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This is why you're POOR!
This is kind of related to the debt crisis, but it speaks more broadly on why you have such distortions in wealth and power in America. It's hard to instigate change when you have the elite 1% controlling the government.
The first essay is written by Nobel economics laureate Joseph E. Stiglitz. He speaks about the 1% and how they exists on a different plane of reality to the rest of us.
The second article is written by a anonymous investment manager, he writes about the who makes up the 1% and how you'll never be one.
The first essay is written by Nobel economics laureate Joseph E. Stiglitz. He speaks about the 1% and how they exists on a different plane of reality to the rest of us.
The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had...Of the 1%, by the 1%, for the 1%
But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
The second article is written by a anonymous investment manager, he writes about the who makes up the 1% and how you'll never be one.
Our clients largely fall into the top 1%, have a net worth of $5,000,000 or above, and if working make over $300,000 per year...Who Rules America? An Investment Manager Breaks Down the Economic Top 1%, Says 0.1% Controls Political and Legislative Process
In 2010 a dozen major companies, including GE, Verizon, Boeing, Wells Fargo, and Fed Ex paid US tax rates between -0.7% and -9.2%. Production, employment, profits, and taxes have all been outsourced. Major U.S. corporations are currently lobbying to have another “tax-repatriation†window like that in 2004 where they can bring back corporate profits at a 5.25% tax rate versus the usual 35% US corporate tax rate. Ordinary working citizens with the lowest incomes are taxed at 10%...
They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules...
Comments
You've generally denounced the argument and the authors. I think what was being asked by Neito was very specifically which points of the argument are incorrect and why.
By the way, I have a friend who subscribes to a lot of pseudo-economic blogs where every other word is capitalized and so forth. I really can't read them, because the people sound like nut cases. My friend, however, is actually very intelligent. He was raised partly in Moscow in a Lenin school and partly in the US, and has a very interesting perspective because of that background. Whenver I tell him that I can't read through some article entirely, he tells me you have to scrape away the crazy to find the argument being made and that it is supposedly good. I have yet to be able to scrape away the crazy.
I have seem random, but interesting, economics studies coming out of MIT. They care fuck all about the politics involved, so they'll say all kinds of funny things that piss off guys like the one who got a Nobel prize for trickle down theory. However, I usually just read the press release that shows up in my inbox rather than following through with the research paper itself. It isn't quite the same.
FACT: The proportion of income being taxed from the 1% high income earners, is less then median to low income earners.
FACT: The French, Russian and Chinese revolutions happened. Reason unequal distribution of wealth. Bet you they thought the same thing... There can't be this much disparity, its just misinformation...
Put your hand up if you make a six figure salary, or have savings/assets ~$100,000 in value?
I sure as hell don't. I make $55,000/yr before tax, granted I'm not destitute but far from that 1%. I don't think I'll ever make $1,000,000 in savings/assets.
So yeah I'm poor.
Your third claim ignores many other factors behind the revolutions; the claim that unequal wealth distribution was the primary cause is essentially unprovable.
My bias inclines me to believe your first claim, but I haven't fact-checked it yet, and considering that the other two aren't valid makes me skeptical.
I agree that the rich have manipulated the government into allowing them to increase the US's income disparity to make them richer. However, supporting one's arguments is important. Especially when one states "facts" that are in fact untrue.
One big difference between us and the French, Russians, and Chinese is that they didn't have American Idol, McDonald's, and Facebook to keep them entertained and distracted. Also, the people of the revolutions cited weren't just a little poor. They were hungry and their children were starving.
Conditions today aren't anywhere near that point. Some people might say with varying levels of credibility that conditions might be trending that way, or heading down that path, but it's still early days yet.
To be serious I would say ~$3000 tax on the $44,000 median income (as of 2004) means a lot more then $40k tax on $200k. If you can't live on a budget of $160k there is something wrong with you.
To my last point, I know its an over simplification. However are you saying that without the unequal distribution of wealth that those revolutions would still happen? Why would citizens of said country rise up and revolt, if they perceived that they were getting decent monies for their labour. Content people do not riot or cause revolutions.
Look here is a graph and the link.
