aside VOX Graphs To Explain Economy/ US Congress Needs To Learn the Basics

The source for the below graphs: 5/23/16 VOX report,This cartoon explains how the rich got rich and the poor got poor,” by Alvin Chang.

“And let’s say the dollar bills below represent all the income in America:”

“In 1967, this is how that $100 was split up:’

“Things stayed about the same for the next decade and a half.”

“Then in 1981, before Ronald Reagan became president, the wealthy began to get wealthier while the poor got poorer.”

“By the time Reagan left office in 1989, this is how that $100 was split up”

“Notice how everyone but the richest has a smaller portion of the money.”

And that trend continued

“Here’s what it looked like in 2014, six years into President Barack Obama’s term:”

“In short, we’ve seen quite an increase in income inequality since the late-1970s.”

“There are many reasons economists believe wealth inequality is a bad thing”

“One reasons is it means everyone doesn’t share America’s economic growth. Another reason is that it prohibits social mobility — and it turns out social mobility in the US might be worse than once thought.”

“One metaphor often used is that when the rungs of a ladder get further apart, it’s harder to climb.”

“But perhaps the best argument against income inequality, though, is that it’s a threat to democracy. If a few people control most of the money, then they can control political outcomes.”

“But how did this happen?”

“We need to go back in time, starting with the 1930s, to really understand.”

“So here we are in the 1930s. This is when we start seeing a strengthening of labor unions, a federal minimum wage, the establishment of Social Security and unemployment insurance, and increased taxes on the wealthy and corporations. Economist Paul Krugman calls this phenomenon “The Great Compression” because these policies created a lot more parity — and held inequality at bay for about 40 years.”

“You can see that in this graph. It shows that, from the 1940s through the mid-1980s, the richest one person got a much smaller portion of the whole:”

“That lasted until the late-1970s — and you saw what happened from then on. It’s what economists call “The Great Divergence,” or a great increase in wealth inequality.”

“So, what caused this?”

“Wealthy people began making more of their money from investments and business income”

“Everyone else continued to make money on salaries and wages. Even from 1996 to 2006, things changed drastically:”

But since the 1970s, we’ve significantly reduced how much we tax investment income

“The most we’ve taxed investment income is about 40 percent. That was in the late-1970s. Since then, rates have been much lower. In fact, until 2013, the most investment income could be taxed was 15 percent. It’s now about 25 percent.”

“Keep in mind that, if you’re filing as a single person, your salary and wages starting at $38,000 are taxed at 25 percent — and from there the rates only go up.”

“Since it’s the rich who made more and more money on investments, taxing investments less helped them a lot.”

“American tax and transfer policies are among the worst in reducing inequality, compared to other developed countries”

“The below chart shows how effective tax rates have changed. Even though we have a relatively progressive tax system, we now have some of the lowest tax rates in decades. Low tax rates mean the US collects less revenue — and can transfer fewer resources back to taxpayers.”

“Here’s the same chart, but showing who controlled Congress when these effective tax rates changed:”

“This isn’t just a story about tax policy. Salary growth has also been higher at the very top of the economic ladder. CEO, athletes, managers, and financial professionals have seen a huge increase in wages.”

“So the past half century has been quite prosperous for a small number of people.”

“Meanwhile, the policies that help everyone else have suffered.”

The federal minimum wage has been going down.

“Adjusted for inflation, minimum wage has gone down by about $3 an hour.”

“And labor unions have shrunk dramatically”

“The percentage of workers who are part of labor unions has plummeted. Studies show unions help workers earn more.”

“Meanwhile, some argue that technological advances and the decline of manufacturing jobs has made education an even bigger determinant for future income.”

That means access to education is more important than ever before — and lower degrees become less valuable

“The chart below shows that those with bachelor’s degrees or less have seen stagnant or falling wages, while those with master’s and doctorate degrees have generally seen rising wages.”

“But despite all this some people (especially republican legislators), think there’s no problem.”

4 comments

  1. Curious what you make of this story:
    Trump: ‘Obamacare Has Been Repealed In This Bill’

    http://www.breitbart.com/video/2017/12/20/trump-obamacare-repealed-bill/

    Wednesday during a cabinet meeting, President Donald Trump discussed the Republican’s tax bill and said the repeal of individual mandate in the bill meant Obamacare has “essentially” been repealed.

    Trump said, “The individual mandate is being repealed. When the individual mandate is being repealed that means Obamacare is being repealed because they get their money from the individual mandate. So the individual mandate is being repealed. So in this bill not only do we have massive tax cuts and tax reform, we have essentially repealed Obamacare. And we’ll come up with something that will be much better. Whether it’s block grants or whether it’s taking what we have and doing something terrific. But Obamacare has been repealed in this bill.”

    Did the Trump administration really find a workaround to repeal ACA or this just rhetoric?

    Like

    • Dear 1EarthUnited,

      This one move has guaranteed that the republicans will lose bigly in 2018. Because of this one move, everyone’s health insurance costs from premiums to copay requirements and deductibles will be increased by an amount that negates any tax cuts benefits for the middle/ poor class for the first few years.

      They will be seeing this before they see any tax cuts.

      But the Rs don’t know when to quit.

      This move of doing away with the Obamacare mandate where everyone is required to have health insurance or be subject to a fine, does deal a major blow to Obamacare. This means that healthier, younger folks will gamble by opting out of purchasing health insurance. This leaves the insurance companies insuring older, less healthy folks which will increase its costs that then gets transferred to their consumers. It is not dead but it will be more expensive.

      Hugs, Gronda

      Liked by 1 person

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