Percentiles

“Most if not all of the bloggers here at CT fall into the latter group. Given our lamentable lack of market research, I can’t say much about readers, but a reading of the comment section suggests that most of our readers also belong to this group.”

Isn’t the 80% level somewhere around $90,000/year household income in the U.S.? I don’t think that’s a good assumption. Many of the untenured in the academic system are dirt poor, and many of your commenters don’t to me seem as well off as you say the posters are.

I’ve been involved in a local Occupy group for a little while, and the only outright hostility (other than a shout of “Go back to Cuba!” from a car, which could have come from anyone) tended for us to be poorer people angry that the middle class were protesting even though they had so much more than they did. Even if the professional class decides to support “the 99%”, I don’t see any reason to assume that the majority of the 99% actually will.

Respectfully skeptical.

It follows that any significant improvement in public services, or in the position of the unemployed and poor, must be funded by higher taxes on the 1 per cent, the 19 per cent or both.

Well, no it doesn’t. Those things might require higher revenue, but higher revenue doesn’t require higher income taxes on some portion of the top 20%. What about economic growth, or higher taxes on a variety of things other than income?

And how much of a tax increase on the top 1% would it take, in a nation as large as the US, to make a significant difference in public services that would affect the top 19%?

Let’s also remember that for the upper percentiles of that top 19%, many of them have reasonable expectations of breaking into that top 1% bracket. Some of them will marry within the same economic class, and double their household earnings overnight; others will simply continue to augment their income with promotions and steady investments.

But #OWS has already achieved things that most people would have regarded as impossible a month ago, and for the moment at least, the momentum is still growing.

What are those achievements?

Here is a graph:

http://economix.blogs.nytimes.com/2011/05/24/where-do-you-fall-on-the-income-curve/

I don’t see how the Civil Rights movement did that.

The NYT graph highlights one point that i think needs to be reiterated. Currently, all the living former Presidents (and the current one) are in that <99.8%, in terms of income and wealth. A significant part of the Congress (2/3 of the Senate and no less than 40% of the House) are also in that <99.8%. Two-thirds of the members of the SCOTUS are in that <99.8% (and the other three are in the <99.1%). We are governed by the 1%. Any changes to the systems (tax, regulatory, price controls etc.) require a decision by those in the 1%.

That means that there needs to be a huge amount of pressure brought to bear on them, to act against their own individual interests. I really don't see this happening. More likely, we will keep getting tiny incremental bumps of illusory support and massive amounts of rhetoric. I am beginning to think we really are on our own, even those in the upper 19%.

I’m a single guy making $80k+ per year, so if I ain’t in the top 20% I’m definitely in the top 25%. And I want to be paying higher taxes because I’m one of those goofy liberal Christian types who actually thinks I (and we as a society) have an obligation to those whom Someone described as “the least of these.”

Just as soon not be spending quite so much on flying killer robots, though, kthxbai.

Two comments:

and more specifically in the identification of the top 1 per cent as the primary source of economic problems.

You could be more charitable as well as more sure of the direction of your causal arrow if you were to allow as that it was the top 1 percent who actively obstructing any solutions to our economic problems, whatever their source.

It follows that any significant improvement in public services, or in the position of the unemployed and poor, must be funded by higher taxes on the 1 per cent, the 19 per cent or both.

See my first comment above. But I keep harping on this one because it keeps getting glossed over: taxation is not only about who pays, but who benefits. Those so-called 1-percenters might justifiably complain that they pay, say, 60% of all taxes collected at the federal, state, and local levels. But this figure by itself means nothing; for example. if they pay 60% of all taxes but get 80% of all federal, state and local benefits then it is the poor who are effectively paying for the rich, not vice versa.

And if you look at all spending, I strongly suspect that this scenario is indeed the case.

Iow, when people reflexively object to paying taxes on the grounds that it’s going to “those people”, whoever they may be, what they’re really saying is that they never seem to get much back in terms of benefits. This seems to me to be a rational complaint – and a well-justified one.

spyder, did you mean to flip around those inequality signs? Naturally US revenue can be increased, and there are cuts that can be made to improve the quality of social services (Part D is the best law George W. Bush ever passed. That says something about the rest of them.) But that’s not going to really affect the hollowing out of the working class. In a world where your participation in society is your participation in labor, receiving handouts is always going to lead to a question about whether you are truly part of society. Expect to see marginally attached work become descriptive of a generation.

Completely agree with all of that. What is happening to us SoV?

It’s not you, it’s me :-)

Another way to look at the distribution game is this: from 1975 to 2010 U.S. inflation-adjusted GDP slightly more than doubled. In 1975, the median inflation-adjusted household income was about $43 K/yr. So if all other things had remained equal, median household income should now be almost $90 K/yr. Instead, last time I looked, it hasn’t even cracked the $50 K barrier.

Yeah, admittedly that’s a very rough calculation with no nuances allowed for changing demographics and changing household composition. All that and more is stipulated. But that calculation is still a pretty good one when it comes to bringing it home to the average joe how badly things are awry in the U.S. in terms of a hard numeric figure he can grasp with his gut. He can look at people who are making that $90 K/yr right now and all the stuff they have that he doesn’t, when by all that’s sane and rational and good about the U.S. and what he’s been told all his life he should .

Wasn’t there a survey a few years back in which 19% of respondents reported themselves to be in the top 1% income-wise?

I want to second Cranky and SoV: the wealthy (1%, next 19%) ARE acting in their own interest when they support higher taxes on themselves. (But, to complicate things….)

That’s assuming that the concept of “our” extends to children and grandchildren (literal or figurative). Maybe it’s also assuming a sense of “ourselves” as Americans or as Brits or as Australians or as Liberians or Cambodians, people who live and work and die in a place, in an intimate nexus (which includes a national government). Globalization, global investment, the very wealthy owning houses on several continents (to which they fly on private planes), and even among some of that 19% (including many academics) the phenomenon of cosmopolitanism: the top 1% and some in the top 20% can afford to watch much of the world turn to rubble, perhaps, so long as they and their families and friends can retreat to their well-protected fortress paradises, or secure neighborhoods and fine schools, or their healthy retirement portfolios. (Think banana republic cosmopolitanism.) What do they care if bridges crumble in Ohio and other parents’ kindergarteners go without in California? Their markets and investments are elsewhere now, as are their imaginations about their “place” in the world (and maybe their physical homes).

Back to thinking as if my previous paragraph didn’t matter. The top 20% should pay more federal income taxes (and SS), not just the top 1%. The funds are needed, that whole bracket has benefited, and it should contribute more to the system from which it has benefited more. But, one caveat, or rather, honest query: how many people in that 19% group are, say, 55 or older? How many of them have been in that category for only a few years? How many of them recently lost a significant percentage of their retirement portfolio? I’m thinking that it’s possible (given boom demographics) that a significant percentage of that 19% may only recently have entered that bracket and are too old now to reap many benefits from their recently larger salaries, not to mention too old to make up easily for the losses in their retirement investments — and who therefore could be actually hurt by much higher taxes, which might only force them to retire at 75 (if they live long enough) rather than 70. Really, an honest query. I’d like more information about the demographics of the 19%.

