Root of Inequity

[RW]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

[Odinson]

The root of inequity is the fact that I`m drunk and don't work.

[Anonymous]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

I'll have to read it later..



In my opinion and from my experience, the best defense against a life of poverty is a stable, two parent family.

[RW]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

I'll have to read it later..



In my opinion and from my experience, the best defense against a life of poverty is a stable, two parent family.

I encourage reading it. It's an interesting perspective on morals, policy, government and work.

[Odinson]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

I'll have to read it later..



In my opinion and from my experience, the best defense against a life of poverty is a stable, two parent family.

What if those two parents were a couple of dudes or lesbians?

[Anonymous]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

I'll have to read it later..



In my opinion and from my experience, the best defense against a life of poverty is a stable, two parent family.

Some people that have kids should never have had them.

[Harry]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

It's an interesting article, and I agree with most of what he has to say.  However, I think the author ignores or understates a few things.



1.  Globalization.  Since the 1970's large corporations of increasingly offloaded manufacturing to developing countries with much lower manufacturing costs.  The blue collar workers of western countries have experienced downwards pressure on wages as they have effectively been forced to compete for work with there international brethren  



2.  Female workforce participation rates.  I'll be unpopular for saying this, but since the 1970's there has been a massive increase in the proportion of women working, and this in turn increased the overall supply of labour in the market.  All things being equal, an increase in the supply of a product (in this case labour) will inevitably lead to a reduction in the price (in this case wages) of that product.  I understand the reasons for the increased female workforce participation rate, but the consequences are what they are.



3.  Reduced taxation and infrastructure spending.  One inevitably leads to the other. and has a corresponding impact on the demand for labour.  The immediate post war decades were characterized by massive public works projects involving the construction of highways, bridges, dams, hospitals, schools, and much more.  These were funded by taxes.  During the 1950's, 60's and 70's the top US tax rate never dropped below 70% https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx">//https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx.  Now it's about 40%.  That's a whole lot less money available for public works, which in turn has a massive follow-on effect in the economy, and a huge reduction in the demand for labour.  When taxes are reduced, only a portion of the foregone revenue is returned to the economy in productive investment and spending, whilst the remainder is "warehoused" in non-income producing assets, such as real estate, or is spent offshore.  This is particularly so with regard to the wealthy, who have a much lesser propensity to spend than typical households, and gives the lie to "trickle down economics".



4.  Technology.  When I was a high school student in the 1970's there was a general belief that the new world of computers and technological development that was just around the corner would lead to a reduction in the numbers within the required workforce, and that this would lead to reduced working hours and increased leisure time.  What actually happened was that as workers became redundant, they were obliged to compete with other workers for what work remained.  This further contributed to the downwards pressure on wages.



5.  Unions.  Or at least their reduced influence.  Without the support of an organized negotiating bodt it is small wonder that workers in a competitive labour market are forced to accept lower pay.



On the other hand, the author ignores the following beneficial effects of:



6. Globalization.  Despite its drawbacks, globalization has lead to substantially reduced prices for consumer goods, such as cars, household appliances and so forth.  For instance, it now takes substantially less weeks of labour for the a given worker to by a car than it did in the 1970s, and



7.  Taxes rates have been reduced for all workers, not just the rich.  So, for each dollar earned, there is a greater %age left over to spend.

[Anonymous]

IHJ, I think you you will find this a particularly interesting read:



http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/">http://www.eoionline.org/blog/x-marks-t ... -dig-here/">http://www.eoionline.org/blog/x-marks-the-spot-where-inequality-took-root-dig-here/

It's an interesting article, and I agree with most of what he has to say.  However, I think the author ignores or understates a few things.



