Financial News

[Balta1701]

No, and apparently, neither do you.

That was the point.

[southsider2k5]

And Bush used it to launch 2 wars. Does anyone have anything to say other than non-funny one-liner attempts?

 

And ignore the entire history of the filibuster? I guess Stewart should have said it instead, then it would have gotten posted...

[Balta1701]

And ignore the entire history of the filibuster? I guess Stewart should have said it instead, then it would have gotten posted...

Hilarious!

[southsider2k5]

Hilarious!

 

Or hypocritical.

[StrangeSox]

yeah, wtf was I thinking posting academic economic research?!?!

[Y2HH]

yeah, wtf was I thinking posting academic economic research?!?!

 

I don't know but we don't need any of that crap here.

[Soxbadger]

Dental plan.

[ptatc]

Emmanuel Saez has an updated paper out looking at income distributions. The top 1% have captured 121% of income growth since 2009.

 

http://www.scribd.com/doc/125269359/Gettin...her-Edmund-Saez

The whole thing should be summarized as you need to make good investment to have significant income growth in 3 years. Only people with money can invest it, thus you need money to make significant money in a short period of time.

[StrangeSox]

huh?

[ptatc]

huh?

Very few people get an increase of 121% through salary alone. It takes investment growth to do that. Only people with money can invest it. You need money to make money.

[StrangeSox]

That's not really what the research was looking at. It wasn't about individuals getting raises, it was about the total share of income growth that was captured by a given segment of the income distribution. If the total income in the US increased by $1000 Billion dollars 2009-2011, then the total income of the top 1% increased by $1210 Billion during the same time period. In other words, the top 1% captured every dollar of growth during that period and then some, meaning that the other 99% saw a net drop in income. That's both in real dollars and in relative percentage of the total income shares.

 

You're right when you point to the fact that the growth has been in investment income, though. Wages have been stagnant or declining for a while now and were really hammered in 2007-2008. Yet, despite record profits (investment growth), we're not seeing wages come up. It wasn't always the case that the only way to increase income was by already being well-off and investing money, but that's been the trend for a while now and it's really kicked up lately, as evidence by the fact that 1% is capturing more than 100%.

 

Bloomberg had a recent article about Walmart on why, long-term, this type of "growth" and having almost all of the wealth be captured by such a tiny slice of the population isn't good for anybody.

http://www.bloomberg.com/news/2013-02-15/w...in-e-mails.html

 

 

[StrangeSox]

Who pays the Corporate Income Tax

 

Bruce Bartlett has a summary of several economists' answers to that question. The answers range from Shareholders 100% to Shareholders 40%, Workers 60%.

 

The just-published March 2013 issue of The National Tax Journal, the principal academic journal devoted to tax analysis, contains four articles by top scholars who have sought to clarify the incidence of the corporate income tax. Unfortunately, there is no consensus.

 

The first article, by a Reed College economist, Kimberly Clausing, supports the traditional idea that capital bears all of the corporate tax. She notes that large multinational corporations have a great deal of flexibility in determining where to locate production, incur costs and realize profits. [...]

A second article, by Jennifer Gravelle, a Congressional Budget Office economist, agrees with this conclusion.

 

But a third article, by an Oxford University economist, Li Liu and a Rutgers economist, Rosanne Altshuler, argues in favor of the idea that labor bears most of the burden of the corporate tax.

 

Finally, four Treasury Department economists detail the method the Treasury uses to allocate the corporate tax in distribution tables. They have the advantage of access to actual corporate tax returns and far greater detail on corporate finances than available to private researchers.

 

The Treasury economists conclude that 82 percent of the corporate tax falls on capital and 18 percent on labor. This is very close to the methodology of the private Tax Policy Center, whose analyses are frequently cited in policy debates. It assumes that 80 percent of the corporate tax is borne by capital and 20 percent by labor.

[Jenksismyhero]

That's not really what the research was looking at. It wasn't about individuals getting raises, it was about the total share of income growth that was captured by a given segment of the income distribution. If the total income in the US increased by $1000 Billion dollars 2009-2011, then the total income of the top 1% increased by $1210 Billion during the same time period. In other words, the top 1% captured every dollar of growth during that period and then some, meaning that the other 99% saw a net drop in income. That's both in real dollars and in relative percentage of the total income shares.

