I think what you've identified is that the poor have gotten better off due to technical innovations reducing the price of basic goods and enhancing their functionality -- while on average wages have tracked inflation. This is a systemic improvement.
Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US was over 80%, peaking at 95%. Now its 37%. The estate tax for much of the 1900s was 80%. Now it's practically 0% for all intents and purposes.
The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened. Systems designed to keep the two groups together have been chipped away at, and are buckling. This is a result of social policy.
>For much the 1900s the top income tax bracket in the US was over 80%,
Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up.
The CBO has all this type of data.
>This is a result of social policy.
It's more the result of changes in the world economy. Computers have made skilled jobs vastly more productive, while unskilled like making burgers or painting exteriors have not seen anywhere near the gains.
And as the rest of the world is catching up quickly to first world quality of life, the advantage the poor in the US had on the world labor supply is much less.
>while on average wages have tracked inflation
Only for white men in the US (and most first world countries). Poor women and minorities have seen vast gains in income over the past 40 years in the first world. The rest of the world has seen a massive gain for the poor.
Remember, the poverty line in the US is about the top 15% of incomes worldwide. Our poor are quite rich by world or historical standards. You used to be able to check this at globalrichlist.com, but it's now down. I suspect you can find this info elsewhere.
As some easy evidence to check, poverty line for a household of three in the US is $21k (and that pre-tax transfer. Post transfer is about 40k). Here's per country median incomes.
>Top tax is not the same as effective tax rate. For example, when Reagan lowered the top brack from 50% to 37% while also closing taxable shelters,the amount the rich paid actually went up.
This is something a lot of folks miss. The US has the most progressive tax system in the western world. The top brackets pay a much larger percentage than anywhere else.
Estate tax being practically zero means huge quantities of un-earned wealth are transmitted from generation to generation. This isn't true in most first-world countries.
The top tax rate in the US isn't nearly as high as many European countries.
The specific quantity of money that is collected as tax revenue has much more to do with just how successful the higher classes are in the US as compared to other countries. This is a function of (wealth inequality multiplied by the top tax rate) not of how progressive the system is -- certainly not at the federal level.
If you have citations, they are much welcome.
The post you're replying to missed many critical factors, such as the fact that the average salary in constant-dollar terms has remained the exact same since 1964 in the US. [1]
>The top tax rate in the US isn't nearly as high as many European countries.
And the bottom tax rate is much much lower than in other countries. The top 3% of earners pay 50% of income taxes in the US. Nowhere in Europe will you find this.
Remember, in addition to their flatter income tax rates, Europe also has 20% VATs which is extremely regressive.
Payroll taxes are both regressive, substantial and non-refundable: 7.65% on each of the employer and employee totaling 15.3%, which stops when you make too much money. This accounts for a further $6273 if you haven’t taken the employee amount into consideration (I didn’t see it in your breakdown) and $3136 if you did but neglected that this is paid on your behalf by your employer and you never see it. This alone zeros out the net credit you mentioned.
Then of course since we’re comparing the rest of the world to the US, you need to add a couple hundred dollars per person per month - easily $10K for a family per year - for health insurance that gives them a $5K out of pocket maximum per year they can’t afford so they don’t die of cancer (but can’t afford an early diagnosis) and can’t afford their insulin. All of which is included in the tax burden and covered in Europe and Canada and Australia and New Zealand and Taiwan, to name a few. This amounts to a regressive 25% tax if you’re comparing directly (as good health insurance costs rich and poor the same, but represents a disproportionately higher amount of take-home pay for the poor).
I never understood the “freeloader” narrative, payroll taxes easily cancel it all out.
I guess what I would say is that "best in class" clearly isn't good enough given the results and the environment in which these decisions are made. Looking at the results, I'd say it's not working. Either we need to turn up the dials, regardless of what everyone else is doing, or find some new dials, but the status quo won't do.
> The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened.
That's a fairly common perception. Most often summarized in "the rich get richer, the poor poorer" (at least on a relative basis).
