Thursday, February 24, 2011

It's the Inequality, Stupid

This is my blog version of a "re-tweet" of an interesting article. Thanks to Karen for pointing me to this article - even though I can't see any content on Facebook as I have opted out of Facebook. I've been interested in income inequality for sometime. Here was a good publication from 2004 and it's only gotten worse!

As a response to "Joe the Plumber" and his claims of Obama's 3% tax increase on income over $250,000 being called socialism or re-distribution of wealth - the evidence suggests that there has been a LONG history of income re-distribution however it is going from the middle-class to the wealthiest income earners. And this is structurally put into the laws.

To me there is nothing wrong with making a lot of money - however I'm not sure why all the rules are written to the benefit of the wealthiest (and they are!). Well - I know WHY - because the rich and powerful write the laws (or influence the politicians that do). I can't figure out why income your money makes in the stock market is taxed at a lower rate (capital gains) than income people make by laboring day in and day out. I can't figure out why the effective tax on many corporations is ZERO and why the effective tax rate of the wealthiest is less than the upper middle class. If you are at or around the AMT line - you are paying THE HIGHEST EFFECTIVE TAX RATE!

Quick side rant - I personally believe most financial companies are merely siphoning money out of the middle class and consolidating it into the hands of very few - which is why I manage all of my own finances and investing. Maybe said a better way - I'm not convinced that financial firms are actually adding value to the economy as a whole.

On the flip side - I also can't figure out why more than 50% of Americans don't have any federal tax liability when they use public services too - but you can see how the standard deduction was put in to offset everything else in this article below.

I hope we drastically change the tax code for individuals and businesses to make it a straight calculation based on income - and then you'll find the tax rate will be MUCH lower because there will be no loop holes or deductions for some and not for others.

Eleven charts that explain everything that's wrong with America.

How Rich Are the Superrich?

A huge share of the nation's economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.

Average Income by Family, distributed by income group.
Advertise on
The richest controls 2/3 of America's net worth

Note: The 2007 data (the most current) doesn't reflect the impact of the housing market crash. In 2007, the bottom 60% of Americans had 65% of their net worth tied up in their homes. The top 1%, in contrast, had just 10%. The housing crisis has no doubt further swelled the share of total net worth held by the superrich.

Winners Take All

The superrich have grabbed the bulk of the past three decades' gains.

Aevrage Household income before taxes.

Out of Balance

A Harvard business prof and a behavioral economist recently asked more than 5,000 Americans how they thought wealth is distributed in the United States. Most thought that it’s more balanced than it actually is. Asked to choose their ideal distribution of wealth, 92% picked one that was even more equitable.

Average Income by Family, distributed by income group.

Capitol Gain

Why Washington is closer to Wall Street than Main Street.

median net worth of american families, median net worth for mebers of congress, your odds of being a millionaire, member of congress's odds of being a millionaire
member max. est. net worth
Rep. Darrell Issa (R-Calif.) $451.1 million
Rep. Jane Harman (D-Calif.) $435.4 million
Rep. Vern Buchanan (R-Fla.) $366.2 million
Sen. John Kerry (D-Mass.) $294.9 million
Rep. Jared Polis (D-Colo.) $285.1 million
Sen. Mark Warner (D-Va.) $283.1 million
Sen. Herb Kohl (D-Wisc.) $231.2 million
Rep. Michael McCaul (R-Texas) $201.5 million
Sen. Jay Rockefeller (D-W.Va.) $136.2 million
Sen. Dianne Feinstein (D-Calif.) $108.1 million
combined net worth: $2.8 billion
10 Richest Members of Congress 100% Voted to extend the cuts
Congressional data from 2009. Family net worth data from 2007. Sources: Center for Responsive Politics; US Census; Edward Wolff, Bard College.

Who's Winning?

For a healthy few, it's getting better all the time.

Gains and Losses in 2007-2009, Average CEO Pay vs. Average Worker Pay

A millionaire's atx rate, now and then. Share of Federal Tax revenue


How much income have you given up for the top 1 percent?


Income distribution: Emmanuel Saez (Excel)

Net worth: Edward Wolff (PDF)
Household income/income share: Congressional Budget Office
Real vs. desired distribution of wealth: Michael I. Norton and Dan Ariely (PDF)
Net worth of Americans vs. Congress: Federal Reserve (average); Center for Responsive Politics (Congress)
Your chances of being a millionaire: Calculation based on data from Wolffhousehold and population data)   (PDF); US Census (
Member of Congress' chances: Center for Responsive Politics
Wealthiest members of Congress: Center for Responsive Politics
Tax cut votes: New York Times (Senate; House)
Wall street profits, 2007-2009: New York State Comptroller (PDF)
Unemployment rate, 2007-2009: Bureau of Labor Statistics
Home equity, 2007-2009: Federal Reserve, Flow of Funds data, 1995-2004 and 2005-2009 (PDFs)
CEO vs. worker pay: Economic Policy Institute
Historic tax rates: Calculations based on data from The Tax Foundation
Federal tax revenue: Joint Committee on Taxation (PDF)

Read also: Kevin Drum on the decline of Big Labor, the rise of Big Business, and why the Obama era fizzled so soon.
More Mother Jones charty goodness: How the rich get richer; how the poor get poorer; who owns Congress?
Dave Gilson is a senior editor at
Mother Jones. For more of his stories, click here. Get Dave Gilson's RSS feed.

1 comment:

Karen said...

i thought you'd appreciate that article. jim and i talked about it that night too.

I think the wealth distribution intentions of america are nice but not at all realistic...