Thomas Piketty Ran The Numbers On Income Inequality. Here’s What He Found.

[Triana]

At the American Economic Association conference this week, economists Emmanuel Saez, Gabriel Zucman, and Thomas Piketty released their preliminary research that uses a new analysis of tax, survey, and national accounts data. That’s more accurate, they say, than just looking at tax data, which misses huge chunks of the actual income people bring home.

The new analysis disputes previous findings that the bottom 90 percent of Americans have seen a slight decline in income since the late 1970s. Instead, the economists say, their income actually increased slightly, by 0.7 percent annually. But the data still corroborates the story of increasing inequality between most Americans and the richest. The incomes of the wealthiest 10 percent grew faster than everyone since 1980, they found. Worse, incomes for the top 1 percent grew about four times as fast as the bottom 90 percent in the same time period.

The data revealed other disturbing trends as well. Until 1980, income for the bottom 90 percent grew at the same pace as the rest of the economy. But after that point, incomes slowed down while the economy kept growing.

Along the same lines, income among the top 10 percent and the bottom 90 used to grow at about the same rate. But since 1980, it’s grown faster at the top and slower at the bottom.

Part of what’s happening is that the source of the top 1 percent’s income has changed. Up until the late 1990s, most of the growth was driven by the rich getting higher wages. But since then, it’s been driven by capital income — money made from returns on investment. That jibes with a past study that found that lowered tax rates on capital gains income are “by far the largest contributor” to growing income inequality.

THE REST:

http://thinkprogress.org/economy/2016/01/06/3736424/income-inequality-saez-zucman-piketty/

[hifiguy]

1. Piketty's monumental book

"Capital in the 21st Century" is absolutely must reading. He's always the smartest person in any room he is in and he GETS it, with the facts and figures to back up his conclusions.

[safeinOhio]

4. Seems simple

Large investment incomes need much higher taxes.

[hifiguy]

6. Piketty's solution

is a progressive global WEALTH tax, levied annually, on wealth -not income - over $250-300K. He realizes it's a utopian proposal, but the thought of seeing billionaires hand over 3-5% of their accumulated ill-gotten gains every year is a wonderful thing to contemplate.

[safeinOhio]

9. I can't remember who came up with this a few years ago.

Once every 10 years a 10% on wealth over $10million. The budget would balance forever.

[Warren Stupidity]

10. That's a horrible idea.

A tax on simple wealth over 250k would hit millions of very unwealthy homeowners with yet another property tax. Perhaps you might consider reinstating capital gains taxes - a tax on income producing wealth - to prior levels rather than yet again punishing average people for the sins of the billionaire class.

Just treat income from investments the same as income from wages.

[zentrum]

13. Okay then..

…..change the amount above which you tax more.

What he wants is a world wide progressive tax and the end of the Fed and other central banks. If 250K is too low for American standards, then adjust to our country. 250K in a poor country like Mexico is immense. I think that's how a progressive tax works.

He wants to lower taxes on the middle and working class.

(And BTW, if I earned 250K I would be willing to pay more in taxes if it changed the entire state of the 99%. My tax dollar would then actually be helping my life more too. Because we'd have great public schools, safer neighborhoods, less prison industry, more infrastructure, healthier people, more democracy in actual practice. It's a no-brainer.)

[Warren Stupidity]

15. "if I earned 250K" - I'm not sure we are using "wealth" to mean the same thing.

I could own a 250K house and earn 50K in wages from a job. My wealth, if my only asset is my house, is 250K. My income is 50K.

[passiveporcupine]

19. Would you own that house, or would you have a mortgage on it?

If you were wealthy, you might own it. But I think you are forgetting how progressive taxation works. It usually exempts the first 250K if that is the starting point, so it's only wealth over and above the 250K that would be hit with the wealth tax, unless I'm misunderstanding this.

And who determines the value of the house/property? City property tax valuations? If so, it's probably valued at below it's actual salable price.