The graph is intriguing, although after seeing Jason's graphs I want to know where the data came from - did it only include hourly wages?
EDIT: I have so many questions about the data and processes that built these graphs, including what normalization was used for inflation. You wouldn't happen to have links to where these came from would you?
This is a contrast to the War of 1812, which we claim was about trade but was actually about trying to take over Canada.
I'm calling you OUT!
Your PDF was about total taxes and returns the US generated in 2008. The average tax percents you quoted are just that averages (page 25 of the PDF for those interested). Basically you are lumping everyone that lodged a tax return and made between $30k-$50k together. Then say this is how much tax we collected from that group and this is how much was earnt by said group. Percentage calculation... BOOM ~7%, same thing was done for the $200k-$500k group... BOOM ~20%. Mistake number two, you then claim that median incomes (~$44k) are only taxed at 7% and people who make $200k at 20%. Yet you failed to mention that people earning in excess of $1,000,000 are taxed at 23%. So by your logic there is only 3% difference in tax, for an income a difference of $800k.
Sure makes for some good reading for the uninitiated, "Look, America has a great taxation system, the poor get taxed less then 10%".
Let me tell you how tax really works. It's a bracket (or graduated) tax. Where a person's income falls into different brackets and taxed accordingly. Now its time to do maths (as of 2010 for singles).
Income: $44,000
First tax bracket: $8,375 taxed @ 10% = $837.50
Second tax bracket: $25,625 taxed @ 15% = $3,843.75
Third tax bracket: $10,000 taxed @ 25% = $2,500
Total tax paid: $7,181.25
Tax as percentage of income: ~16%
Income: $200,000
First tax bracket: $8,375 taxed @ 10% = $837.50
Second tax bracket: $25,625 taxed @ 15% = $3,843.75
Third tax bracket: $48,400 taxed @ 25% = $12,100
Fourth tax bracket: $89,450 taxed @28% = $25,046
Fifth tax bracket: $28,150 taxed @ 33% = $9,289.50
Total tax paid: $51,116.75
Tax as percentage of income: ~$25%
Income: $1,000,000
Total tax paid: 320,308
Tax as percentage of income: ~32%
Now let me reiterate $7k means a hell of a lot more to someone on $44k. Really... "lose respect"... This is teh internet yo...
Just how much do you think the top 1% get paid? You're telling me people who are earning 7-8 figure pay packages are actually paying tax on the full amount. Chances are their wage is in the hundreds of thousands and the rest paid in a way to avoid tax.
Why don't you try reading the articles initially posted.
I personally find government tax rebates to be a joke. I'm curious if anyone can explain the value. I'm curious if "jumpstarting the economy" really happens, or if this just waters down the currency.
The extent of which this currently helps the economy, I don't actually know.
Adjusted Gross Income, Tax Years 2007 and 2008
Second, you failed to understand (or ignored) my point. You claimed that the the top 1% of income earners pay a lower proportion of their income as taxes than those at and below the median. The "average tax rate" row on the table is the proportion of total income paid as taxes by the members of each group. It should be obvious that, while the number would generally be skewed somewhat high due to the additional "weight" of those in the upper income range in each group, the average tax rate is close to the mean tax rate for each group. It is evident, assuming that the average tax rate does not vary over around 7-15% within either group that the top 1% of income earners do pay a significantly higher proportion of their income as taxes than below the median. Therefore, your initial statement was false.
Third, don't presume to lecture me on how the US graduated income tax works. The numbers in the IRS pdf are the rates at which taxes were actually collected, which makes them more relevant, since we're arguing about the proportion of taxes which are actually paid. (The pdf's rates are lower than the theoretical rates because of tax breaks).
Fourth, that ad hominem attack you bound your argument up in was unwelcome and unnecessary. Fifth: This may be the Internet, but this is a motherfucking ivory tower of the Internet, and we won't take you seriously if you make a mistake and then refuse to admit to it.
Sixth: As for avoiding taxes, most of the non-salary income is in stock, which they DO pay capital gains taxes on - it's just that the rate for capital gains is lower, which accounts for the drop in the average rate you mentioned above. Executives do pay taxes of some form on most, if not all of their income.
Is this reasoning sufficient to explain my earlier statement?