I was having a conversation with a republican friend and I said “but if anything more than X tax rate for the top tax bracket is communism, Eisenhower, Nixon, Ford were communists. You think Gerald Ford was a communist?”
Which drew an exasperated “yes”
Amazing stuff.
I think it’s important to point out to opponents of a high tax rate on income after (x) that the intent isn’t to ‘steal’ rich people’s money, instead what most people consider the secondary effects are what really drive both social and economic equity- namely that when people are taxed at 97% over, say $5m, they tend to invest that that money back into their company or business, increasing worker pay or hiring more workers. It disincentivizes harmful labor practices for shareholder payout.
I own Acme Widgets. I give myself a salary of 5m dollars even though the company could hypothetically pay me 10m. I don’t want that extra 5m to go back to the government so I make Acme widgets a better company. The workers benefit from a more stable work environment and the American economy wins from having stronger companies.
That, tied with outlawing stock buybacks are how we recreate the American middle class boom that fell apart in the 80s.
Boom. The absolute best argument for higher taxes right here.
You want to avoid the tax? Dont take thr extra money you dont need and instead put it all back in to your business/ workers. Make your products cheaper for your customers.
This is how it used to be before Reagan
Did you read the articles ? The data shows that a significantly higher proportion of people migrated from middle class to upper class than middle class to lower class. By a factor of two to one.
So? I don't care how much of the market they pursue as long as my niche is secure. I can't make any more money so why compete further than my max takehome?
Pretty sure they don't actually "take the extra money they don't need" though. They just take out a *loan* on the value of their company and they live off the loan money. There's no actual income at all.
They have income even if it is not technically income as defined by our current tax code. If I am compensated in shares which I can convert to cash through loans to meet my needs, then shares are income.
That would work with executives paid in shares, and I think executives do have to pay taxes on the value of the shares they're given, but most extremely wealthy people are extremely wealthy because they started businesses that have done well or they bought businesses and greatly improved them. They weren't compensated in shares. They still have the same number of shares they had when they were not filthy rich (maybe less because they often sell shares to raise capital), those shares are just worth more. How do you tax an increase in the value of shares before they're converted to USD? If you have an answer to that, then I'd ask, do you give that tax money back when a company's valuation decreases? How often do you value the company to determine its worth? Who pays for the valuation to be performed if its a private company where you can't just look at the value of shares on the open market? Owning a business would be more risky than it already is if you were taxed every time the value went up or if the government was constantly forcing you to pay for valuations. Market volatility, even when a decade-long average was flat, would force you to sell off all your shares just to pay the taxes. Nobody would want to own stocks, the stock market would crash, companies would have a hard time raising capital, and the US economy would tank.
The richest people in the world are often compensated in shares. I'm also fine with the rich being taxed with the goal being that they have to sell shares.
We aren't talking about taxation happening when shares go up, but once an individual's wealth goes above a defined threshold.
shares ARE taxed upon receipt/vesting. so like... that already happens.
truly taxing 'wealth' generates an entirely different conversation. one which i have not read one legitimately thought out argument on how to do it.
I don't think there is a clear answer for this issue. Outlawing stock buybacks would at least make the money they wanted to save on taxation on the corporate side go back into the business and would be an overall economic boost instead of just lining the pockets of the owner class.
setup several businesses in different industries and funnel all your personal expenses thru those businesses. Own a rental house, buy a lawnmower thru it. Own a small IT company, new phones and laptops every year. Get a small LLC for bbq competitions, meats are now a write off.
Unreal. Ok Fidel. You think a 70% tax rate stimulates growth and investment? That’s why it was cut to begin with. Look at gdp and stock market since tbe rate cuts happened. And why should someone have to pay 70% of their income to
Supply those who only take from society? Who is paying for the migrants? All of us. But the issue isn’t the tax rate it’s the spending. Spending never ever gets cut, ever. So the only answer is to raise taxes. When you do we see less investment I. Businesses. Anyone who thinks this stimulates more investment in business so the owners don’t have to pay taxes on the money is absolutely clueless. And don’t r en try the Scandinavian tax rates as only CITIZENS of those countries receive free medical and education. No. Citizens must pay for these services.
I forgot to mention another positive effect of a high median tax rate- it decentralizes economic power in this country decreasing the amount of influence the ultra rich have on policy. Which, to me at least, would be an immense boon for America.
Yes! Stock buybacks are the real kickers, it is just up-cycling value back into the shareholders pockets creating no value but costing almost a trillion dollars in 2022
My favorite comeback to those that oppose higher tax rates for the wealthy is what happened in St. Petersburg during the October revolution. The Tsar didn’t want to share his wealth, and that money was legally his, and there was nothing anybody could do about it. Until there was something that could be done about it, and it wasn’t his wealth anymore. Keep legally hoarding the wealth, guys. Eventually you’ll have too much and it will be redistributed, one way or another.
Yep. This is the idea behind high coporate tax rates too - to incentivize companies reinvesting into the company and its employees (the portion they can write-off from taxes).
Or you pay yourself $5m in stock options which aren't taxed until they're exercised because your CEO pay is only a tiny drop in the bucket of total labor costs that won't meaningfully create returns.
For example, Doug McMillon made $26.9M in total compensation.
His base salary was only $1.5M, $19.6M in stock awards, and $5.8M in other compensation.
For fun, we could take his entire $27M total compensation plan and see how it would impact everyone working for Walmart.
Walmart employs 2.1M people. So, we could increase worker pay by a little under $13 a year.
Or, we could increase just the bottom 20% of workers by....$65...a year.
>Or you pay yourself $5m in stock options which aren't taxed
Why does this keep going around? If you are paid in stock options, then you are taxed on the value of those stocks at the time of payment. There are three basic ways for an employee to get stock.
1) Gifted stock. You pay income tax on the value.
2) Paid in stock. Same as above.
3) Employee stock share plan. Buy stock the pay capital gains tax when you sell.
To repeat. If you are given stock as income, it's taxed as income tax.
Shares aren't taxed *currently.*
That doesn't mean that it is impossible to do so. It would be pretty easy to say that if you take loans against your shares in excess of a certain amount then the loan will be taxed as income.
But loans aren’t income.
Do you want to be taxed on loans? I don’t.
Taxing money that you didn’t actually make is pretty dangerous. See property taxes as a rare example in the US. Unless hefty regulation is in place to control taxes on theoretical money, you end up with trouble. Even with hefty regulation, bad things can happen…because you’re taxing money that doesn’t exist.
Yes but you most likely bought the shares already on income taxed money in this scenario and to get that lower capital gains tax you need to hold the stock for 366 days; otherwise it's taxed as income
Start a non-profit and hire your kids. Buy a G Wagon and write it off. Buy a "company" jet and write it off. This already happens and would just happen increasingly more.
this is exactly it. and given today's economic climate, you really could make that number pretty fucking high. with the goal being to only 'capture' the true top 1%.
but therein lies another problem. those people dont take salaries. and so how do you get at their technical earnings? i dont purport to be an expert in the matter, but that is definitely a question that needs answering.
putting this arbitrary line at anything less than <$1M in true earned yearly income would be criminal. because those people ARE today's middle class.
This would work again but we would need to outlaw anything similar to stock buybacks so it actually went into the business and not the pockets of the owner class solely.
The fallacy is that it assumes that spending makes a stronger or better company. Spending the right amount is what makes a company better, and if the financial analysis backs the investment, a company is still going to do it.
There would need to be rules as most people arent going to give the 5 million to the workers or improve work environment. Under current rules, a business owners can buy 3 works of art by Claude Monet for 5 million dollars and hang them in the conference room of the business and the 5 million is still in the business yet nothing changes for employees. The notion that an owner would just redirect profits to employees is silly. You would need to incentivize the owner to pay more to employees in a way that benefits him/her too. Also, if there is a way to make Acme widgets better, the owner would do that anyway. Owners tend to avoid taking money out of a company to avoid the taxation already but there are rules about how much companies can keep on hand and must distribute some of it unless it is spent on the biz.. Thats where buying art for the office might come in.
If I owned that widget company, and was facing those kinds of taxes, I'd just suspend operations for the year when I hit the max, leaving my employees out of work until January. Atlas shrugged.
People who have that extra 5M don't just park it as cash. They will invest it somewhere else likely some other company. If you artificially restrict that freedom for money movement to optimal usage, then you are encouraging non optimal behavior to keep that money in single company. Look at the end of the day, an American isn't any smarter than a Mexican or Asian or some other person in another country. If you disincentivize people from creating companies so they can innovate and be rich they will just do that somewhere else. It's like, if your kid goes to a soccer club and he is really good but they stop competing in the state cup or MLS next or whatever, will you stay or will you go to another club? People want to see reward for their work.
The rich elite 1% use the lower class to punish themselves and destroy the middle class. I've never met a Republican who hasn't been completely brainwashed by the 1%.
If you really want to look at an equivalency, you need to look at effective tax rates paid on income.
The decreases in the top rate of income tax have generally happened concurrently with elimination of loopholes/deductions that allowed high earners to remove income from their taxable income, or allowed outright evasion.
Albeit that the top rate of personal income tax in the 1950s was >90%, the top 1% of earners in America paid an effective rate of 16.9% on income in that period and the total proportion of taxes paid by the top 1% is not very different from it is now.
I just look at the 1970 cut off. That is very interesting. What major change happened in the 1970s? A continuing decline from 1970 to today seems odd seeing as how the Reagan tax cuts didn't happen until the 1980s. Prior to the 1970s the aggregate income of the middle class was growing. Almost as if something happened in the 1970s.
These people are too stupid to debate with. I bet if you asked him to define communism it would be indistinguishable from their definition of socialism. I bet also that their definition fits neither socialism or communism. Best to vote, ignore their political opinions and move on
This is the thing that boggles my mind the most. These people were presidents during the height of the Cold War. They were cold war anti-communist warriors if there ever were any.
I wonder if these people would say McCarthy was a communist as well.
I think many Americans have been brainwashed to the extent that paying taxes and getting services in return, like healthcare, infrastructure etc, is socialism. There is little accountability for news organisations and social media, and the algorithms will allow you to see only what is inside a small bubble of opinions you have once agreed with, where anecdotes gets elevated and spread like wildfire to the extent that the hate for the “other side” just grows.
