How the rich keep geting richer,look over there!

[Bonam]

Also, paying a percentage of taxes understates the point in that Americans as a whole are paying far too few taxes. That's why they have a massive deficit. Much of the 'missing taxes' comes from the tax loopholes and tax cuts which disproportionately benefited corporations and the wealthy elites. US politicians have cut their taxes in response to bribery, but, afraid of the wrath of taxpayers, they have been reluctant to cut services. Instead, they've been borrowing to make up the difference.

Too bad the emphasis in the tax negotiations last year was all about uselessly raising the income tax rates a few % instead of closing all the dumb loopholes. Everyone talks about closing loopholes, but no one actually goes and closes any of them.

It's not the doctors and lawyers but the stockbrokers and CEOs who are being undertaxed,

While there may be a valid argument for the top 0.1% to pay a higher tax rate, it must be realized that going by the number, even if you raised taxes on these few highest earners to 90% and none of them were able to use any loopholes, that would still not eliminate the deficit. If you look at US federal budget numbers, it's not the revenues that are outside of historical norms, but the spending.

along with corporations.

Taxing corporations is dumb. Here's why:

- Higher taxes increase their incentive to move elsewhere to lower tax jurisdictions, and this is a time when we need to keep the jobs here

- Higher taxes just means higher costs to the consumer

- Corporations are taxed anyway, on the income they pay to employees, on the goods and services they sell as consumption tax, on the dividends they pay out, and on capital gains on their stock

- Corporations are the entities most able to effectively hide their revenues/profits and to lobby the government to create/maintain tax loopholes

If one wants to tax corporate profits, just raise the consumption tax, dividend taxes, and capital gains taxes. It has the exact same effect, is more transparent, and much easier and cheaper to administer. Taxing corporate profits/revenues directly is an accounting nightmare and an incentive for corporations to constantly try to modify/evade the tax code. It is just not an efficient tax.

[cybercoma]

Numbers are good at dispelling myths, I agree.

But, you know as well as I do, myths die regardless of their politics. The poor aren't losing ground, according to this.

the gap is widening, as has always been the charge.

[cybercoma]

Correct, the bottom quintile income has not gone up - it has not gone down either as others have claimed.

Point 2 was: people move in and out of the low income quintile every year.

Also, the middle 60% has gone up - unlike many claims of an "eroding middle class"

LICO is not a red herring, poverty is at a historic low point - surely this is significant.

LICO is not the bottom quintile Edited April 26, 2013 by cybercoma

[kimmy]

...

So anyway, the graphs that Canuckistani and Cybercoma found show the real-dollar income of the lowest 20% barely climbs at all, and the middle 60% only slightly better.

Putting those flat little lines against our GDP that grows 3% every year, or against the steeply growing line of the top 20%, and it's clear that this premise that "baking a bigger pie" (as Belinda Stronach put it) doesn't mean more pie for everybody.

It could, but in Canada (and the United States) it doesn't.

Too bad the emphasis in the tax negotiations last year was all about uselessly raising the income tax rates a few % instead of closing all the dumb loopholes. Everyone talks about closing loopholes, but no one actually goes and closes any of them.

Indeed. Obama, for all the accusations that he's anti-business, is just as bad as the Republicans when it comes to being soft on business and Wall Street.

If he was really what he says he is, he'd put an end to the "Double Dutch Irish Sandwich" and other accounting trickery that lets mega-profitable corporations like Google pay next to nothing in US tax.

Taxing corporations is dumb. Here's why:

- Higher taxes increase their incentive to move elsewhere to lower tax jurisdictions, and this is a time when we need to keep the jobs here

- Higher taxes just means higher costs to the consumer

- Corporations are taxed anyway, on the income they pay to employees, on the goods and services they sell as consumption tax, on the dividends they pay out, and on capital gains on their stock

- Corporations are the entities most able to effectively hide their revenues/profits and to lobby the government to create/maintain tax loopholes

If one wants to tax corporate profits, just raise the consumption tax, dividend taxes, and capital gains taxes. It has the exact same effect, is more transparent, and much easier and cheaper to administer. Taxing corporate profits/revenues directly is an accounting nightmare and an incentive for corporations to constantly try to modify/evade the tax code. It is just not an efficient tax.

