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First and foremost, I would like to say I much prefer Congressional studies over many others because it's very easy to manipulate numbers, especially considering political bias and intent. To get a good idea of how statistics can be manipulated is to look at the average income of a population. Take this MSN article for example when considering "average income" to "median income"
study from the Congressional Research Service — the non-partisan research office for Congress — shows that “there is little evidence over the past 65 years that tax cuts for the highest earners are associated with savings, investment or productivity growth."
As you can see $13,595 is quite a stark difference when considering the political and social ramifications of such studies. For anyone who may not understand how median income is determined I'm more than happy to explain upon request. As of now I would like to remain focused on the original article.
First, what seems to be good news: For 2010, the average U.S. income was $39,959, according to the Social Security Administration. However, the median income -- meaning half of Americans made more, half made less -- was substantially lower, at $26,364.
For those who may not know what a capital gain is I will reference what the IRS considers "capital gains and losses".
The top current rate is 35 percent. The tax rate for capital gains was 25 percent in the 1940s and 1950s, then went up to 35 percent in the 1970s, before coming down to 15 percent today — the lowest rate in more than 65 years.
Now back to the original article.
Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, household furnishings, and stocks or bonds held in a personal account. When a capital asset is sold, the difference between the basis in the asset and the amount it is sold for is a capital gain or a capital loss. Generally an asset's basis is its cost, however, if you received the asset as a gift or inheritance, refer to Topic 703 for information about your basis. You have a capital gain if you sell the asset for more than your basis. You have a capital loss if you sell the asset for less than your basis. Losses from the sale of personal-use property, such as your home or car, are not deductible.
So if there is no noticeable significant improvement, why the steady decline in these tax rates over the past 70 years? It may not seem historically important, but it may be something to keep in mind when considering the ever increasing wealth gap. Especially when you take into consideration the noted 20% drop in tax rates from the 70's to today and how it correlates with the wealth gap.Take this NY TIMES article that explains income growth since 1979. Bear in mind that the study broke down the population into quin tiles or or sections of 5, And may not do the true wealth disparity justice.
Lowering these rates for the wealthy, the study found, isn't aligned with significant improvement in any of the areas it examined. Pushing tax rates down had a "negligible effect" on private saving, and while it does note a relationship between investing and capital gains rates, the correlations “are not statistically significant,” the study says. “Top tax rates,” it concludes, “do not necessarily have a demonstrably significant relationship with investment.”
As noted above breaking down the population into quin tiles does not give a good sample of the wealth disparity as the original article concludes.
The figures are striking. In 2004, according to the Congressional Budget Office’s latest official analysis, households in the lowest quintile of the country were making only 2 percent more (adjusted for inflation) than they were in 1979. Those in the next quintile managed only an 11 percent rise. And the middle group was up 15 percent. Do you sense a pattern? The income of families in the fourth quintile — upper-middle-class folks with an average yearly income of $82,000 — rose by 23 percent. Only when you get to the top quintile were the gains truly big — 63 percent.
As you can see, the income of the top 0.1% can easily inflate the average income of the top quin tile or 20%. Remember the difference of "average income" to "median" income I referenced earlier? This is a tactic used when dismissing the idea of increased taxation of the wealthy as being bad. Using the top quin tile or top 20% allows studies to place small business owners and the upper middle class into a group with the most wealthy individuals of our society, thus turning the upper middle class against the poor.SourcesStudy: Tax Cuts for the Rich Don’t Spur Growth CNBC Fast-growing income gap in US MSNIRS Capital gains and losses[url=http://www.nytimes.com/2007/06/10/magazine/10wwln-lede-t.html?pagewanted=all&_moc.semityn.www]NY
There is one part of the economy, however, that is changed by tax cuts for the rich: inequality. The study says that the biggest change in the distribution of U.S. income has been with the top 0.1 percent of earners — not the one percent. The share of total income going to the top 0.1 percent hovered around 4 percent during the 1950s, 1960s and 1970s, then rose to 12 percent by the mid-2000s. During this period, the average tax rate paid by the 0.1 percent fell from more than 40 percent to below 25 percent. The study said that “as top tax rates are reduced, the share of income accruing to the top of the income distribution increases” and that “these relationships are statistically significant.” In other words, cutting taxes on the rich may not grow the economic pie. But the study found that those cuts can affect “how that economic pie is sliced.”
So what forum was I supposed to place this thread in? Is there a financial conspiracy forum that I'm unaware of? When I'm skeptical of where I should place a thread I usually go with general conspiracy's by default. I'm sure if a mod deems it necessary to move it they will.
Originally posted by Consequence
I don't know why this is in the conspiracy section, but the American way is to pay as little taxes and thereby not being able to give the less fortunate of one's own population the help they need (nor the education or medical care to actually do something about the poverty they were raised in).
You are correct. Another group like the Koch brothers is ALEC (American Legislative Exchange Council). Anybody want to take a guess at what they do?
Originally posted by HangTheTraitors
From what I am hearing, the core of this NONSENSE from the Right appears to be coming from DEEP-POCKET bribes such as folks like the Koch brothers with EXTREMIST ideology that seems to desire a an American society that is nothing more than a Master & Slave society. And folks, take a GUESS which one of them are each of us in this equation?
Originally posted by GD21D
You are correct. Another group like the Koch brothers is ALEC (American Legislative Exchange Council). Anybody want to take a guess at what they do?
Originally posted by HangTheTraitors
From what I am hearing, the core of this NONSENSE from the Right appears to be coming from DEEP-POCKET bribes such as folks like the Koch brothers with EXTREMIST ideology that seems to desire a an American society that is nothing more than a Master & Slave society. And folks, take a GUESS which one of them are each of us in this equation?
That's right they assist in writing and implementing legislation.Source
The American Legislative Exchange Council (ALEC) — a “stealth business lobbyist” that works with corporate interests to help them write and implement “model” legislation
And where do you advocate spending to be cut? Also, in what terms do you mean "free up" the private sector? It's rather difficult to agree or disagree with such a vague statement. As a side note, I do need to fix my last source that was the NY TIMES article. My apologies to the participants in this thread for the inconsistency in my OP. ETA:NY TIMES
Originally posted by projectvxn
It does not take a study to know that tax favors for only one segment of the population doesn't spur growth in the economy overall. You have to apply law fairly and evenly if you want taxation to have a positive effect on growth. This also means you have to cut spending and free up the private sector more in order to produce enough to cover the cost of government and repayment of public debt .