patrick.net

It's all Obama's fault!!!

zzyzzx says

It's all Obama's fault!!!

Thank you Captain Obvious - er, Captain ZZYZZX

No surprise here - the Fed and the government catering to the 1% and the 47% have been sucking the wage-slaves dry. What an Obummer.

mell says

The reason for the inequality is largely the Fed and government continuously bailing out the FIRE

What's weird is that inequality started to grow right at the point Reagan's tax cuts took effect, even though the Fed had been around since 1913.

Probably just an eerie coincidence.

Get rid of tax and spend and neo-keynesian crony capitalism, and things will change for the better. EVERY budget MUST be balanced, NO borrowing from future generations/taxpayers (change legislation to make it a crime with severe punishment and this will take care of itself). As simple as that.

HydroCABRON not hydrocarbon says

mell says

The reason for the inequality is largely the Fed and government continuously bailing out the FIRE

What's weird is that inequality started to grow right at the point Reagan's tax cuts took effect, even though the Fed had been around since 1913.

Probably just an eerie coincidence.

Don't let me bring out the 2008 hockey-stick again, Wealth inequality doubled in the last 10 years. I'm not a fan of Reagan increasing the deficit, but taxes are not the main driver for this. Assets are. We can talk about taxing assets (such as land/resources), but not income.

http://time.com/money/2917709/wealth-inequality-doubled-over-last-10-years-study-finds/

Call it Crazy says

And continues DOWN after 5-1/2 years with Obama??

He kept Smirky's tax cuts through 2013 - the conservatives on the Hill threatened to have a sad and shut down the gummint, plus Obama's generally soft on wealth.

Call it Crazy says

Does that mean you will give back ALL your gains in the housing and stock market because they were gained under Repub economic policies?

Will you offer to kill yourself or get polio or smallpox, because so many medical advances were made due to government funding of basic research?

mell says

Don't let me bring out the 2008 hockey-stick again

So what happened in the past 10 years means we shouldn't talk about Reagan's role, seeing as that might cause you to question your religious belief that the Fed is the only significant culprit here.

Do I have it right?

HydroCABRON not hydrocarbon says

mell says

Don't let me bring out the 2008 hockey-stick again

So what happened in the past 10 years means we shouldn't talk about Reagan's role, seeing as that might cause you to question your religious belief that the Fed is the only significant culprit here.

Do I have it right?

No, I am not a fan of Reagan, I am saying that the tax cuts weren't the main driver for this. Public debt and where/how you spend the money generated from said debt matters much more.

mell says

I am saying that the tax cuts weren't the main driver for this. Public debt and where/how you spend the money generated from said debt matters much more.

This matters more than top marginal tax rates dropping into the 35 percent range and capital gains tax cuts?

I don't believe it.

HydroCABRON not hydrocarbon says

mell says

I am saying that the tax cuts weren't the main driver for this. Public debt and where/how you spend the money generated from said debt matters much more.

This matters more than top marginal tax rates dropping into the 35 percent range and capital gains tax cuts?

I don't believe it.

It's worth considering. But where would you draw the line then, what's a reasonable percentage? I'd favor asset and resource taxes plus consumption tax over income and capital gains tax, but would surely touch the cap. gains tax before income taxes. Also, this will not solve much if you keep spending more than you take in.

ahh, democrats are for the poor. vote democrat and you will be and stay poor. if democrats helped promote people to prosperity those people would no longer vote democrat thus killing their voting block.
so democrats goal is to keep people poor and create more and more poor. i knew this as a child although i was never poor.
need proof. look at detroit and liberal democratic strong holds.
want to get ahead, just don't vote yourself to be poor. this world is a simple matrix folks, haven't you figured out how it works yet.

mell says

But where would you draw the line then, what's a reasonable percentage?

42% top marginal rate on income. Tax capital gains at the same rate as income, with no distinction between short and long-term gains.

Cut corporate tax rates while ending deductions for all expenses, particularly interest.

casandra says

ahh, democrats are for the poor. vote democrat and you will be and stay poor. if democrats helped promote people to prosperity those people would no longer vote democrat thus killing their voting block.

so democrats goal is to keep people poor and create more and more poor. i knew this as a child although i was never poor.

need proof. look at detroit and liberal democratic strong holds.

want to get ahead, just don't vote yourself to be poor. this world is a simple matrix folks, haven't you figured out how it works yet.

http://en.wikipedia.org/wiki/Shift_key

Ahh, Detroit: mired in poverty.

This is in total contrast to states like Mississippi, Kentucky, and Alabama, whose consistent support of Republicans has raised so many poor whites out of poverty.

HydroCABRON not hydrocarbon says

mell says

But where would you draw the line then, what's a reasonable percentage?