I find this site unexpectedly moving.

I read threads like this, and just feel like…

Some of y’all need to watch the classic Chris Rock skit about being rich, and being wealthy. I think the OWS stuff is cute, but a dead end. Wealth and opportunity needs to be redistributed, not precisely cash or jobs. We need government to actually fix stuff like electrical grid and bridges and regulate stuff like CO2 emissions. The money for this sort of thing is not going to come from millionaire taxes. It will come from higher gas/sin taxes. It will come from internal devaluation–i.e., prison guards, docters, and stock brokers won’t see higher taxes so much as that their fields shrink in employment or their pay halved–driving personnel and opportunities to more productive endeavors.

Tax jihadism is all about corralling off opportunity for the exclusive benefit of you and your friends, because you know, as Elizabeth Warren states, you didn’t get there by yourself. So fighting off the attempts to lift the ladder by the Clarence Thomases of the world (think about it) is about understanding that low taxes is about starving people you don’t like of the services they need to succeed.

So nuance is pretty important. It is not about morality or fairness. People care about unfairness, because it’s not enough that they succeed, but that other people fail, and notably favorable taxes are a Veblen good. Getting caught up in the language of scoundrels! is to concede the mortality of the movement. This movement should *not* be about raising taxes to some “fair” level on some “lucky” group. Even if you get those tax raises, you in no way impede inequality, because the growth in inequality is about unequal opportunities, not unequal pay.

I find this site unexpectedly moving.

I don’t. Rich people suck, even when they feel sorry for us. You want moving, go here.

I think the key word there is “unexpectedly”.

Okay. My first CT post, and it’s gonna be a long one. Here goes.

Background: I’m currently an engineering graduate student / research assistant. Most of my peers count our stipend as paltry, but even so I’m just above the 50th percentile for single payers (as listed in that TPC table linked via the NYT chart). If you count my tuition waiver towards income, I’m all the way up at the 66th percentile. If I decide to put a higher priority on “income” than on “interesting field of study” when I begin my career, I’ll almost certainly reach the 95th, and quite possibly the bottom rung of the 99th percentile.

And yes, I do “support the 99 percent”. And yes, I do agree that tax rates on the top 20% should be increased. Even if the increase in income inequality wasn’t primarily the result of government policy (and it wasn’t), policy should still adjust to account for that inequality.

But there’s a larger point I want to make: it is possible to support OWS from the political center, and still get pissed off at comments like #27.

I call myself a “progressive libertarian” – libertarian because I want to live in the world libertarians describe, where personal outcomes are solely dependent on talent and dedication; progressive because I do not believe we actually live in that world today. The practical result is that I always vote Democrat, and cheer for the likes of Paul Krugman. (And read CT!)

However, even when viewing things from the perspective of my inner Ayn Rand, I’ve always thought that the Tea Party-fueled response to the Great Recession has been incredibly foolish. The creation of a permanent underclass (the long-term unemployed and their children) will in time have political consequences. It might take decades, but the pendulum will eventually swing in the other direction – possibly too far in the other direction. Americans aren’t supposed to hate the rich simply *because* they are rich – instead, we long for the chance to become rich, ourselves. I believe if that paradigm permanently changes – if the dream dies, and the rich and poor begin a cycle of mutual antagonization – then we as a country are truly screwed.

Right now, I criticize the political status quo from the left; however, I’ve been saying for two years that in a couple decades, when the children of today’s unemployed come into power, I’ll be doing the same thing from the right … without ever actually changing my opinion. Some of the comments on this thread make me reconsider that timetable.

Here’s my plea to liberals in general, for what little it’s worth: Don’t make OWS about hating the rich. Hate those who are selfish, if you must. Hate those who mislead and manipulate the less fortunate, and I’ll join you. But if you turn “the 99 percent” into a rallying cry for the downfall of capitalism itself, you will lose most of your support, and the movement will fail. Please, don’t let that happen.

An extra $675 billion in tax revenues: assuming no Laffer effects at all from getting average (as opposed to marginal) tax rates up to 50%. $675 billion doesn’t even close the budget deficit let alone pay for new public services.

Faulty assumption: that, in the middle of a depression, the US needs to close its budget deficit first and only then think about improving public services. This is wrong, of course. It’s going to be a lot easier to close the deficit in times of prosperity when the extra taxes on the top 1% will be bringing in still more (as will the already-existing taxes on the other 99% for that matter), and public services spending will be much lower.

I agree with #32 (especially with long-term interest rates near zero), but I think that the 19% need to pay more taxes, too. The payroll taxes are horrifically regressive (especially for the self employed) and at least need to have the cap lifted, rates lowered, and maybe a “19% surcharge added”. Trying to run a family of four with 2 cars on US$60k to 80k has to be real hard, but those folks see a higher incremental tax rate than much of the 19. (My income is minimal, but I have no cars and no kids, so I _feel_ like I’m in the 19%.)

I think the right has given a gift to us with the 47 percent talk. Because we should be talking about what went wrong with income tax – why is it taxing at least 27 percent more people than it should have or was designed to.

The last time we had an income skew – not to mention a wealth skew – like we have today was in the 1920s. The income tax was relatively young, then. In Brownlee’s history of the income tax, he summarizes the WWI era as follows:

“The Democratic tax program, which was implemented in the
wartime Revenue Acts, transformed the experimental, rather tentative
income tax into the foremost instrument of federal taxation.
The Revenue Act of 1916 imposed the first significant tax on personal
incomes, doubled (to 2 percent) the tax on corporate incomes,
and introduced an excess profits tax of 12.5 percent on munitions
makers. It rejected a broadly based personal income tax—
one falling most heavily on wages and salaries—and focused on
the taxation of the wealthiest families. Among the provisions of the
1916 legislation was the elimination of the personal exemption for
dividends. Thus, the act deliberately introduced the double taxation
of corporate earnings distributed as dividends. In effect, the
1916 legislation embraced the concept of using the corporate and
personal income taxes as two different means of taxing the rich.
The architects of the Revenue Act of 1916 intended to implement
on one hand, through the personal income tax, an “ability-to-pay”
philosophy and on the other hand, through corporate taxation, a
“benefit” theory of taxation.”

The effect of this worked out as follows”

“In 1918, only about 15 percent of American families had to
pay personal income taxes, and the tax payments of the wealthiest
1 percent of American families accounted for about 80 percent
of the revenues from the personal income tax. Even without taking
into account the incidence of the corporate income tax on the rich,
this wealthiest 1 percent of taxpayers paid marginal tax rates ranging
from 15 to 77 percent and effective rates averaging 15 percent,
having increased from 3 percent in 1916.”

