO compensation? Are you guys arguing that CEOs on average produce 300 times the value of their line employees in a given time frame?

    back in the Good Old Days that you pine for, CEOs were answerable to shareholders as represented by their board.

    In these times of bundled investments, creative instruments, and opaque accounting practices, they rarely answer to anyone. The CEOs club, rotates on various boards and there are no checks on their income at all. CEOs that return an outstanding profit to their shareholders are no more likely than incompetent CEOs to receive "merit pay".

    Couple that with the fact that "supply and demand" has been replaced by "create demand" to individual consumers and "crony demand" in the federal gummint, and you have a system that would be unrecognizable to your prophet Adam Smith (who actually wrote extensively regarding the moral duty of the private sector), but would undoubtedly bring a smile to Ayn Rand, who argued that morality is for wimps, and altruism does not exist.

    Do you think that we might be able to find a few billion in WasteFraudandAbuse in say our defense and foreign policy? Is the federal government able to make decisions that benefit "the people" when legislation and policy is actually written by lobbyists for these Alleged Free Marketeers. The fox is guarding the henhouse and said fox will kill us all and commit accidental suicide in pursuit of the new religion.

    This mindset is putting the nation and the entire world at risk. Get a clue.......

  • (Show?)

    Sill Bizemore:

    There are some of us around this blog that are the working poor.

    By 2004, total Adjusted Gross Income was $6.88 trillion, of which $923 billion (13.4%) was earned by the bottom 50% of taxpayers. So much for the poor getting poorer.

    Wow. So they increased a whole 0.4% of the total in a four year period. They're just getting so rich, aren't they?

    Those towards the upper portion of the 50% may be doing a little better, but for the most part people are doing worse. The gap between the rich and the poor is growing, and the middle class is quickly disappearing.

    And isn't it sad that the bottom 50% of taxpayers only make 13.4% of the income?

  • Bill Bodden (unverified)

    The question that I've never heard a satisfactory answer to is, "in a society that rewards innovation, hard work, personal sacrifice, and thrift, what should the gap be between the rich and the poor?"

    The gap between the rich and poor is difficult to quantify numerically, but the gap should not be so obscenely extreme that some among the rich can spend a million dollars on a birthday party while millions of children go to bed hungry at night and ill-fed to school the next day. The gap should not be so insane that a CEO can be paid tens of millions of dollars while some of his or her employees live in poverty.

  • Chuck Butcher (unverified)

    What a load of ***, the key word here is INCOME, if you are rich there are a whole lot of ways to make that number go down without suffering an iota. I promise you I make less income than many of you, and some of that "less income" is no more than tax games because I am an S-Corp. If you think S-Corp is about small (low income) business you're out of your mind, mine is, but when BushCo talks about small business he has something else in mind, entirely else.

  • Urban Planning Overlord (unverified)

    A classic flaw of socialist thinking is that the poor can be made whole by soaking the rich. In fact, all Socialism does is make everyone poor. Capitalism works because it harnesses a base human emotion, greed, for the benefit of a civilization.

    It is the proper function of a government interested in preserving and uplifting the civilization it serves not to "soak the rich," but rather to ensure that those in the lower income brackets have a decent and acceptable standard of living. If Mr. Novick's comments were aimed at this objective, then I applaud him. But the unfortunate class warfare tenor of his comments says otherwise.

  • (Show?)

    Class warfare? Bah. This country has been subject to rich-on-poor class warfare for decades.

    You can't point to a bit of evidence of successful poor-on-rich class warfare over the last 20 years that actually led to policy change.

  • Bert Lowry (unverified)

    Thanks, Bill. It's nice to see some real numbers. In general, the numbers lend credence to your claim that the Bush tax changes have been at least somewhat progressive.

    I notices a few odd things (these oddities are usually due to the fact that you must use the numbers you find, not the numbers you wish the IRS had compiled):

    1.) It is a little strange that we're looking at adjusted gross income instead of gross income.

    2.) It's a little strange that the income % of the lowest 50% grew 3% (13% to 13.4%), but their after tax income % only grew 1% (14.2% to 14.4%).

    3.) When you couple that with the top 1% after tax income % shrinking, it begs the question "whose after tax income % is rising?"

    Bill, will you post a link to the report(s) you used? I'd like to analyze the numbers across all income brackets. I'd also like to try to find gross income numbers, that is, income before tax shelters.

  • (Show?)

    Not everyone who doesn't work does so by choice.

    Not only that but I guarantee to Mr. 10% that the difference between the rich and the poor on average isn't that the rich work harder. People who are capable of working but don't work are a problem but a small one. Most poor people in this country aren't poor because they don't work. Plenty have full-time jobs and many have more than one job to try and make ends meet.

