Sunday, May 08, 2011

... The More Things Aren't the Same

Yes indeedy. The abused artists of 1950. And what else was going on in 1950?

For one thing, income distribution was just a teensy bit different then. The 95th percentile of income stood around $63,000 (in 1950 dollars). The 80th percentile was making around $40,000. (You'll note that the top category has recently grown more distant from the lower categories.)

Today, of course, forty or even sixty grand seems like a whole lot of lower middle class income, but let me provide a first-hand anecdote. In the 1950s, little Stevie Hulett knew that his sixty-two-year-old grandfather was fabulously wealthy. Gramps drove a new Cadillac, lived in the Hollywood Hills, and spent a couple of days a week at Santa Anita playing the horses. But what really nailed down Stevie's certitude about gramp's fabulous wealth was Mother telling him that the old gent pulled down fifty grand a year.

But maybe another reason income distribution was different sixty years back was that income taxes were more steeply progressive then, with a top rate of 91% if you were high-powered enough to make over $200,000. (We paid for our military-industrial complex in those days, rather than financing it with a credit card.)

Today, of course, with a Kenyan Socialist in the White House, taxation is as low as it's been in six or seven decades, to wit:.

... Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. ...

Ah, but it isn't a zero sum game, some will say. If a few lucky duckies do really, really well and pay lower taxes, well that's the free market working with all its cylinders churning, right? (We'll forget about the big earners who are really just high-priced welfare queens. You know, the Top Dogs at Goldman Sachs, J.P. Morgan, Citibank, Wells Fargo, and other recipients of the Federal Government's trillion dollar subsidies.)

So where do I come down? Leftie union boss that I am, I lean toward a tax rate like we had in Dwight Eisenhower's time, when rates were steeper and budgets were balanced (Eisenhower, Johnson-Nixon and William Jefferson Clinton are the presidents who presided over balanced budgets in my lifetime, and I voted for two of them*.)

I'll be honest. It isn't just balanced budgets I crave, but a stable society. You might have noticed the unrest roiling the Middle East these days. Impoverished masses in Egypt, Syria, Libya and a few other countries have apparently grown tired of the mega wealth and power concentrated at the top, and they've been demonstrating and rioting in the streets. My thinking is, you let the top one half of one percent control everything and you start courting unrest, because people begin to notice how they're eating it financially ... while a chosen few dine on caviar and champagne. And so this factoid is kind of sobering:

According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.

In contrast:

– Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.

– Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.

– And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.

Happily, U.S. wages are a lot higher than in those desert kingdoms, so we don't have any problems with Americans being unhappy with the way things are going, right? Or taking matters into their own hands, right? Right?

* S.R. Hulett voted for Dick Nixon and Bill Clinton, two of our fine presidents who presided over balanced budgets.


Floyd Norman said...

Friends from other countries have asked, "why aren't you Americans rioting in the streets?" I said, we're too busy watching "American Idol."

Anonymous said...

And which two presidents in recent memory presided over the largest expansion of government, including intrusion into our private lives? reagun and bush II. And bush II raised taxes even more than reagun.

Yes, American's pay VERY little Income Tax. While most major corporations pay next to none.

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