I was born in a Communist country, and I have another perception. Poverty has different levels. The most abject poverty is when you go hungry. My family didn't experience that, but we experienced the next step: severe food rationing. War-style rationing in peace times. 90% of the population in my city being subjected to that (the elite party members were not, obviously). My parents driving to a neighboring city to be able to buy potatoes and onions. My kids nowadays spend too much time on iPads and Xbox, I was spending too much time waiting in line to buy bread.
And I can only guess that there were hundreds of millions like me in all the Communist world (China included). For the most part this type of poverty has been eradicated.
That's a very subjective opinion and pointing out a completely different issue.
I remember going to another country to get pasta and rice by the bag - so that we had something to eat... just 25 years ago. That has little to do with poor growth distribution in US.
Having lived in a post-communist country and gaining wealth, I can see now in US that it's drastically harder to be better off here. It's a case of "everyone starts as poor" comparing to "poor have a lot of obstacles in holding onto wealth". You need at least $1mil in generational benefits to be well off in US.(either cash, quality education or other means)
The worst part for US - even moving to a rich place like NYC will not give you the necessary boost anymore(median NYC income is below national median)
Food insecurity is not specific to communist countries, it's a massive problem in capitalist countries today. The US is the richest country in the world and 37 million people experienced food insecurity in 2018
- https://en.wikipedia.org/wiki/Hunger_in_the_United_States
>"Food insecurity" is nowhere near the same thing as going to another city to stand in line for potatoes and onions.
What's the difference? Millions of people in the US have to line up at soup kitchens and food banks in order to avoid starvation.
>On the whole, decentralized distribution is always better than when centrally controlled
That's a strong claim; I'd be interested to look at evidence for it if you have any.
One major counterpoint would be the enormous reductions in poverty that China has achieved over the last decades. Quoting from Wikipedia here:
>The dramatic progress in reducing poverty over the past three decades in China is well known. According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms.
What? China is not a command economy. It used to be, pre-1970s, but no longer is. Companies adjust production in accordance to price signals, not instructions from Beijing. This is not an appropriate counter-example in any sense.
You think that half of governments have more control over their economy than China? You keep bringing up China not being a command economy today. I never said they were, just that they exercise relatively more control over their economy than other states.
In case you don't know, in addition to the portions of the Chinese economy directly owned by state-owned enterprises, the Chinese government exercises a large amount of control over the private enterprises in the country. You might find this article helpful: https://www.theguardian.com/world/2019/jul/25/china-business...
All of this is distracting from my point earlier which is what exactly do you see as the difference between hunger experienced by people in communist countries in the past and the 37 million people in the US who experience food insecurity each year today? You mentioned that people don't have to "line up" for food in the US, but thousands of people do, every day.
I said food distribution is better in decentralized systems than in command economies. You brought in china as a counterexample, probably because you are unaware that they haven't had a command economy in almost half a century
What I disagreed with was when you said centralized control is always worse, not a command economy. I asked for any evidence you have for that claim and you don't seem to have any.
I'm aware of the market reforms in China over the last half century. They've moved the country closer to something like capitalism, but it's still incredibly far from anything in the West.
You seem to be unaware that ~30% of the Chinese economy is owned by state owned enterprises, and China in general, or you wouldn't say something as incorrect as "Compared to other countries, China is around the median in terms of how much control the government has over their economy."
But again, you're dodging the question of why you believe, in the US, widespread hunger is an unfortunate necessity, but in communist countries, it was the result of the economic structure. I'd encourage you to consider why you believe that, and whether it's reasonable.
Meanwhile, the rich have gotten exponentially richer, as public policies have shifted ever more in their favor. For much the 1900s the top income tax bracket in the US was over 80%, peaking at 95%. Now its 37%. The estate tax for much of the 1900s was 80%. Now it's practically 0% for all intents and purposes.
The poor have gotten slightly better off, the wealthy have gotten dramatically better off, and the gap between the two has widened. Systems designed to keep the two groups together have been chipped away at, and are buckling. This is a result of social policy.