1.  Globalization.  Since the 1970's large corporations of increasingly offloaded manufacturing to developing countries with much lower manufacturing costs.  The blue collar workers of western countries have experienced downwards pressure on wages as they have effectively been forced to compete for work with there international brethren  



2.  Female workforce participation rates.  I'll be unpopular for saying this, but since the 1970's there has been a massive increase in the proportion of women working, and this in turn increased the overall supply of labour in the market.  All things being equal, an increase in the supply of a product (in this case labour) will inevitably lead to a reduction in the price (in this case wages) of that product.  I understand the reasons for the increased female workforce participation rate, but the consequences are what they are.



3.  Reduced taxation and infrastructure spending.  One inevitably leads to the other. and has a corresponding impact on the demand for labour.  The immediate post war decades were characterized by massive public works projects involving the construction of highways, bridges, dams, hospitals, schools, and much more.  These were funded by taxes.  During the 1950's, 60's and 70's the top US tax rate never dropped below 70% https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx">//https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx.  Now it's about 40%.  That's a whole lot less money available for public works, which in turn has a massive follow-on effect in the economy, and a huge reduction in the demand for labour.  When taxes are reduced, only a portion of the foregone revenue is returned to the economy in productive investment and spending, whilst the remainder is "warehoused" in non-income producing assets, such as real estate, or is spent offshore.  This is particularly so with regard to the wealthy, who have a much lesser propensity to spend than typical households, and gives the lie to "trickle down economics".



4.  Technology.  When I was a high school student in the 1970's there was a general belief that the new world of computers and technological development that was just around the corner would lead to a reduction in the numbers within the required workforce, and that this would lead to reduced working hours and increased leisure time.  What actually happened was that as workers became redundant, they were obliged to compete with other workers for what work remained.  This further contributed to the downwards pressure on wages.



5.  Unions.  Or at least their reduced influence.  Without the support of an organized negotiating bodt it is small wonder that workers in a competitive labour market are forced to accept lower pay.



On the other hand, the author ignores the following beneficial effects of:



6. Globalization.  Despite its drawbacks, globalization has lead to substantially reduced prices for consumer goods, such as cars, household appliances and so forth.  For instance, it now takes substantially less weeks of labour for the a given worker to by a car than it did in the 1970s, and



7.  Taxes rates have been reduced for all workers, not just the rich.  So, for each dollar earned, there is a greater %age left over to spend.

I agree about globalization. Another factor is mass immigration while technology eliminates jobs.



But, you are dead wrong about taxes. We have a thread here showing the tax bite since 1961 has grown faster than housing and food. The trend in Canada is towards hidden taxes.

[Harry]

I agree about globalization. Another factor is mass immigration while technology eliminates jobs.



But, you are dead wrong about taxes. We have a thread here showing the tax bite since 1961 has grown faster than housing and food. The trend in Canada is towards hidden taxes.

First, I was referring to income tax rates.  This graph shows 99 year history of tax rates for four income levels in the US adjusted for inflation from 1913 to 2013.  

[Anonymous]

Harry, you do realize the Rockefellers never paid anywhere near 90 income tax when the USA had that as it's top rate?



Also, we do spend a lot on on infrastructure, but it's not building a Canadian equivalent of the US interstate highway system. All too often, it's a new hockey rink in a riding the governing party is trying to hold in the next election.



I don't know about Australia, but I don't Canadiansthink Canadians really want mortgage paying blue collar jobs. We voluntarily send them offshore because they are considered "dirty" and outdated. All too often trade unions are working against the interests of labour.

[RW]

Harry, you do realize the Rockefellers never paid anywhere near 90 income tax when the USA had that as it's top rate?



Also, we do spend a lot on on infrastructure, but it's not building a Canadian equivalent of the US interstate highway system. All too often, it's a new hockey rink in a riding the governing party is trying to hold in the next election.



I don't know about Australia, but I don't Canadiansthink Canadians really want mortgage paying blue collar jobs. We voluntarily send them offshore because they are considered "dirty" and outdated. All too often trade unions are working against the interests of labour.

I'm going to have to strongly disagree with your statement about unions working against the interest of labour.  Unions are a collective of workers with worker interest in mind.  If a company decides to ditch out and make everything in China for cheap, that isn't unions working against the interest of labour, its corporations.

