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::The basic problems with increasing income inequality in my opinion are that it reduces ] (increasingly large segments of what used to be the middle class can't afford much more than essentials, which pushes production and total employment down) and monopolizes the labor force (meaning that there are fewer employers requiring fewer workers, but those who remain consolidate and take advantage of the lack of competition, leading to less choice, market abuses, and relatively higher prices.) There are a multitude of other adverse affects listed in '']'' and similar works, but in my opinion almost all of them are secondary. I agree that these facts need to be explained, but I've encountered very strong opposition for the high quality peer reviewed sources I've inserted explaining these topics, so I invite others to find their own and give them a try. ] (]) 21:19, 30 July 2014 (UTC)
::The basic problems with increasing income inequality in my opinion are that it reduces ] (increasingly large segments of what used to be the middle class can't afford much more than essentials, which pushes production and total employment down) and monopolizes the labor force (meaning that there are fewer employers requiring fewer workers, but those who remain consolidate and take advantage of the lack of competition, leading to less choice, market abuses, and relatively higher prices.) There are a multitude of other adverse affects listed in '']'' and similar works, but in my opinion almost all of them are secondary. I agree that these facts need to be explained, but I've encountered very strong opposition for the high quality peer reviewed sources I've inserted explaining these topics, so I invite others to find their own and give them a try. ] (]) 21:19, 30 July 2014 (UTC)
:::"The basic problems with increasing income inequality my opinion are that it reduces ].". It may even be a common theory, but it is '''not''' fully accepted among ''mainstream'' economists. It seems to be accepted among those economists which ''you'' consider mainstream. — ] ]
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The quotation saying that the U.S. has the most income inequality in the history of the world is absurd. That's true if you measure by raw dollar difference between rich and poor, but economists measure this thing by proportional difference. See the Gini Index; the U.S. has a lot of inequality compared to most other Western countries, but much less than most developing countries. Steeletrap (talk) 20:54, 15 May 2014 (UTC)
Is it true but absurd when many people are working to make it larger in both absolute and relative terms, or just true but imprecise? EllenCT (talk) 21:13, 15 May 2014 (UTC)
There is inequality. But it doesn't seem right to factor in what is really a poor person in NYC who makes $50k annually, but does not live very well at all. On that same income in the South (outside major cities) a person would live quite well indeed on 50k.
The other problem I have is that people who are receiving a) Section 8 housing allowance, b) government-owned housing (which may be encompassed by a), c) food stamps, d) help with heating (in the north), e) subsidized health care/Medicaid, and other "help", does not seem to have that factored in. So a person poor in actual income, is not all that badly off after some subsidies are counted. But they aren't counted here. For some, this help is substantial. Maybe 10-20k annually. Student7 (talk) 21:03, 20 May 2014 (UTC)
ITEP tax incidence graph is contradicted by reliable sources and needs to be removed.
This graph is sourced to a partisan lobbying group called Citizens for Tax Justice (ITEP is the group's "think tank" arm). It purports to show that the top 1% pay a lower total tax rate than the preceding 19%, but it has no corroboration and its internal federal component is dramatically contradicted by the federal effective rates given by the Tax Policy Center and Congressional Budget Office.
That's a huge difference that persists over time, and isn't a one year fluke. Here's a CBO breakdown over time that consistently shows the top 1%'s effective federal income tax rate to be around 30%. The Tax Policy Center is also a liberal leaning group, a joint creation of the Urban Institute and Brookings Institute, but it's prominent, widely cited, and its hard incidence numbers are generally respected across political lines. The CBO is obviously also much more prominent and widely cited than the CTJ is. That the TPC and CBO independently derive figures that closely track each other time reinforces their credibility as reliable sources. The Tax Foundation, the conservative equivalent of the TPC, is a long established, respected, widely cited think tank that has directly criticized CTJ/ITEP's methodology in producing the reports used as the graph source. CTJ is the outlier here, and also happens to be less prominent and more aggressively partisan than the ideologically diverse outfits that contradict it. At the very least its results are hotly disputed, and it doesn't warrant the implied authority of a visual image here. VictorD7 (talk) 18:31, 19 May 2014 (UTC)
I agree that the ITEP findings come from a black box which makes it difficult to assess how they derived their numbers. I will add that 2011 is a long time ago for tax rates given the changes in 2013 with new investment income taxes and medicare surcharges on high income households, plus more aggressive phaseouts of deductions.Mattnad (talk) 18:45, 19 May 2014 (UTC)
(edit conflict)Note that there are two separate graphs in the CTJ paper linked to, with respective corresponding textual descriptions:
"The share of total taxes paid by the richest one percent (21.6 percent) is almost identical to that group’s share of total income (21.0 percent)."