 

You're right when you point to the fact that the growth has been in investment income, though. Wages have been stagnant or declining for a while now and were really hammered in 2007-2008. Yet, despite record profits (investment growth), we're not seeing wages come up. It wasn't always the case that the only way to increase income was by already being well-off and investing money, but that's been the trend for a while now and it's really kicked up lately, as evidence by the fact that 1% is capturing more than 100%.

 

Bloomberg had a recent article about Walmart on why, long-term, this type of "growth" and having almost all of the wealth be captured by such a tiny slice of the population isn't good for anybody.

http://www.bloomberg.com/news/2013-02-15/w...in-e-mails.html

 

I don't see how this can be true. My wife and I's retirement accounts and investment accounts all made money in that period and we're not anywhere close to the 1%. I suspect just about anyone with investments would have made money in those years as well. Am I missing something?

Edited February 20, 2013 by Jenksismybitch

[StrangeSox]

Wealth/Net Worth vs. Income. You're not drawing any income from your IRA's or 401k's. Plus we're talking aggregate here over tens of millions of people, so you or me getting a promotion and raise is counterbalanced by a whole lot of people who lost their jobs, got pay cuts, had to take lower-paying jobs, have not seen raises in years (lost ground relative to inflation), etc.

 

The top 1% has seen most of the wealth gains in the post-2008 recovery, but not over 100%. I can't find a good cite for this at the moment, but consider that for most people, if they have positive net worth, their home is their biggest asset. Housing values haven't recovered nearly the way that equities have.

[Y2HH]

I don't see how this can be true. My wife and I's retirement accounts and investment accounts all made money in that period and we're not anywhere close to the 1%. I suspect just about anyone with investments would have made money in those years as well. Am I missing something?

 

Yes, you're missing all the assumptions and bad math that took place to reach these conclusions.

 

I'm not in the 1%, but my wages have increased every year for the past 10 years. I'm doing better than than I ever have before. My investments have also made money over that span, in spite of the recession.

 

According to that entire study, I don't exist at all.

 

Only I do.

 

This is typical of modern "economists" that are more invested in their ideology than they are about economic reality. Some of these numbers may apply to some people some of the time...but it doesn't apply to everyone. And it sure as hell doesn't apply to nearly everyone that's not in the top 1%. Simplify our problems, to simplify our solutions, I guess...it's the way of the future.

Edited February 20, 2013 by Y2HH

[Y2HH]

Wealth/Net Worth vs. Income. You're not drawing any income from your IRA's or 401k's. Plus we're talking aggregate here over tens of millions of people, so you or me getting a promotion and raise is counterbalanced by a whole lot of people who lost their jobs, got pay cuts, had to take lower-paying jobs, have not seen raises in years (lost ground relative to inflation), etc.

 

The top 1% has seen most of the wealth gains in the post-2008 recovery, but not over 100%. I can't find a good cite for this at the moment, but consider that for most people, if they have positive net worth, their home is their biggest asset. Housing values haven't recovered nearly the way that equities have.

 

It's probably fair to say the top 1% have seen the most wealth gains over all of time, too. These are way too broad/generalized numbers to actually mean anything. To find actual meaning in these numbers, it would have to be broken down far more than 1% vs 99%. As these numbers have and probably always will apply if you break it down to simply the top 1% vs the rest of us.

[StrangeSox]

Nah, according to that study, you're a data point. Not every single data point falls on the trend line. You're confusing statements about individuals, which the study doesn't make, with aggregates.

 

Can you point out the assumptions and bad math in that study? Can you point out where it says your position is impossible? Can you show me where Saez's ideology is leading him astray and results in him not accurately analyzing income percentiles and groupings? This paper appears to be a descriptive analysis, not something offering policies or preferred income/wealth distributions.

Edited February 20, 2013 by StrangeSox

[StrangeSox]

It's probably fair to say the top 1% have seen the most wealth gains over all of time, too. These are way too broad/generalized numbers to actually mean anything. To find actual meaning in these numbers, it would have to be broken down far more than 1% vs 99%. As these numbers have and probably always will apply if you break it down to simply the top 1% vs the rest of us.

 

Income and wealth disparities have been increasing over the years. You can look at Saez and Piketty's work for the breakdowns you're looking for, or Edward Wolff's work.

 

From the Saez paper, here's the top 10% income share:

(triangles include capital gains, circles don't)

and the top 10% broken down further:

(black: 0-1%

blue: 5-1%

red: 10-5%)

 

Edited February 20, 2013 by StrangeSox

[Y2HH]

Income and wealth disparities have been increasing over the years. You can look at Saez and Piketty's work for the breakdowns you're looking for, or Edward Wolff's work.

