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How America's Top 20 Percent Perpetuates Inequality

51 points by panic 9y ago

devoply 9y ago
Why would you want to live your life like so many other people are forced to live. If you are at the very top that means privilege. Those are the only people left with privilege, everyone else works for a living and works harder than everyone else for a better living.
dab-daddy 9y ago
FUCK DRUMPF AND FUCK WHITE PEOPLE
gizmo 9y ago
It's not a bad article, but it makes the same observations about opportunity we've read about a thousand times before. The article mostly describes the status quo, but doesn't say much about the root causes or about possible solutions. Maybe the full book is better, but I doubt it. The author doesn't strike me as a person with deep insights. One sentence from the article really sticks out: "The American ideal of a classless society is, to me, a deeply attractive one. It has been disheartening to learn that the class structure of my new homeland is, if anything, more rigid than the one I left behind and especially so at the top." The author, a highly educated middle aged British guy who works at a think tank, needs years to figure out that the United States isn't the bastion of opportunity it purports to be? Come on! Literally the moment your plane lands at the airport you notice food is prepared by immigrants, and taxi drivers have missing teeth. The inequality is visible everywhere, and it stares you in the face. The author only barely recognizes the contradiction between his wish for equal opportunity for all and his desire to give his children a leg up. Ultimately he concludes that hoarding opportunity by the top 20% "results in a less competitive economy as well as a less open society". In other words, he's _still_ arguing that the top 20% should be in favor of equal opportunity out of self interest, because it builds a better society for all. This is in direct contradiction with his earlier observations about the zero-sum nature of opportunity. Efforts to redistribute wealth and opportunity from the rich to the rest does not benefit the rich: it's called class conflict for a reason. Maybe in another decade or so the author will figure this out.
- skj 9y ago
  > Efforts to redistribute wealth and opportunity from the rich to the rest does not benefit the rich Only if you don't consider a benefit to ones descendants.
- aaron-lebo 9y ago
  He may (or may not) be contradicting himself, but the argument isn't wrong. By hoarding wealth, the richest prevent their own wealth from growing (out of risk aversion and greed), and they end up either voluntarily transferring wealth or it's taken from them by an angry underclass. You can see why (after the fact), they would've preferred the former. Posted this yesterday but Acemoglu and Robinson's Economic Origins of Dictatorship and Democracy goes into this in depth. http://neweconomist.blogs.com/new_economist/2006/01/book_review_eco.html http://neweconomist.blogs.com/new_economist/2006/01/book_rev... Besides, it's really nice to be wealthy, but wealth can't protect the wealthiest from getting murdered by someone lacking mental healthcare or getting radicalized because they have no other option. Thus spreading the wealth does help everyone. Also, you are misrepresenting what he said re Britain and the US. I am British by birth, but I have lived in the United States since 2012 and became a citizen in late 2016. There are lots of reasons I have made America my home, but one of them is the American ideal of opportunity. I always hated the walls created by social class distinctions in the United Kingdom. The American ideal of a classless society is, to me, a deeply attractive one. It has been disheartening to learn that the class structure of my new homeland is, if anything, more rigid than the one I left behind and especially so at the top. The only thing he's saying is that while Britain has a society with obvious class differences, the US has those differences hidden. It's not that it took years for him to figure out cause he's a clueless dummy.
  - jacob019 9y ago
    While I would love to live in a more equal society, history shows time and again that government efforts to redistribute wealth mostly destroy it. We should try to devise systems that prevent power from centralizing in the first place.
    - 9y ago
tomjen3 9y ago
and once again he defines the problem so that it has to be a zero sum issue.
svantana 9y ago
It is only natural that the people in possession of resources are reluctant to share them; that is also the case in most countries, in my experience. The weird thing about the U.S. is that so many below-median-income folks are right-wing -- the very ones that would benefit from increased wealth distribution. I guess part of the explanation comes from the mirage that is The American Dream. In some sense a lot of us Top 20 percenters are Dream Sellers -- if you just buy the right shoes, food, anything, you too will be successful and get social status. (Yes I am one of those Scandinavian socialists)
- HalfwayToDice 9y ago
  This is a rather simplistic analysis of why poor people often vote republican in the USA. Ironically, I just visited Gothenburg in "socialist Sweden", and it was the most racially/poverty segregated city I have ever been to in the modern world.
  - DarkKomunalec 9y ago
    To be fair, Sweden has only recently started becoming multicultural, so they might need some time to learn how to handle it fairly.
    - Brockenstein 9y ago
      Generations, or longer, just like everyone else.
- jacquesm 9y ago
  > I guess part of the explanation comes from the mirage that is The American Dream No, it's much simpler than that: blacks, gays, guns, abortion.
  - tnzn 9y ago
    It's most probably a mix of both.
  - 9y ago
DarkKomunalec 9y ago