"The total effective tax rate for the richest one percent (29.0 percent) is only about four percentage points higher than the total effective tax rate for the middle fifth of taxpayers (25.2 percent).2"
The graph used in the article is the "Effective Total Tax Rate" graph, with the value of 29% for the top earners.
The value of 21.1% is shown on the "Incomes and Federal, State & Local Taxes in 2011" table in the pdf file, but not in either of the graphs.
The two values cited above are not shown in graphs in either pdf, but there is an apparently large discrepancy between the two, as you indicate.
That begs the question as to the relationship between the "Effective Federal Tax Rate for the Top 1%" and the "Effective Total Tax Rate for the Top 1%" shown in the graph used in the article, not to mention the different methodologies for calculating the federal tax rate (as opposed to total, of which no mention is made in the TPC pdf. --Ubikwit見学/迷惑18:56, 19 May 2014 (UTC)
I agree it's a bit confusing. If you read the Tax Foundation article cited by VictorD7, the explain some of the logic behind ITEPs numbers. Interestingly, ITEP decided to exclude Federal Tax deductions for state and local taxes, even though they are mostly eliminated by the AMT as well as other deduction phaseouts for higher income households. They also add the portions of FICA paid by the employer into people's tax burden which is NOT paid by the individual (and lets not forget that FICA is mostly forced retirement savings which low income people get back and then some when they stop working). They also excluded the Earned Income Tax Credit which brings down lower income household's Federal tax burden such that the CBO indicates the bottom 20% pay on average a little less than 2% of their income in Federal taxes (not the 5% argued by ITEP). What all of this tells me is that they stacked the numbers to make taxes look as regressive as possible.Mattnad (talk) 19:39, 19 May 2014 (UTC)
Ubikwit, the CTJ just adds the columns together to get the total figure shown in their graph. 21.1% (federal) + 7.9% (state/local) = 29% (total). So hopefully you see that having a radically outlying federal component (around 10 points too low) causes problematic skewing here. VictorD7 (talk) 20:02, 19 May 2014 (UTC)
OK, thanks. I must need some sleep, as I didn't notice those two columns and then the total on the right in the CTJ graph. I see now that the point is that the 29% value is skewed by the low federal component.--Ubikwit見学/迷惑20:44, 19 May 2014 (UTC)
Keep ITEP graph which is consistent with File:Distribution of U.S. Federal Taxes 2000.JPG and figures 18 and 19 on pages 26-8 here. The Tax Policy Center/Peter G. Peterson foundation series are manufactured to mislead people in to thinking that taxes have been or soon will be progressive for the top 1% when in fact their total incidence including transfers and relative lack thereof has become more regressive at a faster rate. The TPC percentage is larger because it is federal income tax only, without the very regressive state and local sales and overall payroll taxes. EllenCT (talk) 06:11, 20 May 2014 (UTC)
Contrary to EllenCT's claims, both her first (Treasury Department) and second (CBO) links show the federal tax rate for the top 1% to be around 30%, close to where the TPC and the CBO source I linked to above consistently have it, and roughly 10 points higher than CTJ does. I ask other editors to weigh in on this and publicly report back which of us is accurately representing the sources, for the benefit of readers who don't click on the links, lest their eyes glaze over and they erroneously conclude this is some sort of "he said/she said" deal. It's really quite simple and easy to see. Also, despite her final sentence above, I'll remind readers that the dramatic contradiction documented in my op is an apples to apples total federal taxation to total federal taxation comparison. EllenCT also failed to explain why she thinks a TPC chart that closely follows results from the CBO and Treasury Department (per her own link) is somehow "misleading", or what motive the TPC might have for being misleading. VictorD7 (talk) 06:58, 20 May 2014 (UTC)
Since you two experts are addressing the issue in terms that a layman like me can basically comprehend, I'll add a comment as to the point I see in EllenCT's assertion.