 

That's probably a result in simple numbers and how much they've grown over that time, a fact that often completely ignored when these types of comparisons are made.

 

When my parents were kids, it costs 10cents to go to the movies. It costs 9$-20$ now, however, when my parents were kids, people made 1$ an hour. Today, they make almost 8$...at minimum. But, the buying power of money has dwindled. So, if I can compare it in the same regard, income disparty may have looked smaller back in the day simply because the smaller numbers, but those smaller numbers had more purchasing power...so the disparty always existed...it's just mathematically more glaring now that were talking billions and trillions instead of thousands and hundreds of thousands...MAYBE millions in some cases...but not billions or trillions.

[StrangeSox]

We're talking about percentages here, so the absolute difference doesn't matter.

 

edit: for some reason all the labeling on those graphs didn't copy over. Go back to the first Saez link and look at the graphs with the labeling. Those high levels on the left-hand side are the 1920's. The income disparity dropped during the Great Depression, stayed level for several decades and then started taking off again in the 1970's.

 

The Wolff paper also compares 1983 data with 2007 data and gives both absolute dollars and percentage shares. It also breaks down wealth composition if you're interested in seeing where/how wealth is actually held across different parts of the population.

Edited February 20, 2013 by StrangeSox

[Y2HH]

We're talking about percentages here, so the absolute difference doesn't matter.

 

The % rises exponentially with those absolute numbers, so again, it's not quite that easy to dismiss it.

Edited February 20, 2013 by Y2HH

[StrangeSox]

The % rises exponentially with those absolute numbers, so again, it's not quite that easy to dismiss it.

 

I think you might be focusing on the individuals again and not the aggregate. Yeah, over your life, your salary will grow like that. But that's not looking at any one individual's income over their life but the collective incomes of the entire country in any given year.

 

We don't see any exponential growth in the data. We see plenty of flat or linear growth.

 

edit: even at the individual level, it doesn't matter. Try a simple excel table to see that.

row 1: Year 1-20

row 2: Income 1 (start at 100)

row 3: Income 2 (start at 1000)

row 4: Income 2 % Share (=A2/(A2+A3))

 

Step each income by 5% every year. In the end, you end up with 252 vs 2526, but the % share is still the same (90.9%). This is essentially what we had in the post-war economy. Wealth was growing steadily, but so were wages across the board. There were income and wealth gaps, obviously, but they were steady %-wise for about a generation. In the late-1970's, wages and productivity were decoupled, wages stagnated for the most part and more and more of our wealth went to the finance sector.

Edited February 20, 2013 by StrangeSox

[witesoxfan]

I don't see anything that's groundbreaking or abnormal with those numbers. The recessed but improving economy, low and middle class people aren't capable of finding much room for growth, but there were plenty of investment opportunities throughout the country, which the wealthy, with large, disposable incomes, will invest in to increase their share of the market.

[Y2HH]

I think you might be focusing on the individuals again and not the aggregate. Yeah, over your life, your salary will grow like that. But that's not looking at any one individual's income over their life but the collective incomes of the entire country in any given year.

 

We don't see any exponential growth in the data. We see plenty of flat or linear growth.

 

Probably...but that's why I tend to not like these types of comparisons that lump massive groups together in order to make a point. I don't think it's surprising that the rich get richer...since they're the ones with money to invest. Just as I don't think it's surprising that the poor get poorer, when everything they buy/need gets more and more expensive. From phone bills to electricity...and phony "tax cuts".

 

My taxes never dropped over the past decade. They were simply shifted around from federal the local...but the amount of money I was paying out in taxes, whether that be in the form of sales, income, property, etc...never changed...if anything it rose quite a bit. So while tax cuts are nice, if they're actual tax cuts (which they never are), they didn't really help anyone, since they were really just tax shifts.

[StrangeSox]

I don't see anything that's groundbreaking or abnormal with those numbers. The recessed but improving economy, low and middle class people aren't capable of finding much room for growth, but there were plenty of investment opportunities throughout the country, which the wealthy, with large, disposable incomes, will invest in to increase their share of the market.

 

Didn't seem to have happened with past recessions (to the same extent) or, especially, with the Great Depression.

 

The paper I posted a page or two back was an update with 2011 numbers to this previous paper:

 

http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf

 

Table 1 on Page 6 compares this recession and the early 2000's recession, where the top 1% saw 65% of income gains in the recovery

Edited February 20, 2013 by StrangeSox