“the loudest and proudest and most active supporters of legislation to enshrine the wealthy as divinely inspired geniuses are themselves just struggling wannabe wealthy fans of Jim Cramer and Rush Limbaugh who mistakenly think that their ship will come in any moment.”
+1
My brother tells the story of one of his in-laws, who is an ardent fan of Rush Limbaugh.
The in-law worked at menial jobs his entire life, and has no particular vocational skills.
His life savings amounted to…maybe a couple of hundred $$…and his retirement plan consisted of buying lottery tickets. Because he automatically agreed with whatever Limbaugh & company were pontificating about, he started spouting off to my brother one day about the need to eliminate the Capital Gains Tax.
My brother looked at this guy quizzically, and asked him, “Butch, which stocks or mutual funds do you own?”. Butch snarled in reply that he had none of those instruments, and that only wealthy people could afford to buy stocks & mutual funds. Regular guys like him just tried to put a few bucks into the bank occasionally, and…that is why he wanted to eliminate the Capital Gains Tax, in order to help little guys like him!
My brother then had to give this guy a (very) basic short course on exactly what Capital Gains are, and had to point out the reality that Butch had never earned any Capital Gains in his entire life, and that he could not possibly derive any benefit from this cause that he thought was so important. Yes, this misguided soul somehow thought that eliminating the Capital Gains Tax would benefit him, but that was because he had absolutely no understanding of the issue.
This little anecdote is just one more case of the less-affluent shooting themselves in the foot, simply because they don’t have a full understanding of an issue and its implications for people in their economic class. If nothing else, Butch learned that day that perhaps he shouldn’t automatically agree with everything that the esteemed Mr. Limbaugh has to say.
@Rod_Knox, I think you might be overestimating our ability and willingness to revolt. We’re far too compliant and complacent for revolution. We’re like the frog in the boiling water.
How many people that you know are willing to forgo their lives and put them on the line for a cause? How many people do you know that would give up their cushy lives for a life of brutal violence? I know lots of people who say they would, but I have doubts.
To quote the late poet Sekou Sundiata:
People be droppin' "revolution" like it was a pick-up line
You wouldn't use that word if you knew what it meant
It ain't pretty
It's bloddy
It overturns things
I recently saw a documentary about Che Guevara, and although I don’t worship him as a hero, and I wouldn’t be caught dead wearing a shirt adorned with his image, the man was a brilliant tactician and a great soldier, often outmarching his fellow soldiers in spite of his recurring asthma attacks. Unfortunately, he was also a terrible murderous administrator after the revolution when he served in the Cuban government. The reason I bring him up is that I see his life before he joined the revolution as the ideal story about what motivates someone to revolt. He was a young medical student who had yet established a home and a family, and he regularly witnessed abject poverty. Our middle class, however, isn’t living in poverty, and likely never will. We in the middle class don’t even see the poverty. It’s neatly tucked away into parts of town we don’t travel though.
Sometimes, when I’m feeling bold, and I see a young college student wearing a Che Guevara shirt, I say something like, “How dare you wear that shirt! Che Guevara ordered the summary execution of my grandparents!” Of course, it’s not true, but I don’t let that stop me.
The people in power know that if they keep the middle class from falling into poverty, they can perpetuate the status quo, and letting the middle class experience poverty in large numbers will leave them with nothing to lose. Right now, middle class people, even if they’re living in a house with an upside down mortgage and with debt up to their eyeballs, have too much to lose by revolting. Until they have nothing to lose, that isn’t going to change.
Never in the history of the world has the working class been so well off. Having said that, there is a differnce in living standard between a unionized industrial trades worker, a pampered unionized civil servant, and non-union migrant worker.
Every economist will tell you that encouraging entrepreneurs to start companies and generate savings for investment allows us to build an industrial country. The tax system is there to generate funds to run government, to be a safety net for those unfortunate, and to provide infrastructure, healthcare and education for future generatons. Too much government income, as in oil rich countries like Venezuela causes a distorted economy, corruption an generally does not benefit the population at large.
In other words, the private sector, taking risks, generates wealth, which should be taxed appropriately, but not so much as to cause companies to leave. Great Britain, under many years of labor rule, created a lazy and arrogant working class while destroying many industries with excessive taxation. Margaret Thatcher tried to reverse some of that and kept Britain from becoming another Greece.
@Docnick: “Never in the history of the world has the working class been so well off.”
Never in the history of the world has anyone been so mistaken.
By any measurable standard, the middle class has been experiencing a decline in standard of living since at least the late 1960s. Adjusted for inflation, the average middle class salary has been in near constant decline. It’s only when you ignore inflation that the average middle class salary looks better than it’s ever been.