Fig. 18 appears to show that the rate of "Individual Income Taxes" paid by the top 1% has fallen to less than 20% since 2003-4, and that the amount of "All Federal Taxes" is slightly less than 30% per the last data shown.
If the total amount of income of the top 1 is 21%, as shown in the first graph in the CTJ pdf, then a total tax rate (as shown in the same fig.) of 21.6% would represent a difference of only 0.6%. That would seem to indicate a negligible degree of progressivity that would not prejudice the system as being characterized as "flat".
On the other hand, these figures and data do not speak in the same language with respect to all the issues, so it is hard to see what factors and conclusions should be compared in the respective studies in order to determine what the NPOV would be.
For example, though there is a significant discrepancy between 21% and 30.4%, the discrepancy approaches a negligible level between the values of 29% and 30.4%%. So, even though the CTJ pdf refers to 21% in one graph, in the other graph showing the value (effective Total Tax Rate = 29% for top 1%) that seems to correspond to the value (Average Effective Federal Tax Rates = 30.4% for top 1%) in the TPC graph show closer parity, despite the aforementioned discrepancy between 21% and 30.4%.
It is not clear what the discrepancy between 21% and 30.4 means in relation to the closer parity between 29% and 30.4%, assuming that those are comparable values.
Ubikwit, remember that the CTJ's "29%" rate is for all taxes, including state/local, while the TPC's "30.4% rate is only for federal taxes. Adding state/local to that (even CTJ's uncorroborated figure of 7.9%) would increase the TPC total several points more. But the question here is whether I or EllenCT was accurately relating what her two linked sources said, and you addressed at least one of them by confirming what I said about it showing the top 1%'s federal tax rate at around 30%, which is consistent with the TPC, not CTJ. You didn't comment on the other one. I also encourage others to read and publicly relate what the links show. VictorD7 (talk) 08:37, 20 May 2014 (UTC)
I've seen economists quote the CTJ figures, so AFAIK, it is a reliable source. What this discussion is missing is that the tax laws changed in 2013. Remember the expiry of the Bush tax cuts (originally in 2010), the 'fiscal cliff' and the tax compromise hammered out in late-2012? That compromise raised taxes on the high end. (See here for pretty chart.) I'm guessing that the discrepancy between the sources is largely because one set is looking at current law (after fiscal cliff), and another set is looking at tax incidence during the Bush tax cut years. LK (talk) 09:54, 20 May 2014 (UTC)
I don't think the CTJ figures reflect the 2013 tax year that incorporated the fiscal cliff tax changes, but the TPC figures do not either. The TPC tends to track closely with the CBO calculations which is why their ~30% effective tax rate is close the level indicted by the CBO (as shown in the Krugman article) pre-tax law changes. For a clearer view the CBO indicates higher taxes under 2013 tax law in this chart here. The top 1% tax rate is well over 30% according to the CBO. If you agree with Krugman that the CBO figures are a Reliable source, they don't show an effective tax rate as low as 21% at any time in recent history. What do you think?Mattnad (talk) 10:15, 20 May 2014 (UTC)
Yes he does, but I'd like to get LK's thoughts on whether he thinks the CBOs view of effective federal tax rates, as well as sources that align more closely to them, is the way to go. CTJ seems to be an outlier in this regard.Mattnad (talk) 14:14, 20 May 2014 (UTC)
LK, check again. To highlight the discrepancy between the sources I used TPC and CTJ data from the same year in the op, 2011. I also posted CBO data going back decades showing that the top 1%'s federal tax rate has been around 30% or higher for many years. Despite being a leftist polemic, Krugman simply cited pretty much the same federal CBO data I did, even capturing the recent surge to the mid 30s (though the Atlantic piece he uses as a source combines CBO and TPC data, those last few years being TPC estimates). I'm not sure why you posted it, but it adds even more evidence to CTJ's tax incidence numbers being a totally uncorroborated outlier disputed by the other sources. The 2000 Treasury Department chart linked by EllenCT showed the same thing. LK, I would appreciate it if you would acknowledge these facts (like those two op links are for 2011 not post "2013") to show that good faith, rational discussion is possible here. If we can't start from the same factual premises, or are somehow seeing different versions of reality (maybe extreme software glitch?) then there's little hope for productive collaboration. VictorD7 (talk) 18:09, 20 May 2014 (UTC)
Victor, please refer to the TPC table that you link to, the column 'All Federal Taxes' includes Corporate Income Tax attributed to shareholders. The ITEP report does not attribute the Corporate Income Tax to shareholders. Therein lies the difference. The figures are consistent once you take that into account. AFAIK, the ITEP is a respectable institution whose figures economists regularly use without comment (unlike the Tax Foundation, which has gotten some iffy press). LK (talk) 06:43, 21 May 2014 (UTC)
ITEP FAQ: "How does ITEP estimate the incidence of corporate income taxes? It is generally agreed that corporate income taxes, at both the state and federal level, fall primarily on owners of capital. In accordance with this theory, ITEP’s incidence analyses of state corporate income taxes typically distribute the incidence of the tax according to nationwide ownership of capital assets such as stocks and bonds.....The incidence of the tax in ITEP’s analyses is generally quite progressive, because the vast majority of capital income nationwide is held by the very best-off Americans."