"Race played a significant role here, with whites reacting (almost entirely incorrectly) to a sense that Americans of color were overtaking them." I suppose that 'almost' is there to exclude population numbers, what with whites projected to become a minority by 2050 (in the US - the white population is pretty small on a global scale, at ~8%).
- oblio 9y ago
  To Europeans the whole US "white" thing is ludicrous. Americans count Hispanics as non-White, and while a good percentage of them are probably mixed, a big group are definitely what we'd call "white". You guys would go to Spain and Italy and call locals "Hispanics", based on your definition, while no German (for example) would ever do that.
  - DarkKomunalec 9y ago
    I live an hour's drive away from Italy, and it doesn't seem ludicrous to me to notice that people have less European ancestry south of the US border. Although this holds increasingly true for the south of the US itself, as well.
  - lotsofpulp 9y ago
    I think it's a class/culture thing, not a skin color thing. Hispanic implies you speak Spanish at home, likely to be an immigrant, maybe 1st or 2nd generation to be born in America, and your food/holiday/overall culture is different from the old "white" American one depicted in old TV shows and movies.
- morsch 9y ago
  We're all mongrels: http://web.stanford.edu/~learnest/les/mongrel.htm http://web.stanford.edu/~learnest/les/mongrel.htm More to the point: https://www.nytimes.com/2015/06/11/opinion/the-myth-of-a-white-minority.html https://www.nytimes.com/2015/06/11/opinion/the-myth-of-a-whi...
  - DarkKomunalec 9y ago
havella 9y ago
For households without kids it wouldn't be egregious to have the ability to make 529 size contributions to Roth-IRA.
- bluedevil2k 9y ago
  "529 type contributions to Roth-IRA" -- They do, it's called a Roth IRA
  - havella 9y ago
    mmm perhaps lack of clarity on my comment. I was referring to the size of the maximum contribution. $14000 for 529 vs 5500 for ROTH and there's an income limit for ROTH. ~190k
    - smileysteve 9y ago
      For that, we have the Roth 401k. Certainly 401ks aren't limited to the 20%, but the 20% can certainly contribute more easily and get more nominal matching.
notacoward 9y ago
I'm not sure I agree with the author's policy prescriptions, but the figures on income growth among different segments are interesting. As much as we might be falling behind the top 1%, we 2-20% folks are still pulling away from the rest and that has important implications. A thought-provoking read overall.
- sharemywin 9y ago
  What I found most interesting is his point about licenses and degrees etc. Most doctors need to start over that are licensed in other counties. Try getting a professional license if your a felon(even a drug charge).
pdog 9y ago
I think the top 50 percent are really responsible for income and wealth inequality. Why should they have more than the bottom half?
droithomme 9y ago
> the top fifth of the income distribution—broadly, households with incomes above the $112,000 These are not rich oligarch industrialists at all. If your total household income, husband and wife together, is $112k, you're middle class in most of the country. In some areas like the Bay and Manhattan, you're lower middle class. You generally don't have access to subsidized rent and you don't get subsidies for health care. Making people at this level earn less so everyone will be more equal just means more fall into poverty. A better solution is to focus on returning skilled high pay jobs to the US in order to get more people into higher brackets. > Income growth has not been uniform within the top fifth, of course: a third of the income rise went to the top 1 percent alone. But that still left $2.7 trillion for the 19 percent just beneath them. 2.7e12/326.e6*.19 = $1574 increase each on average. For the income range discussed, this is just barely keeping up with the rate of inflation.
- maxerickson 9y ago
  Have you properly accounted for households vs people in your final calculation and comparison?
  - droithomme 9y ago
    Yes I did and that was clear in my post. Much more interesting is "a third of the income rise went to the top 1 percent alone". Don't you think that is relevant? These folks received vastly more earned income raise than the rate of inflation. Should we consider unearned income as well?
jmaygarden 9y ago
If you define a class by the top 20% of income earners, then you can never have a "classless" society. You'll always have a mathematically top 20%. That's an entirely different idea than say nobles versus peasants or racial apartheid. I liked much of what the author had to say, but claiming that America has a more rigid class structure than a nation with a hereditary monarchy seems like a stretch.
- pokemongoaway 9y ago
  Correct... This classification system is not serving the "other" 80%!
- tnzn 9y ago
  Just wanted to point out that "You'll always have a mathematically top 20%" is only if we stay in the same system, which is kind of arguing in a circle... Plus if there's a huge gap between the bottom 10 and top 90%, this still means there's a class system of some sorts.
- JSONwebtoken 9y ago
  Why should I not deserve to be in the top 20%? I worked hard, studied diligently, and obtained rare and pragmatic skills so that I may live my life to a greater degree of contentedness than 80% of people. Why should I not I want my kids to grow up with the privileges of the top 20%? I worked the hours of 3 standard people over my lifetime to accumulate the wealth I want to pass onto my offspring to secure my genetic legacy. Aren't I just fulfilling what biology deems as life's most imperative mission? Why should I feel hated for cashing in the chips on a successful venture that would have failed 9 out of 10 other times? Starting a business already has negative expected value, so why is it on the 1 out of 10 times that I succeed, 40% of what I win gets taken away? Why should I want to live my life to the same degree of effort and reward as every else? What is the point of living life in such a manner, as governed by some impenetrable limiter of success and reward, it would be like being stuck for the rest of your life on tutorial island in Runescape, where you can't burn your shrimp on the campfire and you can't die to monsters, as that is where 100% of accounts begin their lives and where 80% of accounts never log back in.