In order:

-they are already moving jobs elsewhere to cut labor costs, so this is not actually anything new. And they don't actually even have to move employees, they just need to move their location. Google is an American company, right? Most of their employees are in America. Most of their revenue comes in through their Ireland office, for reasons having nothing to do with where their revenue actually comes from, and everything to do with accounting shenanigans.

-I suspect higher taxes would more likely mean lower dividends to shareholders.

-Corporations aren't taxed on income paid to employees. (they're taxed on net profit, not gross revenue; wages paid are an expense and reduce net profit.) Ditto dividends, etc. Capital gains are taxed at a lower rate than other kinds of income, so there ought to be an asterisk there.

-agreed, but I think that's more an argument for reforming the tax code than for not taxing businesses.

As for raising the capital gains tax... it won't happen. It's heresy to even suggest it. An unspeakable assault upon the Job Creators™. Buttholes like Paul Ryan think the capital gains tax ought to be reduced all the way to zero, because corporations are already taxed.

-k

[Canuckistani]

The report also draws on another unspecified private sector study that notes 3.8 per cent of Canadian households control $1.78 trillion in wealth. That accounts for 67 per cent, two-thirds of the money in Canada.

http://www.cbc.ca/news/story/2010/12/01/con-rich-get-richer.html

About 246,000 Canadians earn incomes averaging $405,000 a year. They accounted for 32 per cent — nearly one-third — of all the growth in income during the boom years from 1997 to 2007.

"That's a bigger piece of the action than any other generation of rich Canadians have taken," noted the study's author, Armine Yalnizyan, senior economist at CCPA.

During the last great economic boom in the 1950s and 1960s, top-earning Canadians accounted for just eight per cent of income growth.

All Canadians should benefit from the increase in GDP, not just those at the top. We get a much stabler, healthier society with a strong middle class participating in the increase in wealth, and even the lowest earners getting a piece of the action. It actually reduces all sorts of societal costs, from healthcare to the justice system to increasing productivity to not have inequality too great.

“The growing share of income going to top earners means that this group now has a greater capacity to pay taxes,” the report said. “In this context governments may re-examine the redistributive role of taxation to ensure that wealthier individuals contribute their fair share.”

The top federal marginal income tax rates declined markedly in the past 30 years, falling to 29% in 2010 compared with 43% in 1981.

As well, tax benefits now only offset less than 40% of wage inequality, compared with more than 70% before the mid-1990s.

“Taxes and benefits reduce inequality less in Canada than in most OECD countries,” the report said. “Benefit rates fell and benefits became less targeted. Changes in income tax rates played less of a role.”

Other factors driving this inequality include a rise in self-employment, greater disparity in male wages (more women in the workforce helped offset this) and low-wage workers losing hours at a greater pace than higher-wage workers.

The report recommends creation of more and better-paying jobs through investments in education at the childhood level as well as incentives for workers and employers to encourage skills investments throughout working life.

http://business.financialpost.com/2011/12/05/canadas-rich-still-getting-richer-oecd/and Edited April 26, 2013 by Canuckistani

[Michael Hardner]

the gap is widening, as has always been the charge.

Of course, that's the charge. And the gap is what's referred to as 'poverty', although many would take poverty to mean an absolute measure of wealth, not a relative one. When we discuss these things, we put slogans and myths behind us, and we learn about reality, like Adam and Even eating the fruit of knowledge we are.

[eyeball]

The gap is not not referred to as any such thing as poverty. It's spreading rate of growth is the issue and it's an indicator of economic injustice and unfairness. It is these that yield poverty.

Like dealing with a forked tongue devil when discussing this with you apologists.

[carepov]

The gap is not not referred to as any such thing as poverty. It's spreading rate of growth is the issue and it's an indicator of economic injustice and unfairness. It is these that yield poverty.

