On the distribution of wealth/income

[davester]

That would be a much more helpful graph if it was matched with an identically formatted income graph. The top quintile is paying almost 70% (declining in the last decade) of federal taxes according to that graph. However, if the top quintile's income has skyrocketed during the period (which I'm pretty sure it has), then the stable to declining tax share means that the burden has shifted to the lower classes and the rich are getting a free ride.

[Ted King]

davester wrote:
That would be a much more helpful graph if it was matched with an identically formatted income graph. The top quintile is paying almost 70% (declining in the last decade) of federal taxes according to that graph. However, if the top quintile's income has skyrocketed during the period (which I'm pretty sure it has), then the stable to declining tax share means that the burden has shifted to the lower classes and the rich are getting a free ride.

That's true, but it never-the-less is the case that since the wealthy are paying such a big chunk of the revenue that runs the government, it still amounts to a redistribution of income from wealthier to the less wealthy. That was the point I was making in the part of the OP you quoted.

[davester]

Ted King wrote:
That's true, but it never-the-less is the case that since the wealthy are paying such a big chunk of the revenue that runs the government, it still amounts to a redistribution of income from wealthier to the less wealthy. That was the point I was making in the part of the OP you quoted.

I bet that if we looked at an identical graph of the boom years in the US (i.e. the 1950s), we would see a broader distribution of federal taxes simply because all of the wealth wasn't so concentrated at the top. I think it's somewhat misleading to look only at tax burden. It's important to look at the relationship between tax burden and income, which is why percentage of income graphs are probably a more reasonable view. The graphs you've shown don't mean a whole lot to me other than illustrating that the top quintile makes vastly more money than everybody else.

[Ted King]

davester wrote:
[quote=Ted King]
That's true, but it never-the-less is the case that since the wealthy are paying such a big chunk of the revenue that runs the government, it still amounts to a redistribution of income from wealthier to the less wealthy. That was the point I was making in the part of the OP you quoted.

I bet that if we looked at an identical graph of the boom years in the US (i.e. the 1950s), we would see a broader distribution of federal taxes simply because all of the wealth wasn't so concentrated at the top. I think it's somewhat misleading to look only at tax burden. It's important to look at the relationship between tax burden and income, which is why percentage of income graphs are probably a more reasonable view. The graphs you've shown don't mean a whole lot to me other than illustrating that the top quintile makes vastly more money than everybody else.
But the point I was making was different from those points, so of course what I showed wouldn't be as helpful for illustrating those other points. I have no problem with you bringing up other concerns and I'm certainly not suggesting that those aren't valid concerns, I was just trying to show why I made the point I was making - that income is being redistributed from the wealthy to the less wealthy through taxation. I don't think there is much disagreement amongst economists about that. Then I went on to argue that taxation and redistribution through government programs is not the most socially responsible way to do that redistribution. I'm just not sure the best way to reduce the disproportionate wealth/income that would go to those who don't merit it before the income flows to them.

[Acer]

What proportion of taxing the rich actually results in redistribution in the classic sense, i.e., taking from the rich and giving to the poor? The rich enjoy the same highway system, military and civil police protection, consumer protection, health care and research, access to natural resources, stable currency, etc. etc. Indeed the value-to-them of these shared resources is even greater to the rich because they, for example, have more valuable property to protect or travel more. Moreover, they "take" from the collective in other ways because they externalize significant business operating expenses to the government, such as to fund their employees' retirement or disability, to educate their workforce, clean up their messes, etc.

The rich tend to defend themselves as the givers in the equation, when the take is quite significant.

[davester]

Ted King wrote: ...income is being redistributed from the wealthy to the less wealthy through taxation... ...Then I went on to argue that taxation and redistribution through government programs is not the most socially responsible way to do that redistribution. I'm just not sure the best way to reduce the disproportionate wealth/income that would go to those who don't merit it before the income flows to them.

Taxation and redistribution is a blunt tool to be sure, but I don't know what else there is. If you come up with a different scheme then I'm sure that the plutocrats will find a way around it because they in large part control the lawmakers and they (except for a few Warren Buffett types) certainly want to maintain the status quo. The fact is, most of those that are wealthy got that way in large part because the system has been constructed (by the plutocrats before them) to benefit them at the expense of the lower classes. The playing field is not level and the system is slanted far towards enriching those who already have money.

[Ted King]

Acer wrote:
What proportion of taxing the rich actually results in redistribution in the classic sense, i.e., taking from the rich and giving to the poor? The rich enjoy the same highway system, military and civil police protection, consumer protection, health care and research, access to natural resources, stable currency, etc. etc. Indeed the value-to-them of these shared resources is even greater to the rich because they, for example, have more valuable property to protect or travel more. Moreover, they "take" from the collective in other ways because they externalize significant business operating expenses to the government, such as to fund their employees' retirement or disability, to educate their workforce, clean up their messes, etc.

The rich tend to defend themselves as the givers in the equation, when the take is quite significant.

