
Revised estimates of the share of national income going to top earners - clumsysmurf
https://www.dissentmagazine.org/blog/rising-income-inequality-usa-piketty-study
======
readams
People continue to focus on income inequality and ignore wealth inequality.
Income is a terrible way understand inequality and also not a good way to
compare how inequality is changing, since the really rich people increase
their wealth in ways other than income.

The bizarre focus on income means that we set our sights on a weird slice of
upper middle class professionals (doctors, lawyers, etc.) while ignoring
totally the real rich people.

~~~
Retric
Capital without income is not particularly useful. The problem is we use the
IRS definition of income ignoring unrealized gains which distorts the income
perspective for the top 1% / 0.01%.

~~~
readams
Yes, exactly. Rich people increase their wealth primarily through unrealized
capital gains. It's very safe for Warren Buffet to proclaim he wants tax rates
increased because this barely affects him at all.

~~~
loeg
Buffet realizes millions of dollars in income each year and gives much of it
to charity. He gives billions more to charity not in the form of income.[0]

> “My 2015 return shows adjusted gross income of $11,563,931,” he revealed.
> “My deductions totaled $5,477,694.” About two-thirds of those represented
> charitable contributions, he said. Most of the rest were related to Mr.
> Buffett’s state income tax payments.

> As it turns out, the charitable contributions that Mr. Buffett did deduct
> from his income make up just a tiny portion of the more than $2.85 billion
> he donated to charity last year, he said.

[0]: [http://www.nytimes.com/2016/10/11/business/buffett-calls-
tru...](http://www.nytimes.com/2016/10/11/business/buffett-calls-trumps-bluff-
and-releases-his-tax-return.html)

~~~
peller
He is also, along with Bill Gates, a founder of the Giving Pledge, "a campaign
to encourage the wealthy people of the world to contribute their wealth to
philanthropic causes."[0]

[0]
[https://en.wikipedia.org/wiki/The_Giving_Pledge](https://en.wikipedia.org/wiki/The_Giving_Pledge)

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bluetwo
The question articles like this never get around to asking is: What would
"fair" look like?

The data is never going to be flat. That would mean the top earners and the
lowest earners had identical incomes. Call that what you want but that's not a
free economy.

~~~
devilsavocado
Picketty's book does at least attempt to address this. He proposes a switch
from income tax to wealth tax. He shows that most inequality is a result of
the growth of existing wealth (most of which was inherited). Taxing wealth
instead of income can help reverse, or at least stop the increasing levels of
inequality. A very small percentage of wealth would need to be taxed to
accomplish this.

~~~
pavlov
Such a wealth tax existed in Nordic countries in the late 20th century, at
least.

Wealth taxes in Sweden and Finland were eliminated around 2005 because capital
gains tax was considered more equitable to various wealth classes and more
easily administrated. The wealth tax laws had become a nest of loopholes that
brought in relatively little income in the end.

It would be interesting to see a new wealth tax designed for the digital era.

~~~
devilsavocado
There are still a few countries with wealth taxes[0]. I'm not sure if they
work well or not for these countries. Picketty doesn't spend to much time on
the subject of existing wealth taxes. He is more focused on a global wealth
tax, which is much more ambitious. Something that would need to be designed
for the digital era indeed.

Amusing find from the linked article: Back in 1999 Trump proposed a one time
wealth tax of 14.25% for individuals worth more than 10 million.

[0]
[https://en.wikipedia.org/wiki/Wealth_tax](https://en.wikipedia.org/wiki/Wealth_tax)

------
fisherjeff
Am I the only one a little frustrated by the groupings here? I'd prefer that
it was in raw percentiles rather than something like average of percentiles.
Seems like the very lowest incomes drag the bottom 50% down and the highest
incomes inflate the averages of the upper percentiles.

Not to say that I don't think the current state of income and wealth
inequality aren't troublesome, it's just that in this case when they say,
e.g., "top 10%", what they really mean is something closer to "95th
percentile".

