US Income Inequality

Kuros

Rookie
Jun 25, 2011
550
69
0
Louisville
The GINI coefficient measures income inequality in a given country or locality. The lower the GINI coefficient the more equal income across the country or locality.

gini%20map%20large.jpg


US compared to other countries. Red countries have greater income inequality, the blue countries less.

gini%20map%20twotonefull%20pos-thumb-600x302-63701.jpg


Source
 
The GINI coefficient is based on data that is pretax and doesn't count gov't transfer payments such as SS and medicare and the like. So, rich guys income is not adjusted for the taxes they pay and the data for the low income people doesn't reflect the money and benefits they get from the gov't.

Which is not to say there isn't any income inequality, of course there is. But it is somewhat overstated. They changed the way they collected data for the GINI in 1993, so the results are somewhat skewed for data before then compared to after. And the data collection in one country may not be the same as in another, so comparing 2 countries may not be an exact indication o actual inequality. And in many cases, the total amount of income is not that great, so the inequality is less if only because there's less wealth to accumulate in that country.

I'm not going to say that income inequality isn't an issue, but I do think it's overblown by politicians who want to build support for raising taxes and redistributing wealth. They go for short term policies that get them re-elected rather than long term solutions that address the roots of the issue.
 
I've been told our governments CIA pays a lot of attention to the GINI coefficent

if so, i suspect they've good reason....

~S~
 
So we're all supposed to earn the same now? 'Income inequality' - a left wing tool to divide people for political purposes.

Fuck 'em.
 
The GINI coefficient is based on data that is pretax and doesn't count gov't transfer payments such as SS and medicare and the like.

THE above is actually a very valid complaint. The GINA coefficient does, however, Include Social security payments.

I'm not going to say that income inequality isn't an issue, but I do think it's overblown by politicians who want to build support for raising taxes and redistributing wealth. They go for short term policies that get them re-elected rather than long term solutions that address the roots of the issue.

I don't think it's really overblown.

Our society depends on the gini coefficient to be within a range where the supply side (basically the investment classes) has enough money to invest AND the demand side (basically the working classes) has enough money to BUY what the SUPPLY side makes.

Right now, thanks in large part to unwise tax policies, the USA's GINA coefficient appears to be out of balance.
 
Last edited:
Our society depends on the gini coefficient to be within a range where the supply side (basically the investment classes) has enough money to invest AND the demand side (basically the working classes) has enough money to BUY what the SUPPLY side makes.

Correct. I'll add here that in any industrialized economy, the first of those (availability of capital) has never been a problem. No mature industrialized economy has ever experienced an economy-wide capital shortage arising from excessive equality.

(I'm not actually sure that's possible. In the extreme case of everyone having an exactly equal income, the aggregate savings by all households might provide enough capital for all investment needs. But whether that's true or not, even if there is a level of equality that is "too equal," no capitalist economy has ever come within shooting range of it in actual history.)

Capitalist economies tend to err on the other side, and all of them do, the variable being by how much. When the U.S. is more unequal in income than any other advanced economy, which is obviously the case, we're doing something seriously wrong.
 
You sure the Gini coefficient includes SS payments? From what I read, it excludes benefits that the lower incomes get, and does not discount taxes, so the rich guy's incomes look bigger and the low income guys look smaller than their real incomes. Can naybody show me a link where it says SS is excluded?

You do realize they changed the way the Gini is computed back in 1993, so it looks worse than it did up until then. Not so say we don't have income inequality, but it's not the big deal it's made out to be. Especially if you consider the huge advances in investments since 1980, when the market was at 800 and now it's 11,500 or so. That's a huge increase in wealth, earned by those who risked their money on startups and new ideas like Windows and PCs. And who got the lion's share? Te people who had the most money to invest, the rich people. No big mystery about it, that new wealth did not come at the expense of anybody else either.

Unwise tax policies, what would that be? You know why Buffet pays a lower tax rate than his secretary? It's cuz most of his income is capital gains and dividends, which is taxed at 15%. I see that Obama wants to raise that up to about 23% in total, does anybody really think you can do that without economic consequences? Especially when there are so many other countries with more advantageous business climates relative to taxes and regulations and everything else. If that tax change goes into effect, you can plan on one hell of a bad depression.
 