Something, however, shifted in the 1920s, when the GOP ran the executive branch. The composition of federal revenues shifted to income tax income – away from tarriffs, consumption and corporate taxes. But even then, according to Brownlee, the GOP passed legislation that deduced the first 3,000 dollars of income – which means that the income of the average American family wasn’t taxed at all.

Interestingly, the rate of growth of government in the 20s at the national and state level was pretty high – as Brownlee points out – just as the old source of revenue, tariffs, were collapsed. Free traders seldom talk about tarriffs as anything else but impediments to free trade, but, in fact, they were mighty generators of government income at the time. They were replaced by income taxes. Even though the GOP did not go as far as the modern GOP in increasing non-progressivity, still, the GOP favored cutting taxes on investments and corporations and shifting the tax burden to individuals.

The current income tax would be a much better thing if income up to the 80 percent level – up to 120 thousand, I believe – were simply exempted, corporate taxes were raised, tarriffs were reconsidered, and the tax on the wealthiest doubled.

This was the background to the 20s, when the GOP ran the executive branch.

Khan: “However, even when viewing things from the perspective of my inner Ayn Rand, I’ve always thought that the Tea Party-fueled response to the Great Recession has been incredibly foolish. The creation of a permanent underclass (the long-term unemployed and their children) will in time have political consequences. It might take decades, but the pendulum will eventually swing in the other direction – possibly too far in the other direction. Americans aren’t supposed to hate the rich simply because they are rich – instead, we long for the chance to become rich, ourselves. I believe if that paradigm permanently changes – if the dream dies, and the rich and poor begin a cycle of mutual antagonization – then we as a country are truly screwed.”

The first and foremost thing to remember about the Tea Party is that it’s a lying fraud. A bunch of Republicans started protesting *after* they lost the Presidency and Congress. While Bush & Co. were gleefully abusing power and looting like third-world kleptocrats, they were supporting him. And even in the 2008 election, McCain got 47% of the vote. Considering increased youth and minority turnout, and (assuming) that the GOP was really hurting with actual independents, it’s clear that GOP voters turned out quite enthusiastically to vote for their man – there were virtually no Republicans who had lost faith with the party due to the corruption which they’d be allegedly protesting against three months after Obama was sworn in. We’ve seen that before (the militia movement in the early 90’s), and will see that again in the 2020’s. The Tea Party was astroturf from the beginning, seemed to be made up of people who both didn’t have jobs and had enough money to go around protesting, and was warmly received by the elites. Compare WSJ editorials, Tea Party vs. OWS, and of course Fox News was basically a sponsor.

“The creation of a permanent underclass (the long-term unemployed and their children) will in time have political consequences. It might take decades, but the pendulum will eventually swing in the other direction – possibly too far in the other direction. ”

The political consequences have been very, very good for the GOP. They thrive on this, and seem to suppress votes enough to keep going. Even in 2008-present, they took only a very temporary set-back, and succeeded in blocking a lot of stuff by being sheer *ssholes, in public, with the backing of the elites.

Wall St pretty much got away with it, with only minor casualties, who both don’t matter, and whose property the winners bought for a government-subsidized song.

At this point, a serious, successful, violent and massive backlash *might* restore the balance.

The real issue politically isn’t the 99% vs the 1%, but those who think they will ‘win big’ versus those who are more realistic or pessimistic about their future (not just in terms of earnings, but in terms of future health problems and other unexpected liabilities). Perhaps the individualistic optimism, the feeling that ‘one person can achieve anything if he tries hard enough’ that is ingrained in US culture carries a big share of the blame, and more pessimistic, fatalistic people would vote for a more sensible welfare state and would be more willing to acknowledge the debt the super-rich owe to luck and to the contributions of others. In effect, the oligarchs can and do sell their model of society to the American public in the same way that people sell pyramid schemes.

On the culture war, here’s a question for CTers: how would you feel if the Democrats shifted towards not just the economic interests of the average American worker of limited education, but also her/his cultural attitudes towards religion, science, gender roles etc? Would you be happy to ally with the less enlightened among the 80% in order to achieve your economic goals, as the oligarchs have done? (I doubt that the top 1% as a whole are as socially conservative as the current Republican party, except for a shared reverence for the cult of the alpha male.)

“If I decide to put a higher priority on “income” than on “interesting field of study” when I begin my career, I’ll almost certainly reach the 95th, and quite possibly the bottom rung of the 99th percentile.”

I think that you’re deluded. Links like this one, for instance, put good engineering jobs at $80-100K. According to the figures that Harold linked to earlier, 95th income percentile is $200K. 99th is $500K.

But I think that this whole post is kind of wrong, too. As Walt writes above, what’s important is wealth, not income. You might object that if you tax wealth, it may not be a permanent source of taxes. But that’s OK. This is really a political problem in a much more immediate sense than it’s a tax-base problem. The basic problem is that the 1% control politics. Why, for instance, can the U.S. do nothing about global warming? It’s because we’ve been captured by 1% interests to a much greater degree than other countries.

Politics of the Netherlands can probably provide some answers to the ‘social attitudes’ question. They have one of the most socially liberal and most socially conservative population groups in the world, and yet somehow it all works out.

@Rich
Might be true if the emphasis on making money extends to jumping at management positions and abandoning a strictly engineering/scientific track as quickly as possible. Looking for jobs suited to the top 1%, and avoiding those that only involve “an interesting area of study,” will probably actually lead to an income in the top 1%. That’s how I interpreted the post. Good engineering jobs with a Ph.D., right now, probably start a little higher than $80K but not $250K in many fields. When people say engineering is a good field if you want to make money, they mean being solidly in the top 25% or so (assuming you pass your courses and get a job). But accounting is probably a safer bet if you can stand the boredom.

“how would you feel if the Democrats shifted towards not just the economic interests of the average American worker of limited education, but also her/his cultural attitudes towards religion, science, gender roles etc? Would you be happy to ally with the less enlightened among the 80% in order to achieve your economic goals, as the oligarchs have done? ”

No. Hopefully if the economy improves these individuals will start to care less about culture war issues. Besides in the long run these battles are already won.

“Bear in mind that this is household data, and that two incomes are the norm in the top quintile (a reversal of the old days when wives of upper-income men were the least likely to work). I see Marc already made this point, but I’ll repeat it.”

Yes, but…. if you’re planning to get a $100K/year job, then in order to be at the 95th income percentile, your spouse also needs to have a $100K/year job. How likely is that, really? Going into management from engineering may get you into the upper income categories. But in that case, why not just start with a business degree? It’s useless to actually know how to do anything if you want to make the real money. The whole aspirational “I’m a grad student right now but I’m almost surely going to be 95th percentile” thing seems to me to be not very realistic, and depends on a lot more luck than the poster seemed to think it did.