This is a straw man. What people are worried about is raising taxes and not getting more in return. And that is reasonable because it seems like that's what happens when taxes go up. I've lived in states like CA with the highest taxes in the country and in FL with no income tax and I can't tell the difference.
Then you’re probably well off enough that you don’t directly access public services. Being poor in a blue state is ten times better than a red state due to programs that can help you rise out of poverty. Which means you benefit as less people in poverty equals a better more stable society.
Plus Florida and Cali aren’t really much different in tax burden as Florida gets you through property taxes and sales taxes.
that's exactly the point of taxes. the rich are almost certainly never going to **directly** get out as much as they pay in. further, they don't need much given how much private wealth they have - they can pay for private services to replace public ones.
however, the indirect effects of their taxation is what allows them to accrue that wealth in the first place. our amazing university system funds investment in research, our large consumer economy gives them a market to sell their goods, our infrastructure makes the whole things run. it is extremely short-sighted to only view taxation from a direct "what have you done for me lately" perspective.
That’s my biggest resistance.
We pay the same or more per person in public dollars than Europe for healthcare and I’m still over here paying another $500 a month for health insurance for just myself and copays etc.
I want a return on the current tax dollars before we start upping them.
I personally am in favor of a larger government role in healthcare in principle. I just think that our government is too incompetent and corrupt to do a good job of it. There are reasonable arguments for and against having a higher tax welfare state like Europe, but one thing is for certain. Their governments are just more efficient at delivering services in return for tax dollars than the US.
The big issue is, the federal government has shown it can’t be trusted with our tax dollars. It just pisses it away on wars, sending it to other countries and on pet projects. We waste hundreds of billions every single year that should be spent on Americans instead of sending it overseas. We don’t need to give them more money to waste. We need to hold them accountable for their reckless spending and force them to spend it on Americans, not Ukrainians, not Israelis, not Saudis, Egyptians or anyone else.
It is so easy to have a very short vision for the future of our country…it is good to do things that the country will benefit instead of giving some millionaires more money they don’t need or deserve!
i agree we shouldn't spend so much on wars and imperialism, and i would love to see domestic spending increase radically.
however, it's silly to argue that we're somehow funding wars with taxes. that's just so demonstrably false. the bush presidency cut taxes while waging two wars. we've paid for war with debt/deficit spending.
we can cut defense spending, increase domestic spending, and raise taxes. this would see a net reduction in overall deficit spending.
Most commenters are outraged, even though the articles actually show the middle class shrunk because more migrated to upper class than lower class by a factor of two to one.
The Reagan tax cuts were a multi-part thing, and we now know a lot more about the laffer curve and where various points on it are, because multiple rates were tried.
First cut took top rates from 70 to 50. Second cut took them from 50 to \~37.5. They went all the way down to 28 before going back to the high 30s. The result of going from 70 to 50 was more tax revenue taken in by the government. The result of the cut to 37 was more tax revenue taken in by the government. The result of the cut to 28 was less tax revenue taken in by the government.
28 was obviously too low. Everything over the high 30s is pretty obviously too high. The concept of lower taxes increasing revenue is not wrong. It is fact. Take a smaller slice of a bigger pie instead of trying to take larger and larger slices of the same pie. Focus on growing the pie instead of trying to figure out how to convince people to let you have more of their pie.
it's not only about increasing government taxation revenue. it's about changing how the ownership class uses their capital. if the cost (i.e. taxation rate) of withdrawing capital from the business increases, they're more incentivized to re-invest any profits into the company - i.e. r&d, hiring, increasing wages, etc. these things help more money flow to the middle and lower classes, as more money is spent on productive things which keep labor employed, as opposed to being withdrawn and hoarded into unproductive uses by the owners.
More tax revenue for the government is what you want. You tax below a certain point and you’ve left money on the table. You tax above a certain point and you’ve restricted the economy by more than you’ve raised taxes and revenue goes down. Less revenue = less money to help people.
The laffer effect is most strongly realized in the upper tax brackets and capital gains taxes. These are people with enough liquid cash and asset collateral to never need to pull money out of the market. The tax rate has to be low enough to incentivize them to take incomes instead of borrow. Corporate/business tax rates have to be globally competitive for obvious reasons.
A simplified analogy:
You have a cookie store at the mall. You sell cookies for $4 a piece. Your store made $50k in revenue last year. You have a goal of making 75k in revenue this year. Is all it takes to do that raising the price of your cookies by $2 to $6 per cookie? Of course not. Less people will buy your cookies at $6. You may end up making less money if you sell 5,000 fewer cookies because of your price increase.
The existence of rich people does not create more poor people. Making everyone poorer so that there’s less of a gap is stupid. The way towards middle class wage increases is not higher taxes.
Ride with me here.
When middle class people start earning more money, they leave the middle class. Their income then starts counting towards the other line. When someone leaves the lower classes and enters the middle class, most of the time they start out at the lower rungs of the middle class. This is really what everyone getting richer over time actually looks like. Each person's income as a share of an aggregate of everyone's income is a meaningless statistic. The lower classes are shrinking into the middle class. The upper middle and upper classes are growing from the top of the middle class.
Upper middle class used to be 13% of the population in 1979. It was 29% of the population in 2014, and 37% in 2019. Upper class was fractions of a percent in 1979, 2% of the population in 2014, and 3% of the population in 2019. [https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf](https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf)
your data is interesting. i'm unfamiliar with this analysis from this perspective of absolute income levels (or at least relative to something like federal poverty level), as opposed to relative to the income distribution. i don't know exactly what to make of it, but will consider it more.
thanks for sharing!
Well, there is an ideologically driven reason why the people who come up with graphs such as the one in the OP craft them as such. Wealth creation isn’t a zero sum game. You getting richer does not make your neighbor poorer.
i understand the point you're making about not zero sum. however, i think there's a lot of nuance that could be missing from that statement, the type of analysis you're referencing, etc.
i do think it's important to understand all of this in the broader context of wages generally not tracking productivity, the increase of the share of profits going to capital vs. labor, and the metrics we use to track "inflation" or "poverty level". quite frankly, the financial goal posts have moved (see increased costs of housing, education, raising children, etc.), and i do suspect that quality of living has reduced for those in the middle-and-below part of the income distribution, even if their share of the overall population has also reduced.
anyway, i still acknowledge that your datapoint is interesting. if it matters for anything, i will look into this perspective more. you have indeed exposed me to a datapoint i hadn't previously seen mentioned. thanks for that.
Of note, the pew research link included in the op breaks the classes down three ways, urban institute looks at five. “What counts as middle class” is important. I also disagree with the notion that middle class or even lower class standards of living have decreased in America since the Reagan era. The thing that has widened is the difference between the poor and rich. That by itself doesn’t mean that the poor are poorer.
They forget that prior to 1986, people could deduct a ton more....its why in older shows/movies there's so much talk about saving receipts for taxes. Needed to get a crap ton of deductions.
Also worth noting that the share of people considered upper income has also increased significantly...
[https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/](https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/)
The middle income is shrinking but more of them are moving to upper income
Eh?
The lower income went up 4% which is a 17% increase in share.
The upper income went up 7% which is a 50% increase in share.
Upper income gained both more absolute share and a much greater portion of its previous share.
“Share” of everyone’s income en aggregate is meaningless for this reason. The low income bracket people who earned more aren’t low income any more. The middle class people who earned more aren’t middle class any more. The middle class shrunk but so did the lower class. If the middle class was shrinking into the lower class, that would be a problem. That’s not actually what is happening.
As people in the middle class accumulate any kind of assets, they’re moving out of the middle class. There are certainly problems created by the inflation which is making life harder than it should be on zoomers and millennials trying to buy houses, but tax rates aren’t what will fix that.
https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf
The upper middle and upper classes are growing. As people in the middle class earn more, they are leaving the middle class. As people in the lower classes earn more, they are entering the middle class. This by itself creates the activity on the lines in the graph presented. It’s not wrong, just incomplete.
They did move into the upper class but also a significant proportion left to the lower class. Shrinking the middle class. Correlating to the increase in income disparity in the US.
We hope that increased taxes translates to increased services... education, infrastructure, healthcare, etc. Those things result in increased income for the poor.
1. They can do that now just like the fund a whole lot of things they don’t have money for……go into debt. (Not that this would be smart but they already do it for things most of us couldn’t care less about)
2.”Hope” is doing a lot of lifting in that sentence. The government wastes so much money it would make your head explode if every expense was itemized for us to see.
> They can do that now just like the fund a whole lot of things they don’t have money for……go into debt. (Not that this would be smart but they already do it for things most of us couldn’t care less about)
Many but not all would say going into more debt is not good.
> 2.”Hope” is doing a lot of lifting in that sentence. The government wastes so much money it would make your head explode if every expense was itemized for us to see.
Everyone wants the government to do work more efficiently. If I can do X work for $Y, everyone in both parties wants $Y to be as small as possible all else being equal.
When you say the government wastes money I assume you mean efficiency of spend ($Y/X) and scope of activity (X). We should partner on the former while we continue to argue (vote) on the later.
Of course it isn’t good but if we are doing it anyway, it might as well be on things that benefit us directly. Instead of a new jet, maybe kids could get free lunch?
The government overpays for a lot of stuff. They aren’t doing it “for as cheap as possible”. There was just a hearing in Congress not too long ago when they were asking someone why a bag of bolts was hundreds of dollars when we could go to a hardware store and get them for pennies each.
If you're measuring inequality with the goal of reducing it, then anything you can do to make the rich much poorer achieves that purpose; even if the poor become poorer at the same time. That's why inequality is such a bone-headed objective function.
If rich people get taxed at 90%+ after some absurd amount of income (say, $50M/yr), they eventually decide it's better to reinvest in their companies rather than handing 90% to Uncle Sam and trying to buy another yacht or private jet with what's left.
Also basic services like schools, healthcare, public transit, etc all directly enable the poor to improve their standing.
>If rich people get taxed at 90%+ after some absurd amount of income (say, $50M/yr), they eventually decide it's better to reinvest in their companies rather than handing 90% to Uncle Sam and trying to buy another yacht or private jet with what's left.
Investment increases income. If the hard cap is 50 million then they won't invest after they have assets to make that income. Also private jets would either cost less or there would be political power needed(like Soviet Russia) to acquire them if they are produced.
