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US like developing nations in income inequality

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The USA is becoming more akin to Sri Lanka, Mali, and Russia in income inequality than it is like Sweden, Switzerland, or the UK. We’re starting to resemble a developing nation with huge gaps between the very rich and the rest of us, while the middle class loses ground.

Is it really wise to offer more breaks for the rich? Where’s the trickle-down from the last eight years?

clipped from www.dailykos.com

The Gini index (or coefficient) is a measure of income inequality, with 0 meaning everyone has the same income and 1 meaning one person has all income and everyone else has none. As Elizabeth Gudrais noted recently in Harvard Magazine’s Unequal America:

For the United States, the Gini coefficient has risen from .35 in 1965 to .44 today. On the per-capita GDP scale, our neighbors are Sweden, Switzerland, and the U.K.; on the Gini scale, our neighbors include Sri Lanka, Mali, and Russia.

Those some are becoming more numerous as a result of declining earnings. Real weekly wages (real: meaning adjusted for inflation) in the United States rose during every decade from 1830 to 1970. But since 1973, it’s been mostly a downhill slide, with the exception of the late ‘90s.

1964: $686

1974: $714

1984: $632

1994: $589

2004: $630

2008: $612

The wealthiest 1% of Americans earned 21.2% of all income in 2005
The bottom 50% earned 12.8% of all income, down from 13.4% in 2004
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Written by Monte

October 26, 2008 at 9:15 pm

Posted in Politics

TheTrueConservative: Higher tax rates and economic growth

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Intriguing! After the post just prior to this, Do lower taxes on the top 1% boost economy?, a comment appeared from Steve Roth at TheTrueConservative. He offers an outlook unusual on the web. Go check it out. Here’s a sample of his work, comparing taxes to changes in gross domestic product of nations:

clipped from trueconservative.typepad.com

Oecd_taxes_and_gdp_growth_scatter
If taxes have a profound effect on growth, you’d expect to see a trend from the upper left (low taxes, high growth) to the lower right. And there is the faintest glimmer of one—check out the trend line.
Over twenty years the difference between low (23%) and high (46%) taxers was [only] a profound several percentage points of GDP growth.
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Follow the link to the other chart in his post, which compares tax increase with GDP growth. Here’s his conclusion:

. . . there’s not a shred of evidence that taxes in the range of 30–50% of GDP are the catastrophe that American anti-taxers assert.In fact, since all of these stable, prosperous, successful countries tax in the range of 25–50% GDP, the strongest evidence we see here is that taxes (or actually, expenditures) in that range are necessary to that prosperity. [emphasis mine]

C’mon, “economic conservatives” – let’s face the facts: modern conservatism’s anti-tax passion is the emperor’s new clothes. Has it made <i>you</i> more prosperous? Of course not.

Let’s question the shibboleths that keep us apart, and get on with building a better society.


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Written by Monte

January 17, 2008 at 1:48 pm

Posted in patriotism, Politics

Do lower taxes on top 1% boost the economy?

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Since the days of Reagan, many have held that the economy can be stimulated by cutting taxes on the incomes of people who have the most money to invest. An insightful analysis at LaneKenworthy.net offers evidence questioning that assumption. Consider some intriguing observations on the data graphed below.

Chart 1: Note that at the close of World War II, Americans in the top 1% of income paid a marginal tax rate of 90%. Now, it’s about 35%. I’m sure most Americans don’t realize how profoundly this rate has fallen.

Chart 2: As the rate dropped, government revenue from this group (as a proportion of GDP) plummeted. Find ‘the late ’90s through 2001; compare them with ’02-’05.

Chart 3: Finally, note the comparison of the top 1%’s marginal tax rate with the growth rate of the national GDP. Note that it’s pretty tough to find a link between the two.

clipped from lanekenworthy.net
The following chart shows the top marginal rate and the average effective rate on the top 1% of taxpayers since World War II

The following chart shows federal government tax revenues as a share of GDP by the effective tax rate on the top 1%. Read the rest of this entry »

Written by Monte

January 16, 2008 at 7:50 pm

Posted in Politics

A daring proposal for peace in Iraq

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I don’t want peace in Iraq. I want much more than that. I want an entirely different American foreign policy.

I want to be a part of an America that inspires trust and leads by example. I want an America that supports human rights regardless who violators of them may be. I an America that spends as much on healing the world as it does on dominating it. I want an America that people of every nation can see as an indispensable part of world well-being.

But those are not the ideas under debate on Capitol Hill. In foreign affairs, the political buzz is mostly about which party can best do the same things that have always been done.  There is little creativity directed toward changing the status quo: the power-and-control assumptions that convince every generation that we must make war.

ethical way point 1

Astonishingly fresh, then, is a proposal drafted by Rev. Tony Campolo and Rabbi Michael Lerner. Signed by Christians, Jews, Buddhists, Muslims, and others of many backgrounds, it focuses on the ethics of world participation rather than narrow self-interest. I excerpt its three main points:

Ethical way point 1The remedy for wrong-doing begins not only with the act of changing the path (stop funding war) but also with apology and repentance (in the Biblical sense repentance conveys a return to one’s highest self after one has gone astray and betrayed one’s highest values). Therefore, we propose … Read the rest of this entry »

Written by Monte

April 26, 2007 at 10:48 pm