Income Inequality: Problem, Analysis A and B, Effects on Growth, Evaluating Cures

1. The Problem     2A, Most Voters Want Lower Taxes       2B. Political Failure    

3. Effects on Economic Growth      4. Cures     5. Epilogue

1. Problem

The Very Very Rich
Benefited Most from Government Supported, Continuous Economic Growth

THE CENTER FOR EQUITABLE GROWTH

"The bulk of this growth was concentrated at the very top… above the 99.99th percentile, a group that contains only about 12,000 households. The share of incomes above the 99th percentile (around $372,000 in 2012) but below the 99.99th percentile (around $7.2 million in 2012) has barely changed in the last two decades…" posted by Brad DeLong

Source

Will Trump "trump" This Rich Hand?

See American Income Inequality Perfectly Explained by M. Blyth
 
begins at 5 minutes of 11 minute interview.


2A. Most Voters Want Lower Taxes  
Four large groups work to lower their taxes.

 

  Group One
Wealthy Lowered Their Taxes
In Spite of Rising Income!

Increased Income of the top 1% was high, but reasonable but those earning in the top 1/10 of 1%
(those over $435,000 in 2014) really are making
 out in our Flat Free-Trade World.

Going After the Top 1/10 of 1% or even the top 1%
will help but it will not solve the problem. Retirement Age Must be increased and tax incentives to be more green just make  sense. The size of homes in getting gluttonous.

See Noam Chomsky on Madison and Aristotle
on Democracy as a system designed to protect private property
 from income equality.

 

Top Income Tax Rate and Capital Gains Rate Both Down

Group Two
Lower Their Taxes With Tax Expenditures.

 

Editor's Note: Peterson's Foundation estimate for the highest tax expenditure  employer paid health care is twice that of the Joint Committee on Taxation. Since most of Peterson's are similar
 on the other measures I think Peterson
wants tax changes to reduce tax expenditures.

 

 


Group 3 Keep Their Benefits High
 

Size and redundancy of Safety Net should be analyzed for efficiency.

See Why is Poverty Controversial
 

Group Four    Most Gained

Market Income

Quintile         1st 2nd 3rd 4th    5th
1979        7,707          19,131        26,596        35,708     78,520 
1989        7,392        19,324        28,663        40,254     104,318
1999        8,709        22,344        32,688        46,157     139,325
2007        9,290        24,374        35,985        51,379   166,871
 Change        1,584          5,243          9,390

       15,672

 

      88,351

  % Change

21% 27% 35% 44%  

113%

 

3B. Political Failure

Our Democratic Federalist Capitalistic Republic
is responsible for the design, implementation and success of society's problems. It will eventually succeed but with some constitution. People wanting a income different distribution should vote accordingly but many voters feel they have more important needs often met with the use of Political Action Committees.

Guns are protected by the NRA.

God is protected by  relegiouse rights groups

Greed is protected by the Chamber of Commerce, AARP and other Super PACs

Government is protected unionized employees, politicians wanting to enhance their career possibilities.


Income Inequality Effects on Economics Growth?

As GDP Growth Continues , Will It Eventually Go Down?

  Choose One

A. Income of bottom quarter grows at 2%
and inequality drops 3%

B. Income of bottom quarter grows 4%
and inequality increases 3%

Source Income Inequality Affects Growth
has an expanded analysis.

Editors Note: Thos not liking government insist we are already feeling the negative effect of high taxes, those who like government say "No Way José."

4. Evaluating Cures

1) College Only Helps Our Brightest Who Must Work Very Hard. Our education system must change from maximizing the math and verbal ability of all students to maximizing a student's special intelligence, that which they do well. Career and life preparation requires a new Education Manifesto.

 

2) There is No Solution for Too Many Low Paying Jobs

The more capitalist the system
 the more it produces
until it doesn't.

See World Changed and Good Jobs Disappeared

 

 

 

3) Political Solution, Voters Gave Entitlements More, Poverty Less

 

Epilogue

Income Inequality is made most important by Media and Politicians.
It is based on Market Income which is Not the Most Appropriate Measure.

Well-Being is UP

1) Political Stability has allowed productivity to increase which is a key to increased individual wellbeing especially child and young people Think how the public safety net has increased since the 1930's. Who wants to give up SS and Medicare? Why do some always want to cut the other guys government benefits. Think economic distress in Russia, Europe, and even Japan and Germany.
 

2) Scientific achievements have continuously added to citizen well-being. Think public health, smart phones, streaming audio-video, Gillette Stadium ... See Health Problems Solved

3) Personal compensation which includes market income, fringe benefits and government transfers have increased though not so much lately. Think Russia, China, and Europe's really slow recovery from the Great secession. 

4) Nurture thorough better parenting has increased continuously if not always rapidly and with genetics Nature is next.

Replacing market income with wellbeing which included the Safety Net.

Tax Expenditures

Examples of Six Types of Tax Expenditures

Interesting but for a Peasant I live well.

View image on Twitter

What I learned today 7/27/16
Before Slavery those captured in war were killed or eaten!

 

Income Data Summary from Chart 1979-2914
in thousands of dollars
Source Urban Institute
 

Super Rich earning over $350
Grew to 1.8% of Population.

How Donald Trump and Other Real Estate Developers
Pay Almost-Nothing in Taxes/

Most Agree with Warren Buffett's 5% Tax Over $5 Million Income Which Would Brings in $20 Billion. Source

Upper Middle Earned $100-$349 Grew Dramatically to 29.4

Taxing Upper Middle Income Class say 5% would bring in more than $20 Billion. Would it affect the American Dream?

 Middle Middle Earned $50-$99 Decreased to 32.0%

Lower Middle Earned $30-$49 Decreased to 19.8%

Poor $30 Decreased to 19.8% Plus a Higher Safety Net

Do We Need to Know For All Income Classes
Who Gets What from Our Safety Net?  Source

 

 

VI. Effectiveness of Government Poverty Programs