~~~
pesenti
It makes the results much more striking, even more at the top than the bottom,
but not necessarily in a bad way. Raw percentiles aren't representative (e.g,
knowing that the bottom 50% makes $50K and lower doesn't tell the full
picture). I do think that using "median" rather than "average" would be better
(though a bit trivial, median of "top 10%" is the raw 95th percentile). Also,
by using "average" it is possible to match them directly to the "share of
total wealth" numbers.

------
pasbesoin
Heard for the first time in a while, the other day: "Health is wealth."

The U.S. economy has far more wealth than needed to provide everyone in the
country (at least, everyone who elects to participate) basic, quality
healthcare. Not necessarily advanced-age end-of-life spendorama experiences,
but far enhanced opportunity to remain or regain health and related quality of
life during the majority of living years.

There could still be plenty of economic inequality. But we could vastly
diminish an unnecessary suffering as well as the economic stress of health
burdens.

If we can't go that far. If we can't, in action, live up to the basic morals
most of us claim to have...

These people do not need nor, in my opinion, deserve to get any richer, until
we've solved this.

We don't all have to be billionaires, to have quality of life. But we do need
health. And THAT is something we can fix, right now. If we have the will.

------
dlo
I wish they'd just put the data online for us to look at.

~~~
mooreds
Have you checked here?
[http://piketty.pse.ens.fr/en/capital21c2](http://piketty.pse.ens.fr/en/capital21c2)

Not sure if that gets you what you are looking for.

~~~
dlo
Good call. Thanks!

------
aaron-lebo
For the paper:

[http://gabriel-zucman.eu/files/PSZ2016.pdf](http://gabriel-
zucman.eu/files/PSZ2016.pdf)

I'd like to see coverage of it from a more neutral source.

------
jknoepfler
Please stop using means when describing percentile data. I understand the
desire to demonize a catchy sounding demographic, but the vast majority of the
"top 1%" don't have an annual income anywhere approaching 1m/yr.

------
yetanotheracc
So the share of income going to the top 1% has increased to new heights during
the Obama presidency, yet the election of Trump - as opposed to his rival who
was expected to continue Obama's policies - is seen as irrational?

~~~
readams
No this article talks only about taxable income. Wealth inequality is far more
important and for some reason nobody talks about it.

~~~
pg314
It is far easier to get data about income (through tax records) than it is to
get data about wealth.

------
curiousgal
>top _earners_

Kinda ironic.

------
blisterpeanuts
I'd like Prof. Gordon to break down the skyrocketing 1% incomes by profession.
Wasn't most of it due to high tech?

His chart shows the disparity dramatically widening starting in the mid-80s,
which is precisely when the microcomputer revolution was accelerating. The
1990s saw a booming stock market and the minting of thousands of new
millionaires and dozens of billionaires as well.

These stock-rich technology entrepreneurs should be seen not as an
exploitative class to be feared and countered, but rather as a sign of
successful capitalism at its finest, brilliant new ideas that have changed the
world and vastly expanded the major Western economies with new modalities for
doing our work, communicating, and nearly everything else.

~~~
adwhit
One of the points Piketty makes in his book is that the rich generally aren't
the heroic creative geniuses of Ayn Rand's imagination.

Most wealth is inherited. Wealth grows faster than the economy at large. The
rich get richer. They spend their money lobbying for lower tax rates, and they
get them. They lobby for privatization, and they get them. They lobby for
monopolies and patents and bailouts, and they get them.

Interesting to note that half the population are no richer than they were
almost 50 years ago.

~~~
blisterpeanuts
Gates, Jobs, Ellison, Zuck et al didn't inherit their wealth.

~~~
anigbrowl
_One of the points Piketty makes in his book is that the rich_ generally _aren
't the heroic creative geniuses of Ayn Rand's imagination._

1\. There are always going to be outliers, but most people are going to be
closer to the middle of a normal distribution.

2\. The examples you mention were all excellent entrepreneurs, but they were
also a bit lucky with timing and social position; Jobs' adoptive parents were
blue-collar workers but none of these future industrialists grew up in
poverty. If we could reduce the latter a bit we might have even more of the
former.