[GummyBearz]

21. "If you were wealthy, you might own it." - just not true

My parents bought a house in California in the 70's and have paid it off. Their house is now worth a lot of money. They are both retired and no way could they pay even 5% of what that house is worth. This system would kick middle class retired people out of the homes they have lived in for 50 years. Come up with a better idea

[hifiguy]

25. They'd be paying a tenth of a percent or two

according to Piketty. Only people with wealth in the tens of millions or more would be paying 3-5%.

[passiveporcupine]

29. If they are both retired and still lliving in the same house

they probably would not qualify for the wealth tax, because without putting it on the market for sale, it's taxable value is much lower than it's salable value. Cali taxes hold the value until you sell it..then it jumps up.

So I doubt people in that situation would be affected.

And maybe the law should exempt the house you actually live in, unless you have multiple homes and move around. Just offering a suggestion to protect elderly people who have valuable property but live in it.

But again...the real kicker is, it's not the first 250K you get taxed on. So, if your house is appraised by Zillow at one million or more, but you live in it and your taxable value is still a little over 100K (because if you didn't have a low tax valuation like that you probably would have lost the house long ago if you don't have decent retirement funds), I seriously doubt your zillow valuation is going to be used.

I don't think anyone is out there trying to screw the little people. But I do understand the "panic" that even the possibility of something like this happening can cause. I panic every time I hear talk of cutting social security, because it's all I have to live on. Then after my panic calms down a little and I think about what I'm hearing,I realize it would not apply to me because I'm already retired. The cola does apply to me and that pisses me off.

My Mom just passed in November, but she was in her house 54 years, so it's worth a couple hundred K now, even though they bought it at about 20K I think? So no...situations like that should not be allowed to break a homeowner with little actual living income. She was having to pay high property taxes on it, and the only reason she could afford it was that it was paid off...only insurance and taxes due. And she did not live in a place like silicon valley where property values are beyond ridiculous. She had SS and some income from her school union pension...she was an office worker, not a teacher, so she didn't make a lot. I understand your concerns, but I think they can be taken into consideration when implementing a tax like this.

[hifiguy]

32. A far better explanation than mine

and much more like what Piketty is proposing.

[Warren Stupidity]

33. That's an improvement but not what was originally

suggested. I'm still opposed to taxing non-productive assets. I hate existing property taxes for the same reason. Tax income no matter what the source is and tax all income on a progressive rate scale.

[passiveporcupine]

36. Lots of people living in a community are homeowners without income

other than social security or disability. So should they be taxed on their income? They, like me, could be struggling to make it on what little they have. Of course, if you don't make enough you don't have to pay income taxes. And it can be hard to pay property tax on low income too, so I cannot afford to live in a nice house here because of property taxes...so there is that.

I'm not sure how I feel about this. If I were wealthy, and didn't have to pay property tax on the mansion I'm living in, and didn't have a source of income (just lots and lots of money stashed away, say inherited from my family)...I'd not be contributing anything to the community I live in. I'm not sure that's OK. I think you need to be contributing to the community you live in, and own property in.

I think paying taxes on property, commits you to the way money is used in your community. You can live in your community and work in another state and all your income tax goes to the other state. That happens here where I live all the time, because I'm close to state lines.

[Warren Stupidity]

28. " If you were wealthy, you might own it." - or if you live in your house for 30 years.

So it is yet another tax on being a responsible old person.

[passiveporcupine]

38. That wasn't my point

I actually back Cali's property tax laws to a point. I don't believe elderly people should have to leave their homes because they cannot afford property taxes on property that has gained value over the years. Once you reach a certain "retirement" age, and no longer have income other than SS and/or retirement funds, I think you should no longer have to pay property taxes on your primary residence. Within reason of course. Maybe setting a limit of how much is allowed to be untaxed. If your primary residence is the Hearst Castle and land, I might think that needs adjusting.

[Warren Stupidity]

40. Wouldn't it be much simpler to tax all income?

[hifiguy]

17. It would be steeply progressive according to Piketty.

At least as I remember it from reading his book a few months back. People with small amounts of wealth would be paying something like a tenth of a percent but billionaires would be paying 3-5%.