    I think that taking money from one set of people and handing it over to another ought to be the last resort and reserved for those cases where there's just no other way. On the other hand, our economy needs to be structured (and it is structured, there are no economies that aren't goverened by laws and regulation) so that no one working hard at a job that needs to be done lives in poverty and everyone has opportunities to get ahead.

  • (Show?)

    no one working hard at a job that needs to be done lives in poverty

    I agree, Doretta. While we can't stop people from making bad choices that serve to impoverish themselves, we can certainly demand better of our employers. Real living wages and health insurance should be a requirement, not something the government backfills.

  • Bill Holmer (unverified)

    Dear Bert,

    Nice to see some genuine, honest intellectual curiosity. The link is as follows:

    You're right about having to use the numbers as you find them. So in some cases you have to back into the total income and total tax numbers. But it's just arithmetic.

    Adjusted Gross Income is before deductions, but after adjustments such as moving expenses and IRA contributions. While it would be nice to look at total income before adjustments, I seriously doubt that it would have any significant impact on the relative progressivity of federal income taxes.

    Actually, the AGI of the bottom 50% grew 10.7% from $834 billion in 2000 to $923 billion in 2004. It was just their share of total AGI that increased from 13.0% to 13.4%.

    On an after-tax basis, the income of the bottom 50% grew by 12.6% from $795 billion to $896 billion. The after-tax income of the next 49% grew 12.8% from $4.64 billion to $5.15 billion, and the after-tax income of the top 1% grew 3.1% from $970 billion to $1 trillion.

  • Sadie (unverified)

    The other important part of this conversation has to be the increasing debt of the lower and especially the middle class. Obviously the top 1% doesn't have to worry about such things, but the rest of us do.

    I'm no economist, but it would seem to me that in a time when everyone is paying less in taxes, if the debt is going up for those in the lower tax brackets while the wealth is going up for those in the higher tax bracket all we are accomplishing with tax cuts is a reason for the wealthy to hold on to their money and make more money off the debt spending of the lower classes.

  • Miles (unverified)

    Bill, I'm genuinely, intellectually curious about your statistical obfuscation.

    First, you state that the only true measure of a tax system's "progressivity" is to look at percent of total income taxes paid. And since after the Bush tax cuts that percent has risen for the top 1% and fallen for the bottom 50%, you claim that it proves that the cuts were progressive. But as others have pointed out, that assumes the pie is the same size. Of course we know that it's not the same size, so if the incomes of the rich are in fact growing at twice the rate of the incomes of the poor, the percent of total income taxes paid by the rich can grow even if their actual tax burden on each dollar earned falls.

    Second, you argue that between 2000 and 2004, the percentage of AGI going to the top 1% of income earners fell from 20.9% to 19.0%, again proving that Bush's tax cuts are progressive. But the accompanying graph in the NY Times article shows that there was a brief dip in the early 2000s due to the declining stock market. And you fail to mention that in 2005 -- the point of the linked article -- that percentage is back up to 21%, last seen in the 1920s. Why are you stopping at 2004 and leaving out this important, updated information?

    Statistical obfuscation aside, it's pretty obvious by any objective standard that income inequality is growing. Some of us in the top 10% understand that we are here partially because we've worked hard, and partially because we've benefitted from things beyond our control (good parents, safe community, good schools, and luck). Personally, I have no interest in the income gap growing any larger than it is, and I think those of us in the top 10% should be happy to give back, through our taxes, to those who weren't as fortunate. Are some of them undeserving? Of course. But most of them work hard, and I personally want to live in a society where our public policies mitigate the differences between the rich and poor rather than exacerbate them.

  • (Show?)

    Yea, and these incomes are even after adjustments like "moving expenses and IRA contributions."

    Of course these are adjustments that are taken more heavily at the top income brackets than the bottom.

  • Sill Bizemore (unverified)

    You know, you guys are right, you have convinced me. It sounds like to think like a progressive I need to agree that:

    1. Any CEO who makes 300 times the average american salary is a criminal. It is unjust and unfair that someone makes that much money. We should throw anyone who makes an obscene amount of money in jail. First to go: Leo DiCaprio who made 25 million for being in a frickin movie and Barbie Streisand who made $92 million. Why do they have to make so much money when kids go to bed hungry every night. I am sure barbie and leo can live on $100k a year. Why don't these "progressives" give their money to the poor? What about old George Soros, worth $8.5 Billion and the 80th richest person in the world - c'mon, as progressives we hate guys like george soros - he is rich. He should give all of his money away to charity right now.

    He is a bad bad man because he is rich. Gimme your money, dammit!