Increased inequality does not typically cause increased poverty. There are many cases of increased inequality and a reduction of poverty. Reduction of inequality and reduction of poverty are separate goals that require different approaches and policies. Ideally, I would like to see a more equal society and the elimination of poverty. If I had to choose between a less equal society with a lower poverty rate or a more equal society with a higher poverty rate I would choose the former.

I agree that inequality is a big problem in the US. Canada's situation is very different:

http://www.conferenceboard.ca/hcp/details/society/income-inequality.aspx

[Michael Hardner]

The gap is not not referred to as any such thing as poverty.

I think that it is referred to as 'poverty'. Talking about more Canadians in the bottom x% is what we mean by increased poverty.

It's spreading rate of growth is the issue and it's an indicator of economic injustice and unfairness. It is these that yield poverty.

Very confusing. What does that mean "spreading rate of growth" ? And does this mean you think poverty isn't increasing in Canada ?

Like dealing with a forked tongue devil when discussing this with you apologists.

I give you no reason to distrust me. I didn't assume your sloppy language above was meant to deceive, so please continue to assume the best intentions from yours truly. It's pretty sad when people who ask for numbers all the time raise suspicion.

[cybercoma]

Of course, that's the charge. And the gap is what's referred to as 'poverty', although many would take poverty to mean an absolute measure of wealth, not a relative one. When we discuss these things, we put slogans and myths behind us, and we learn about reality, like Adam and Even eating the fruit of knowledge we are.

I'm not sure why you think the gap is referred to as poverty. It's referred to as income inequality. More people aren't in poverty. Less people are. That's true. However, the problem we're facing is that almost all of the increases in wealth are going to a tiny sliver of society on the back of the work down by all those below them. I've posted references countless times to studies that show the abysmal effects of inequality in OECD nations. It doesn't just affect those at the bottom of the ladder, but also those at the top.

[cybercoma]

Michael,

More to the point, the very notion that all the increases in wealth are going to a tiny sliver of society shows that the system is not a fair one. Should the top get more? Absolutely! Should they get all of it? Of course not.

[carepov]

... the problem we're facing is that almost all of the increases in wealth are going to a tiny sliver of society on the back of the work down by all those below them.

Yes, top quintile incomes are rising faster than the rest, but they are not getting "almost all of the increases in wealth":

"... between 1995 and 2010. While average after-tax incomes increased by 12% for families with incomes in the bottom 20% and by 23% for families with incomes in the middle 60%, it rose by 37% for those in the top income group."

http://www4.hrsdc.gc.ca/[email protected]?iid=22

Also remember people move in and out of different income levels every year.

The problem of growing inequality in Canada is being overblown. We should instead be looking at our success in reducing poverty, leveraging that success to further reductions and completely wiping out child poverty!

[Pliny]

It's quite the opposite actually. The reason we have an advanced capitalist society (read: capitalist-socialist mixed economy) is that the sweatshops and child labour of the late 19th century early 20th century was antithetical to the stability required for capitalism to be productive. So if you're going to argue from the point of history, don't forget the saboteurs and labour strife of history that made doing business practically impossible. Don't forget that education and healthcare are required by industry, so they don't have a sick, illiterate, and disobedient workforce. Your idea of history is looking at a bunch of despots and tyrants, then claiming they're the definition of socialism and that's why it didn't work. You completely fail to recognize that we are and have been living in a partially socialist society for a couple generations now, so has Britain (for even longer) and Germany (for longer still). And you know who brought in social welfare first? Bismarck in Germany. In case you're not aware of your history, he's not a socialist, but a conservative.

Yes, we have been living in a partially socialist society for a couple of generations. Your mistake is in thinking that the mix was welcomed and government has not progressively grown to be the bigger portion and continues to grow in proportion.

[cybercoma]

Your mistake is in thinking that the mix was welcomed

Actually, it would be a mistake for you to think that it's not. Not even the Great Right Hope (Harper's Conservatives) are getting rid of the social welfare system.

Edited April 26, 2013 by cybercoma

[Canuckistani]

There isn't a modern state that could function without a mix of statist elements. The eternal question is how much. By all indications the Scandinavian countries have it right.

