America takes notice of gap in incomes

Houston Chronicle) ^ | December 16, 2006 | MATTHEW BENJAMIN

[GodGunsGuts]

...

The portion of national income earned by the top 20 percent of households grew to 50.4 percent last year, up from 45.6 percent 20 years ago; the bottom 60 percent of U.S. households received 26.6 percent, down from 29.9 percent in 1985, according to the Census Bureau.

Meanwhile, average pay for corporate chief executive officers rose to 369 times that of the average worker last year, according to finance professor Kevin Murphy of the University of Southern California; that compares with 131 times in 1993 and 36 times in 1976.

...

[Doogle]

..don't cha just love it when they throw numbers around...
sounds like Calypso Louis and his mothership and time machine.

Doogle

[Toddsterpatriot]

The lower line in the graph shows that the amount of income Messrs. Piketty and Saez attribute to the top 1% accounted for 10.6% of personal income in 2004. That 10.6% figure looks much higher than it was in 1980. Yet most of that increase was, as they explained, "concentrated in two years, 1987 and 1988, just after the Tax Reform Act of 1986." As Mr. Saez added, "It seems clear that the sharp, and unprecedented, increase in incomes from 1986 to 1988 is related to the large decrease in marginal tax rates that happened exactly during those years.".....

The top line in the graph shows how much of the top 1%'s income came from business profits. In 1981, only 7.8% of the income attributed to the top 1% came from business, because, as Mr. Saez explained, "the standard C-corporation form was more advantageous for high-income individual owners because the top individual tax rate was much higher than the corporate tax rate and taxes on capital gains were relatively low." More businesses began to file under the individual tax when individual tax rates came down in 1983. This trend became a stampede in 1987-1988 when the business share of top percentile income suddenly increased by 10 percentage points. The business share increased again in recent years, accounting for 28.4% of the top 1%'s income in 2004.

As was well-documented years ago by economists Roger Gordon and Joel Slemrod, a great deal of the apparent increase in reported high incomes has been due to "tax shifting." That is, lower individual tax rates induced thousands of businesses to shift from filing under the corporate tax system to filing under the individual tax system, often as limited liability companies or Subchapter S corporations.

The Top 1% . . . of What?

[eleni121]

Anyone want to set this idiot straight...

mbenjamin2@bloomberg.net

[GodGunsGuts]

This is especially so since their jobs are increasingly being sent to places like Red China.

[SF Republican]

I find the avg CEO at 369 times to be odd, for a $20,000 worker that would mean his boss makes $8million. That, I do not believe.

[rightinthemiddle]

"Americans overwhelmingly say the growing gap between rich and poor has become a serious national concern, a sentiment that may bolster Democrats' plans to narrow the income divide when they take control of Congress."

"A month after Republicans lost their majority in Congress, poll respondents generally expressed optimism about the economy, with about three in five saying it's doing well. "

"Still, anxiety about the growing rich-poor divide unites Americans, crossing income and political divisions."

"Democrats are considering proposals to shrink the income gap, such as boosting the minimum wage, scrutinizing executive pay, increasing tax credits available to the poor, and making health care and higher education more affordable."

ELECTIONS HAVE CONSEQUENCES...ELECT SOCIALISTS, YOU GET SOCIALISM.

[rightinthemiddle]

"A month after Republicans lost their majority in Congress, poll respondents generally expressed optimism about the economy..."

_______

The Media at work! The Democrats have saved the day BEFORE they take control. It's a Miracle!

[Jeffrey_D.]

""Americans overwhelmingly say the growing gap between rich and poor has become a serious national concern, a sentiment that may bolster Democrats' plans to narrow the income divide when they take control of Congress.""


What these idiots just don't get is that in not tooo many years, the "Dreaded Gap" will be right back.......

for reasons understood by FReepers!

[Mopp4]

Funny that these little diatribes always choose to compare the income of CEOs with average workers.

I'm with you on this....it's a stupid comparison...the level of responsibility to the company is totally differnent between the two positions.

[GodGunsGuts]

I don't look at it from the class envy perspective. I look at from the perspective that our economy is not experiencing a broad-based recovery. The people in finance and Wall Street are doing just great. Unfortunately, the middle class seems to be barely holding its own in the wage arbitrage battle going on with places Red China.

[rightinthemiddle]

Class envy. Jealousy. Class warfare.

This is how Communists and Socialists have taken control throughout history.

Now, capitalists have become the despised elite "royalty." The difference is, most of them earned it.

[Toddsterpatriot]

Unfortunately, the middle class seems to be barely holding its own in the wage arbitrage battle going on with places Red China.

Did your "professor" tell you that? You never responded to my substantive refutation of his drivel. I wonder why? LOL!

[Archie Bunker on steroids]

Here we go...take more from the good decision makers and give it to the lousy decision makers. Eliminating accountability for one's actions....wonderful people those libs are.

[gusopol3]

the amazing thing about his (Alan reynolds in WSJ) was in that set of stats(who knows if they're the same ones?) that social security income amounts to almost 15% of allhousehold income, but it doesn't count(i.e. "makes the denominator smaller" in his terms). I always say A- Rod and myself average $12.5 million annually.

[dfwgator]

In a free economy, the gap is simply a function of the gap in ambition. Some paths simply are more lucrative than others, and in this country, people have the freedom to choose their path. Some paths lead to riches, others, not.

Other countries try to limit this, by limiting educational opportunities, and impose strict controls and what companies can do. They look at it as balancing freedom for security.

But the lessons of history clearly show, that those who trade freedom for security, in the end, get neither.

[Uncle Miltie]

Thanks for the cite and support.

[Toddsterpatriot]

We need to stick together to refute the doomer idiots.

[Jeffrey_D.]

"In a free economy, the gap is simply a function of the gap in ambition. Some paths simply are more lucrative than others, and in this country, people have the freedom to choose their path. Some paths lead to riches, others, not."


I could not agree more, Like I said earlier, "The bottom 60% need to work smarter."

[expat_panama]

The confusion here is because nobody's reading the article that Guns has posted for us.  

This article is not about what's happening with how income is proportioned among the deserving and the undeserving.  This article is reporting the results of a poll of what people think of how America's income is being handed out.  What they're saying is that most people (especially Democrats) think rich people get too much and that maybe the federal government should save us.

Guns appears to not only agree with the idea of having the feds seize and redistribute everyone's wages, but he also seems to agree that the Houston Chronicle is telling the truth about what our thinking on incomes is, and that there's no need to bother going to all the trouble of looking at the actual income tallies themselves.

Now that's what I call scientific method!

[Maelstorm]

I love this bandwagon. The communists are about again. The economy isn't in stasis and all economic locals are not the same. These numbers tell you absolutely nothing about what is really going on or even that something is wrong. I do think executives are overpaid but in a free nation their wages are determined by the companies that employ them. Wages are not set in a vacuum. Negotiations take place and since these "guys" are often master negotiators they reap the benefits of their positions.

I think entertainers are paid too much also but as long as they aren't being paid out of the tax payers coffers then why should I care? If the people at the bottom were to worry more about making themselves a valuable commodity rather than getting drunk on themselves as human beings they'd move up the ladder faster. It is frustrating and there are a lot of unnecessary barriers to success but that is life and you can either wait for someone to lift you over those barriers or you can go around them and over them any way you can.

I'd like to see it estimated how many people are employed or receive benefit from those in the top 20%. Quoting averages makes it appear to the layman that those in that economic bracket got there in some nefarious way. That the top 20% pay 80% of taxes, well we don't need to go there.