Ron Johnson thinks that Income Inequality is the American way

[Torie]

Here's a better chart in response to Ernest. This is also from the historical household income data at the US Census. I found that the top of the second quintile (40%) was the most stable in real dollars, only increasing 5% from 1969 to 2014, so I used that to compare the other quintiles. The bottom quintile remained almost unchanged compared to the second quintile during that span of years and is very close to half the second quintile.

The growth is in the upper three quintiles. The middle quintile grew about 17% compared to the bottom two quintiles. Since the bottom two quintiles had little growth in real dollars, that 17% is close to the growth in real dollars since 1967.  The fourth quintile grew at 35% compared to the bottom two quintiles, or about double the rate of the middle. The limit for the upper 5% grew at 54% compared to the bottom two quintiles, or about triple the rate of the middle. My apologies for the year sequence which looked fine until the software rendered it to a bitmap.

Does this chart exclude transfer payments from its numbers? My assumption is that the ratcheting up of income by the top quintile has generated more revenue to finance increased transfer payments for the poor. Over time, some are worried that the ever increasing percentage of the population getting substantial transfer payments, will take on a life of its own, ala Greece, leading to severe macro-economic problems. The fix of course, is to destroy the teachers' unions, and professionalize the teacher class, but I digress. Until then, I expect current trends to continue. Which is a great tragedy, at once immoral, and ultimately destabilizing.

[Torie]

The focus on "income inequality" is misplaced; there should be a larger focus on wealth inequality and income inequality. In truth, the two cannot be separated and when economic inequality is perceived as a function of wealth and income, the problem is rendered very severe.

I agree that inequality in both wealth and income are at play here. The perceptions may also be closely linked. However, the causes are quite separate and the means to address them are also quite separate. Conflating the two tends to block solutions since it's easy to poke holes by showing how a proposal wouldn't address either the income inequality or the wealth inequality.

Aside from the estate tax, a wealth tax would be hard to administer, and would raise a host of policy problems. Folks would tend to buy unproductive assets that they can secret, like jewelry and gold. They would tend to favor non publically traded assets where games can be played with valuation. None of that would be good for the economy. We want folks to invest in stuff that will help the economy grow. And for really rich people, it would tend to cause them to renounce their citizenship and decamp to some pleasant place that does not levy a wealth tax. It's one thing to have assets taken away after you and your spouse die. It's another to have them taken away while alive. If the wealth tax were Draconian enough, partner Dan and I might move to Halifax and move next to DC Fine or something. Dan of course would agitate to move to independent Samoa.

I quite enjoy my anti teachers' unions rants. Expect more of them!

[Torie]

Aside from the estate tax, a wealth tax would be hard to administer, and would raise a host of policy problems.

This is the case with all taxes, Torie.

It's a matter of degree. Everything is a balancing test. The "best" taxes are sales taxes, but they're regressive.

[Torie]

It's a matter of degree. Everything is a balancing test.

Naturally. But you do have a terrible, terrible habit of shrieking that IT CAN'T BE DONE whenever something is proposed that you very much do not want to see happen.

I don't think so, but whatever. I was pointing out the problems with a wealth tax. Obviously it could be done. If you disagree with my description  of the problems, feel free to address that if the spirit so moves you. France I think has a wealth tax. Start from there. Go for it!

[Torie]

Well, there are always two strands at hand in any public issue discussion. The issue of the specifics of the solution - in this case that wealth taxes are finickity and often lead to unforeseen issues - and the entirely seperate matter of whether the issue (of wealth inequality) is worth doing something about in the first place.

Exactly, wealth inequality, and in particular, wealth stagnation (actually more like decline) except for those on the very top, is a real problem - almost a toxic problem. And how to address it intelligently, rather than counterproductively, is a challenge. I keep harping on reforming low income zip code schools as ground zero on this for the long term, because I believe that is where the rubber meets the road. There is almost no issue that animates me more - none.