One thing that's missing, particularly in the tax cuts for the rich debate, is the difference in actual tax rates for us middle class and the rich. From my pay check withholding (single) I'm paying about 30%, plus my employer is paying another another 7.6% for SS, plus sales tax and my taxes are pushing north of 35%. The rich on the other hand pay mostly capital gains which maxes out at 15%. Throw in deductions for things like real estate and such and the real tax rate is probably closer to 10%. (Citations and actual figures gratefully accepted)
The rich dont need additional tax breaks. They need to pay tax rates closer to what the rest of us do.
It's not their fault you chose to depend on earned income for your livelihood. Judging from your comment, you're obviously aware that they were smart enough to earn their livelihood from portfolio and passive income so instead of punishing them for that, why don't you do the same thing?
Obviously, a passive income doesn't just depend on "smarts", it also requires initial assets and cultural capital that are generally inherited from the previous generation.
If you sort people by wealth (or height, or IQ, or penis length, or any other numerical quantity), and then divide them into the top N% and the bottom 100-N%, the top N% will have more than N%, unless everyone has the same wealth, height, etc..
The wider the range of the distribution, the bigger the concentration will be.
I wonder how much of the wealth distribution disparity is simply a consequence of the fact that we have a wide range (near $0 to many $billions).
...which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80%...
They're making it sound like the top percentage of wealthy people are hogging the wealth, taking it away from everyone else. What about the possibility that the top 20% had a considerable hand in creating that additional 15% of wealth?
People write these findings as if they're surprising. It's not. Take Google, for instance:
-The founders, early hires, and investors made a lot. This is their top 1% accounting for 35% of the wealth
-The rest of the employees made not as much, but still quite a lot. This is the next 19% holding 50%.
Then there's people who didn't have anything to do with building Google, who own none of Google. That's the other 80% of people, who own 15%.
The people who didn't build Google benefit a heck of a lot from the people who did - they have free to a range of amazing quality free services - search, Gmail, Maps, Earth, Apps, Finance, Analytics, Voice, Android, etc, etc, etc. They don't own Google and they're not millionaires. But they're much better off because the Google guys built that amazing company, which is why they're so wealthy.
Looking at the Real vs. Imagined Welath Distribution, it's easy to see that people underestimate the top 20%, but what is striking to me is the the bottom 40% isn't even visible on the actual distribution because they make up about %0.3. Call me ignorant but that was a big surprise to me.
EDIT: Just wanted to make it clear that the slate link is only about wealth and not income.
The nytimes wrote an interesting article on this a while back titled "How We Value The Super-Rich." It suggests that Americans don't have a general resentment towards the wealthy, but rather a resentment toward rich people who aren't perceived as generated wealth.
A couple of quotes:
"The super-rich of high-tech, on the other hand, create tangible things that make our lives easier, and this we can respect. Steve Jobs gave us the ubiquitous iPod. Larry Page and Sergey Brin, the roller-blading Google guys, devised a better way to search the Internet. Jeff Bezos gave people a way to shop in their pajamas. Bill Gates makes the desktop software on the computers most people use every day."
"In contrast, the public seems to resent the big boys of Wall Street because they do not appear to have invented anything -- unless you count ingenious ways to make more money. Option derivatives are as inexplicable to the general public as particle physics. Richard Fuld of Lehman Brothers, Alan Schwartz of Bear Stearns and Robert Willumstad of AIG might have tremendous records of innovation. If they do, none of us were told."
I actually think that much of the supposed American resentment toward the "rich" is anger with wall street. I have a feeling that some wall street PR will attempt to use this ambiguity, attempting to equate anger toward bailed out banks with a general hostility toward capitalism, investing, rich people in other sectors of the economy such as high tech, etc....
I also think that it would be foolish for "the left" (am I allowed to say that?) to play right into this by acting too alarmed about wealthy people who clearly have created great wealth.
So sure, give Thomas Jefferson and George Washington a huge percentage of the profit from this country.
A better analogy is that Sergey Brin's kids will never have to lift a finger in his life, and he'll still make more money than all of your grand kids combined, regardless of how smart, good, and ambitious they are.