[Warren Stupidity]

27. Again there is a better approach, one we had in place before the Reaganization pf everything.

I'm fine with taxing income producing wealth - just tax that income the same as all other income. But non-productive assets like houses should not be taxed until they actually produce wealth, as in when they are sold.

[passiveporcupine]

30. What about real estate developers who might own a lot of property

of high value and are sitting on it for the prices to go up even more. A primary home that you live in, is one thing. It's not considered "income" for your home value to rise as you live in it, or even as you put money into it to develop it and increase it's value.

[Warren Stupidity]

31. They get taxed when they sell. It was a system that worked just fine until we broke it.

[ChiciB1]

20. So Many Times People Don't Stop & Realize How Much

they're being taxed as a homeowner as a sample. Our local hospital has to take people in who never pay their bill so I pay a hospital tax. I pay taxes for garbage pick up, utility taxes, fire taxes, school taxes, property taxes, just to name a few.... one could add more to the list. Just saying that many don't ever think about these taxes most of the time.

[ChiciB1]

18. I Got The Book As A Christmas Gift...

Not an easy read for many, but it's what I wanted. I'm so glad I have it, just started it. My one problem is that I really dislike having to stop and start reading any book. But, life interrupts and it's very, very busy for me right now.

I agree with your findings about the book! It's a must read, but too many people don't want to digest economics at this level. Even my son-in-law said this to me.

[hifiguy]

22. The analytical parts in the first 60% of the book are

heavy reading. The last third or so is much easier going, and that's where the conclusions and policy proposals are. It's worth the effort!

[ChiciB1]

23. Oh, Have No Doubt... I'm Going To Finish It All!

I wanted his book for some time, just never got around to buying it. Actually was reading a book about John Adams and also Oliver Stone/Peter Kuznick's book "The Untold History of the United States." I put both aside to start Piketty's. Thought his deserved priority given where we are now in this country.

[hfojvt]

39. well I kinda don't like the way

the article lumps the whole bottom 90% together, and then runs to the legendary 1%.

As if there is no substantial difference between the 88th percentile and the 16th.

As if the people at the 96th percentile are NOT very well off. (even though they are not part of the legendary 1%).

[malaise]

2. Reagan - Neo-liberalism

that simple

[safeinOhio]

5. You've got it

Neoliberalism=workers are parasites. Ruthless rich are gods.

[Enthusiast]

11. Yooge plus one!

[tecelote]

3. "Between 2009 and 2014, the top 1 percent took home 58 percent of all income growth."

Time for America to take a hard left turn.

Bernie. He's the ticket.

[hifiguy]

7. Damn tootin'!! nt

[Enthusiast]

12. Huge +1!

[Rex]

8. And yet some still love this form of economic terrorism.

We will probably never recover from the damage done to this country by Maggot Reagan.

[JDPriestly]

14. K&R. I hope that Bernie starts using these numbers.

We need to revise our tax code but not the way the Republicans want to revise it.

[murielm99]

16. By all means,

buy Piketty's book and read it. I was amazed by how simple and sensible it was.

[Uncle Joe]

24. Kicked and recommended.

Thanks for the thread, Triana.

[smirkymonkey]

26. K&R

[Takket]

34. 1980

"Until 1980, income for the bottom 90 percent grew at the same pace as the rest of the economy. But after that point, incomes slowed down while the economy kept growing. "

Gee, what happened in 1980 that fucked everything up?

[Triana]

35. . . .

"Part of what’s happening is that the source of the top 1 percent’s income has changed. Up until the late 1990s, most of the growth was driven by the rich getting higher wages. But since then, it’s been driven by capital income — money made from returns on investment. That jibes with a past study that found that lowered tax rates on capital gains income are “by far the largest contributor” to growing income inequality."

[Kablooie]

37. Reagans dream come true.

He knew what he was talking about.
Design a system where the rich can increase their wealth immeasurably without any extra effort at all. Wealth produced from nothing but wealth. The eternal cycle that ensures the wealth will not be used to benefit anyone. It simply becomes a larger number in an accounting book so the wealthy can brag about it to friends.