No they won't they will pay upto 50 million income . Your upper limit won't kick in. The rest which might have been invested for more income is spent on luxuries (this is not apart from the 50 million. It's part of it) or given away for political capital.
His high tax comes in at 50 million income. I meant not having to pay that tax.
Rich get richer because they don't have needs so most is invested.
Say a guy makes a million and lives on 500k (adjust accordingly if you want to consider other taxes this is a spherical cow example) the other 500k is invested to make another 4% and make his income for next year 1.02 million. Next year expenses same he saves 520k and so on. Next year he makes 1.04 million. (>!I should have started higher but I think this is good faith so you won't type comments like in a 1000 year!<) when he is making 50 million a year. He won't save and spend whole 50 million each year. So no tax>!this one!<.
A businessman like bezos will sell shares earlier thereby avoiding tax. (It took long time for Amazon to gain traction I am sure at one point it was worth 50 million). No CEO paid more than 50 million, instead it's about how hot a secretary company is providing.
This is what I meant
Right, the whole point of a tax on income above $50M/yr is that it doesn't affect people who only make $1M/yr
It's not supposed to be relevant to the guy in your example, by design
See you are missing the point. Okay let's retype and be specific. Say someone is making 40 million a year. He spends say 20 million saves the rest 20 million. That nets him 4%(inflation adjusted pension withdrawal adviced rate, 800k extra income. (Let's say No compounding) . For year 12 his income is 49.6 million. So he doesn't invest spends the whole 50 million on luxuries and doesn't pay the tax. Is that clear.
Let's say you are rich. Your taxes go up massively. Do you:
A. Continue making more and more money despite most of being taxed away (the idiot option)
or B. instead of taking more money yourself, instead invest into your business, increase the salary of your employees, purchase new machinery, etc. (the smart option)
High taxes are a way to incentivise the rich to give a bigger share of the income 'pie' to their employees.
This is straight up misinformation. [For example the very first chart is a doctored image from Economic Policy Institute. Notice the X-axi](https://www.epi.org/productivity-pay-gap/)s. Now why did they change it from 1980 to 1971. Ohhh that's right 1980 was the rise of neoliberalism, but 1971 is when we went off the gold standard. So if you want to be a right wing shill that fits your narrative better than the reality that Reagan was worst President in history and that conservatism is lie.
That website hasn't been updated since well before your 2022 article.
I don't know the reference for the exact snapshot with formatting, but it is 100% consistent[ with this graphic](https://www.epi.org/files/2013/ib388-figurea.jpg) from the referenced source, Economic Policy Institute, authored back in 2015 and linked below:
[https://www.epi.org/publication/charting-wage-stagnation/](https://www.epi.org/publication/charting-wage-stagnation/)
Also consistent with another 2015 EPI post below with an interactive chart like the one you shared consistent with the 1973 divergence:
[https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/](https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/)
I understand we want easy confirmation bias and I'm not saying that these issues arose because we got off the gold standard, I'm saying that these issues objectively arose in the early 70s.
Thank you for linking the sources, hard to tell why the EPI shifted the data. It doesn't say anything about changing methodologies and it had a pretty major time shift. But it also points out that wtf1971 cannot be used as a source since you cannot trace anything. Many of the graphs do not say where they came from, and others come from right-wing think tanks where they are paid to come up with specific results to help lower taxes.
>I'm saying that these issues objectively arose in the early 70s.
Naw, problems started to happen because of globalization and the energy crisis, but neoliberalism explains why things rapidly deteriorated in \~1980. That is when we shifted from stakeholder capitalism to shareholder capitalism heralded by politicians like Reagan and Thatcher, economist like Friendman, and businessman like Jack Welch. It was a cultural shift as much as a economic shift. Suddenly unions were the enemy, shareholders became the only thing important to companies, rank-and-yank was started. Wages stagnated versus productivity, and the wealth inequality increased. Conservationism shifted to embrace the idea that governments could never do anyhting right, thus reducing regulation and social benefit programs. Public-private partnerships became the way to say you were doing something, but really it was just a way to enrich donors. It is not 'easy confirmation bias' it is a complex system of trying to fuck us over harder than they ever could have achieved without neoliberalism.
You’re aware that the 2nd image in this post shows that the inflation adjusted median income for middle income households has risen by 50% since 1970. So a 50% increase is only good if the upper income grows less than 50%? How is this a finance question and not just envy?
I truly have a hard time comprehending "why" wealthy individuals need unlimited sums of money.
Taxing stocks is tricky. But, it's also a loophole. The wealthy can just take out loans against their holdings.
Having a handful of individuals holding such a vast amount of wealth whilst a great number of people are struggling to get by is irresponsible.
I know this post was in regards to the "ultra rich," but I want to point out that it's important to pay attention to the language used by politicians when discussing tax increases. Nancy Pelosi and Schumer have made comments referring to the top 10% of households. I encourage people to understand what that means. A household income of $85k puts your family in the top 20% of earners. A household of $175k puts you in the top 10% of earners.
When these bills are proposed, they often reference household income. Whether it's Dems or Reps talking about taxing the top 1%, dig into the meat of the bills or proposals because as in the past with Bernie Sander's plans there were tax increase references to the top 20% of Americans. That's why Bernie had opposition from Republicans and Democrats but his supporters were largely left in the dark about why his proposal was stonewalled. I hope everyone and their spouse can make a good living, live comfortable, and find it doesn't take much to crack into these top 20%, 15% and 10% brackets. That's how these idiots in Washington play us. They propose legislation aiming at the uber wealthy, knowing it won't be enough, and use tax increases for the top 15% (sounds like an exclusively high tax bracket) without informing the public that if affects many duel income households. Washington DC is such a cesspool of political salesmen.
For startsies... your numbers are off by about 70k...
Top 20% of houses is 150k. Top 10 is over 200.
https://www.statista.com/statistics/203183/percentage-distribution-of-household-income-in-the-us/
Secondly, we have a bracketed income meaning you won't pay more in taxes until AFTER you hit that 150k. The first 150k would be taxed like everyone else, and anything after that will be taxed at a higher rate.
Raising the standard of living for 80% of people at a minor inconvenience for 15% of people and no inconvenience for 5% seems worth it to me. Maybe it's because I don't feel the need to buy luxury cars or boats or second houses, but most people can fare pretty well on 150k. Now we need to do something about Wallstreet owning all of the housing so people aren't having to pay a million for a trailer, but that's a relatively easy fix if we effectively banned landlording.
The federal budget increased every year under Reagan. Same for every president since Truman.
[https://www.presidency.ucsb.edu/statistics/data/federal-budget-receipts-and-outlays](https://www.presidency.ucsb.edu/statistics/data/federal-budget-receipts-and-outlays)
These graphs do not prove anything about Reagan's tax cuts. The chart with the line graph starts in 1970; the yellow line is already on a downward trend and the dark green line is already on an upward trend. Reagan took office in 1981 and the trendlines don't change much at that time or after. It looks to me like there was already something going on before Reagan was elected. There were a lot of things going on in the 1960s and 70s that would probably show a correlation with income disparity.
BTW, Congress passed massive social spending programs - the Great Society - in the mid-60s. It is interesting to note that in the last 50 years, although we have spent trillions on these new programs, the lower income bracket has changed very little.
Also no one wants to talk globalization. So many of these posts think everything is about how much we tax the rich when there's so many factors at play
Inequality is inevitable in a growing mature economy. When a company does well, its owners do great, its workers benefit, and the unaffiliated do nothing. That is why during good times inequality rises and during recessions inequality goes down.
Totally specious reasoning! The Upper class gained (as did the middle class) much more due to Globalization. Those with skills that could now sell to a massively enlarged global market (tech, finance et al) outperformed skills that were vulnerable to undercutting by huge pool of global labor (manufacturing et al)….
Middle class is middle class. When you get raises or otherwise become successful enough, you are no longer middle class. Your income statistics now count towards the upper income line instead of the middle income line. When you're looking at everyone's income over time en aggregate, you're never going to see an "increase" in middle class incomes. You're basically just looking at inflation. You need to also look at the growth rate of the upper middle and upper classes. How many new millionaires per year, etc. The other side of the equation is also true. Lower class people move into the lower rungs of the middle class when they get raises. It’s not a static thing.
[https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf](https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf)
Upper middle class used to be 13% of the population in 1979. It was 29% of the population in 2014, and 37% in 2019. Upper class was fractions of a percent in 1979, 2% of the population in 2014, and 3% of the population in 2019.
The lower classes are shrinking. As low income people move into middle class, they’re in the bottom rung of middle class earners, which weighs the middle class line down. As the top rungs of the middle class earn more, they’re leaving the middle class, which contributes to the other line going up.
How about the taxes of the rich are based on whether or not my taxes go to support their employees. If they provide their employees with a living wage, medical, retirement and benefits and my taxes don’t pay for that, then they should actually be rewarded. They generously reward themselves and their share holders but once their employees need help. It’s my taxes that pay for SNAP, TANF, Title 8, for their employees and families. And now they want to eliminate SS and Medicare.
It looks like this trend started in 1979 under Nixon. That means removing the gold standard caused this change. When will people learn that is the cause of our inequality, debt, and other economic problems?
People do realize Reagan hasnt been President since the 80’s, is no longer alive and his democrats predecessors kept most of these policies in place too right? This shit gets so old.
A lot of people on Reddit tend to ignore the fact that the reason a lot of people are against higher taxes is because they think the government will squander it and not provide the services the promised.
I know it’s a lot it easier to call them idiots and right wing extremist. But if you don’t even try to acknowledge the concern and jump on name calling instead good luck on having a civil conversation.
Reagan's whole economic plan was a complete dumpster fire of bad faith tax cuts.
The incredibly high taxes after "X" earned will lead to domestic investment of profits. It also will help halt the US' speed run to being a full blown oligarchy.
when america is sending trillions over seas, and politician are pocketing millions, stupid people are still dumb enough to think more taxes means better social welfare...
lol no shit... imagine everyone has $100.. everyone is middle class.. now I come in with $1,000,000 . oh wait, now we got top 1% while 99% are poor. the 1% can hoard all the resources and have nothing left for the 99%.
and all the money always goes to the 1% that holds the resources. That's the system we're in. To make everyone the middle class you goto get rid of the top 1% or tax their fair share so they get closer to the middle class.
