To update one of the tables for the next edition of my favorite textbook, I have been looking at the new CBO report on the distribution of income and taxes. I found the following calculations, based on the numbers in the CBO's Table 7, illuminating.
Because transfer payments are, in effect, the opposite of taxes, it makes sense to look not just at taxes paid, but at taxes paid minus transfers received. For 2009, the most recent year available, here are taxes less transfers as a percentage of market income (income that households earned from their work and savings):
The negative 301 percent means that a typical family in the bottom quintile receives about $3 in transfer payments for every dollar earned.
The most surprising fact to me was that the effective tax rate is negative for the middle quintile. According to the CBO data, this number was +14 percent in 1979 (when the data begin) and remained positive through 2007. It was negative 0.5 percent in 2008, and negative 5 percent in 2009. That is, the middle class, having long been a net contributor to the funding of government, is now a net recipient of government largess.
I recognize that part of this change is attributable to temporary measures to deal with the deep recession. But it is noteworthy nonetheless, as other deep recessions, such as that in 1982, did not produce a similar policy response.
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Maybe it was a birdy bread-bomber from the future?!
The American people were sold out. Plain and simple. The manufacturing base was decimated and with it went the good jobs. This was all facilitated (free trade agreements, deficit spending, etc.) at the behest of large corporations looking to arbitrage the price and wage differentials in different markets. All the while, inflation continues to wipe out wages. So having decimated the opportunities for the middle class now, this statistic can hardly be considered surprising.
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"Let China sleep, for when she wakes, she will shake the world." - Napoleon Bonaparte
"Circulation ceases first at the outer edges [Europe and Japan]. It will take a while yet for the decay to reach the heart [America]." - Foundation & Empire by Isaac Asimov
Does this factor in how much the Fourth quintile, Highest quintile and Top one percent get from government subsidies, bailouts, and other assorted leech****ery?
Does it include things like social security that the middle probably pays, isn't called a tax, but is in fact a tax?
All the while, inflation continues to wipe out wages.
Not 'all the while'. The problem starts and ends with inflation. No one would have been moving jobs overseas if wages/housing/prices in the US were 1/10th what they are now. And I'm being generous - you can google the money supply numbers yourself to see what they were before we embarked on the inflation game.
Quit bitching about your freedom because you can't have freedom if people aren't allowed to hire who they want. Get to the freaking source - it isn't hard to look at inflation and realize it is the reason business has been driven from the US.
Grashopa, if America wages were 1/10 of what they are wouldn't overseas wages be ~1/10 of whatever they are as well?
Without claiming any particular expertise, it seems to me that inflation has provided the anesthesia during the process Fraudster describes.
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In this case credit expansion is what provided the inflation, and it is also credit expansion that has allowed the government to provide guns and butter, so I would agree Anti.
Just remember that when you call for 90% cuts in wages that YOU could be in the receiving end of that. I don't get how people love to call for others to get screwed and BITCH AND COMPLAIN when they get screwed.
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"Let China sleep, for when she wakes, she will shake the world." - Napoleon Bonaparte
"Circulation ceases first at the outer edges [Europe and Japan]. It will take a while yet for the decay to reach the heart [America]." - Foundation & Empire by Isaac Asimov
Grashopa, if America wages were 1/10 of what they are wouldn't overseas wages be ~1/10 of whatever they are as well?
Why would wages over there be 1/10th? If the money supply in the US goes up 10x what does that have to do with China when it hadn't started printing money yet? We basically stole from the Chinese people by printing up all those USD and sending them over there. They are doing the same back to us right now by doubling their money supply every 3 years without having their currency drop in value by half.
Quote:
Just remember that when you call for 90% cuts in wages that YOU could be in the receiving end of that. I don't get how people love to call for others to get screwed and BITCH AND COMPLAIN when they get screwed.
Huh? If the money supply drops 90% how does that screw anyone? Money is just a medium of exchange - it affects the Price in GDP = P*Q but doesn't affect the quantity. Why would you be screwed if wages were frozen the past 30 years? The prices of the things you buy never would have went up either.
Inflation is theft because:
1) It steals from those who hold cash
2) The increase in the money supply is caused by either A) Government borrowing which goes to their friends or B) Bank lending which goes to their friends.
3) The increased money supply does trickle down from the banks and government, but if you put up a graph of wages vs the money supply it is pretty obvious that trillions have been stolen from workers over the last 40 years as wage growth doesn't even approach the fraudulent CPI let alone actual inflation which is money supply growth.
I'm not sure why this is difficult to understand. If there are 2 dollars in existance and I create 2 more ( Which happens every 6-7 years of the last 40) than nothing changed in the economy except the person who held the original 2 dollars just lost 50% of his purchasing power.
If there was 2 dollars in the US economy today than we'd simply be paying each other 1 billionth of a penny for the things we buy. Would you then complain about how you only make a millionth of a penny each year? But my wages could have been 100,000 dollars last year! I'm only making a millionth of a penny now! We're all screwed!
Just remember that when you call for 90% cuts in wages that YOU could be in the receiving end of that. I don't get how people love to call for others to get screwed and BITCH AND COMPLAIN when they get screwed.
Unless of course you are arguing that by inflating the money supply in the US since the '60s while at the same time using our control of the banking system to prevent smaller countries from doing the same means that the US consumer has benefitted from the money printing then you are correct. Our wages went up by 10x while wages in China remained the same thus we were able to pay Chinese workers with our printed dollars and get things for cheap.
So yeah if you increase your money supply and prevent other countries from doing so while not allowing the currency exchange rates to accurately reflect the increase in your money supply you have gained over the people in other countries in purchasing power.
But as I already noted that is a direct cause of the loss of jobs in the US over the last 40 years. What you gain by having your wages jacked up you lose by having corporations quite rightly refuse to pay you those wages when they can hire overseas just as easily as you can consume overseas.
Still don't agree because there have been dramatic increases in productivity over that intervening period. So you would have capital capture the entire increase, with labor getting none? So basically the pie increases, but labor's absolute share remains the same and on a relative basis declines? I won't buy into that.
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"Let China sleep, for when she wakes, she will shake the world." - Napoleon Bonaparte
"Circulation ceases first at the outer edges [Europe and Japan]. It will take a while yet for the decay to reach the heart [America]." - Foundation & Empire by Isaac Asimov
I can't speak to the exact interaction of exchange rates but if widgets produced over there aren't cheap compared to widgets made here they'll be made here.
The mechanism for their prices/wages to fall is that if they don't US demand dries up.
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Health is better than health insurance http://gerson.org/ Over the past 60 years, thousands of people have used the Gerson Therapy to recover from so-called “incurable” diseases such as cancer, diabetes, heart disease and arthritis.
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