CTJ opinion piece: "The Corporate Income Tax Is Borne by Shareholders and Thus Very Progressive....Corporate leaders sometimes assert that corporate income taxes are really borne by workers or consumers. But virtually all tax experts, including those at the Congressional Budget Office, the Congressional Research Service and the Treasury Department, have concluded that the owners of stock and other capital ultimately pay most corporate taxes. Further, corporate leaders would not lobby Congress to lower these taxes if they did not believe their shareholders (the owners of corporations) ultimately paid them. (In contrast, corporations do not lobby for lower payroll taxes, which are borne by workers)."
I found that via ITEP's website several months ago when this was discussed in depth and it was decided to remove the chart. Here are more quotes from one of those discussions: . Then there's the "Who Pays?" source you just posted. From page 8: "State personal income taxes — with their counterpart, corporate income taxes — are the main progressive element of state and local tax systems." Page 128 shows the national average breakdown, and ITEP attributed a rate of zero corporate taxes to the bottom 95%, 0.1% to the next four percent, and 0.3% to top 1%. Of course that report is just state/local, but it confirms their other public statements about attributing corporate taxes progressively to corporate owners. Clearly corporate taxes don't account for the huge discrepancy between ITEP and the other sources. You didn't confirm that your screen is properly showing the TPC page we both linked to as being for 2011, LK, but I hope you acknowledge that the claim you just made about ITEP not attributing to shareholders was a (good faith) mistake, so third party readers don't assume this is still a point of dispute. I enjoy talking to you, LK. The optimist in me feels you'll turn out to be a reasonable guy, it's just a matter of us getting on the same page regarding the basic facts. Let me humbly suggest that you start taking the assertions of whichever friend has been feeding you info on this topic so far with a well earned grain of salt. PS - ITEP mostly just appears on liberal blogs, and Krugman has had vastly more iffy press than the Tax Foundation, but that's an irrelevant tangent I'll refrain from going down. VictorD7 (talk) 07:49, 21 May 2014 (UTC)
Look, just because the ITEP states that the corporate income tax should be attributed to owners of capital does not mean that the chart that is disputedoes attribute corporate income tax to capital. The figures are totally consistent once you remove corporate income tax. For example, this NYT graphic on tax rates has similar figures, it specifically states that they are based on income and payroll tax rates sourced from the CBO. So it's pretty clear that independent people get similar figures to the ITEP sourced graph if you don't attribute corporate taxes. In any case, ITEP is treated as a reliable source by other sources considered reliable, so Misplaced Pages should treat ITEP as RS, that's pretty much the end of it. (You can take it up with WP:RSN if you believe otherwise.)