Another measurable standard is to look at how many people with middle class salaries are living without health insurance because of the cost.
I get the feeling your last paragraph suggests that public spending doesn’t generate wealth. If that’s the case, I disagree. For example, public K-12 education and public universities generate wealth with taxpayer money. The interstate highway system, bridges and other roads generate wealth because they enable businesses to thrive.
Margaret Thatcher was a hero to some and a villain to others, and what would have happened without her policies is nothing more than speculation. You don’t know that GB would have ended up like Greece. There are so many differences between the two cultures and how they treat government and taxes that they are really nothing alike.
“By any measurable standard, the middle class has been experiencing a decline in standard of living since at least the late 1960s. Adjusted for inflation, the average middle class salary has been in constant decline.”
I can find no facts to support that statement. Even web sites complaining about income inequality talk about how middle and lower income levels have failed to RISE as much as the wealthy. A reasonable complaint, but very different from your statement.
I would argue that just looking at adjusted income doesn’t tell the whole story. In 1967 the average price of a house was 3X the average income. The price of the average new small sedan car was about 25% of the average income. Today, the average price of a house is probably 5X average income and the price of a new small sedan is perhaps 65% of average income. Tax burden has also risen.
All factors considered, I have no doubt that discretionary income has dropped and siposable income has largely dried up.
TSMB - where’d you come up with all that? Cars today on an inflated adjusted basis are about the same as they were, and tax burdens (federal at least) have dropped across the board.
Nice to get some real hard data. Yes, the working class Americans have seen their net incomes drop in terms of real purchasing power. However, the working class in nearly every other country has seen a significant increase.
One of the reasons is the steep decline in highly paid, low skilled union jobs in the US. UAW membership has dropped steeply and manufacturing jobs requiring little skill have been largely outsources overseas. However, if you want to work hard, you can still earn an incredible salary in the Alaskan oil industry.
However public service union jobs are as cushy as ever. California has been almost bankrupted by the aggresisve demand of public servants.
The average house size in the US over that “declining” period has increased in size from 1400 sq ft to 2400 sq ft. Somebody must be able to afford these mortgages.
Overall in the US the nature of work has changed, and an unhealthy gap has developed between those with steady jobs and those without. The latter is more and more being carried out by foreign (legal or otherwise) workers without organized representation.
My first steady job out of school gave me a salary that took 6 months (before tax) to buy a stripped down VW Beetle. My son’s first job out of school paid enough to buy a stripped Hyundai Accent with only 3 months salary. And the Accent is a better car than the classic Beetle.
Every dollar of “earned income” up to $110,000 has FICA paid on it. Capital gains is not subject to FICA taxes. It suits the interests of those who make those charts to ignore the truly wealthy whose tax rate is only 15%, and the truly poor who pay the FICA tax PLUS income tax on their wages. The poor pay a greater percentage of their income in taxes than the wealthy but it doesn’t suit anyone to include all the facts in their charts.
Does the chart above mention capital gains at all? No. And capital gains is the income of the wealthy, not earned income.
Here’s more data. Note you’d have to be making over $10 million for capital gains to be more than 50% of income. Now you’re into the top tiny fraction of a %. The “Top 1%” that folks are so fond of hating starts at $370,000 in adjusted gross income, with less than 20% coming from capital gains.
And some additional facts:
"In The Journal of Economic Perspectives (Winter 2007), Messrs. Piketty and Saez estimated that “the upper 1% of the income distribution earned 19.6% of total income before tax [in 2004], and paid 41% of the individual federal income tax.” No other major country is so dependent on so few taxpayers.
A 2008 study of 24 leading economies by the Organization of Economic Cooperation and Development (OECD) concludes that, “Taxation is most progressively distributed in the United States, probably reflecting the greater role played there by refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. . . . Taxes tend to be least progressive in the Nordic countries (notably, Sweden), France and Switzerland.”
The OECD study—titled “Growing Unequal?”—also found that the ratio of taxes paid to income received by the top 10% was by far the highest in the U.S., at 1.35, compared to 1.1 for France, 1.07 for Germany, 1.01 for Japan and 1.0 for Sweden (i.e., the top decile’s share of Swedish taxes is the same as their share of income)."
see
Also, the prior plots of total income INCLUDE capital gains income. It’s not a secret, it’s reported to the government.
And are you really trying to convince me that you are not taking full advantage of the capital gains tax, @texases? You surely don’t want me to think that you are that out of touch with reality. Or possibly you think that I am…