    1. If you are poor, then it is the government's job to make you rich, even if that means taking money from others (as long as the government doesn't take from rich progressives who give money to progressive candidates)

    2. We must regulate how much money everyone makes. For instance, CEOs cannot make more that twice the average american salary. And if you are a conservative CEO, you can't make more that 1/2 the average American salary.

    Yeah, this all makes sense to me.

  • (Show?)

    I don't see anyone saying that. What we're saying is that it's wrong when a CEO makes hundreds of millions while his employees are working full time and living off food stamps.

    It is in a CEO's best interests to keep wages low, health insurance inaccessible or non-existent, keep people from getting full time wages, give out low raises, etc. Doing so means he gets millions of dollars in bonuses. And CEOs act like this every day.

    But saying it's wrong doesn't mean the same thing as saying it is illegal.

    This isn't just about government, it's about society as a whole. As a society we need to see the importance of businesses paying a living wage. Of making health care accessible and affordable, which likely means going to universal health care like the other industrialized nations have. That having funds available to people when they have health problems and cannot work is important. That every citizen in our society is equal and deserves at a minimum to be able to do more than just survive -- to actually have a safe place to live, healthy food that is actually enough to eat - not just to survive, etc.

    This isn't about making the poor rich or the rich poor. It's about fixing the problem of us having such a huge inequity between the rich and the poor that we now have 44% of people who say they just barely get by each month. That we have people working multiple jobs who still can't make enough for food, shelter, transportation, and health care.

  • Bill Bodden (unverified)

    A classic flaw of socialist thinking is that the poor can be made whole by soaking the rich. In fact, all Socialism does is make everyone poor.

    This is another example of the Bumper Sticker Syndrome (BSS) practiced so effectively by the likes of Ann Coulter and Lars Larsen. In other words, it is meretricious nonsense.

    One of the greatest thinkers of the 20th Century was Peter Drucker who was given the title of the father of modern management and was highly respected by all managerial ranks in capitalist enterprises; however, he did not see capitalism as the solution to all problems. One of his theories held that a successful society needed three entities: business enterprises, government, and volunteer organizations. The trick is to decide which functions belong where. Most government operations are more or less socialist in nature. Some are more successful than others. Sweden, Finland and France have strong socialist components. All three have functions that serve their peoples well. In a World Health Organization (WHO) study published in 2000 or thereabouts, France was rated No. 1 in overall health care while the United States was rated 37th. Sweden and Finland were also high up the table. All three, despite the socialist influences in their countries, still manage to have very wealthy people. None of these three nations has anywhere near the number of people living in poverty or are homeless that we have in the United States.

  • Ryan M (unverified)

    BS. I am in the top 10% income. I work my ass off for every penny I make. Why should I have to pay because there are people out there who aren't willing to work as hard as I have to get where I have in life?

    What a load of garbage. This statement embodies almost everything that is wrong with Republican thinking. So everyone should go out and get a Harvard MBA? The point of capitalism is that everyone CAN'T be rich. I ask Sill B., Bill H. et al: if everyone "worked as hard as you" who is going to check you out at Target? Who is going to clean your hotel room? Who is going to build your roads? Who is going to teach your children? Who is going to clean your hospital room, clean your dishes in a restaurant, answer the phone in your office, pump your gas, drive your goods across country, serve your country in the military?

    Should any of these people who are "working their asses off to get where they are in life" also make over $100k a year? Or is that only reserved for you and your sanctimonious, wrong thinking deserving rich?

    Let's leave the folks who make bad choices out of the debate, and also folks who can't work for illness, or whatever. These people represent a small piece of the pie and are always trotted out as the poster children for those who need to justify their "I work harder than everyone else because I have money" arguments. The majority of the poor work and work in jobs that are essential to the economy and essential to making their rich bosses richer.

    People don't get rich in a vaccuum. They get rich because someone else stays poor. The rich use more resources and have more power. So save the poor little rich guy routine.

    Sill B., your whole argument is crap and I don't have the energy to go through it line by line. Suffice it to say that the persecution of the rich by Democrats is JUST.NOT.FAIR! And MUST.BE.STOPPED!

    It may not be criminal to be filthy rich (or even regular rich), but it is immoral to make 300% times what your average employee makes and your average employee doesn't have health care, struggles to make ends meet, and is working for a wage designed to make sure your 300% is safe. But you work harder than they do, right?

    And if Sill and Bill have their way, the rapidly decreasing middle class will soon fall into the category of people who just don't work hard enough.

    Bottom line: we need nationalized health care, paid maternity leave for all workers, fair and livable wages for everyone, equal access to great education, and the realization that no matter how hard everyone works, only a very small few will be rich. And of course we need elected officials who understand this and who don't go out of their way to screw over poor people on a consistent basis.

