Food for Thought: A Graphical Peek at Income Inequality in the United States

[Joanne98]

Ever since my post on the the unemployment situation in the U.S. last Sunday, I have been trying to get up to speed on what is known about income equality. My starting point was "15 Mind-Blowing Facts About Wealth And Inequality In America" comprising 15 graphs, the most impressive of which I reproduce below in a slightly modified form to make the comments at the top and bottom legible.


Because the fine print in this figure could scarcely be read even in its web-published version, I reproduce those comments in the quotes below, which refer to the three vertical green bars in the top graph and then the two red bars in the lower graph.

The greater the gap between the rich and everyone else, the more dangerous economics becomes.
In 1928, a year before the U.S. economy nose-dived into depression, the top one-hundreth of 1 percent of U.S. families averaged 892 times more income than families in the bottom 90 percent.
In 1980, the last pre-Reagan year, families in the bottom 90 percent averaged $30,446 in income, after adjusting for inflation, $72 more than the the $30,374 comparable families earned in 2006. The top 0.01 percent in 1980 took home an average $5.4 million, less than one-fifth the $29.6 million average income of the super-rich in 2006.
In 2006 the top 0.01 percent averaged 976 times more income than America's bottom 90 percent.
In 1944 the top marginal tax rate -- the rate on income in the highest tax bracket -- hit 94 percent. In that year, taxpayers making more than $1 million, in 2005 inflation-adjusted dollars, paid Uncle Sam 65 percent of their total income in tax.
In 2005 taxpayers making more than $1 million faced a top marginal rate of 35 percent. These deep pockets paid just 23 percent of their income in federal tax.
Still, this nicely colored and annotated visual is a second-hand product. So I searched the web to find the authors of the two graphs. It turned out that the bottom graph was relatively well known (here for example), whereas the upper one was exclusively the result of relatively recent research by Professor Emmanuel Saez and his coworkers. The main publication on the subject authored by Thomas Piketty and Saez is entitled Income Inequality in the United States 1913--1998 and was published in the February 2003 issue of The Quarterly Journal of Economics. It has since been updated to 2006. These papers are based on study of individual income-tax returns that have been published by the IRS ever since 1913. The authors have carefully studied these returns in order to separate the shares of each source of income, such as wages, business income, and capital income. Their plotted data are for "tax units" defined as a married couple living together or a single adult, including dependents if any. Because of the much larger exemptions prior to 1944, uniting these data with the more recent data restricted them to studying only the top decile. However, they innovatively broke out the top decile into progressively smaller fractiles (see table below), where income is defined as gross income excluding capital gains and before individual taxes.

continued>>>>
http://impactglassman.blogspot.com/2010/04/food-for-thought-graphical-peek-at.html

[NYC_SKP]

1. I wish someone would hold a BIG FUCKING POSTER of that in Front of Congress.

Every day until something is done.

I'm talking about a Congress member.

Recommended, and this could be posted in GD for more visibility.

:thumbsup:

[elocs]

2. A readable and printable version of the graph would be great.

Even one where all of it could be read online would be great.

[patrice]

3. Oh, the glories of the phony Free Market!! That's what bugs me the most about this information

All of the people (Republicans/Teapartyers) defending the inertial states of these two groups of ***DIGITS*** do so on the grounds that something called Freedom is good for people, because it causes people to develope more of their god-given aptitudes and talents into actual skills.

That would be true if there were such a thing as Freedom, but the intertial states of these economic masses are so great that, for significant minorities, there are significantly fewer options for over-coming the economic current INHERENT to their social class.

Simply put, these graphs illustrate that there is

No such thing as a truly Free Market of skills and abilities.

[jtuck004]

4. The divisions of taxes in that blog posting leave a little bit to learn

For example, as you go up the income scale, while your taxes increase on income it is much more likely that at least a portion, maybe a really LARGE portion, comes from stocks and bonds or hedge funds with other instruments. These are taxes at a MUCH lower rate (15%) on the assumption that
it is good that you are putting your money into building the economy.

So when the guy that ran the huge hedge fund made 4 billion dollars from everyone else's misery (his gains paid for by our tax money), he wasn't taxed like everyone else on that, just on his salary, which was around 300 million, near as I can tell.

so maybe the government isn't as altruistic as one might imagine...

[patrice]

5. Even my dyed-in-the-wool Libertarian, corporate attorney, 2nd husband had this epiphany

about a year ago, in which he said "The rich have too much money". When I asked him what he meant, he said that all their money was doing was making more money; it wasn't being re-invested in anything that produces real value.

Yeah, they are "putting (their) money into building the economy" but only a certain very limited sector of that economy that is comprised almost entirely of digits that they and their buddies own and swap for fun and "profit".

It's just exactly like Sean Hannity justifying the .75 on the dollar that he takes from his veterans' charity on the basis of the .25 that goes to the veterans (.75 that he would ***NOT*** be able to make, mind you, by himself *without* those veterans), except that the ratio is probably quite a bit worse than 3:1.