rbcgerard 9y ago
I always get a little annoyed when people talk about benefits of some tax deduction accruing to the "rich". It's not that it's technically wrong but, but rather a sort of a truism - if you can take the max deduction and have a high marginal tax rate you will accrue more benefit (whether it's 529 or mortgage interest deduction). That being said, you also are likely to pay more taxes both nominally and proportionally if you are benefiting from a 529 deduction - so when you take the revenue side of the equation into account the proposition looks a lot less lopsided...
- rubyfan 9y ago
  Also specific to the 529 issue, many of these families will go on to pay more out of pocket tuitions than the bottom 80% who benefit from all sorts of government money and aid.
- mgkimsal 9y ago
  "deduction", perhaps, but what about "reductions"? The AHCA had a provision to eliminate a 2% additional tax on dividend income (IIRC) for people earning over $200k. Removing that is, as far as I can tell, only a benefit to "the rich" (by some definition, maybe not yours).
  - prostoalex 9y ago
    A very small segment of the rich who rely on dividend payments for cashflow and are not financially savvy enough to hold dividend-producing stocks in a trust or tax-shielded accounts. Special provision for higher tax on dividend income after a certain threshold (a) complicates the tax code (b) increases the cost of tax preparation, therefore removing disposable income that would be spent elsewhere from those sectors of the economy and (c) encourages companies to favor stock buybacks over dividend payments, which introduces its own distortions into the economy. And oh, by the way, it's completely avoidable if you suspect your income will exceed $200k and are willing to spend 10 minutes to rebalance your taxable accounts in favor of growth stocks, real estate and municipal bonds. Other than that it's an excellent provision in the tax code.
- rayiner 9y ago
IanDrake 9y ago
"First they came for the Socialists, and I did not speak out— Because I was not a Socialist. ... Then they came for me—and there was no one left to speak for me." Now replace the socialist, trade unionist, and Jews from this famous quote and insert your income percentile to see what's going on here. I said this during the occupy movement. It's not the 1%, not the 2%, not the 10%, not even the 20% that need to be worried. For they will not satisfy those who have not achieved what they desire. What people who promote class warfare desire is financial results without work or risk because that's how they perceive those with money attained it. Expect to see articles about the top 25% and 30% next.
- KozmoNau7 9y ago
  "What people who promote class warfare desire is financial results without work or risk because that's how they perceive those with money attained it." Which also happens to be the truth. Sure, hard work and risk were involved, but generally not on the part of the people who ended up with the money.
  - Para2016 9y ago
    As another commenter pointed out, to be in the top 20% a household only needs to earn $112k a year. That's like 2 teachers getting married, or 2 nurses, or 2 mid level office workers/government workers. And this college fund implies there are kids involved. So a household with $112k/year and kids should be taxed heavily as possible because they didn't earn it? If they live in a high cost area or have any debt/medical problems they'll be in even more trouble. It sounds to me like you want to tax and burden families such as that to move them back down into the income strata where there is uncertainty for housing/medicine/food/education/transportation. Why don't you like the idea of people working and earning an income in order to remove those uncertainties? That's all I want to do with my life. Is that such a terrible desire that when I finally get there I should have it taken away? By the way, I'm a recent medical graduate with 250k in debt from a lower-middle class family. If all goes well I'll be one of those evil 20% people after residency.
    - 9y ago
0x27081990 9y ago
A and B decide what C has to pay for D, while some of that tax money happens to fell into A and B pockets.
flexie 9y ago
The article says top 20 percent consists of the households making $112,000 or more. Many of those families live in places like New York or California where $112,000 is not much. The families I know in New York City making around $2-300,000 live paycheck to paycheck in tiny, old rented apartments. Both parents work until 6-8 PM, they barely see their kids except in weekends. They spent the first decade or so after college paying off student debt and now they have five figure credit card debt. Their life is void of luxury. No cars, no fancy vacations, no real estate, no savings, no shares, often no pensions savings either. Everything is spent on kindergartens, nannies, schools, rent etc. You may be upper middle class if your family makes $112,000 in Oklahoma. But it simply doesn't make sense to regard people in New York City or the Bay area with such salaries as upper middle class.
- rarec 9y ago
  Families making $200,000-300,000 lives paycheck to paycheck? Sorry, but just what in the everliving fuck are they doing with that money? Burning it for warmth?
  - redblacktree 9y ago
    Paying interest payments it seems.
  - dagw 9y ago
    Housing costs for a place in the nice part of town plus sending a couple of kids to the 'right' school will eat up much of that. Plus then (of course) you need the clothes and cars and vacations to match the the above lifestyle and that will eat up the rest of it.