Maybe I misread the original post, but it did seem to focus on income distribution, not on wealth, and on income distribution as a way to support public goods. But the real public good would be getting the undue influence of wealth out of politics. I don’t think that raising the capital gains tax is going to do it.

Henri, I don’t think the point is that people should be demonizing the 19%; the point is more that the well-paid-professional-class 19% are just starting to realize their economic interests are not really in common with the 1%, or with the 0.01%, but more with the other 80%. And that the “we are the 53%” shell game is a ploy to muddy those waters.

But I’m not personally so sure it’s weak. I think the “lucky duckies” line about income tax is a dishonest but powerful attack, which is why they keep using it.

The first time I saw it in the wild was several years ago. There’s this American nonprofit called “Econ4U” that claims to be promoting public economics education, but in practice everything they do is slanted to promote right-neoliberal or libertarian ideas. They were running little multiple-choice quizzes in the slideshow of ads preceding the feature in movie theaters. One of the questions was exactly the lucky-duckie factoid, showing the percentage of households paying no federal income tax (excluding FICA, of course). The answer flashed up, 47% or something like that, and somebody in the audience shouted at the top of his lungs: “WHY AREN’T THEY PAYING ANY TAXES???” Direct hit!

Rich P: “…thing seems to me to be not very realistic, and depends on a lot more luck than the poster seemed to think it did.”

And especially with this economy, the likelihood of yet another downturn and the continuing probability of an actual second crash. Then factor in a world which has far faster depreciation of intellectual knowledge, companies locking in IP so that it’s harder for an employee/contractor to move elsewhere, and a global labor market. A $20/hr worker has strong pressure on wages; a $100k/yr worker has even stronger.

Taxing the rich plus putting a hatchet to the defense budget could finance the current U.S. public sector. It could not finance social democracy. If you want the latter (I do), then Obama’s no taxes for those under $250K schtick should be criticized.

Did numbers on this a while back, in here:

http://www.amazon.com/Political-Economy-Contemporary-Capitalism-Perspectives/dp/0765605309

Maybe what’s needed is some kind of consciousness raising for people in the top 20%–like that cop/nurse couple–about the way things really are and why they should think of themselves instead as “bottom 99%” and why they should want to work to make things better for the bottom 99%.

Maybe what’s needed is some kind of consciousness raising for people in the top 20%—like that cop/nurse couple—about the way things really are and why they should think of themselves instead as “bottom 99%” and why they should want to work to make things better for the bottom 99%.

Well, Republican troglodytes like Kasich and Walker are certainly helping to raise the consciousness of the cops. Ohio cops and firefighters are fighting mad about the anti-union Senate Bill 5 and hopefully will assure its downfall on the ballot next month.

Mortgages, mostly.

That sounds like a bad use of funds. But, how much is the average mortgage? I always thought it was cheaper than renting a comparable place long term. Are people really paying over $10,000 a month on mortgages for reasonably sized houses in middle America? That is more expensive than rent in London.

#62 Tim, I was agreeing with you, dude.

My broken record on this: the U.S. left, unlike those in Canada or Europe, have a fixation on progressive taxation, rather than progressive fiscalism (the impact of spending and taxes combined). It’s a defensive posture, along the lines of “we need more taxes, but you won’t have to pay them. It’ll be those other guys.” Big, not necessarily progressive taxes, including big VATs, finance social democracy everywhere but in Sweden. The latter has big income taxation, among other goodies.

2 points:

1) how many top-20%s think they are only doing well because the top-1%s are doing so well? obvious examples: corporate lawyers, high-end doctors and psychologists, various art world ppls, and so on.

2) i think a lot of top-20%s are more egalitarian on wealth than on power/respect. in today’s world, they have a privileged position, but if they look out at the OWS crowd, and a little voice inside them says “i am not sure these people care that i went to dartmouth.”

The policy of the 1% is economic cannibalism, but they are chewing from the bottom up, so if you are in the 19%, it is not you and yours, who are being eaten alive at the moment. Unemployment rates are not especially high among the 19%, and wages and household incomes remain fairly stable; it is still possible to have health insurance, and some prospect of retiring someday in something other than abject poverty.

There’s a lot of talk about the polarization of politics, about people adopting radical rhetoric and radical positions, but it is not the polarized radicals and name-callers, who have paralyzed our politics, all the synthetic made-for-cable-news Obama v. the House Republicans drama notwithstanding. The paralysis is in the combination of the complacency of the self-satisfied among the 19% and the extremely shallow discomforts of those, who still have a lot, but feel a bit of slippage, without having much of a diagnosis handy.

The weakness of progressive politics has long been the combination of its instinctive revulsion for political solidarity, with the lack of an institutional agenda. Liberals always suspect racism, when they hear expressions of political solidarity. And, then there’s the class condescension in attitudes toward, say, unions, or country music. At best, well-off liberals want a politics of “empathy”, which implies a certain distance from the afflicted, both socially and in the abstract.

It isn’t just a matter of kindling a bit of a feeling of political solidarity between the 80% and their sympathetic betters among the 19%, although that would be nice. The problem is that the 19% have an extremely shallow view of their predicament; their institutional agenda, such as it is, remains basically preservationist. Krugman — and I like Krugman a lot — Krugman exemplifies the spoken desire to avoid structural remedies, or even a real admission of structural problems. His call for fiscal stimulus carries the clear message that it doesn’t matter what is done to change the status quo.

I read the “We are the 99%” as being about solidarity, or a wish for a solidarity, which would entail the elite serving the whole, instead of themselves. It is not my thought that it involves a reliance on redistributive tax policy (although I, personally, favor a top rate of income tax of 70% or higher and corporate income tax rates of 50%). Like shah8 @25, it seems to me that the main issue is a fair society and a distribution of opportunity. The present policy of the 1% of cannibalistic disinvestment disguised as “austerity” deserves a more cogent critique from the 99% or the 19%.

J. Otto Pohl: people spend their money on rent or mortgage (which both also involve local property taxes), food, clothing, medical and dental bills, maybe things like daycare, soccer cleats or piano lessons for children, or a gym membership for themselves, or even the occasional concert or night out to dinner. We’re not talking yachts here.

A lot depends on where you live. My daughter and her partner (who don’t make anywhere near $100,000! in fact, they’re living on student loans) spend more each month on a teeny one-bedroom apartment in Brooklyn ($1400, and that’s considered “a steal” — they bargained it down from $1700 when NYC real estate suffered right after the quasi-crash, though now the landlord wants to make it $1700 again) than my husband and I do for the mortgage + property taxes on our house — and we pay a lot more on this house in Massachusetts than we would pay for it in, say, Alabama or Oregon (most locations), though a lot less than if we lived in the Boston or NYC area.