I totally agree that wealthier people get more value out of public expenditures than poor people but with the top quintile of income earners are paying 70% of the total federal taxes, there is no way we could afford big, costly programs like Medicaid if they didn't pay such a high proportion of all federal taxes. A significant chunk of the funding for Medicaid is essentially a redistribution of wealth from the wealthiest to the poorest. I think that is totally justified and is something that should happen, but my concern is that as the wealth disparity grows, we liberals will want to keep looking to government programs to do more and more redistribution to address the imbalance. I don't think such a strategy is viable. Instead, I think we liberals need to look at the root of the problem - why is our economic system distributing so much wealth to so few hands in the first place? Our economic system should be able to provide anyone who works hard with sufficient living conditions without needing a lot of government assistance. I'm wondering how can we jigger the economic system to accomplish that since I am convinced that that approach is far superior to having the government do more and more taxation to provide for the poor when the system should distribute sufficient resources to them in the first place as they do their work.

[davester]

Ted King wrote: I think we liberals need to look at the root of the problem - why is our economic system distributing so much wealth to so few hands in the first place? Our economic system should be able to provide anyone who works hard with sufficient living conditions without needing a lot of government assistance. I'm wondering how can we jigger the economic system to accomplish that since I am convinced that that approach is far superior to having the government do more and more taxation to provide for the poor when the system should distribute sufficient resources to them in the first place as they do their work.

I think the answer to that is clear. Significant changes that have been made to cause income disparity are largely based on reduced controls on undue influence through lobbying and campaign contributions, reduced controls on predatory business practices in the financial sector, and shipping US jobs to low cost labor pools in impoverished countries. These factors include: recognition of corporations and individuals; removal of controls on campaign contributions especially PACs and SuperPACs; repeal of Glass-Stegall; refusal of the government to pursue the malefactors in the financial meltdown due to fear of losing campaign money; outsourcing; and enabling of offshore tax havens. None of these things are of any benefit to the citizenry as a whole. They have all come about since the 1970s and many of them need to be put back the way they were.

[Ted King]

davester wrote:
[quote=Ted King]I think we liberals need to look at the root of the problem - why is our economic system distributing so much wealth to so few hands in the first place? Our economic system should be able to provide anyone who works hard with sufficient living conditions without needing a lot of government assistance. I'm wondering how can we jigger the economic system to accomplish that since I am convinced that that approach is far superior to having the government do more and more taxation to provide for the poor when the system should distribute sufficient resources to them in the first place as they do their work.

I think the answer to that is clear. Significant changes that have been made to cause income disparity are largely based on reduced controls on undue influence through lobbying and campaign contributions, reduced controls on predatory business practices in the financial sector, and shipping US jobs to low cost labor pools in impoverished countries. These factors include: recognition of corporations and individuals; removal of controls on campaign contributions especially PACs and SuperPACs; repeal of Glass-Stegall; refusal of the government to pursue the malefactors in the financial meltdown due to fear of losing campaign money; outsourcing; and enabling of offshore tax havens. None of these things are of any benefit to the citizenry as a whole. They have all come about since the 1970s and many of them need to be put back the way they were.
I agree with all of those. Making it easier to form unions again would help some as would raising the minimum wage even more. I keep wondering if there are more deeply systemic changes that could be made, though. All those things seem to be like tinkering around the edges, but maybe there aren't any deep systemic changes we can make so what we are left with is those sorts of "tinkering" strategies.

[decay]

well this might shed some light on things...

http://www.icij.org/offshore/secret-file...bal-impact

Dozens of journalists sifted through millions of leaked records and thousands of names to produce ICIJ’s investigation into offshore secrecy ­

A cache of 2.5 million files has cracked open the secrets of more than 120,000 offshore companies and trusts, exposing hidden dealings of politicians, con men and the mega-rich the world over.

The secret records obtained by the International Consortium of Investigative Journalists lay bare the names behind covert companies and private trusts in the British Virgin Islands, the Cook Islands and other offshore hideaways.

They include American doctors and dentists and middle-class Greek villagers as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.

The leaked files provide facts and figures -- cash transfers, incorporation dates, links between companies and individuals -- that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.

The hoard of documents represents the biggest stockpile of inside information about the offshore system ever obtained by a media organization. The total size of the files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.

To analyze the documents, ICIJ collaborated with reporters from The Guardian and the BBC in the U.K., Le Monde in France, Süddeutsche Zeitung and Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation (CBC) and 31 other media partners around the world.

Eighty-six journalists from 46 countries used high-tech data crunching and shoe-leather reporting to sift through emails, account ledgers and other files covering nearly 30 years.

“I’ve never seen anything like this. This secret world has finally been revealed,” said Arthur Cockfield, a law professor and tax expert at Queen’s University in Canada, who reviewed some of the documents during an interview with the CBC. He said the documents remind him of the scene in the movie classic The Wizard of Oz in which “they pull back the curtain and you see the wizard operating this secret machine.”


and more...