  - throwaway2016a 9y ago
    Can't speak for those people but our household makes roughly $200,000 and after paying: - Taxes - Mortgage - Interest on the mortgage - Property insurance - Our child's daycare so we can both work - Payments on loans for every appliance that unexpectedly broke - Saving Half those costs would go away if we didn't buy a big house. For example, we have two air conditioning units and the heaters and both heaters died in the past year and costs $2,000+ to repair. More money = more money tied up in assets and "good debt" = less actual discretionary money at the end of the mont It ends up being about the same as someone who makes significantly less BUT we have equity in our property and money in our retirement funds at the end. And I'm not going to lie. I enjoy a nice dinner ($500), a broadway play ($1,000 for good seats), or a Red Sox game ($900) once and a while.
ajuc 9y ago
I never understood that about USA. Free (or at least affordable) university education is one of the most cost-effective investments a state can make. I've seen it work wonders in Poland in the last 25 years. And I don't mean "education to become academic scientists" - that part sucks in Poland. I mean "education to become globally competitive in high-margin areas of economy". It's cheap, it benefits economy in many ways, and it lowers the inequality. If Poland can afford it (and could afford it when it had GDP per capita under 10 000 USD) - USA can too. Also - economy is not zero-sum. Yes, top 20% is always 20%, but if the division between incomes of top 20% and top 30% is negligible - why should we care about top 20%? And if your country has 20% of people that can compete on global market, but other countries have 40% or 60% - you're screwed. Well, I guess you can just import them instead of teaching your own, but what to do with these non-competitives you're left with?
briandear 9y ago
... likely to run into the solid wall of upper middle-class resistance, even those that simply require a slightly higher tax bill... What are the unintended consequences of this slightly higher tax bill? Does this writer not know of the Laffer Curve? The top 20% already pay the vast majority of income taxes in the United States And now he suggests they should pay more? Why not instead reprioritize spending, including cuts to programs that are proven not to work? The "War on Poverty" has not resulted in any significant change to US poverty rates yet money is still spent on those programs. Farm subsidies, social security and Medicare and Medicaid fraud and abuse and the defense department's propensity to bleed money-- there are many areas that can and should be addressed before simply raising taxes. And what about college cost inflation? College expenses have risen more dramatically than health costs. Could the influx of easy public money and loans have something to do with it? Look at the cartel's controlling textbooks and scientific journals! We lose our collective minds over Uber surge pricing but say nothing about $200 textbooks that were often written by professors working for public institutions. In universities you have countless Provosts and vice Provosts who pretty much add no value. You have administrators who simply administer other administrators. It's a racket of which the mafia could be proud. Adjunct professors barely scrape by while the "Director of Residental Student Diverisity Affairs" makes six figures. Many on the left like to complain about CEO pay yet let academia have a free pass to hand out titles and six figure non-teaching jobs out like candy -- all on the backs of students and indirectly, the taxpayer. If we want to expand educational access then the universities ought to start with themselves: cut the waste, lower the price. But they won't do that; the "liberals" in charge of universities actually perpetuate the educational inequality they purport to oppose. It certainly isn't conservatives in the Ivy League that maintain legacy based admissions or $80,000 per year price tags. The problem isn't that taxes are too low, it's that government does a bad job when it comes to budgeting and fiscal policy. I am not opposed to "left wing" proposals as much as I am opposed to "raising taxes and redistributing wealth" as the only means presented as the way to accomplish those proposals. Zero-based budgeting would be a good start. Then every year the government can better allocate money rather than just continually adding to whatever the previous year's expenditures happen to have been.
- maxerickson 9y ago
  The Laffer curve is a fantastic rhetorical device. Where's your data showing what the slope of it is for the current US tax regime? Oh, you don't have one? Why not? Afraid it might undermine the rhetoric? The fraud in Social Security and Medicare and Medicaid isn't that high. If you want to bitch about those programs, bitch that they don't pay market rates for the services they mandate, hiding a tax in the payments other people make for medical services.
NoGravitas 9y ago
The top 20% certainly do support problematic policies, and they do need to look at how their preferred policies are harmful to most Americans. But the real problem is still the 1% (or the 0.1%). It just hasn't caught up with the top 20% yet. Unless the arc of US politics changes radically, and I've seen no indication that it will, over the next 30 years, these people are going to be proletarianized the way the rest of us have been over the last 30. You can see it already in the decline of private medical practices as doctors become employees of hospitals and chain clinics. In the decline of tenured faculty at universities. The zottas are not going to tolerate that share of their wealth going to their high-skilled servants for any longer than they have to.
androck51 9y ago
Just on the funding level..... the top 20% pay 84% of federal income taxes .... So, maybe they should pay 100%, and 'feel' guilt free for the income tax category...