I think we should call an end to this. A discussion of that particular graphic is moot. Because of changes to the tax code, any graphic/figures from before 2013 shouldn't be used except to illustrate historic tax rates. Whether to include or exclude corporate taxes and state/local taxes is another issue. My choice would be to either leave them both in or take them both out. As an aside, there are people who disagree with him, but I have yet to see it shown that Krugman has ever made a knowingly false statement. LK (talk) 08:08, 21 May 2014 (UTC)
LK, I just posted quotes from ITEP's own FAQ stating that they attribute to shareholders. I pointed out that your own source shows them attributing corporate taxes extremely progressively. I'm not sure what else one can do. Yes, the TPC and other sources obviously show lower rates if you only count income/payroll taxes (ignoring estate, excises, and corporate), but you can't assume that's what CTJ is doing when their own chart explicitly states it includes corporate taxes. Attributing corporate taxes differently wouldn't mathematically account for the gap with TPC anyway. Do you have a shred of evidence that CTJ/ITEP doesn't attribute corporate taxes to shareholders? PS - Actually Krugman has been accused of lying before and he's certainly been wrong a lot, but, again, that's an irrelevant tangent. We evidently have a difficult enough task just reading the same pages and seeing the same words, so let's stick to establishing agreement on the basic, pertinent facts. Updated reply to your update: No, RS is context specific. Sources are neither stamped "not RS" across the board or approved for inclusion in every circumstances no matter what. It depends on what's being added and where. ITEP is a reliable source for its own views (like the fact that it attributes corporate taxes to shareholders), but its tax incidence figures are nowhere nears as reliable, prominent, or widely cited as those by the Tax Policy Center or CBO. VictorD7 (talk) 08:23, 21 May 2014 (UTC)
Note b states "income includes ... corporate profits net of taxable dividends, neither of which is included in the average cash income figures shown." So they are attributing profits that have not been paid out directly to owners of capital, that seems unusual, and a bit shady to me (leads to double counting I suspect). I've a feeling that is how CTJ got those particular figures from the ITEP model. LK (talk) 08:47, 21 May 2014 (UTC)
Despite some different reasoning, there seems to be strong support for removing the CTJ chart, so I'll go ahead and do so. VictorD7 (talk) 08:32, 21 May 2014 (UTC)
Automatic pov?
For editors who are assuming that income inequality is a "problem," the specifics of why it is a problem needs to be laid out a bit better. This might include a sentence or two from the linked article income inequality. It could be that simple.
Quotes could (therefore) be improved by including people who give reasons for their statements and don't just assume a given outcome is obvious for obvious reasons. On a different topic, for example, "I think the speed limit on state highways should be increased/decreased because tourists are avoiding our state because the speeds they travel are too slow/there are too many fatal accidents attributed to high speeds." Just opining that speed levels should be increased or decreased seems puerile and ineffective IMO. Which is why we should probably not quote politicians! They try to be deliberately vague for credible deniability reasons. Student7 (talk) 14:29, 27 May 2014 (UTC)
We need to know (correlation works here) what the difference is in crime statistics or whatever between more equal states like Utah, Wyoming, and Alaska (besides being rather underpopulated) and DC and Puerto Rico (other than having higher population densities). In fact, might not that account for the differences, in part? High density places have more vigorous populations that stimulate an economy that permits very high wages for some? Low density places have less vigorous economies? Way it looks to me. Maybe different internationally. Right now not sure of this article utility or the Gini index at all. I 'want to believe that egregious income differences create problems, but nothing here seems to show that. More cant than fact. Student7 (talk) 15:01, 30 July 2014 (UTC)
The basic problems with increasing income inequality in my opinion are that it reduces aggregate demand (increasingly large segments of what used to be the middle class can't afford much more than essentials, which pushes production and total employment down) and monopolizes the labor force (meaning that there are fewer employers requiring fewer workers, but those who remain consolidate and take advantage of the lack of competition, leading to less choice, market abuses, and relatively higher prices.) There are a multitude of other adverse affects listed in The Spirit Level: Why More Equal Societies Almost Always Do Better and similar works, but in my opinion almost all of them are secondary. I agree that these facts need to be explained, but I've encountered very strong opposition for the high quality peer reviewed sources I've inserted explaining these topics, so I invite others to find their own and give them a try. EllenCT (talk) 21:19, 30 July 2014 (UTC)
"The basic problems with increasing income inequality my opinion are that it reduces aggregate demand.". It may even be a common theory, but it is not fully accepted among mainstream economists. It seems to be accepted among those economists which you consider mainstream. — Arthur Rubin(talk)