People write these findings as if they're surprising. It's not.
Before reading this article, did you know that CEO pay has grown twice as fast as the S&P 500, three times as fast as corporate profits, and sixty-nine times as fast as production workers? And that the minimum wage, adjusted for inflation, has not grown at all and has in fact lost ground?
Yes, it's true that good companies make everyone wealthier in absolute terms, but that's not the whole picture either. Not every company is Google.
Why should you or I care how fast a company is increasing the pay of their CEO? That's an issue for their shareholders. If I'm not a shareholder I don't care, it's not my money.
If I was in the business of selling luxury yachts or real estate in exclusive neighborhoods, I'd definitely prefer a smaller number of wealthier individuals.
Are you seriously maintaining that someone who inherits $10M and lives off the interest is contributing more to America than someone who works for Habitat for Humanity for $35K a year? It's much more logical to suggest that the American system allowed the top 1 % to accumulate much more wealth than they would have amassed by their wits alone, and consequently owe a disproportionate share back to society.
I think nobody blames CEOs to get n-times more than the average worker. But this article blames a malfunction in company-hierachies to be able determine a realistic, 'earned' salary.
And with the malfunction in mind I don't think that these findings are to be applied to the googles, but to those companies with atomized shareholder stakes.
True wealth is how long you can maintain your preferred lifestyle without working. While most of us won't become rich [1], we can become wealthier [2]. As Robert Kiyosaki says, most people trade time for money (job) [3]. We are lucky as software entrepreneurs to have the ability to make some money without working (e.g. working for yourself is not scalable but a revenue-generating website can be multiplied - example: http://rejectiontherapy.com)
> But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)
A small adage: the poor of yesterday are not necessarily the poor of today. Immigrants arriving in the US are usually at the bottom of the ladder. As long as the US receives immigrants, it will have a somewhat bottom-heavy income distribution (more than otherwise).
Also note that while it may be tempting to "soak the rich", they are the most mobile segment of society. Arguably too, they are the most productive private users of capital. (I'd make a distinction here between real private capitalists and bankers/financialists etc)
Finally, technology allows individuals today to be vastly more productive than their potential peers. The differences are much more stark in a high division of labor society. Whereas, if you are a great hunter your productivity could be maybe 2-3 times better than average, a guru programmer can be a few orders of magnitude above the otherwise average skilled professional.
People seem to love pointing out income distribution numbers (seemingly to pit people against the wealthy, but maybe I'm wrong). But let's not forget who also pays the taxes:
So, 42% of the wealth supplies 38% of the tax base? That's pretty close, of course, but when you're talking about trillions of dollars 4% is quite a big shortfall.
The NTU distributions appear somewhat oddly presented in those tables, and odd portrayals of data make me curious. Odd displays can indicate the existence of information that a presenter intentionally wishes to avoid highlighting, or information that the presenter simply does not recognize is present, and that information can be as interesting as what a presenter does choose to highlight.
Based on the Slate data referenced elsewhere in the comments here, there looks to be around 84% of the aggregate income for the top 20% of the earners.
Then interpolating the data buckets shown within the NTU tables and particularly guessing that the 20% range is around 80% of the taxes paid, and matching that with the Slate income charts.
This implies that the folks with 80% of the income pay somewhere roughly around 80% of the taxes. Give or take.
I'd be interested in seeing a NTU-like breakdown matched with what data Slate has shown for relative incomes; matched with what looks to be the income and with slicing the income based on the different AGIs.
Leftists are obsessed with money, but just for the record, the media rules America. Money is mainly concerned with protecting and growing itself, not ruling anything as such.
The right is obsessed with ensuring that other people don't get the money they inherited, even it is for things like subsidized lunches for poor children.
And the reason I call out "inherited" is I notice a fundamentally different position between people I know who have earned their wealth versus those that have inherited it (even for relatively poor/middle-class people who have inherited their position through things as basic as being white in the US -- which tends to mean you've had generations to accumulate capital that can be transferred).
The rich dont need additional tax breaks. They need to pay tax rates closer to what the rest of us do.