The Gini Index and US Tax Rates

[Usui Takumi 1,562]

Just something I picked up on recently, which should of course be a "no duh" but thought I would pass on.

US income inequality is linked to the top tax bracket.

Here is the Gini Index for each period with the corresponding high tier tax rate.

1927: 45 - 24% tax

1947: 37.6 - 86% tax

1967: 39.7 - 70% tax

1970: 39.4 - 71% tax

1980: 40.3 - 70% tax

1990: 42.8 - 31% tax

2000: 46.2 - 39% tax

2006: 47 - 35% tax

At the moment income equality is equal to the boom years of the 20's and if the rate continues we'll be equal to Mexico within just a few decades.

[w¡n9Nµ7 §£@¥€r 123]

Just something I picked up on recently, which should of course be a "no duh" but thought I would pass on.

US income inequality is linked to the top tax bracket.

Here is the Gini Index for each period with the corresponding high tier tax rate.

1927: 45 - 24% tax

1947: 37.6 - 86% tax

1967: 39.7 - 70% tax

1970: 39.4 - 71% tax

1980: 40.3 - 70% tax

1990: 42.8 - 31% tax

2000: 46.2 - 39% tax

2006: 47 - 35% tax

At the moment income equality is equal to the boom years of the 20's and if the rate continues we'll be equal to Mexico within just a few decades.

That's ok because God loves the rich and the poor can just move to Mexico.

[alienlovechild 75]

A few caveats on the Gini Index

Gini coefficients do include investment income; however, the Gini coefficient based on net income does not accurately reflect differences in wealth - a possible source of misinterpretation. For example, Sweden has a low Gini coefficient for income distribution but a significantly higher Gini coefficient for wealth (still low by international standards, but significantly higher than for income: for instance 77% of the share value owned by households is held by just 5% of Swedish shareholding households )[14]. In other words, the Gini income coefficient should not be interpreted as measuring effective egalitarianism.

Care should be taken in using the Gini coefficient as a measure of egalitarianism, as it is properly a measure of income dispersion. For example, if two equally egalitarian countries pursue different immigration policies, the country accepting higher proportion of low-income or impoverished migrants will be assessed as less equal (gain a higher Gini coefficient).

Comparing income distributions among countries may be difficult because benefits systems may differ. For example, some countries give benefits in the form of money while others give food stamps, which might not be counted by some economists and researchers as income in the Lorenz curve and therefore not taken into account in the Gini coefficient. The USA counts income before benefits, while France counts it after benefits, making the USA appear slightly more unequal vis-a-vis France than it admittedly is. In another example, USSR appeared to have relatively high income inequality: by some estimates, in the late 70's, Gini coefficient of its urban population was as high as 0.38[16], which is higher than many Western countries today. This apparent inequality ignored the fact that many benefits received by Soviet citizens were nonmonetary and were afforded regardless of income: these benefits included, among others, free child care for children as young as 2 months, free elementary, secondary and higher education, free cradle-to-grave medical care, free or heavily subsidized housing. In this example, an accurate comparison between the 1970s USSR and Western countries would require one to assign monetary values to such benefits (a difficult task in the absence of free markets). Similar problems arise whenever a comparison between pure free-market economies and partially socialist economies is attempted. Benefits may take various and unexpected forms: for example, major oil producers such as Venezuela and Iran provide indirect benefits to its citizens by subsidizing the retail price of gasoline.

http://en.wikipedia.org/wiki/Gini_coefficient

[Usui Takumi 1,562]

A few caveats on the Gini Index

Gini coefficients do include investment income; however, the Gini coefficient based on net income does not accurately reflect differences in wealth - a possible source of misinterpretation. For example, Sweden has a low Gini coefficient for income distribution but a significantly higher Gini coefficient for wealth (still low by international standards, but significantly higher than for income: for instance 77% of the share value owned by households is held by just 5% of Swedish shareholding households )[14]. In other words, the Gini income coefficient should not be interpreted as measuring effective egalitarianism.

Care should be taken in using the Gini coefficient as a measure of egalitarianism, as it is properly a measure of income dispersion. For example, if two equally egalitarian countries pursue different immigration policies, the country accepting higher proportion of low-income or impoverished migrants will be assessed as less equal (gain a higher Gini coefficient).

Comparing income distributions among countries may be difficult because benefits systems may differ. For example, some countries give benefits in the form of money while others give food stamps, which might not be counted by some economists and researchers as income in the Lorenz curve and therefore not taken into account in the Gini coefficient. The USA counts income before benefits, while France counts it after benefits, making the USA appear slightly more unequal vis-a-vis France than it admittedly is. In another example, USSR appeared to have relatively high income inequality: by some estimates, in the late 70's, Gini coefficient of its urban population was as high as 0.38[16], which is higher than many Western countries today. This apparent inequality ignored the fact that many benefits received by Soviet citizens were nonmonetary and were afforded regardless of income: these benefits included, among others, free child care for children as young as 2 months, free elementary, secondary and higher education, free cradle-to-grave medical care, free or heavily subsidized housing. In this example, an accurate comparison between the 1970s USSR and Western countries would require one to assign monetary values to such benefits (a difficult task in the absence of free markets). Similar problems arise whenever a comparison between pure free-market economies and partially socialist economies is attempted. Benefits may take various and unexpected forms: for example, major oil producers such as Venezuela and Iran provide indirect benefits to its citizens by subsidizing the retail price of gasoline.

http://en.wikipedia.org/wiki/Gini_coefficient

Yes that applies when comparing nations (strike the mexico comment if you will), but this is a comparison of the United States with her past selves.