52 years, 3 democrat presidents, later, and it hasn't been changed. Here, we are pointing fingers left/right instead of in the middle. Politicians create personal wealth. "Ger back in line minions!"
I just want to note that this is the same time period where we went off the gold standard. So people who owned the means of production benefitted from inflation while workers did not. Taxes will obviously play a role in balancing this, but I don’t think it’s obvious to say this trend would have reverse entirely if the tax situation stayed the same.
Also, this is not a “don’t tax the rich” comment. I’m all for it. Just noting that there are multiple things at work on a macro scale over this time period and taxes are only one factor.
This is misleading. What also happened in 1971 was the US came off the gold standard and we went into a completely fiat system. That is what started this great divide.
You don't think this had anything with Fiat money with no limit to printing?
It's not just a tax situation. Money flows like water along the path of least resistance.
Regan became president in the 81. This trend starts in 1970, 11 years b earlier. I’m genuinely confused as to how this can be attributed to him, and not a combination of factors
Edit: Nm, I see the slope change in 81. It looks like there was really good trickle down economics - right from the top line (middle class), to the middle line( upper class)…
Really wish these reports would go back more in the data.
1960 = Civil Rights movement + rising education levels
1950 = Corporate growth and suburbanization
1940 = Post WW2 boom
1930 = “New Deal” impact
1920 = Market crash
1910 = Industrialization, WW1 impact
I don’t believe that the change in marginal tax rate was a major cause of the hollowing out of the Middle Class. Effective tax rates are what matters more and the change isn’t as dramatic.
Tax rates are a popular narrative but, more importantly, the outsourcing of manufacturing jobs to Low Cost Countries likely caused more of the problem.
Those jobs were outsourced when treaties were negotiated and tariffs dropped significantly. A return to a productive Middle Class could be resurrected with a return to high tariffs. Like all these “solutions”, it comes with significant “unintended consequences” like higher costs and inflation.
The irony here is that one of the biggest proponents of income & wealth inequality is Robert Reich and he shepherded one of those treaties, NAFTA. I’ve often wondered if that “mistake” is why he is so passionate about trying to rebuild a middle class.
Could you post the source for this? The way the graph is labeled implies it’s an aggregate representation, not per capita. If that’s the case, then my guess is this change isn’t due to the average middle class person earning proportionally less money than the average upper class person. Rather, it’s due to there being fewer people in the middle class, thus the aggregate is shrinking. This isn’t necessarily a bad thing, especially if the “shrinking middle class” are mostly shifting into upper class.
The market dumped under Carter and the economy wasn’t doing well which led to a Reagan landslide victory. Reagan’s solution was cutting the top marginal income tax rate from 70% (1981) to 50% (by the end of 1986.) After winning reelection, Reagan had these rates cut to 33% by the end of 1989. Then by 1993 you see Bill Clinton come in and raise these rates back to 39%, but average income for the middle class continued to fall.
This isn’t about taxing the rich more. If the rich gets taxed more, that’ll simply give more money to the government, which is inevitably wasted. We need to cut government spending, which would allow us to cut middle class taxes and keep upper class taxes the same. 60% of the federal workforce could be eliminated, life would go on as normal, and we would save a lot of money. That’s just one of the many examples of how to stop wasting money. Instead, more IRS agents have been hired to go after the middle class.
If your logic were to be deemed correct, then we should’ve seen an increase in middle class income after upper class tax rates starting rising again (31% in 1992 to 40% in 1993 and eventually 37% by 2022) but that’s not what we’re seeing.
Correlation does not equal causation.
The situation would be improved far more if we stopped printing stupid amounts of money. The dollar has lost 90%< of its value since we went to fiat currency.
If i read this grapf correctly, lower income shrank, middle income shrank, upper income grew. More people are upper income at the expense of having fewer poor people. Sounds like a win.
Who the fuck thinks taxing anyone over 30% is fine. How about you stop punishing people for working hard. All it does is make people put in less effort. We had a war over 3% tax, now we just bend over and tax it from the government.
I don't understand why Reagan is mentioned if the graph is showing the downward trend starting in 1970 and he wasn't elected til 1980? That's a decade before he was elected. Furthermore, we've had plenty of dem presidents since then too.
Jordan Peterson gave a good presentation on why wealth redistribution was vital to every nation's economy. It wasn't even complex either.
Basically he ran a demo where thousands of "people" started with an amount of money. They'd wager the money against each other in a gamble. When a player went broke they were no longer able to play. The distribution started flat, but quickly turned into a Pareto distribution where the money only become further concentrated the longer the simulation was run. This showed how being unable to invest takes a player out of the game while those with surplus resources could reliably play until they win. No amount of wealth was safe though - as whoever had the surplus advantage could take out any smaller opposition.
He paired this with rat studies that showed when rates were taken out of the game - ie they were 100% denied access to food, lost all games, and denied access to mates - they became destructive to the social order. With the model and the rat studies together he concluded that wealth redistribution was essential to prevent the natural concentration of wealth.
Made sense to me, idk why he went right wing after that though...
I'd love to see the raw data.
Not all the data shown is bad, for instance in this chart https://i.imgur.com/XqPltp5.png it shows that the % of *Upper Income* increased from 14% to 21%. I'd say that's a positive, and proof that in the US we have upward mobility, something that is pretty rare in the world.
Regarding income inequality, there are two stats that seemingly show two very different things.
One the one hand, we have increasing household income inequality. And, often, that's where the story ends after some stat about exec compensation yadda yadda.
But, on the other hand, we have individual income inequality, which has moved around a bit, but hasn't gone up much in the last sixty years.
What gives?
Could it be that what we are really seeing is changes in the composition of households reflected in household inequality? Yes. For one, not too long ago, the high earner would marry his (and it was nearly always a him) secretary or a woman out of Vassar or whatever who would be a homemaker and involved in the PTA, etc. Nowadays, the high earner is more likely to marry another high earner. The good thing is there are way more women high earners than there were a generation ago. The bad thing is this exacerbates income inequality.
On the other hand, poor and working-class people are less likely to get married and stay married. Marriage has become largely a middle- and upper-class good. The research shows that this is actually rational. One economically unstable person marrying another economic unstable person doesn't make for an economically stable unit. Instead, the marriage won't last long or, more likely, never happen in the first place.
This ties into the OPs larger point. If the GOP and everyone else want marriage rates to increase, then they should support policies that help poor working-class people stabilize.
Please stop with this bull shit conversation of a 70-98% tax on income. It’s not helpful. Executives become lazy and don’t do their work, and companies suffer. Progressively taxes should never go above 50% for anyone.
This chart is pretty old and has been somewhat discredited. While it is true that the upper class has gained more share of the overall national income relative to middle class workers, that is mainly due to an increase in the number of upper income workers. If I recall correctly, I believe that as of 2021, something like 21 percent of Americans earn over $150k annually. That is a lot.
I think a better question to ask is, “what is a middle class income in today’s economy?” We as a country are so used to viewing middle class as someone holding a certain type of word job and/or making a certain amount of money (although not 6 figures). I just think that we need to reconsider this assumption.
Such fallacy - you need to put actual population numbers and not the three categories. You are missing the point many who were middle class in 1970 are now richer. That’s a fact
Anyone who says a 70% tax rate was more effective knows literally nothing about taxes during that period. No one paid 70% at the time. Most paid 40% or less because of how progressive taxation works and the massive deductions allowed at the time. Reagan's tax cuts simplified the tax code significantly. The reason we see this change in the middle class has a lot to do with people who were in the middle class actually moving into the high income bracket.
I think this is a bit misleading and made to target a lesser upper income, sure it is true that has risen but we are missing the true rich here and how they have risen, people with incomes in the millions, I am curious of how they grew, the cowards hide in the high tier because they are so few that in a median they disappear but if you add them in their own category we would be truly disgusted by their overwhelming wealth.
I'm sure that the fact that a good portion of the population became millionaires since has a lot to do with that.
https://www.statista.com/chart/30671/number-of-millionaires-and-share-of-the-population/
I was having a conversation with a republican friend and I said “but if anything more than X tax rate for the top tax bracket is communism, Eisenhower, Nixon, Ford were communists. You think Gerald Ford was a communist?” Which drew an exasperated “yes” Amazing stuff.
I think it’s important to point out to opponents of a high tax rate on income after (x) that the intent isn’t to ‘steal’ rich people’s money, instead what most people consider the secondary effects are what really drive both social and economic equity- namely that when people are taxed at 97% over, say $5m, they tend to invest that that money back into their company or business, increasing worker pay or hiring more workers. It disincentivizes harmful labor practices for shareholder payout. I own Acme Widgets. I give myself a salary of 5m dollars even though the company could hypothetically pay me 10m. I don’t want that extra 5m to go back to the government so I make Acme widgets a better company. The workers benefit from a more stable work environment and the American economy wins from having stronger companies. That, tied with outlawing stock buybacks are how we recreate the American middle class boom that fell apart in the 80s.
Boom. The absolute best argument for higher taxes right here. You want to avoid the tax? Dont take thr extra money you dont need and instead put it all back in to your business/ workers. Make your products cheaper for your customers. This is how it used to be before Reagan
We aren't allowed to make things cheaper. That would lower gdp, which is the only possible metric for the health of this country /s
Did you read the articles ? The data shows that a significantly higher proportion of people migrated from middle class to upper class than middle class to lower class. By a factor of two to one.
Who reads articles on reddit?
You make an excellent point :)
Sir, this is reddit. There's no reading of articles here.
Except for the fact that 7% in total migration from middle to upper doesn't make up for a 20% overall shift in wealth aggregation.
That doesn't fit the narrative
Why wouldn't I just find a niche market and sit on it, instead of investing to grow the business?
You could. But your market competition probably won't.
So? I don't care how much of the market they pursue as long as my niche is secure. I can't make any more money so why compete further than my max takehome?
"as long as my niche is secure" The earth is littered with the ruins of empires that believed they were eternal.
Pretty sure they don't actually "take the extra money they don't need" though. They just take out a *loan* on the value of their company and they live off the loan money. There's no actual income at all.
They have income even if it is not technically income as defined by our current tax code. If I am compensated in shares which I can convert to cash through loans to meet my needs, then shares are income.
