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Sunday 3 March 2013
Income Inequality: 1 Inch to 5 Miles

If we look at the half-century from 1961 to 2011, ignoring inflation, we can see how federal tax burdens have shifted, especially the Social Security tax. It expanded from 3.1 percent of GDP to 5.5 percent. That tax stops this year at $113,700 of wages, just about the threshold for the top 10 percent.

Over those 50 years, federal corporate income tax receipts grew 764 percent and personal income taxes 2,540 percent, while Social Security taxes soared 4,881 percent.

Visualize it this way: Increases in national income are becoming more and more concentrated on the top rung, while the combined federal income and payroll tax burden grows down the ladder, where incomes are getting smaller.

That is a lot of stress being placed on people between the bottom rung and the top. I think it is more stress than the social ladder can bear, although when and how it will break no one will know until it happens.

Tax policy is driving these trends.

Ponder again that ratio in income growth after 45 years between the vast majority and the top 1 percent of the top 1 percent — $59 more to $18.7 million more. For each extra dollar of annual income going to each household in the vast majority, an extra $311,233 went to households in the top 1 percent of the top 1 percent. One inch to almost five miles.

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    “if you are not outraged, you are not paying attention.”
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  11. shrinkrants reblogged this from azspot and added:
    Next time someone you know speaks of “income redistribution” tell them about this.
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