Remember, too, that $100,000 before taxes is a lot less after federal income taxes, SS…. Probably more like $70,000-$75,000 net. Though there are built-in advantages to most hirer salaries. Probably most people (certainly individuals; couples, this will vary) grossing $100,000 a year have jobs that have some good benefits, especially good health plans with the employer contributing a lot toward them. Still, medical insurance and such: a lot of money.
Btw, a lot a lot a lot of my husband’s income and mine in the last fifteen years has gone not only to college educations for our children (we’re still paying for that, actually) but to helping them out as grad/professional students or in emergencies. (Just yesterday: my daughter learned she needs some medical tests that her law student medical plan won’t cover. She has no money for them — so, there goes $700.00 we would have liked to put toward our ever-receding retirement.)
I’m truly not complaining! We’re doing fine — far better than I ever imagined when I went into academics. And my daughter is fortunate that she can turn to us, and we are fortunate that we can help her out. Just saying, it’s no mystery where a combined salary of $100,000 can go in a year.
Given the range of individuals/couples/families grossing $100,000 or so: even though I believe federal income taxes on the 19% do need to be hirer at some point, emphasizing the 99% does make more sense.
I do hope Khan will pick up your general attitude, J. O. P., and pursue the area of engineering that interests him rather than going after the big bucks.

My household is at roughly the 95th percentile and we’re solidly liberal, because of what we see as our enlightened self-interest.

“There was always an argument in terms of enlightened self-interest or class-interest, that it was better to give up a bit of (pre-tax and post-tax) income to maintain a stable and relatively egalitarian society.

That exactly. It’s not charity. I figure I’m buying something valueable (if rather intangible) with that money.

I’m absolutely furious at those morons at my general income level and above who have drunk the Randian cool aid. They’re going to blow up something that works really freaking well for us. IDIOTS. These are people who think FDR was awful. The New Deal & the like saved American capitalism and made their lives possible. But no, they hate him.

Big, not necessarily progressive taxes, including big VATs, finance social democracy everywhere

This is silly. Before advocating this, please make sure you already have something that looks like a ‘social democracy’: socialized medical care, free childcare, free higher education, at least 2 years of unemployment benefits with free professional training, etc.

But since no one promises any of that, this suggestion that ‘everybody should pay more taxes to finance social democracy’ rings a little hollow. In reality, most likely you’re going to be paying more to blow shit up in far away places.

But since no one promises any of that, this suggestion that ‘everybody should pay more taxes to finance social democracy’ rings a little hollow. In reality, most likely you’re going to be paying more to blow shit up in far away places.

Thank you for the dose of reality. This chicken / egg problem makes it extremely hard to get from where we are to social democracy. So in my opinion we should be focusing on jobs, inequality, and social mobility rather than on expanding the welfare state. For example, while I believe that socialized medicine gives by far the most care for the buck, I’d happily settle for the largely private Swiss system which, though expensive by world standards, is still much less so than the mess we have now.

Well I’ve been close to 95%ile (sinking downwards a bit post middle age). But, being rich is having enough savings/investments to know you’d be Ok without a job -not there yet, interest/dividends are less then 20% of salary (ugh). So where does it all go?
Housing. In my case paid for, but sunk a lot of capital.
College fees. Three kids in college. Two are in state schools, but in California that will soon catch up to private schooling costwise.
Transportation. Basic car commuting, nothing fancy.
Rainy day funds. What if one -or more of the kids can’t make get a job, and needs help? What if the job ends, and can’t be replaced? That also means finding health insurance…
Retirement. I’m fortunate to have a 100% match for 401K, so I’m sinking the max (matchable) $16.5K into it. Of course market returns the past decade have been dismal, roughly breaking even.

So, yes even those in the upper half of the 19%, are building some wealth. But its hard to build enough to feel secure.

79 I think your wrong. I applied for over 300 positions in the US including adjunct positions and did not get a single interview after I got my PhD in 2004. I had two scholarly books and a number of peer reviewed journal articles at the time. A few rejection letters basically told me I would never get a job in the US because I had no teaching experience and no amount or quality of publications could overcome that disability. At this point I am happy to remain overseas. I like Ghana. It is much more morally advanced than the US.

But, in my case there quite literally are no jobs for me at US universities even though I had done what all the experts say which is get lots of publications. It turns out publications count for absolutely nothing. The only things US universities care about is teaching experience, having a US degree (mine is from SOAS at the University of London), and being ideologically correct. The whole emphasis on publication turned out to be a bold faced lie. If I have gone to a US university, been a TA, had no publications, and been a support of some faddish left wing ideological trend I would have gotten a job in my home country. But, then again I am probably a lot happier in Africa then I would have been if I had pursued that track.

#78 Monsieur Vieuxtemps, the dilemma for citizens of the U.S. (and indirectly for everyone else) is that more dough for social programs and more for blowing shit up in far away places go hand in hand in U.S. history. All suggestions for remedies welcome.

“If health insurance is provided by your employer than the only necessity left is food.”

A quibble: typically the employee pays 30% of the insurance premium. If I didn’t have to go pick up my car at the shop right now, I’d look up mine for you.

But yeah, $100k-$200k/yr in household income is a lot (even here in relatively high cost-of-living Connecticut) and you should be able to save a bunch of money over time.

As others have said, family expenses are the big thing. I’m down at the bottom end of the distribution with J. Otto, but without kids it’s fine.

Smug liberals who think that the social democratic project is finished have obviously never thought about the immense work of social reproduction performed by unpaid household labor. A few years ago, it seemed like the next big fight for progressives might be over the extension of family leave/paid sick days/public child care. Obviously sidelined for now, but in the long run real social democracy is going to mean that a lot of child-raising (the costs and risks first, but a big part of the actual work too) moves out the private sphere.

Well, Mister Sawicky, with all due respect, sorry, but I don’t see “hand in hand”. There is no “guns and butter”, it’s either guns or butter. Nor do I see a “chicken / egg problem” here. Explain to me how I benefit from paying taxes, item by item; what will I be getting for paying more? Am I getting more predator drones, more bank bailouts? Well, thanks but no thanks. All that vague rhetoric about ‘financing social democracy’ and ‘the price we pay for civilization’ – that’s just insulting.

Reading various comments here, I’m struck by how askew things are. When SoV refers to dorms as cement blocks in the 70’s, I think, yes, whatever happened to the idea of a dorm room as a version of the scholarly monk’s cell? Less money invested in dorms that are like luxury apartments (I won’t even raise the perennial complaint about # of administrators) could mean more teaching positions from which people like J.O.P. might benefit, overworked current faculty (and most are overworked) might benefit, and most of all, our students might benefit. In today’s NYT a story about how hard it is for accomplished Indian students to find a place in an Indian university, so more are coming to US schools. Meanwhile, SoV and I probably had to do well in high school to get into a good college (with bare-bone dorms) back in the day, but the competition was nothing like what it is today, for the same reasons (if on a smaller scale) that Indian students can’t find enough places in Indian universities today.
And this is just a glance at a slice of the well-educated.
Production of wealth is one thing. Its allocation and distribution are another. We (the US, certainly) are very good at the former, inept at the latter.
Massive reorientation of our thinking and approaches is needed. Of what we dream for (but with lots of ambitious dreaming, still). As some have suggested above, a lot of the problem in the US lies with basing so much of our “common” wealth collection on employers and individual income.