51 points by panic 9y ago

Why would you want to live your life like so many other people are forced to live. If you are at the very top that means privilege. Those are the only people left with privilege, everyone else works for a living and works harder than everyone else for a better living.

dab-daddy 9y ago

FUCK DRUMPF AND FUCK WHITE PEOPLE

gizmo 9y ago

It's not a bad article, but it makes the same observations about opportunity we've read about a thousand times before. The article mostly describes the status quo, but doesn't say much about the root causes or about possible solutions. Maybe the full book is better, but I doubt it. The author doesn't strike me as a person with deep insights. One sentence from the article really sticks out: "The American ideal of a classless society is, to me, a deeply attractive one. It has been disheartening to learn that the class structure of my new homeland is, if anything, more rigid than the one I left behind and especially so at the top." The author, a highly educated middle aged British guy who works at a think tank, needs years to figure out that the United States isn't the bastion of opportunity it purports to be? Come on! Literally the moment your plane lands at the airport you notice food is prepared by immigrants, and taxi drivers have missing teeth. The inequality is visible everywhere, and it stares you in the face. The author only barely recognizes the contradiction between his wish for equal opportunity for all and his desire to give his children a leg up. Ultimately he concludes that hoarding opportunity by the top 20% "results in a less competitive economy as well as a less open society". In other words, he's _still_ arguing that the top 20% should be in favor of equal opportunity out of self interest, because it builds a better society for all. This is in direct contradiction with his earlier observations about the zero-sum nature of opportunity. Efforts to redistribute wealth and opportunity from the rich to the rest does not benefit the rich: it's called class conflict for a reason. Maybe in another decade or so the author will figure this out.

