Re: The American Election
Posted: Mon Nov 03, 2008 3:59 am
When talking about taxes and "spreading the wealth", I think it's interesting to take a good look at the numbers.
Between 1979 and 2005, the top five percent of American families saw their real incomes increase 81 percent. Over the same period, the lowest-income fifth saw their real incomes decline 1 percent.
There is a high and increasing income inequality in the US. The top 1% population has an income equal to 45% of the bottom earners (in 2004).
See more numbers for example here
http://en.wikipedia.org/wiki/Income_ine ... ted_States
There are a couple of official institutions which give some numbers to study as well, like:
http://www.census.gov/hhes/www/income/h ... f03ar.html
This very large inequality is what makes talking about tax plans difficult. But once you understand the numbers a bit, it will place the fear of some "middle-class" Americans for higher taxes into a bit of perspective. The crucial piece of information is the large inequality. Let's just assume that the amount of money needed to run the country (that includes building roads, financing the army, health care, etc) stays the same. (in reality tax revenue will have to increase to pay for paying back the country's debts and the population getting older, retiring, etc)
A tax cut for the richest 1% (as Bush did) means a huge amount of tax revenue is missed. A tax cut for the lower incomes has a very small influence on the tax revenue. Now it's funny to hear an average Joe talk about being afraid of redistribution of wealth. So he might vote Republican, because in general the Republican party is for lower taxes (especially for the rich). But if you look at the income distribution, you realize that the benefits of those lower taxes will almost all go to the very rich. The lower income groups make so little money, that increasing or decreasing their taxes doesn't make much difference. In other words, from an emotional perspective, you can be mad at your poor neighbor who doesn't make much money and doesn't pay much taxes, while you do. But from a broader perspective, the only way to be able to run the country, is by increasing taxes on the richest people.
Why so many people seem to think that a progressive tax system is wrong is difficult to understand, considering these numbers. Why is Joe the plumber so afraid of the tax increase from 35% to 39% for the amount of money he might make more then $250.000? (Obama's plan)
Then there's the second problem of such a large inequality. Having a very small group of very rich individuals and corporations owning almost all the money in the country brings along a great risk for the democracy of the country. Money equals power and influence. And corruption. Just look at the 38.000 well-paid lobbyists in Washington. And the huge influence of large corporations on the legislative process.
Between 1979 and 2005, the top five percent of American families saw their real incomes increase 81 percent. Over the same period, the lowest-income fifth saw their real incomes decline 1 percent.
There is a high and increasing income inequality in the US. The top 1% population has an income equal to 45% of the bottom earners (in 2004).
See more numbers for example here
http://en.wikipedia.org/wiki/Income_ine ... ted_States
There are a couple of official institutions which give some numbers to study as well, like:
http://www.census.gov/hhes/www/income/h ... f03ar.html
This very large inequality is what makes talking about tax plans difficult. But once you understand the numbers a bit, it will place the fear of some "middle-class" Americans for higher taxes into a bit of perspective. The crucial piece of information is the large inequality. Let's just assume that the amount of money needed to run the country (that includes building roads, financing the army, health care, etc) stays the same. (in reality tax revenue will have to increase to pay for paying back the country's debts and the population getting older, retiring, etc)
A tax cut for the richest 1% (as Bush did) means a huge amount of tax revenue is missed. A tax cut for the lower incomes has a very small influence on the tax revenue. Now it's funny to hear an average Joe talk about being afraid of redistribution of wealth. So he might vote Republican, because in general the Republican party is for lower taxes (especially for the rich). But if you look at the income distribution, you realize that the benefits of those lower taxes will almost all go to the very rich. The lower income groups make so little money, that increasing or decreasing their taxes doesn't make much difference. In other words, from an emotional perspective, you can be mad at your poor neighbor who doesn't make much money and doesn't pay much taxes, while you do. But from a broader perspective, the only way to be able to run the country, is by increasing taxes on the richest people.
Why so many people seem to think that a progressive tax system is wrong is difficult to understand, considering these numbers. Why is Joe the plumber so afraid of the tax increase from 35% to 39% for the amount of money he might make more then $250.000? (Obama's plan)
Then there's the second problem of such a large inequality. Having a very small group of very rich individuals and corporations owning almost all the money in the country brings along a great risk for the democracy of the country. Money equals power and influence. And corruption. Just look at the 38.000 well-paid lobbyists in Washington. And the huge influence of large corporations on the legislative process.