[one...two...tree 2,762]

At the moment income equality is equal to the boom years of the 20's and if the rate continues we'll be equal to Mexico within just a few decades.

That's just free market capitalism working. The hard working people rise to the top and the lazy people sink to the bottom.

[w¡n9Nµ7 §£@¥€r 123]

That's just free market capitalism working. The hard working people rise to the top and the lazy people sink to the bottom.

Inshallah.

[Ali G. 37]

Alien there are a range of international index (rankings) illustrating the wealth of the average Joe in the US's sinking faster than the Titanic. Break such rankings down further into regions and I think you will find the Midwest and South is on par with various second world countries.

Zero investment into the country and free services for all illegals have driven the country into the ground. It's why I read article after article of people saying invest your money overseas because Obama has screwed up America, apparently GWB's deficits were different, yet not once stop and think why are these other countries absolutely annihilating us in terms of actual personal wealth. Yes actual, rather than GDP divide by population.

[w¡n9Nµ7 §£@¥€r 123]

I don't care about none of that, my TV and laptop keep me happy and blissfully unaware (yes, I am aware of the irony).

[Usui Takumi 1,562]

That's just free market capitalism working. The hard working people rise to the top and the lazy people sink to the bottom.

Thats a joke right? A better example, and one for the last decade would be : The thieves and back stabbers rise to the top, honest people sink to the bottom.

[w¡n9Nµ7 §£@¥€r 123]

Thats a joke right? A better example, and one for the last decade would be : The thieves and back stabbers rise to the top, honest people sink to the bottom.

most people who does well for themselves are not dishonest, nor are they thieves or backstabbers. sorry, but that's loser talk.

[Ali G. 37]

That's just free market capitalism working. The hard working people rise to the top and the lazy people sink to the bottom.

What kills me is to see people who work hard, live on their measly salary, and watch their jobs go abroad (for a profit), cheer on the select few earning billions for doing absolutely nothing. Zilch, Nada etc. Any attempt to skew this the other way, is seen as socialism by them. Truly unbelievable. The rich have managed to use the ignorance of those that are uneducated against them. Boy when it comes to military, these same folk drool at the mouth and throw the anti-socialist comments out the window. Same deal with military spending and deficits.

Edited February 2, 2010 by Booyah

[Usui Takumi 1,562]

The idea that the hard workers rise to the top is a noble idea, but it simply isn't happening in the US. It seems asset stripping to make a short term profit before retirement is the way to go these days. The guy who toils away for 25 years who is a part of that asset being stripped becomes the loser in the end.

Edited February 2, 2010 by Sousuke

[w¡n9Nµ7 §£@¥€r 123]

The idea that the hard workers rise to the top is a noble idea, but it simply isn't happening in the US. It seems asset stripping to make a short term profit before retirement is the way to go these days. The guy who toils away for 25 years who is a part of that asset being stripped becomes the loser in the end.

Look beyond Wall Street. America is the home of Silicon Valley. Not happening? Only if you decide to ignore it so you can go on and pretend that the reason you haven't risen to the top is because you're honest. When in reality the reason is you're just not all that innovative. Hey, it's cool.. neither am I.

[Ali G. 37]

Look beyond Wall Street. America is the home of Silicon Valley. Not happening? Only if you decide to ignore it so you can go on and pretend that the reason you haven't risen to the top is because you're honest. When in reality the reason is you're just not all that innovative. Hey, it's cool.. neither am I.

How many people can be the google / facebook founders? Anyways, IT only makes up a part of employment. You cannot expect everyone to work in the industry. Then again, this industry is just as susceptible to change than any other industry. Probably more, considering the millions of jobs that have been outsourced to foreign countries, all in the name of greater profits for a select few.

The average American worker is being robbed blind and they don't even realize it. It's why the country has people (Americans) living in trailer after trailer, ghetto after ghetto. First trailer I saw in 23 years was when I visited the US on holiday. But hey, at least they are free right. lmao.. Dirt poor but free. Then again, are they free? Is someone who has to watch out for going in the wrong neighborhood or being shot really free?

Edited February 2, 2010 by Booyah

[Usui Takumi 1,562]

Look beyond Wall Street. America is the home of Silicon Valley. Not happening? Only if you decide to ignore it so you can go on and pretend that the reason you haven't risen to the top is because you're honest. When in reality the reason is you're just not all that innovative. Hey, it's cool.. neither am I.

Silicon Valley is the one bright spot in an otherwise bleak outlook and as Booyah mentions its not bullet proof either.

Edited February 2, 2010 by Sousuke