[Anonymous]

Harry, you do realize the Rockefellers never paid anywhere near 90 income tax when the USA had that as it's top rate?

Right you are.



Thomas Piketty (who is best known as the French economist promoting progressive tax rates) compiled data estimating tax rates in 1960, when the top rate was still 91%. According to his data, shown in the chart below, the top .01% of income earners paid an effective 31% income tax rate in 1960, compared with a rate of 25% in 2004. While slightly higher, it's fairly similar considering the huge variation in marginal rates (91% vs 36%). Piketty does claim the rich were more affected by corporate tax rates in the 50's, as shown on the chart, but the Manhattan Institute has a good rebuttal to that finding in this paper.

Also, one would assume with taxes so high, that tax receipts as a percentage of GDP would also be much higher, but they weren't:



This is partly because there were much more generous tax deduction loopholes decades ago, such as being able to deduct significant capital losses from income (instead of just $3000/year). Or the ability to offset income taxes by buying a home and then gradually depreciating the home every year, but while also collecting rental income on the home (to cover the mortgage). Tax reforms of 1964, 1969, and 1986 gradually patched these loopholes.



But what was probably the biggest lost deduction for wealthy individuals was the elimination of deductions on passive investment losses on real estate. Before 1986, wealthy individuals would often buy real estate with no hopes at all of it cash flowing. That wasn't the point. The point was that real estate is depreciated every year in the eyes of the IRS. Even though in the long run, properties usually go up in value, the IRS assumes that every twenty-seven-and-a-half years a property's value will depreciate to zero.

This "loss" can be written off. So, for example, say a man earning $100,000 a year buys a property worth $275,000. He rents out the property and breaks even on it. The tax code allows that person to write off $10,000 as a loss which he can count against his income for that year. So now he only has to pay taxes on $90,000. If he owned ten such properties, his income would be zero, at least according to the IRS.

Many decades ago, the IRS actually considered real estate to be a depreciating asset. Not anymore:



When the income tax rates were cut under Reagan, this loophole was mostly closed in exchange under the Tax Reform Act of 1986. Only the mortgage interest deduction remained for real estate for most taxpayers

http://greyenlightenment.com/debunking-the-90-eisenhower-income-tax-myth/">http://greyenlightenment.com/debunking- ... -tax-myth/">http://greyenlightenment.com/debunking-the-90-eisenhower-income-tax-myth/

[Anonymous]

Democrats still think that under the current tax code they will be able to raise more revenue by letting marginal rates go up. But that ignores the fact that the federal government has never been able to get much more than 19 percent of GDP in tax revenues, and sustain that level for very long, no matter how high the top marginal tax rate goes.



It shows the historical path of federal taxation as a percentage of GDP (using the earliest records available from the OMB) alongside top-marginal-tax-rate data from the Tax Policy Center. From 1930 to 2010, tax-revenue collection in the United States has never topped 20.9 percent, averaging 16.5 percent of GDP over 80 years. This despite the drastic historical fluctuation in tax rates on the wealthiest Americans.

http://www.nationalreview.com/corner/254034/hausers-law-reality-isnt-negotiable-veronique-de-rugy">http://www.nationalreview.com/corner/25 ... ue-de-rugy">http://www.nationalreview.com/corner/254034/hausers-law-reality-isnt-negotiable-veronique-de-rugy

[Anonymous]

For every year between 1952 and 2014, the government has brought in between roughly 16 and 20 percent of GDP in tax revenue and between 7 and 9 percent of GDP in income tax revenue. Furthermore, since at least 1980, the percentage paid by the top 20 percent has gone up. In 1980, the top 20 percent paid 55 percent of all income taxes. In 2013, they paid closer to 70 percent. It appears pretty obvious that, while yes, there was a 90 percent tax rate on the books, no one actually paid it.

[Angry White Male]

The root of inequity is the fact that I`m drunk and don't work.

This!  Classic, to the point, and that's it!