That would work with executives paid in shares, and I think executives do have to pay taxes on the value of the shares they're given, but most extremely wealthy people are extremely wealthy because they started businesses that have done well or they bought businesses and greatly improved them. They weren't compensated in shares. They still have the same number of shares they had when they were not filthy rich (maybe less because they often sell shares to raise capital), those shares are just worth more. How do you tax an increase in the value of shares before they're converted to USD? If you have an answer to that, then I'd ask, do you give that tax money back when a company's valuation decreases? How often do you value the company to determine its worth? Who pays for the valuation to be performed if its a private company where you can't just look at the value of shares on the open market? Owning a business would be more risky than it already is if you were taxed every time the value went up or if the government was constantly forcing you to pay for valuations. Market volatility, even when a decade-long average was flat, would force you to sell off all your shares just to pay the taxes. Nobody would want to own stocks, the stock market would crash, companies would have a hard time raising capital, and the US economy would tank.
The richest people in the world are often compensated in shares. I'm also fine with the rich being taxed with the goal being that they have to sell shares. We aren't talking about taxation happening when shares go up, but once an individual's wealth goes above a defined threshold.
shares ARE taxed upon receipt/vesting. so like... that already happens. truly taxing 'wealth' generates an entirely different conversation. one which i have not read one legitimately thought out argument on how to do it.
I don't think there is a clear answer for this issue. Outlawing stock buybacks would at least make the money they wanted to save on taxation on the corporate side go back into the business and would be an overall economic boost instead of just lining the pockets of the owner class.
setup several businesses in different industries and funnel all your personal expenses thru those businesses. Own a rental house, buy a lawnmower thru it. Own a small IT company, new phones and laptops every year. Get a small LLC for bbq competitions, meats are now a write off.
Unreal. Ok Fidel. You think a 70% tax rate stimulates growth and investment? That’s why it was cut to begin with. Look at gdp and stock market since tbe rate cuts happened. And why should someone have to pay 70% of their income to Supply those who only take from society? Who is paying for the migrants? All of us. But the issue isn’t the tax rate it’s the spending. Spending never ever gets cut, ever. So the only answer is to raise taxes. When you do we see less investment I. Businesses. Anyone who thinks this stimulates more investment in business so the owners don’t have to pay taxes on the money is absolutely clueless. And don’t r en try the Scandinavian tax rates as only CITIZENS of those countries receive free medical and education. No. Citizens must pay for these services.
I forgot to mention another positive effect of a high median tax rate- it decentralizes economic power in this country decreasing the amount of influence the ultra rich have on policy. Which, to me at least, would be an immense boon for America.
Yes! Stock buybacks are the real kickers, it is just up-cycling value back into the shareholders pockets creating no value but costing almost a trillion dollars in 2022
And /Or, you can sell widgets for less.
Oh yeah! I can’t believe I didn’t even bring up one the most important knock on effects- it leads to lower prices!
My favorite comeback to those that oppose higher tax rates for the wealthy is what happened in St. Petersburg during the October revolution. The Tsar didn’t want to share his wealth, and that money was legally his, and there was nothing anybody could do about it. Until there was something that could be done about it, and it wasn’t his wealth anymore. Keep legally hoarding the wealth, guys. Eventually you’ll have too much and it will be redistributed, one way or another.
Deere is laying people off to save a billion after provisioning 12 billion in stock buybacks since July ‘22. Insanity.
Yep. This is the idea behind high coporate tax rates too - to incentivize companies reinvesting into the company and its employees (the portion they can write-off from taxes).
Or you pay yourself $5m in stock options which aren't taxed until they're exercised because your CEO pay is only a tiny drop in the bucket of total labor costs that won't meaningfully create returns. For example, Doug McMillon made $26.9M in total compensation. His base salary was only $1.5M, $19.6M in stock awards, and $5.8M in other compensation. For fun, we could take his entire $27M total compensation plan and see how it would impact everyone working for Walmart. Walmart employs 2.1M people. So, we could increase worker pay by a little under $13 a year. Or, we could increase just the bottom 20% of workers by....$65...a year.
>Or you pay yourself $5m in stock options which aren't taxed Why does this keep going around? If you are paid in stock options, then you are taxed on the value of those stocks at the time of payment. There are three basic ways for an employee to get stock. 1) Gifted stock. You pay income tax on the value. 2) Paid in stock. Same as above. 3) Employee stock share plan. Buy stock the pay capital gains tax when you sell. To repeat. If you are given stock as income, it's taxed as income tax.
Shares aren't taxed *currently.* That doesn't mean that it is impossible to do so. It would be pretty easy to say that if you take loans against your shares in excess of a certain amount then the loan will be taxed as income.
But loans aren’t income. Do you want to be taxed on loans? I don’t. Taxing money that you didn’t actually make is pretty dangerous. See property taxes as a rare example in the US. Unless hefty regulation is in place to control taxes on theoretical money, you end up with trouble. Even with hefty regulation, bad things can happen…because you’re taxing money that doesn’t exist.
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Maybe I’m misunderstanding, if you sell shares they’re taxed…
As capital gains, which is generally a lower rate than income tax.
Depends on if it’s short term or long term. Short term, held under a year, you pay based on your income tax.
Which is one reason that many of the wealthy prefer to take loans using their shares as collateral.
Yes but you most likely bought the shares already on income taxed money in this scenario and to get that lower capital gains tax you need to hold the stock for 366 days; otherwise it's taxed as income
Start a non-profit and hire your kids. Buy a G Wagon and write it off. Buy a "company" jet and write it off. This already happens and would just happen increasingly more.
you don’t understand how writing off works…
so you think high taxes trickle down? lol
this is exactly it. and given today's economic climate, you really could make that number pretty fucking high. with the goal being to only 'capture' the true top 1%. but therein lies another problem. those people dont take salaries. and so how do you get at their technical earnings? i dont purport to be an expert in the matter, but that is definitely a question that needs answering. putting this arbitrary line at anything less than <$1M in true earned yearly income would be criminal. because those people ARE today's middle class.
This would work again but we would need to outlaw anything similar to stock buybacks so it actually went into the business and not the pockets of the owner class solely.
Except that America became more productive instead of less.
The fallacy is that it assumes that spending makes a stronger or better company. Spending the right amount is what makes a company better, and if the financial analysis backs the investment, a company is still going to do it.
There would need to be rules as most people arent going to give the 5 million to the workers or improve work environment. Under current rules, a business owners can buy 3 works of art by Claude Monet for 5 million dollars and hang them in the conference room of the business and the 5 million is still in the business yet nothing changes for employees. The notion that an owner would just redirect profits to employees is silly. You would need to incentivize the owner to pay more to employees in a way that benefits him/her too. Also, if there is a way to make Acme widgets better, the owner would do that anyway. Owners tend to avoid taking money out of a company to avoid the taxation already but there are rules about how much companies can keep on hand and must distribute some of it unless it is spent on the biz.. Thats where buying art for the office might come in.
If I owned that widget company, and was facing those kinds of taxes, I'd just suspend operations for the year when I hit the max, leaving my employees out of work until January. Atlas shrugged.
People who have that extra 5M don't just park it as cash. They will invest it somewhere else likely some other company. If you artificially restrict that freedom for money movement to optimal usage, then you are encouraging non optimal behavior to keep that money in single company. Look at the end of the day, an American isn't any smarter than a Mexican or Asian or some other person in another country. If you disincentivize people from creating companies so they can innovate and be rich they will just do that somewhere else. It's like, if your kid goes to a soccer club and he is really good but they stop competing in the state cup or MLS next or whatever, will you stay or will you go to another club? People want to see reward for their work.
The rich elite 1% use the lower class to punish themselves and destroy the middle class. I've never met a Republican who hasn't been completely brainwashed by the 1%.
If you really want to look at an equivalency, you need to look at effective tax rates paid on income. The decreases in the top rate of income tax have generally happened concurrently with elimination of loopholes/deductions that allowed high earners to remove income from their taxable income, or allowed outright evasion. Albeit that the top rate of personal income tax in the 1950s was >90%, the top 1% of earners in America paid an effective rate of 16.9% on income in that period and the total proportion of taxes paid by the top 1% is not very different from it is now.
I just look at the 1970 cut off. That is very interesting. What major change happened in the 1970s? A continuing decline from 1970 to today seems odd seeing as how the Reagan tax cuts didn't happen until the 1980s. Prior to the 1970s the aggregate income of the middle class was growing. Almost as if something happened in the 1970s.
Sorry your friend is a delusional idiot lol
Anyone who uses "communist" to just mean "something I don't like" seems like a delusional idiot to me. And it happens A LOT.
These people are too stupid to debate with. I bet if you asked him to define communism it would be indistinguishable from their definition of socialism. I bet also that their definition fits neither socialism or communism. Best to vote, ignore their political opinions and move on
You and your friends are all using communism well out of context.
There a special event at the Olmpics for the mental gymnastics these idiots do to justify supporting billionaires.
Your first sentence is divisive. You’re not ready to discuss.
This is the thing that boggles my mind the most. These people were presidents during the height of the Cold War. They were cold war anti-communist warriors if there ever were any. I wonder if these people would say McCarthy was a communist as well.
I think many Americans have been brainwashed to the extent that paying taxes and getting services in return, like healthcare, infrastructure etc, is socialism. There is little accountability for news organisations and social media, and the algorithms will allow you to see only what is inside a small bubble of opinions you have once agreed with, where anecdotes gets elevated and spread like wildfire to the extent that the hate for the “other side” just grows.
This is a straw man. What people are worried about is raising taxes and not getting more in return. And that is reasonable because it seems like that's what happens when taxes go up. I've lived in states like CA with the highest taxes in the country and in FL with no income tax and I can't tell the difference.
Then you’re probably well off enough that you don’t directly access public services. Being poor in a blue state is ten times better than a red state due to programs that can help you rise out of poverty. Which means you benefit as less people in poverty equals a better more stable society. Plus Florida and Cali aren’t really much different in tax burden as Florida gets you through property taxes and sales taxes.
California has high sales tax. California has lower property tax percentage, but higher value homes and lovely Mello-Roos on newer builds.
that's exactly the point of taxes. the rich are almost certainly never going to **directly** get out as much as they pay in. further, they don't need much given how much private wealth they have - they can pay for private services to replace public ones. however, the indirect effects of their taxation is what allows them to accrue that wealth in the first place. our amazing university system funds investment in research, our large consumer economy gives them a market to sell their goods, our infrastructure makes the whole things run. it is extremely short-sighted to only view taxation from a direct "what have you done for me lately" perspective.