First off, I’ll give John Q his market research assistance: I fit very squarely into the 19%, though like a lot among we fortunate 19%, I have spent the majority of my working life in the bottom 80%. (also: for J Otto’s question about what we spend it on – in my case I don’t spend it, my stack of money just keeps on growing).

Now, for my opinions, such as they are: There are poor people. They could benefit from some downward redistribution of resources, in various ways. Downward distribution can be a good idea, as the wealthy don’t need all of the resources. If you are in the 19%, then DOWNWARD MEANS AWAY FROM YOU.

Sure, John Q has made some nods here in the direction of public policies that burden the 1% while leaving the rest of the top 20% OK, but even to the extent that the details could theoretically work out that way (something of which I am not satisfied), there simply isn’t anywhere near enough curiosity about such details in movements like OWS for policies that thread that needle to have any hope of implementation.

Social justice is better served if the 99% vs 1% meme is treated as the literary metaphor it really always was. Trying to squeeze in a literal interpretation will throw it off the rails and end up preventing progress on assisting the truly needy. You either accept expansion of the pool of people to bear the costs, or you fail.

97 Isn’t it true that there aren’t enough people 1n the 1 % to make a difference whether we give nothing back or something back? It may mean little or nothing to them, but they are citizens and why not let them have the same access to public services as other citizens.

@43, @49, @53 – First, I was looking at the “Single” column of the tax policy center’s table, linked via that chart – I have no idea what kind of salary my hypothetical future spouse might make, so including married couples in the calculation makes no sense. And in that column, 94th percentile is 77k; 95th is 87k; 99th is 193k. Second, I should also mention that I’ll have a PhD in Aerospace Engineering, specializing in a relatively new and high-demand sub-field, and that the 99th figure is only reachable if I go into business for myself (or, yes, management) — but I keep meeting Aero PhDs who have done just that, and make significantly more than 200k. My own academic advisor has repeatedly floated the idea of going into business for ourselves, just to market an algorithm I’m currently developing. (I think it’s a pipe dream, for the record, but it still makes me optimistic about future opportunities.)

Granted, if the aerospace/defense sector gets cut significantly (until recently, a laughable notion), most of the high-paying options will be severely curtailed. Moreover, I’m not crazy about working in that sector due to my own political tendencies, which is why I make a distinction between money and interest. For me, the “interesting field” would be the space sector, or pure academic research. (And at the risk of going way off-topic, here’s the *really* unrealistic dream I have: I want to help make commercial space transport a profitable endeavor. It seems to be the only way to ensure a permanent human presence in space. Maybe I could make money of my own in the process, maybe not, but I’d still like to help.)

Oh, and in the spirit of the sub-thread spawned by J.O.P.: It’s probably because I come from a lower-middle-class family in Montana, but I live very frugally by the standards of my peers. Up until 2 months ago, I saved 50% of my R.A. stipend. Since then, I’ve moved to a studio apartment within walking distance of campus, which cuts my savings in half … but still.

Beyond all this hoopla about money and realism, I can generally agree with the sentiment from 43 that the biggest problem is the power held by the rich, not their income or wealth per se.

Miracle Max, what’s the point of taking peoples money at gunpoint to spend it on things they want anyway? Redistribution or efficiency are the two reasons for the state to provide services I can think of.

@71 and @106: Do these observations help explain the political quietude of many academics and many in the arts since the 80’s — however progressive, vocal, and active they may be especially on issues like gay rights — on economic issues? Both the dependence on the donations of the 1% to the institutions that sustain professors and artists, and the sweet savor of proximity to the glamor of the lives that the 1% lead, from swank openings at a gallery to dinner with a trustee or hopes of getting funded to attend that conference near Lake Como? Insidious co-optation?

“Big, not necessarily progressive taxes, including big VATs, finance social democracy everywhere but in Sweden. The latter has big income taxation, among other goodies.”

Well, not really so much. VAT is 25% on almost everything (even 21% on food, ofeten unrated elsewhere). Income taxation is high and corporate and capital low. Lane Kenworthy has pointed out that the tax system there (note, the tax system, not the tax and benefit system) is less progressive than it is in the USA.

“Did you read the post? Specifically the part that says, “households the top 1 per cent of the income distribution now receive around 25 per cent of all income, up from 12 per cent a few decades ago.” Seems to me that 10 percent of GDP would buy quite a bit of social democracy.”

Sure I did. Tax as % ge of GDP in the US is around 30%, a bit under maybe. In Sweden is more like 50%. An extra 10% of income (not GDP) doesn’t close that gap.

Which is all I’m saying, as Max is. You cannot buy Nordic style social democracy just by taxing the rich. For there aren’t enough rich people and they don’t have enough money to pay for it all.

Look, once you introduce meaningful welfare-state programs, financing them won’t be a problem; even the two skimpy American ones, Medicare and Social Security, are surprisingly hard to kill. And those are weak ones: if I’m 35, or even 45, do I really care what’s going to happen to me when I’m 67? The trick is to enact these programs, financing will come naturally. But the 1% guys will not let you enact them; their think-tanks and media channels work hard to scorn the “culture of entitlement” and promote “individual responsibility”.

In more traditional societies, this is one of the primary reasons people want to have lots of children.

True, it is the primary reason, but not for 67. They need help when they are 40.

@1o6, @107, etc.:
There seems to be a lot of focus in these discussions about whether the 19% do, or should, “identify” (in a cultural, not economic, sense) with the 1% and their tastes. That seems peculiar to me. I have to guess it is different in, say, England. (Look at the socioeconomic breakdown for the UK in Wikipedia, for example.)

Along the same lines, on the USIH blog there is a discussion of the word “bourgeois.” I remember being surprised in history courses to come across the idea that, for example, we only have the thoughts of middle class women in the nineteenth century, because they are the ones who kept diaries, and that “middle class” was defined as the daughters of doctors and lawyers–my college friends whose fathers were doctors and lawyers did not use the word this way.

There seems to be excessive room for confusion.

“There was always an argument in terms of enlightened self-interest or class-interest, that it was better to give up a bit of (pre-tax and post-tax) income to maintain a stable and relatively egalitarian society. But in an individualistic society like that of the US such arguments don’t go very far.”

I’m think arguments like that can go far in the US, and have done so, historically, in response to the excesses of Galtian individualism (think the Gilded Age and the age of reform that followed, think Hoover and FDR). One of the great disappointments of the Obama administration since its earliest days has been its failure to lead in reform and in educating a public ready to be educated. Instead, he praised Rep. Ryan.