  • Thread starter
  • Banned
  • #9
The GINI coefficient is based on data that is pretax and doesn't count gov't transfer payments such as SS and medicare and the like. So, rich guys income is not adjusted for the taxes they pay and the data for the low income people doesn't reflect the money and benefits they get from the gov't.

Which is not to say there isn't any income inequality, of course there is. But it is somewhat overstated. They changed the way they collected data for the GINI in 1993, so the results are somewhat skewed for data before then compared to after. And the data collection in one country may not be the same as in another, so comparing 2 countries may not be an exact indication o actual inequality. And in many cases, the total amount of income is not that great, so the inequality is less if only because there's less wealth to accumulate in that country.

I'm not going to say that income inequality isn't an issue, but I do think it's overblown by politicians who want to build support for raising taxes and redistributing wealth. They go for short term policies that get them re-elected rather than long term solutions that address the roots of the issue.

I found some support for this in wiki:

Income in the United States is counted before benefits, while in France it is counted after benefits, which may lead the United States to appear somewhat more unequal vis-a-vis France.

Also important: GINI coefficient measures income only, not wealth.

Wiseacre said:
Unwise tax policies, what would that be? You know why Buffet pays a lower tax rate than his secretary? It's cuz most of his income is capital gains and dividends, which is taxed at 15%. I see that Obama wants to raise that up to about 23% in total, does anybody really think you can do that without economic consequences?

Simpson-Bowles would've unified the rate for capital and ordinary income, raising the marginal rate on the former and lowering it on the latter. Obama should've unified capital and ordinary income.

The best argument for a favorable LTCG rate: the income is spread out over time, so upon realization of income, it shouldn't be taxed at the full rate. I understand this. But at the same time, we should tax passive income at a higher rate, because sweat labor should be favored over capital investment. By my calculus, this means capital gains rates should be even with ordinary income. Note that unifying the characterization of income also simplifies the tax code.
 
If you equate capital gains income with ordinary personal income for tax purposes, you are in effect disincentivizing investments here in the US. I can't say this often enough, we live in a global economy, and if you do not incentivize investments here then all that money WILL flow elsewhere. Make no mistake, there IS an economic consequence if you do that.
 
If you equate capital gains income with ordinary personal income for tax purposes, you are in effect disincentivizing investments here in the US. I can't say this often enough, we live in a global economy, and if you do not incentivize investments here then all that money WILL flow elsewhere. Make no mistake, there IS an economic consequence if you do that.

Yes, we get it. That's why nobody in this thread has proposed the high tax rates of the Eisenhower-Nixon years. But, I'm sorry, we disagree on the level of optimum taxation. I think we were very close to that in the Clinton years.
 
If you equate capital gains income with ordinary personal income for tax purposes, you are in effect disincentivizing investments here in the US. I can't say this often enough, we live in a global economy, and if you do not incentivize investments here then all that money WILL flow elsewhere. Make no mistake, there IS an economic consequence if you do that.

Yes, we get it. That's why nobody in this thread has proposed the high tax rates of the Eisenhower-Nixon years. But, I'm sorry, we disagree on the level of optimum taxation. I think we were very close to that in the Clinton years.


Things are not the same as they were when Clinton was the president. Remember animal spirits, irrational exuberance? Well, we ain't got that now, not even close. We could have those higher rates then and still grow the economy and create jobs. But not any more.

If we can get back to that kind of growth, I'd be more than willing to start inching up the tax rates. But not before, and besides, I want my gov't to spend the money they get now much more wisely and effectively before I give 'em one more nickel of extra taxes.
 
Yes, we get it. That's why nobody in this thread has proposed the high tax rates of the Eisenhower-Nixon years.

Very well, then let me go on record as doing exactly that. The idea of high taxes on the rich as a disincentive to investment is false, and the fact that the U.S. economy in the Eisenhower-Nixon years outperformed the post-Reagan economy in terms of per-capita economic growth by more than two to one shows it.

As long as we make investments in real wealth creation (that is, the production of goods and services) fully deductible, a very high top marginal tax rate spurs investment rather than suppressing it. That's because investment in job-creating activity becomes, in effect, a tax shelter. But a highly desirable one.
 