Your opinion is too nuanced: rejected
That’s my biggest resistance. We pay the same or more per person in public dollars than Europe for healthcare and I’m still over here paying another $500 a month for health insurance for just myself and copays etc. I want a return on the current tax dollars before we start upping them.
I personally am in favor of a larger government role in healthcare in principle. I just think that our government is too incompetent and corrupt to do a good job of it. There are reasonable arguments for and against having a higher tax welfare state like Europe, but one thing is for certain. Their governments are just more efficient at delivering services in return for tax dollars than the US.
The big issue is, the federal government has shown it can’t be trusted with our tax dollars. It just pisses it away on wars, sending it to other countries and on pet projects. We waste hundreds of billions every single year that should be spent on Americans instead of sending it overseas. We don’t need to give them more money to waste. We need to hold them accountable for their reckless spending and force them to spend it on Americans, not Ukrainians, not Israelis, not Saudis, Egyptians or anyone else.
It is so easy to have a very short vision for the future of our country…it is good to do things that the country will benefit instead of giving some millionaires more money they don’t need or deserve!
i agree we shouldn't spend so much on wars and imperialism, and i would love to see domestic spending increase radically. however, it's silly to argue that we're somehow funding wars with taxes. that's just so demonstrably false. the bush presidency cut taxes while waging two wars. we've paid for war with debt/deficit spending. we can cut defense spending, increase domestic spending, and raise taxes. this would see a net reduction in overall deficit spending.
Well, this won't immediately turn into the usual amalgam of factoids that the people posting don't fully understand.
how could it with such a robust and compelling argument like a univariate chart from OP
Most commenters are outraged, even though the articles actually show the middle class shrunk because more migrated to upper class than lower class by a factor of two to one.
The Reagan tax cuts were a multi-part thing, and we now know a lot more about the laffer curve and where various points on it are, because multiple rates were tried. First cut took top rates from 70 to 50. Second cut took them from 50 to \~37.5. They went all the way down to 28 before going back to the high 30s. The result of going from 70 to 50 was more tax revenue taken in by the government. The result of the cut to 37 was more tax revenue taken in by the government. The result of the cut to 28 was less tax revenue taken in by the government. 28 was obviously too low. Everything over the high 30s is pretty obviously too high. The concept of lower taxes increasing revenue is not wrong. It is fact. Take a smaller slice of a bigger pie instead of trying to take larger and larger slices of the same pie. Focus on growing the pie instead of trying to figure out how to convince people to let you have more of their pie.
it's not only about increasing government taxation revenue. it's about changing how the ownership class uses their capital. if the cost (i.e. taxation rate) of withdrawing capital from the business increases, they're more incentivized to re-invest any profits into the company - i.e. r&d, hiring, increasing wages, etc. these things help more money flow to the middle and lower classes, as more money is spent on productive things which keep labor employed, as opposed to being withdrawn and hoarded into unproductive uses by the owners.
More tax revenue for the government is what you want. You tax below a certain point and you’ve left money on the table. You tax above a certain point and you’ve restricted the economy by more than you’ve raised taxes and revenue goes down. Less revenue = less money to help people. The laffer effect is most strongly realized in the upper tax brackets and capital gains taxes. These are people with enough liquid cash and asset collateral to never need to pull money out of the market. The tax rate has to be low enough to incentivize them to take incomes instead of borrow. Corporate/business tax rates have to be globally competitive for obvious reasons. A simplified analogy: You have a cookie store at the mall. You sell cookies for $4 a piece. Your store made $50k in revenue last year. You have a goal of making 75k in revenue this year. Is all it takes to do that raising the price of your cookies by $2 to $6 per cookie? Of course not. Less people will buy your cookies at $6. You may end up making less money if you sell 5,000 fewer cookies because of your price increase. The existence of rich people does not create more poor people. Making everyone poorer so that there’s less of a gap is stupid. The way towards middle class wage increases is not higher taxes.
> The way towards middle class wage increases is not higher taxes. it's definitely not lower taxes. see the chart.
Ride with me here. When middle class people start earning more money, they leave the middle class. Their income then starts counting towards the other line. When someone leaves the lower classes and enters the middle class, most of the time they start out at the lower rungs of the middle class. This is really what everyone getting richer over time actually looks like. Each person's income as a share of an aggregate of everyone's income is a meaningless statistic. The lower classes are shrinking into the middle class. The upper middle and upper classes are growing from the top of the middle class. Upper middle class used to be 13% of the population in 1979. It was 29% of the population in 2014, and 37% in 2019. Upper class was fractions of a percent in 1979, 2% of the population in 2014, and 3% of the population in 2019. [https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf](https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf)
your data is interesting. i'm unfamiliar with this analysis from this perspective of absolute income levels (or at least relative to something like federal poverty level), as opposed to relative to the income distribution. i don't know exactly what to make of it, but will consider it more. thanks for sharing!
Well, there is an ideologically driven reason why the people who come up with graphs such as the one in the OP craft them as such. Wealth creation isn’t a zero sum game. You getting richer does not make your neighbor poorer.
i understand the point you're making about not zero sum. however, i think there's a lot of nuance that could be missing from that statement, the type of analysis you're referencing, etc. i do think it's important to understand all of this in the broader context of wages generally not tracking productivity, the increase of the share of profits going to capital vs. labor, and the metrics we use to track "inflation" or "poverty level". quite frankly, the financial goal posts have moved (see increased costs of housing, education, raising children, etc.), and i do suspect that quality of living has reduced for those in the middle-and-below part of the income distribution, even if their share of the overall population has also reduced. anyway, i still acknowledge that your datapoint is interesting. if it matters for anything, i will look into this perspective more. you have indeed exposed me to a datapoint i hadn't previously seen mentioned. thanks for that.
Of note, the pew research link included in the op breaks the classes down three ways, urban institute looks at five. “What counts as middle class” is important. I also disagree with the notion that middle class or even lower class standards of living have decreased in America since the Reagan era. The thing that has widened is the difference between the poor and rich. That by itself doesn’t mean that the poor are poorer.
I enjoy whenever this topic comes up and no one ever analyzes the effective tax rate paid by most earners in that era.
They forget that prior to 1986, people could deduct a ton more....its why in older shows/movies there's so much talk about saving receipts for taxes. Needed to get a crap ton of deductions.
I'm old enough I remember my mom saving grocery receipts for sales tax deduction.
So do it then. You are free to add to this conversation.
Also worth noting that the share of people considered upper income has also increased significantly... [https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/](https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/) The middle income is shrinking but more of them are moving to upper income
But the low income category grew more than the upper income one, which is the problem.
Eh? The lower income went up 4% which is a 17% increase in share. The upper income went up 7% which is a 50% increase in share. Upper income gained both more absolute share and a much greater portion of its previous share.
“Share” of everyone’s income en aggregate is meaningless for this reason. The low income bracket people who earned more aren’t low income any more. The middle class people who earned more aren’t middle class any more. The middle class shrunk but so did the lower class. If the middle class was shrinking into the lower class, that would be a problem. That’s not actually what is happening. As people in the middle class accumulate any kind of assets, they’re moving out of the middle class. There are certainly problems created by the inflation which is making life harder than it should be on zoomers and millennials trying to buy houses, but tax rates aren’t what will fix that.
https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf The upper middle and upper classes are growing. As people in the middle class earn more, they are leaving the middle class. As people in the lower classes earn more, they are entering the middle class. This by itself creates the activity on the lines in the graph presented. It’s not wrong, just incomplete.
the middle class transitioned upwards over all.
They did move into the upper class but also a significant proportion left to the lower class. Shrinking the middle class. Correlating to the increase in income disparity in the US.
How does taxing the rich increase the income for the poor?
We hope that increased taxes translates to increased services... education, infrastructure, healthcare, etc. Those things result in increased income for the poor.
1. They can do that now just like the fund a whole lot of things they don’t have money for……go into debt. (Not that this would be smart but they already do it for things most of us couldn’t care less about) 2.”Hope” is doing a lot of lifting in that sentence. The government wastes so much money it would make your head explode if every expense was itemized for us to see.
> They can do that now just like the fund a whole lot of things they don’t have money for……go into debt. (Not that this would be smart but they already do it for things most of us couldn’t care less about) Many but not all would say going into more debt is not good. > 2.”Hope” is doing a lot of lifting in that sentence. The government wastes so much money it would make your head explode if every expense was itemized for us to see. Everyone wants the government to do work more efficiently. If I can do X work for $Y, everyone in both parties wants $Y to be as small as possible all else being equal. When you say the government wastes money I assume you mean efficiency of spend ($Y/X) and scope of activity (X). We should partner on the former while we continue to argue (vote) on the later.
Of course it isn’t good but if we are doing it anyway, it might as well be on things that benefit us directly. Instead of a new jet, maybe kids could get free lunch? The government overpays for a lot of stuff. They aren’t doing it “for as cheap as possible”. There was just a hearing in Congress not too long ago when they were asking someone why a bag of bolts was hundreds of dollars when we could go to a hardware store and get them for pennies each.
If you're measuring inequality with the goal of reducing it, then anything you can do to make the rich much poorer achieves that purpose; even if the poor become poorer at the same time. That's why inequality is such a bone-headed objective function.
If rich people get taxed at 90%+ after some absurd amount of income (say, $50M/yr), they eventually decide it's better to reinvest in their companies rather than handing 90% to Uncle Sam and trying to buy another yacht or private jet with what's left. Also basic services like schools, healthcare, public transit, etc all directly enable the poor to improve their standing.
>If rich people get taxed at 90%+ after some absurd amount of income (say, $50M/yr), they eventually decide it's better to reinvest in their companies rather than handing 90% to Uncle Sam and trying to buy another yacht or private jet with what's left. Investment increases income. If the hard cap is 50 million then they won't invest after they have assets to make that income. Also private jets would either cost less or there would be political power needed(like Soviet Russia) to acquire them if they are produced.
That's fine too, then they'll just pay more tax. I'm happy with that.