On the whole, Americans do believe passionately in the virtues of a stable and relatively egalitarian society. (Commenters like James Refell@10 and Rob in CT@77 are not, I believe, unrepresentative.) Americans also tend to believe that ours already is such a society, even when it’s not. But as more and more people can’t help but face the reality of our economic inequalities today, they get angry and can be roused, as the generally favorable response by the public to OWS shows.

AF@114, JQ@97 et alia

With Reagan, the U.S. began a significant experiment in economics: reducing marginal income tax rates, particularly “at the top” and on capital income. There’s a detailed history to this experiment, which includes the decision to increase marginal rates on the bottom, through the increases to FICA (Social Security wage taxes), and to systematically eliminate the economic rents available to unions, by direct assault on labor unions and by de-regulation of transportation and liberalization of trade. De-regulation of banking aimed at destroying the savings and loans (aka thrifts). So, I don’t want to pretend for a moment that the reduction in income tax rates was some bloodless abstract policy, affecting only “after-tax” income, and with no cognizance of other policies to affect the distribution of income, “pre-tax”.

With our eyes open to the overall policy context, then, let’s consider for a moment the effects of radically reducing marginal income tax rates and rates on capital income. The classic argument, made by conservatives — notably Arthur Laffer and the WSJ editorial page crew — was that reducing marginal rates reflected simple truths of economics. The “marginal principle” proved that reducing “punitive” marginal rates would unleash additional effort, and, therefore growth. Laffer lent his name to the exaggeration that reducing rates would actually result in so much additional effort and growth, that government revenue might actually increase. A corollary generalization was pushed through the propaganda mills, to the effect that a tradeoff existed for a society, between the legally enforced equality of socialist oppression with its tendency to economic stagnation and the freedom of the free market with its prospect of wealth creation and high growth and opportunity.

Liberal economists, already mostly neo-liberals in the spirit of Charles Peters, offered a very weak rebuttal. They endorsed free-trade and de-regulation in principle, with no significant qualification. Most noticed the time-bomb in S&L deregulation only after it had gone off. They contented themselves with noting that the Laffer Curve was a bit of an exaggeration.

Now, thirty years later, reality has returned its rebuttal, and it has considerably more force than the idiot stylings of neoliberals like Brad DeLong.

Shall we roll tape? Shall we now apply our critical thinking skills to evaluating the outcome of the experiment? Shall we notice?

With typical weak-mindedness, the neo-liberals, rather belatedly have acknowledged the facts, say, of Piketty and Saez. In the abstract, they are willing to acknowledge that inequality of income and wealth have increased. With Hacker & Pierson, they can kinda, sorta penetrate to the insight that increasing risk is being imposed on the working and middle classes to support this re-distribution upward.

Where’s that tremendous economic growth, though? It’s in India and Brazil and China, and its benefits are flowing to the top of the food chain in corporate America and Wall Street. If Detroit is a wasteland, we are supposed to celebrate that China is no longer backward, and, of course, no one is to begrudge a billionaire his billions.

In the 19th century, the classical economists developed an analysis of the distribution of income, which focused on the concept of economic rent, the portion of factor income in excess of what was required to bring the factor into use. They lived in a Europe, whose economies, and politics, were still dominated by landed aristorcracies, whose incomes were, literally, rent. The dynamics and fundamental injustice of such arrangements were a felt reality. The idea that economic rents could be taxed — should be taxed, and heavily — without much affecting incentives and useful production was widely understood.

The immediate subject, though, is top marginal income tax rates. What is it, with the benefit of 30 years of hard experience informing us, we should expect from low marginal tax rates on very, very high earners and on capital income?

What does it mean for someone making $300,000 a year to work harder in order to earn $400,000 a year? What does it mean for someone receiving capital income of $2 million a year to make the effort to make a capital income of $5 million a year? What are their opportunities? What are their options? And, does the general public have any interest in seeing those opportunities taken?

I would suggest that the concept of economic rent is useful here, in several respects. First, it is a moral rebuttal to the libertarian claims of a Robert Nozick. Wilt Chamberlin’s income as a basketball player is mostly an economic rent, and only incidentally a matter of individual talent or effort.

Second, the possessors of large incomes, which is to say, the possessors of large rents, have an incentive to act conservatively in politics, even in the most pernicious causes. Witness the effects the skyrocketing rents enjoyed by the Koch brothers, whose fortune has multiplied in the shadow of peak oil, has had on our politics generally, or the politics of responding to global warming in particular. It is not quite as vivid a moral crime as that of the English landlords, who starved 2 million Irish peasants to death in the Potato famine — the event that prompted the repeal of the Corn Laws, an attack on their economic rents — but it may prove even more fateful.

Third, consider what a corporate executive can do with his power, to increase his income, when taxes do not make those efforts self-defeating. The CEO is not a superman, able to add hours to his day in response to lower marginal tax rates. But, he has great political power in a political machine, a bureaucracy running on the economic rents of a great franchise. What can he do? He can cheat. He can lie. He can screw the other stakeholders.

We don’t have to theorize. We can look to thirty years of experience with the effects of low top marginal rates. We can look at corporations, where rising CEO compensation sets off a vicious Klingon tournament, in which executives compete to have possession of the throne, even for a short period — and at rates of compensation running into the tens of millions per annum for CEOs, you can become independently wealthy in only a short period. Or, consider the joys of so-called “private equity” investments, in which a takeover is financed by heavy borrowing, the firm is stripped of value and the other stakeholders are left with nothing. These are the effects of low top marginal rates of income tax.

I submit that a top marginal rate of 70% or more is urgently necessary. Not just to finance more spending on infrastructure or social insurance or other public goods, but just to quell rampant abuse of private power.

When the 1% take 25% of national income, they are not doing good, to “earn” that money. There just are not many honest ways to make $10 million, let along $100 million, in a year.

HV@120

My calling it “an experiment” is a fictitious framework, of course, while yours is more of an organic argument. Even within an organic framework, though, there isn’t a single source of pressure, nor is the pressure constant. The predator-prey cycle is a more exact analogy, I would think, and that shows all kinds of dynamics.

You might think it somewhat ridiculous to call the sheep to arms, but the job of calling the wolves is tenured and already filled.

Harold, the top marginal tax rate (federal + state + local) already is roughly 65%.

Would you like to show your arithmetic on that one, stubydoo?

Cause I find it hard to get much above 50% and even if I throw in 10% or so for sales taxes, that still wouldn’t get much of anyone to your 65%

This is what I get in high-tax California:

Federal rate (top bracket, >379,150): 35.0%
California State (maximum rate): 9.3%
California mental health services*: 1.0%
FICA (employee +employer) 2.9%
Grand Total: 48.2%

*applies to incomes over $1 million

Federal rate middle bracket: 28%
FICA (employee) 5.65%
FICA (employer) 7.65%
California State 9.3%
Grand Total: 50.6%

State sales tax rate (Los Angeles county): 8.75%

So, basically, I get combined income tax rates maxing out around 50%. Interestingly, the peak in marginal rates is somewhere in the middle — for a wage earner who is still subject at the margin to Social Security taxes, but who clears the threshold for a 28% Federal income tax rate.