42% top marginal rate on income. Tax capital gains at the same rate as income, with no distinction between short and long-term gains.

Cut corporate tax rates while ending deductions for all expenses, particularly interest.

Not bad. I'd prefer a two-to-three tiered flat income tax, but can live with a progressive income tax if the top rates are reached at higher incomes than they currently are. I'd make up with a consumption tax for any shortfalls if there would be any. I'd like to keep the distinction of long-term and short term cap. gains to give an incentive of investing/saving for the long-term, at least up to a certain amount or considering a ratio salary to cap. gains. I agree on ending deductions (esp. on interest).

HydroCABRON not hydrocarbon says

ending deductions for all expenses,

What ? You're kidding right ?

The rest seems reasonable, although I would cap taxes on gains well below ordinary income (but not at 15%).

Vicente says

Middle Class Wealth Gone!

http://www.youtube.com/embed/-DT7bX-B1Mg

The chart shows two problems:

1. Prior to "Greenspan Put," recessions and market crashes increased the percentage of wealth held by the bottom 90%. The top 10% grow their wealth faster during economic expansions, as expected, and take their lumps during recessions and crashes before the late 1980's. However, after the late 1980's, the top 10% wealth growth out- paced the society as a whole rain or shine.

2. The statistics used to generate the graph may not be complete: present cash value of multi-decade if not life-time welfare handouts are probably not in the graph. For example, a family qualifying for life time housing subsidy of $1500 a month at current discount rate is having the equivalent of $400 thousand worth of asset; life time medical insurance and care with no cap on total payout are worth multiple millions! Those "assets" for being a poor citizen in America are obviously not included in the graph; adding back those baseline "assets," the percentage of wealth actually enjoyed and potentially available to the bottom 90% increase dramatically.

marcus says

Wtf ? You claim that lower progressive taxes cause wealth disparity, but lower progressive taxes has an an intermediate affect of raising deficits.

Right--but you have to be careful when attributing cause. In this case the cause is reduction in taxes on upper incomes.

The results are increased deficits and increased wealth disparity.

Increased deficit isn't the cause.

For example--you could have high taxes on upper incomes and spend it all and more on programs helping low income folks causing deficits. That wouldn't cause wealth disparity.

You guys might be interested in this talk, which is all about tax cuts and deficits in the Western World. The Prof makes the key point: It wasn't Democracy that broke the Great Expansion in the post WW2 era, it was Capital.

http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=2642

Countries world wide will need to choose between screwing the public and screwing capital, who lends them the money needed after the governments slashed taxes on the wealthiest while simultaneously "Broadened the Tax Base" mostly by not adjusting tax brackets.

So the wealthy made out two ways: Lower taxes, and interest lending to governments. Actually, three, since the spending didn't fall and corporations captured much of that in the era of privatization also.

tatupu70 says

Increased deficit isn't the cause.

global warming isn't the cause of these weird local weather patterns, it's the carbon in our atmosphere.

Can I envision a possible world in the future, where under some sort of fascist dictatorship, we are able to have low taxes for the rch, without high deficits, because all programs benefiting the poor and middle class are ended, and investment in the future of the country and its infrastructure stops, and the regular folk are slowly dying off or living in shanty towns ? Yes. Under that scenario you would be right.

But under the political climate of the past recent decades, where the government was still for the people (and a little bit by the people) not just for the rich and the corporations, high deficits were a necessary condition for low taxes and for wealth disparity to have increased the way that it has.

That was a great run from the early 60s to 1981 or so. I like that if we are to believe that graph, the inflation stagflation of the 70s didn't stop the upward climb of middle class wealth.

It might be that the graph is depicting total middle class wealth in such a way that the increasing number of people in the middle class is a big part of it (as opposed to wealth per middle class family increasing), although presumably it's both.

In any case. It is interesting.

My strong fear is that if and when we have our next significant inflationary surge, that both interest rates and wages will not keep up. Real interest rates will probably go negative if it were to happen in the next several years.

I hope I'm wrong.

It's getting clearer by the day that deficit spending is the main driver of sucking out the wealth of the middle class. The good thing is that more people will come around to finally put an end to this criminal practice of indebting future generations which have no right to vote and using the excess liquidity to fuel rampant crony capitalism - look no further than the housing market. Hey, but our resident patnet experts will have everybody cornered, and that's really all that matters!

tr6 says

On the other hand the money that's taken in as taxes could be loaned to "students" to make 8% a year.

it could, yes, but student loans are about 3% of .gov's current outgo

Does "starve the beast" work ?

Did Bush's tax cuts which redirected SS surplus to the rich in the form of tax cuts, have an impact on how much room the government had to increase government spending 10 years later ?