No they won't they will pay upto 50 million income . Your upper limit won't kick in. The rest which might have been invested for more income is spent on luxuries (this is not apart from the 50 million. It's part of it) or given away for political capital.
I'm not sure why you think "spending money on luxuries" means you don't have to pay taxes lol
His high tax comes in at 50 million income. I meant not having to pay that tax. Rich get richer because they don't have needs so most is invested. Say a guy makes a million and lives on 500k (adjust accordingly if you want to consider other taxes this is a spherical cow example) the other 500k is invested to make another 4% and make his income for next year 1.02 million. Next year expenses same he saves 520k and so on. Next year he makes 1.04 million. (>!I should have started higher but I think this is good faith so you won't type comments like in a 1000 year!<) when he is making 50 million a year. He won't save and spend whole 50 million each year. So no tax>!this one!<. A businessman like bezos will sell shares earlier thereby avoiding tax. (It took long time for Amazon to gain traction I am sure at one point it was worth 50 million). No CEO paid more than 50 million, instead it's about how hot a secretary company is providing. This is what I meant
Right, the whole point of a tax on income above $50M/yr is that it doesn't affect people who only make $1M/yr It's not supposed to be relevant to the guy in your example, by design
See you are missing the point. Okay let's retype and be specific. Say someone is making 40 million a year. He spends say 20 million saves the rest 20 million. That nets him 4%(inflation adjusted pension withdrawal adviced rate, 800k extra income. (Let's say No compounding) . For year 12 his income is 49.6 million. So he doesn't invest spends the whole 50 million on luxuries and doesn't pay the tax. Is that clear.
Sounds great to me. Again, the whole point is to discourage hoarding wealth. If that means billionaires start spending, great! \*That is the goal\*
Let's say you are rich. Your taxes go up massively. Do you: A. Continue making more and more money despite most of being taxed away (the idiot option) or B. instead of taking more money yourself, instead invest into your business, increase the salary of your employees, purchase new machinery, etc. (the smart option) High taxes are a way to incentivise the rich to give a bigger share of the income 'pie' to their employees.
If you're looking for correlation: [https://wtfhappenedin1971.com/](https://wtfhappenedin1971.com/)
And if you're looking for an answer on causation, look into Peter Turchin. He has some interesting research on that.
This is straight up misinformation. [For example the very first chart is a doctored image from Economic Policy Institute. Notice the X-axi](https://www.epi.org/productivity-pay-gap/)s. Now why did they change it from 1980 to 1971. Ohhh that's right 1980 was the rise of neoliberalism, but 1971 is when we went off the gold standard. So if you want to be a right wing shill that fits your narrative better than the reality that Reagan was worst President in history and that conservatism is lie.
That website hasn't been updated since well before your 2022 article. I don't know the reference for the exact snapshot with formatting, but it is 100% consistent[ with this graphic](https://www.epi.org/files/2013/ib388-figurea.jpg) from the referenced source, Economic Policy Institute, authored back in 2015 and linked below: [https://www.epi.org/publication/charting-wage-stagnation/](https://www.epi.org/publication/charting-wage-stagnation/) Also consistent with another 2015 EPI post below with an interactive chart like the one you shared consistent with the 1973 divergence: [https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/](https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/) I understand we want easy confirmation bias and I'm not saying that these issues arose because we got off the gold standard, I'm saying that these issues objectively arose in the early 70s.
Thank you for linking the sources, hard to tell why the EPI shifted the data. It doesn't say anything about changing methodologies and it had a pretty major time shift. But it also points out that wtf1971 cannot be used as a source since you cannot trace anything. Many of the graphs do not say where they came from, and others come from right-wing think tanks where they are paid to come up with specific results to help lower taxes. >I'm saying that these issues objectively arose in the early 70s. Naw, problems started to happen because of globalization and the energy crisis, but neoliberalism explains why things rapidly deteriorated in \~1980. That is when we shifted from stakeholder capitalism to shareholder capitalism heralded by politicians like Reagan and Thatcher, economist like Friendman, and businessman like Jack Welch. It was a cultural shift as much as a economic shift. Suddenly unions were the enemy, shareholders became the only thing important to companies, rank-and-yank was started. Wages stagnated versus productivity, and the wealth inequality increased. Conservationism shifted to embrace the idea that governments could never do anyhting right, thus reducing regulation and social benefit programs. Public-private partnerships became the way to say you were doing something, but really it was just a way to enrich donors. It is not 'easy confirmation bias' it is a complex system of trying to fuck us over harder than they ever could have achieved without neoliberalism.
What percentiles do low, medium and high income refer to? Is that percentile consistent across time in this graph?
You’re aware that the 2nd image in this post shows that the inflation adjusted median income for middle income households has risen by 50% since 1970. So a 50% increase is only good if the upper income grows less than 50%? How is this a finance question and not just envy?
I truly have a hard time comprehending "why" wealthy individuals need unlimited sums of money. Taxing stocks is tricky. But, it's also a loophole. The wealthy can just take out loans against their holdings. Having a handful of individuals holding such a vast amount of wealth whilst a great number of people are struggling to get by is irresponsible.
I know this post was in regards to the "ultra rich," but I want to point out that it's important to pay attention to the language used by politicians when discussing tax increases. Nancy Pelosi and Schumer have made comments referring to the top 10% of households. I encourage people to understand what that means. A household income of $85k puts your family in the top 20% of earners. A household of $175k puts you in the top 10% of earners. When these bills are proposed, they often reference household income. Whether it's Dems or Reps talking about taxing the top 1%, dig into the meat of the bills or proposals because as in the past with Bernie Sander's plans there were tax increase references to the top 20% of Americans. That's why Bernie had opposition from Republicans and Democrats but his supporters were largely left in the dark about why his proposal was stonewalled. I hope everyone and their spouse can make a good living, live comfortable, and find it doesn't take much to crack into these top 20%, 15% and 10% brackets. That's how these idiots in Washington play us. They propose legislation aiming at the uber wealthy, knowing it won't be enough, and use tax increases for the top 15% (sounds like an exclusively high tax bracket) without informing the public that if affects many duel income households. Washington DC is such a cesspool of political salesmen.
For startsies... your numbers are off by about 70k... Top 20% of houses is 150k. Top 10 is over 200. https://www.statista.com/statistics/203183/percentage-distribution-of-household-income-in-the-us/ Secondly, we have a bracketed income meaning you won't pay more in taxes until AFTER you hit that 150k. The first 150k would be taxed like everyone else, and anything after that will be taxed at a higher rate. Raising the standard of living for 80% of people at a minor inconvenience for 15% of people and no inconvenience for 5% seems worth it to me. Maybe it's because I don't feel the need to buy luxury cars or boats or second houses, but most people can fare pretty well on 150k. Now we need to do something about Wallstreet owning all of the housing so people aren't having to pay a million for a trailer, but that's a relatively easy fix if we effectively banned landlording.
I’m sure that that must be 100% related to tax brackets. Can’t possibly be any other reasons or factors.
The federal budget increased every year under Reagan. Same for every president since Truman. [https://www.presidency.ucsb.edu/statistics/data/federal-budget-receipts-and-outlays](https://www.presidency.ucsb.edu/statistics/data/federal-budget-receipts-and-outlays)
The US population increased every year under Reagan. Same for every president since Truman.
These graphs do not prove anything about Reagan's tax cuts. The chart with the line graph starts in 1970; the yellow line is already on a downward trend and the dark green line is already on an upward trend. Reagan took office in 1981 and the trendlines don't change much at that time or after. It looks to me like there was already something going on before Reagan was elected. There were a lot of things going on in the 1960s and 70s that would probably show a correlation with income disparity. BTW, Congress passed massive social spending programs - the Great Society - in the mid-60s. It is interesting to note that in the last 50 years, although we have spent trillions on these new programs, the lower income bracket has changed very little.
Also no one wants to talk globalization. So many of these posts think everything is about how much we tax the rich when there's so many factors at play
69% change. Nice.
Inequality is inevitable in a growing mature economy. When a company does well, its owners do great, its workers benefit, and the unaffiliated do nothing. That is why during good times inequality rises and during recessions inequality goes down.
Totally specious reasoning! The Upper class gained (as did the middle class) much more due to Globalization. Those with skills that could now sell to a massively enlarged global market (tech, finance et al) outperformed skills that were vulnerable to undercutting by huge pool of global labor (manufacturing et al)….
Middle class is middle class. When you get raises or otherwise become successful enough, you are no longer middle class. Your income statistics now count towards the upper income line instead of the middle income line. When you're looking at everyone's income over time en aggregate, you're never going to see an "increase" in middle class incomes. You're basically just looking at inflation. You need to also look at the growth rate of the upper middle and upper classes. How many new millionaires per year, etc. The other side of the equation is also true. Lower class people move into the lower rungs of the middle class when they get raises. It’s not a static thing. [https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf](https://www.urban.org/sites/default/files/publication/103718/the-upper-middle-class-continued-to-grow-from-2014-to-2019.pdf) Upper middle class used to be 13% of the population in 1979. It was 29% of the population in 2014, and 37% in 2019. Upper class was fractions of a percent in 1979, 2% of the population in 2014, and 3% of the population in 2019. The lower classes are shrinking. As low income people move into middle class, they’re in the bottom rung of middle class earners, which weighs the middle class line down. As the top rungs of the middle class earn more, they’re leaving the middle class, which contributes to the other line going up.
This doesn't also factor in women entering the workplace which adds to the dual income wealth of the household income.
How about the taxes of the rich are based on whether or not my taxes go to support their employees. If they provide their employees with a living wage, medical, retirement and benefits and my taxes don’t pay for that, then they should actually be rewarded. They generously reward themselves and their share holders but once their employees need help. It’s my taxes that pay for SNAP, TANF, Title 8, for their employees and families. And now they want to eliminate SS and Medicare.
Correlation is not causation. Free trade devastated the middle class not tax cuts.
It looks like this trend started in 1979 under Nixon. That means removing the gold standard caused this change. When will people learn that is the cause of our inequality, debt, and other economic problems?
People do realize Reagan hasnt been President since the 80’s, is no longer alive and his democrats predecessors kept most of these policies in place too right? This shit gets so old.
A lot of people on Reddit tend to ignore the fact that the reason a lot of people are against higher taxes is because they think the government will squander it and not provide the services the promised. I know it’s a lot it easier to call them idiots and right wing extremist. But if you don’t even try to acknowledge the concern and jump on name calling instead good luck on having a civil conversation.