If I throw in sales taxes, maybe I can get an argument going for that top marginal rate scraping a 60% ceiling, but that’s really stretching the argument, I think.

Of the roughly 235,000 federal income tax filers for 2009, who reported $1,000,000 or more in adjusted gross income, 1415 paid no federal income tax at all! The average tax rate was less than 25%

Would you like to show your arithmetic on that one, stubydoo?

What they do now, even in federal tables, is counting the mythical 35%, that corporations (legal persons) supposedly pay, as a tax paid by stockholders. This is how they fake progressivity of the tax code.

Mankiw is famous for hackilicious and self-obsessed meditations on the awesome power of teh marginal rates to motivate behavior. It’s really bad economics. If teh marginal mattered in the way, and to the extent, he imagines, Harvard wouldn’t be paying him a salary, would it?

De-regulation of banking aimed at destroying the savings and loans (aka thrifts).

No, this is just wrong; the thrifts were already insolvent by 1980 (due to locked-in long mortage rates as inflation and short rates sky-rocketed.) The deregulation was an attempt to get around the existing problem without spending money, which failed disastrously.

mpowell: in what country do you get to deduct state and local taxes? not in the US! not for a while now.

Tim, don’t you work for a corporation? And you think that a corporation is a passive vehicle for passing profits on to shareholders? For real? For really real? Like, you’re not kidding?

“In any case, the intersection point here is capital gains. Eliminating the concessional treatment of capital gains (only a decade or so old) would have a big impact, and would be much easier to implement than a new wealth tax. The other big measure would be to restore the effectiveness of inheritance taxes.”

To create a prosperous and egalitarian society, to un-do the last 35 years of redistribution upward to the wealthiest 1 to 10% (an empirical matter where the line is drawn), you have to have a voracious one-time wealth tax. Somehow I think, in the context of Occupy Wall Street, that proposals ‘possibly do-able in Congress someday under our present rules for campaign contributions,’ are not what the discussion should be about. What if we had campaign finance rules preventing a now legal form of bribery? Isn’t that reform the baseline that creates any realistic possibility of egalitarian redistribution, such as ‘radical but possibly very popular’ proposals like a big wealth tax?

I had to look it up, so here’s a link to the Allan Grayson/P.J. O’Roarke takedown:

http://videocafe.crooksandliars.com/scarce/econ-101-alan-grayson-schools-pj-orourke

Oh, so then you don’t know how they work, then. That makes sense.

My calling it “an experiment” is a fictitious framework, of course, while yours is more of an organic argument.

Well, the last thirty years of economic policy wherein taxes have been reduced on the rich, regulations weakened and so on and so forth has been very much a test of a certain class of economic theorizing. So I think it’s entirely appropriate for you to call what happened an experiment.

And you’re also right in saying that we now have direct observations to show those theories just don’t hold up. Where your description goes off the rails I think is that the proponents of those theories never had the slightest intention of abiding by the results of those experiments.[1] I find this one particularly infuriating. I think we’ve talked about this one before, where back in ’93 prominent Republicans and conservative “intellectuals” of the day went on public record saying that if passage of the Omnibus Reconciliation bill – “the biggest tax increase in history” – didn’t cause a recession and/or systemic economic hardship they’d know their ideas were wrong and accordingly would resign from public life. Putting your money where mouth is, as it were, and a sound sentiment which I heartily approve. And it certainly sounded as if these guys were operating within the framework of some sort of experimental methodology (I had a much higher opinion of conservatives and libertarians back then).

Well, we know what happened with that one, don’t we? What we got instead after the bill was passed (I’m not claiming any causality here) was some of the best economic growth we’ve had in a long, long time. And – whadda surprise! – instead of following through on their stated convictions and shutting the hell up, these same “intellectuals” advanced elaborate after-the-fact rationales to show that those happier times were really a vindication of Reagan’s ideas and his actions in office. Oh, and that anybody who thought otherwise was free to try and prove them wrong. And that anyone pointing out how this was yet more theorizing in face of direct observations to the contrary was just being small, spiteful and petty, and almost certainly a hippie to boot. Same as it ever was :-(

[1]I think we’ve also talked about this one before, the discussion over at Angry Bear a few years back concerning Mike Kimel’s research showing that by just about every metric you could think of and despite any elaborate arguments about delayed causality to the contrary, Democrats have been better for the economy than the Republicans over the last 70 or so years. That research ultimately ended up in book form, Presimetrics. Thanks, Cactus :-)

“Oh, so then you don’t know how they work, then. That makes sense.”

Eh? When considering a complex technical point I should not rely upon a century of study of said complex technical point but purely on personal experience?

That I have/have not had an electric shock personally has an impact on how the National Grid should be run for example?

Ah, I see. If you take the standard deduction you don’t deduct local/state taxes. If you itemize, which we do, you deduct those things.

As someone who grew up in a rather dangerous neighborhood I would submit that my primary economic concern is insulating myself from the criminally-prone underclass. I do not see how this discussion incorporates that very pressing concern. I pay a good portion of my income just for the privilege of not having to reside in proximity to the demographic environment in which I was raised.

Boy, so I was tired of grading (of the yes! I can grade that! sort) and came here. Wish I were in the 1%! No, I don’t, in fact. I have zero interest in that kind of wealth. Or in much less than that kind of wealth. All I know is that our modest local tax accountant scoffs at all the receipts we dutifully produce at tax time (usually April 14 — we’re very bad).
I do know that there was a time (maybe 25 years ago) when, if you were insane enough to save all your sales tax receipts, you could take a deduction somewhere.
The interesting question — I’ve thought about this in non-fraught contexts: when middle class folks still did their own taxes, including without benefit of TurboTax and the like, they actually learned a lot and could counter politicians’ blather with their own hard-earned tax-prep knowledge.

Based on my lower, but probably fair, salary I am in the 80%. No matter what I do with deductions, I still pay 20% of my income in income tax. This seems ridiculous to me knowing that the rich have the ability to come up with deductions that I can only dream of and the poorer just pay nothing. I would love to see a flat tax, 10-15% for everyone. It can come right of of paychecks and transactions (capital gains/stock pay outs, etc) which would eliminate the need to file an income tax form. We could virtually eliminate the IRS; and most of us middle classers would stop feeling like we are shouldering the burden for the richies and the poories. Damn my good work ethic! I sometimes wished I had tried harder to live off the man or went to work at wall street. I could have done either, but neither seemed very unshameful at the time.