Assholes should have voted Democratic & Republican & their wealth would have been protected. FMTT

Vicente says

Middle Class Wealth Gone!

That's not true.

It is not "gone"....

It merely transferred from the middle class to me.

I'm scum and proud of it. Fuck the middle class.

The chart shows middle class wealth correlated with outsourcing.

Outsourcing and the 4X increase in Lawyers/Engineers is the root cause of the decline of the Middle Class.

This has been my observation since about 1987, and others are also starting to observe the same:

http://fas.org/sgp/crs/misc/R42400.pdf

humanity says

there are times when larger deficits (ie larger than they would have been with higher taxes) make lower taxes possible. And that during these times the level of the deficit is not independent of the the level of the taxes.

Therefore if wealth disparity has anything to do with how progressive taxes are, it also (sometimes) has something to do with the level of the deficits.

If A and B are not independent of each other and C is dependent on B, then A is not independent of C.

I couldn't have said it better myself.

When you realized that we (I) never made a statement about an absolute direct causal relationship between deficits and wealth inequality, and that I repeatedly asserted that I was not trying to suggest that it was the root cause of wealth disparity, you lowered yourbar to this provably false statement.

"Deficits have nothing whatsoever to do with increasing wealth disparity."

Why don't you have the common courtesy to read and comprehend this.

humanity says

Yes, but you're talking deficits versus not deficits (ie simplistic black and white). I'm talking about the magnitude of deficits. But I'm not even saying that larger deficits always cause larger wealth disparity. I'm saying that there are times when larger deficits (ie larger than they would have been with higher taxes) make lower taxes possible. And that during these times the level of the deficit is not independent of the the level of the taxes.

Therefore if wealth disparity has anything to do with how progressive taxes are, it also (sometimes) has something to do with the level of the deficits.

If A and B are not independent of each other and C is dependent on B, then A is not independent of C.

I know that you're smart enough to comprehend what I'm saying.

Apparently you think that deficits are independent of tax levels. For example if we had a mini revolution, and income taxes were made substantially more progressive, and estate taxes were raised, maybe to kick in at 2 million, and capital gains tax rate were raised significantly, you think that these new revenues would almost immediately be spent, resulting soon thereafter in deficits just as high as they would have been had taxes not been raised ?

Thanks a lot CIC. You're too kind. Just trying to refer back to what I said.

Let's look at the chart again:

The 2001 tax cuts were front-loaded for the middle-quintiles, while the 2003 tax cuts accelerated the scheduled 2005-2009 phase-ins to that year.

The full package was a trillion-dollar give-back to the wealthy.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/02/the-legacy-of-the-bush-tax-cuts-in-four-charts/

2. Fueled income inequality: This chart from the Congressional Research Service suggests that the Bush tax cuts, which significantly reduce top marginal tax rates and capital gains rates, helped widen income inequality in the 2000s. As the report says, “as the top tax rates are reduced, the share of income accruing to the top of the income distribution increases — that is, income disparities increase.” This chart shows how the percentage of income flowing to the top 0.1 percent of earners increases as top tax rates decrease.

I'm not going to get into mell's argument, only repeat mine that cutting taxes on the rich basically resulted in them buying treasuries instead of paying taxes.

Not only will they get the interest -- the 30 year treasury was sold for 5% 2006-2007, but a tax payment hits their net worth while bond buys are neutral to their balance sheet.

Romney had a 14.1% tax rate in 2011. Case closed.

First, as said elsewhere, the choice is voluntary. The buyer can choose bonds over other instrument, commodities, assets or cash. The taxpayer has no choice.

Second, the buyer expects his money back, and interest, and he may trade the instrument before maturity and enjoy profits in capital gains. The taxpayer gets nothing back.

Tax collections and bond sales may be treated by the government as revenue, but only the bond is also booked as a liability.

Pretty big difference.

Bellingham Bill says

Not only will they get the interest -- the 30 year treasury was sold for 5% 2006-2007, but a tax payment hits their net worth while bond buys are neutral to their balance sheet.

MEanwhile this shows the impact on the governments balance sheet, the difference between what was projected before those tax cuts,and what happened. Of course there's the spending on two wars and medicare part D occurring too. Not to mention the spending that Bush and Obama did because of the crash in '08, and also the reduction in revenues due to the recession. So it's hard to isolate exactly how much of the area between the curves is just due to the tax cuts. They do estimate it on the right. Clearly the single biggest factor.

Bellingham Bill says

I'm not going to get into mell's argument, only repeat mine that cutting taxes on the rich basically resulted in them buying treasuries instead of paying taxes.

That's an interesting thought. I don't think so. Equities I would buy into. Real estate for sure. Tbills are being bought by governments, banks, and funds. Maybe indirectly through a balanced mutual fund or IRA you could make that argument.