[eyeball]

I think that it is referred to as 'poverty'. Talking about more Canadians in the bottom x% is what we mean by increased poverty.Very confusing. What does that mean "spreading rate of growth" ? And does this mean you think poverty isn't increasing in Canada ?

I thought we were talking about how the rich keep getting richer. I think the process by which this is happening, i.e. government tilted playing fields, is and will cause poverty to increase. Especially in a world of dwindling natural capital. I mean this is more about physics than economics.

I give you no reason to distrust me.

You do when you ask me what I mean by "spreading rate of growth".

I didn't assume your sloppy language above was meant to deceive, so please continue to assume the best intentions from yours truly. It's pretty sad when people who ask for numbers all the time raise suspicion.

I OTOH can do little but assume your feigned confusion over plain English is a sloppy deflection. You're not stupid just sloppy but I don't know why. I just can't figure you out at all so I guess that's where the mistrust really comes from.

I rarely if ever ask for numbers anymore, I've seen to many figures lie and liars figure to be bothered.

[Fletch 27]

Getting "Rid of it" or Improving on it and eliminating social welfare fraud? As what he said he would do.... providing him a majority. You can spin it either way I guess..

Actually, it would be a mistake for you to think that it's not. Not even the Great Right Hope (Harper's Conservatives) are getting rid of the social welfare system.

[Canuckistani]

Poverty is one thing, but too much inequality also has very negative effects on health, the justice system and even productivity as people feel the playing field is too slanted and stop trying or just underperform on the job.

[Fletch 27]

The "Gap" is growing simply because more and more past "Low Income" earners are making more money distancing themselves from the other low-income earners.. This creates a gap...

Eg:

Low income then: .............. High Income then: .................

Low Income now: ... High Income now: .....................................

The Gap is indeed growing,, but it should be seen as a great positive..

Poverty is one thing, but too much inequality also has very negative effects on health, the justice system and even productivity as people feel the playing field is too slanted and stop trying or just underperform on the job.

Edited April 26, 2013 by Fletch 27

[Canuckistani]

qué?

Edited April 26, 2013 by Canuckistani

[Michael Hardner]

I'm not sure why you think the gap is referred to as poverty.

I have heard it described as such in interviews on the CBC.

It's referred to as income inequality. More people aren't in poverty. Less people are. That's true.

Can you find a cite from a poverty activist that agrees with that ?

[cybercoma]

qué?

What Fletch is trying to say is that he has absolutely no idea the graphs posted in this thread actually mean.

[cybercoma]

Can you find a cite from a poverty activist

Why would I do that?

[Michael Hardner]

I thought we were talking about how the rich keep getting richer. I think the process by which this is happening, i.e. government tilted playing fields, is and will cause poverty to increase. Especially in a world of dwindling natural capital. I mean this is more about physics than economics.

Is poverty increasing or not ?

You do when you ask me what I mean by "spreading rate of growth".

If you mean that "personal income is increasing in real terms for the top x% faster than the bottom y%" then ok. That is clear. But that doesn't mean poverty is increasing does it ?

And my statement is a lot clearer than "the rich are getting richer". If a rich person only added $1 to his net worth at the end of the year, then he "got richer" but that doesn't seem like he did so well either.

I OTOH can do little but assume your feigned confusion over plain English is a sloppy deflection. You're not stupid just sloppy but I don't know why. I just can't figure you out at all so I guess that's where the mistrust really comes from.

I rarely if ever ask for numbers anymore, I've seen to many figures lie and liars figure to be bothered.

Hopefully you can now see what I'm looking for in terms of clarity, from my previous examples.

If you refuse to use math, then I can't force you to - but hopefully you can see that I'm not trying to deceive or "feign" anything at all. You're just hard to read.

[carepov]

I have heard it described as such in interviews on the CBC.Can you find a cite from a poverty activist that agrees with that [poverty is declining]?

I would very much be interested too. I would strongly consider supporting any poverty activist group that said something like:

"Over the last 20 years, Canadian poverty rates have been declining - but there is still work to be done. One child living in poverty is one child too many."