Yes, we get it. That's why nobody in this thread has proposed the high tax rates of the Eisenhower-Nixon years.

Very well, then let me go on record as doing exactly that. The idea of high taxes on the rich as a disincentive to investment is false, and the fact that the U.S. economy in the Eisenhower-Nixon years outperformed the post-Reagan economy in terms of per-capita economic growth by more than two to one shows it.

As long as we make investments in real wealth creation (that is, the production of goods and services) fully deductible, a very high top marginal tax rate spurs investment rather than suppressing it. That's because investment in job-creating activity becomes, in effect, a tax shelter. But a highly desirable one.


Weren't the marginal tax rates back in the 50's upwards of 90%? LOL, you really think you can raise taxes that much in today's global economy with no blowback? You don't think everybody and his brother will try to find all sorts of ways to park or invest their money offshore, and that the people who are rich enough to do so will leave this country in droves?
 
Yes, we get it. That's why nobody in this thread has proposed the high tax rates of the Eisenhower-Nixon years.

Very well, then let me go on record as doing exactly that. The idea of high taxes on the rich as a disincentive to investment is false, and the fact that the U.S. economy in the Eisenhower-Nixon years outperformed the post-Reagan economy in terms of per-capita economic growth by more than two to one shows it.

As long as we make investments in real wealth creation (that is, the production of goods and services) fully deductible, a very high top marginal tax rate spurs investment rather than suppressing it. That's because investment in job-creating activity becomes, in effect, a tax shelter. But a highly desirable one.


Weren't the marginal tax rates back in the 50's upwards of 90%? LOL, you really think you can raise taxes that much in today's global economy with no blowback? You don't think everybody and his brother will try to find all sorts of ways to park or invest their money offshore, and that the people who are rich enough to do so will leave this country in droves?

Here's what the global tax climate looked like in 2005 for top marginal rates:

08_Chapter_6-23.gif


A 73-90% top Federal income tax rate would be madness. Remember, there are also local and state taxes.

Nevertheless, a 5-10% increase on the top rate would be quite reasonable, and needed to pay down the deficit.
 
Last edited:
...a 5-10% increase on the top rate would be quite reasonable, and needed to pay down the deficit.
The purpose of rate increases is fairness, not revenue. During the '08 primary debates Obama was asked why he wanted tax rate hikes if they lowered revenue, and his answer was "it's a question of fairness." Historically revenue rises after rate cuts and falls with rate hikes.
 
" Nevertheless, a 5-10% increase on the top rate would be quite reasonable, and needed to pay down the deficit. "


If we were really paying down the debt I'd go along with this. But we all know that isn't the case, lib/dems raise taxes for one reason and one reason only - to spend more money. When the gov't wastes as much money as they are on bullshit like Solyndra and high speed rail, and refuse to take money out of that area to pay for FEMA, that's when I know beyond doubt that debt/deficits are not their focus. When we have a 1.5 trillion deficit and you get maybe 70 billion in new revenue from raising taxes and you squawk like a plucked chicken, that's when I know you have no interest in paying down the debt.
 
murka will be blue soon.All the rich(and corporations) will leave and you'll all be broke. It's called duh fall of duh Mpyre.

the difference is we wont run to some third world country like your fat ass did....pick up some more shit.....your rent is due in a week.....
 
" Nevertheless, a 5-10% increase on the top rate would be quite reasonable, and needed to pay down the deficit. "


If we were really paying down the debt I'd go along with this. But we all know that isn't the case, lib/dems raise taxes for one reason and one reason only - to spend more money. When the gov't wastes as much money as they are on bullshit like Solyndra and high speed rail, and refuse to take money out of that area to pay for FEMA, that's when I know beyond doubt that debt/deficits are not their focus. When we have a 1.5 trillion deficit and you get maybe 70 billion in new revenue from raising taxes and you squawk like a plucked chicken, that's when I know you have no interest in paying down the debt.

Can someone please provide numbers to show how much impact raising taxes (as described) has on the debt (if we were paying it off).

I keep hearing about how we need to raise taxes to pay off the debt, but I have not seen any projections on what that really means.
 

Forum List

Back
Top