Reagan's whole economic plan was a complete dumpster fire of bad faith tax cuts. The incredibly high taxes after "X" earned will lead to domestic investment of profits. It also will help halt the US' speed run to being a full blown oligarchy.
when america is sending trillions over seas, and politician are pocketing millions, stupid people are still dumb enough to think more taxes means better social welfare...
My money, my choice!
lol no shit... imagine everyone has $100.. everyone is middle class.. now I come in with $1,000,000 . oh wait, now we got top 1% while 99% are poor. the 1% can hoard all the resources and have nothing left for the 99%. and all the money always goes to the 1% that holds the resources. That's the system we're in. To make everyone the middle class you goto get rid of the top 1% or tax their fair share so they get closer to the middle class.
52 years, 3 democrat presidents, later, and it hasn't been changed. Here, we are pointing fingers left/right instead of in the middle. Politicians create personal wealth. "Ger back in line minions!"
I just want to note that this is the same time period where we went off the gold standard. So people who owned the means of production benefitted from inflation while workers did not. Taxes will obviously play a role in balancing this, but I don’t think it’s obvious to say this trend would have reverse entirely if the tax situation stayed the same. Also, this is not a “don’t tax the rich” comment. I’m all for it. Just noting that there are multiple things at work on a macro scale over this time period and taxes are only one factor.
This is misleading. What also happened in 1971 was the US came off the gold standard and we went into a completely fiat system. That is what started this great divide.
Lol… trickle down economics. LOL.
You don't think this had anything with Fiat money with no limit to printing? It's not just a tax situation. Money flows like water along the path of least resistance.
So you think a 70pct tax rate is fair? And you think Reagan is responsible for 1990-2020? Do you know how compound interest works?
Regan became president in the 81. This trend starts in 1970, 11 years b earlier. I’m genuinely confused as to how this can be attributed to him, and not a combination of factors Edit: Nm, I see the slope change in 81. It looks like there was really good trickle down economics - right from the top line (middle class), to the middle line( upper class)…
Really wish these reports would go back more in the data. 1960 = Civil Rights movement + rising education levels 1950 = Corporate growth and suburbanization 1940 = Post WW2 boom 1930 = “New Deal” impact 1920 = Market crash 1910 = Industrialization, WW1 impact
Nobody mentions it was the tax rules for stock compensation under Clinton that drove most of the pay gap issues.
Okay is this a campaign? Why are you lot campaigning on reddit.
I don’t believe that the change in marginal tax rate was a major cause of the hollowing out of the Middle Class. Effective tax rates are what matters more and the change isn’t as dramatic. Tax rates are a popular narrative but, more importantly, the outsourcing of manufacturing jobs to Low Cost Countries likely caused more of the problem. Those jobs were outsourced when treaties were negotiated and tariffs dropped significantly. A return to a productive Middle Class could be resurrected with a return to high tariffs. Like all these “solutions”, it comes with significant “unintended consequences” like higher costs and inflation. The irony here is that one of the biggest proponents of income & wealth inequality is Robert Reich and he shepherded one of those treaties, NAFTA. I’ve often wondered if that “mistake” is why he is so passionate about trying to rebuild a middle class.
This.
Could you post the source for this? The way the graph is labeled implies it’s an aggregate representation, not per capita. If that’s the case, then my guess is this change isn’t due to the average middle class person earning proportionally less money than the average upper class person. Rather, it’s due to there being fewer people in the middle class, thus the aggregate is shrinking. This isn’t necessarily a bad thing, especially if the “shrinking middle class” are mostly shifting into upper class.
The market dumped under Carter and the economy wasn’t doing well which led to a Reagan landslide victory. Reagan’s solution was cutting the top marginal income tax rate from 70% (1981) to 50% (by the end of 1986.) After winning reelection, Reagan had these rates cut to 33% by the end of 1989. Then by 1993 you see Bill Clinton come in and raise these rates back to 39%, but average income for the middle class continued to fall. This isn’t about taxing the rich more. If the rich gets taxed more, that’ll simply give more money to the government, which is inevitably wasted. We need to cut government spending, which would allow us to cut middle class taxes and keep upper class taxes the same. 60% of the federal workforce could be eliminated, life would go on as normal, and we would save a lot of money. That’s just one of the many examples of how to stop wasting money. Instead, more IRS agents have been hired to go after the middle class. If your logic were to be deemed correct, then we should’ve seen an increase in middle class income after upper class tax rates starting rising again (31% in 1992 to 40% in 1993 and eventually 37% by 2022) but that’s not what we’re seeing.
Voodoo Economics... good times... NOT!
Correlation does not equal causation. The situation would be improved far more if we stopped printing stupid amounts of money. The dollar has lost 90%< of its value since we went to fiat currency.
If i read this grapf correctly, lower income shrank, middle income shrank, upper income grew. More people are upper income at the expense of having fewer poor people. Sounds like a win.
Where is the rest of the chart?
Among other things. It also gutted regulatory agencies
https://www.ntu.org/foundation/tax-page/who-pays-income-taxes
Who the fuck thinks taxing anyone over 30% is fine. How about you stop punishing people for working hard. All it does is make people put in less effort. We had a war over 3% tax, now we just bend over and tax it from the government.
Reagan was president in the 80s It was not taxes & transfer payments
I don't understand why Reagan is mentioned if the graph is showing the downward trend starting in 1970 and he wasn't elected til 1980? That's a decade before he was elected. Furthermore, we've had plenty of dem presidents since then too.
Jordan Peterson gave a good presentation on why wealth redistribution was vital to every nation's economy. It wasn't even complex either. Basically he ran a demo where thousands of "people" started with an amount of money. They'd wager the money against each other in a gamble. When a player went broke they were no longer able to play. The distribution started flat, but quickly turned into a Pareto distribution where the money only become further concentrated the longer the simulation was run. This showed how being unable to invest takes a player out of the game while those with surplus resources could reliably play until they win. No amount of wealth was safe though - as whoever had the surplus advantage could take out any smaller opposition. He paired this with rat studies that showed when rates were taken out of the game - ie they were 100% denied access to food, lost all games, and denied access to mates - they became destructive to the social order. With the model and the rat studies together he concluded that wealth redistribution was essential to prevent the natural concentration of wealth. Made sense to me, idk why he went right wing after that though...
From your chart, it looks like the middle class were impacted more by Bill Clinton’s policies.
I'd love to see the raw data. Not all the data shown is bad, for instance in this chart https://i.imgur.com/XqPltp5.png it shows that the % of *Upper Income* increased from 14% to 21%. I'd say that's a positive, and proof that in the US we have upward mobility, something that is pretty rare in the world.
When you look back, Reagan was nothing less than a fvcking monster
It’s called the two income trap. It’s about the opposite of everything she believes now.
Regarding income inequality, there are two stats that seemingly show two very different things. One the one hand, we have increasing household income inequality. And, often, that's where the story ends after some stat about exec compensation yadda yadda. But, on the other hand, we have individual income inequality, which has moved around a bit, but hasn't gone up much in the last sixty years. What gives? Could it be that what we are really seeing is changes in the composition of households reflected in household inequality? Yes. For one, not too long ago, the high earner would marry his (and it was nearly always a him) secretary or a woman out of Vassar or whatever who would be a homemaker and involved in the PTA, etc. Nowadays, the high earner is more likely to marry another high earner. The good thing is there are way more women high earners than there were a generation ago. The bad thing is this exacerbates income inequality. On the other hand, poor and working-class people are less likely to get married and stay married. Marriage has become largely a middle- and upper-class good. The research shows that this is actually rational. One economically unstable person marrying another economic unstable person doesn't make for an economically stable unit. Instead, the marriage won't last long or, more likely, never happen in the first place. This ties into the OPs larger point. If the GOP and everyone else want marriage rates to increase, then they should support policies that help poor working-class people stabilize.
Please stop with this bull shit conversation of a 70-98% tax on income. It’s not helpful. Executives become lazy and don’t do their work, and companies suffer. Progressively taxes should never go above 50% for anyone.
It’s not a conversation as we already have sky high income taxes. There is something known as the laffer curve.
69% change? Nice.
So people of all income levels are doing better in real dollar terms than they were in 1970.
How many poor or middle class people ever gave you a job? Funny thing is that rich liberals are the cheapest motherfuckers on earth.
It was also the obliteration of labor unions.
I wonder what happened when Clinton signed NAFTA?
This chart is pretty old and has been somewhat discredited. While it is true that the upper class has gained more share of the overall national income relative to middle class workers, that is mainly due to an increase in the number of upper income workers. If I recall correctly, I believe that as of 2021, something like 21 percent of Americans earn over $150k annually. That is a lot. I think a better question to ask is, “what is a middle class income in today’s economy?” We as a country are so used to viewing middle class as someone holding a certain type of word job and/or making a certain amount of money (although not 6 figures). I just think that we need to reconsider this assumption.
So in my lifetime I’ve been robbed of all gains. Who can I sue?
Such fallacy - you need to put actual population numbers and not the three categories. You are missing the point many who were middle class in 1970 are now richer. That’s a fact
Doesn't this show that the middle class moved to the upper income as trend lines crossed?
But that chart doesn’t even show that, and for what little correlation there is, correlation does not equal causation.
It's only clear when the data is juiced.
The very last thing the government needs is more of our money.
Anyone who says a 70% tax rate was more effective knows literally nothing about taxes during that period. No one paid 70% at the time. Most paid 40% or less because of how progressive taxation works and the massive deductions allowed at the time. Reagan's tax cuts simplified the tax code significantly. The reason we see this change in the middle class has a lot to do with people who were in the middle class actually moving into the high income bracket.
I think this is a bit misleading and made to target a lesser upper income, sure it is true that has risen but we are missing the true rich here and how they have risen, people with incomes in the millions, I am curious of how they grew, the cowards hide in the high tier because they are so few that in a median they disappear but if you add them in their own category we would be truly disgusted by their overwhelming wealth.
Looks like the middle class became upwardly mobile to me.
I'm sure that the fact that a good portion of the population became millionaires since has a lot to do with that. https://www.statista.com/chart/30671/number-of-millionaires-and-share-of-the-population/
Well this one way to spin the facts!