  • (Show?)

    Recent events at Circuit City bring this subject into sharper focus. CC laid off roughly 8% of its retail workforce for the expressed reason that they were making "too much money." We're talking the most senior, knowledgeable, and presumably competent sales people on the floor. News reports have stated that some laid-off employees earned as little as $11.58 per hour.

    ABC News reports:

    According to figures from one congressman, the six top executives at Circuit City earned roughly $33.5 million over the last three years — enough to employ 450 people for three years at $12 an hour.

    I don't know about the rest of you, but I won't be shopping at Circuit City again.

  • (Show?)


    Thanks for that example. I stopped shopping there when they fired some employees here in Oregon for trying to start a union.

    It's pretty common in the retail sector for them to do this. And chances are that $33.5M didn't include stock that they bought low and then sold high when they'd cut back pay and benefits and laid off employees in order to bring in "record profits." They then expect their smaller work force to bring in more money than the previous year, when there were more employees, handle more customers, etc.

  • (Show?)

    Ryan M,

    Good post, but one quibble.

    If a CEO makes 300% of the income average of "line employees" they are making three times as much money. Currently it's three hundred times as much as the "line employee".

    That's 30,000%.


    The income disparity between rich and poor in the US is the greatest that it's been in over a hundred years. Yet we are slipping in our once dominant position versus the rest of the world in education, health care, manufacturing, and other indicators.

    This ain't about what's legal. It's about what's good for the economic system called capitalism, and the damage done by greedy people who have enough capital to pervert a system that has served us more or less well for two centuries.

    The surest way to kill the Free Enterprise system is to make it less free. You can do that through too much regulation as happened in Britain in the '60s and '70s or by too little regulation as has been done by the US in the '90s and '00s.

    If you really believe in the Free Market, you should be alarmed at the way our system is being undermined by that much more primitive system of Crony Capitalism. That system will always lead to self-destruction, through a radical swing toward over regulation through the voting process, or through violent upheaval, or an outside usurping of the corrupt state.

    That's the history, anyway, and "Those who ignore..........", etcetera.

  • nina (unverified)

    when it comes to money, we can sure get heated, especially when it comes to the concept of sharing. we teach this concept of sharing to our children yet send them out into a world that is dog eat dog, what is mine is mine, even if what is mine is a million dollar salary, bonuses, multiple homes while what you have is a run down rental and a $10/hour job with no benefits. too damn bad for you.

    something very interesting with this mentality. this sense of entitlement. what kind of a world do we want? a world where people work and still live in poverty? ok then keep the current system in place. but if you want to see all living a prosperous life then we have to talk about changing the system and talk about sharing the wealth. why in blazes is this so threatening for some? we're all equally deserving and worthy of living a prosperous life (at least we all have the equal right to obtain and create such a life and the current system does not allow for this) and that kind of life need not be earned as we have been taught. it's time to remove the rugged individualistic hats we have been told to wear and remember the values we teach our children. new thinking. it's time.

  • Marvin McConoughey (unverified)

    One of the most striking inequalities is the rising gap between wealth and income. Richer folks tend to have much greater wealth relative to their incomes than do the poor. It helps the very rich that a wealthy dynasty can pass on wealth generation after generation while paying little tax. In the other direction, capital gains taxation wrongly treats a dollar invested decades in the past as equivalent in value to a currently invested dollar. Our mixed-up taxation system needs a top-to-bottom overhaul, but it will not happen soon.

    Another way of looking at inequality is to compare Americans with other planetary citizens. Many whom we call poor enjoy lavish lifestyles compared to denizens of the poorest nations.

    I wonder how important it is to discuss tax rates. Cannot companies simply adjust compensation levels to offset the expected tax rate that their top executives pay? If so, then the tax rate loses some of its value as an indicator of how tax-burdened the rich are.

    The function of the rich is important. A society with very low savings, as we now have, is more reliant on the wealthy to finance investment. Of course not all stated wealth can be realized. Mr. William Gates has a nominal published wealth, but if he were to actually try selling all of his stock, investors would likely view that as a corporate weakness and bid the stock down. Meanwhile, he does donate billions to help the poor. I am not sure that government would do better with his money.

    I note that the most powerful congressional members of both parties tend to be well off. Perhaps money is needed to gain and hold great power.

    Overall, I think the growing level of wealth inequality should be a matter of attention. Some inequality is merit driven and desirable. But enormous inequality fosters dissension and discontent.

  • (Show?)

    In recent years even Fed chairmen Alan Greenspan and Ben Bernanke, not generally considered to be liberals, have spoken publicly about the risks to democracy associated with rising income inequality.

connect with blueoregon