skj 9y ago
> Efforts to redistribute wealth and opportunity from the rich to the rest does not benefit the rich Only if you don't consider a benefit to ones descendants.
aaron-lebo 9y ago
He may (or may not) be contradicting himself, but the argument isn't wrong. By hoarding wealth, the richest prevent their own wealth from growing (out of risk aversion and greed), and they end up either voluntarily transferring wealth or it's taken from them by an angry underclass. You can see why (after the fact), they would've preferred the former. Posted this yesterday but Acemoglu and Robinson's Economic Origins of Dictatorship and Democracy goes into this in depth. http://neweconomist.blogs.com/new_economist/2006/01/book_review_eco.html http://neweconomist.blogs.com/new_economist/2006/01/book_rev... Besides, it's really nice to be wealthy, but wealth can't protect the wealthiest from getting murdered by someone lacking mental healthcare or getting radicalized because they have no other option. Thus spreading the wealth does help everyone. Also, you are misrepresenting what he said re Britain and the US. I am British by birth, but I have lived in the United States since 2012 and became a citizen in late 2016. There are lots of reasons I have made America my home, but one of them is the American ideal of opportunity. I always hated the walls created by social class distinctions in the United Kingdom. The American ideal of a classless society is, to me, a deeply attractive one. It has been disheartening to learn that the class structure of my new homeland is, if anything, more rigid than the one I left behind and especially so at the top. The only thing he's saying is that while Britain has a society with obvious class differences, the US has those differences hidden. It's not that it took years for him to figure out cause he's a clueless dummy.
- jacob019 9y ago
  While I would love to live in a more equal society, history shows time and again that government efforts to redistribute wealth mostly destroy it. We should try to devise systems that prevent power from centralizing in the first place.
  - 9y ago

tomjen3 9y ago

and once again he defines the problem so that it has to be a zero sum issue.

svantana 9y ago

It is only natural that the people in possession of resources are reluctant to share them; that is also the case in most countries, in my experience. The weird thing about the U.S. is that so many below-median-income folks are right-wing -- the very ones that would benefit from increased wealth distribution. I guess part of the explanation comes from the mirage that is The American Dream. In some sense a lot of us Top 20 percenters are Dream Sellers -- if you just buy the right shoes, food, anything, you too will be successful and get social status. (Yes I am one of those Scandinavian socialists)

HalfwayToDice 9y ago
This is a rather simplistic analysis of why poor people often vote republican in the USA. Ironically, I just visited Gothenburg in "socialist Sweden", and it was the most racially/poverty segregated city I have ever been to in the modern world.
- DarkKomunalec 9y ago
  To be fair, Sweden has only recently started becoming multicultural, so they might need some time to learn how to handle it fairly.
  - Brockenstein 9y ago
    Generations, or longer, just like everyone else.
jacquesm 9y ago
> I guess part of the explanation comes from the mirage that is The American Dream No, it's much simpler than that: blacks, gays, guns, abortion.
- tnzn 9y ago
  It's most probably a mix of both.
- 9y ago

DarkKomunalec 9y ago

"Race played a significant role here, with whites reacting (almost entirely incorrectly) to a sense that Americans of color were overtaking them." I suppose that 'almost' is there to exclude population numbers, what with whites projected to become a minority by 2050 (in the US - the white population is pretty small on a global scale, at ~8%).

oblio 9y ago
To Europeans the whole US "white" thing is ludicrous. Americans count Hispanics as non-White, and while a good percentage of them are probably mixed, a big group are definitely what we'd call "white". You guys would go to Spain and Italy and call locals "Hispanics", based on your definition, while no German (for example) would ever do that.
- DarkKomunalec 9y ago
  I live an hour's drive away from Italy, and it doesn't seem ludicrous to me to notice that people have less European ancestry south of the US border. Although this holds increasingly true for the south of the US itself, as well.
- lotsofpulp 9y ago
  I think it's a class/culture thing, not a skin color thing. Hispanic implies you speak Spanish at home, likely to be an immigrant, maybe 1st or 2nd generation to be born in America, and your food/holiday/overall culture is different from the old "white" American one depicted in old TV shows and movies.
morsch 9y ago
We're all mongrels: http://web.stanford.edu/~learnest/les/mongrel.htm http://web.stanford.edu/~learnest/les/mongrel.htm More to the point: https://www.nytimes.com/2015/06/11/opinion/the-myth-of-a-white-minority.html https://www.nytimes.com/2015/06/11/opinion/the-myth-of-a-whi...
- DarkKomunalec 9y ago

havella 9y ago

For households without kids it wouldn't be egregious to have the ability to make 529 size contributions to Roth-IRA.

bluedevil2k 9y ago
"529 type contributions to Roth-IRA" -- They do, it's called a Roth IRA
- havella 9y ago
  mmm perhaps lack of clarity on my comment. I was referring to the size of the maximum contribution. $14000 for 529 vs 5500 for ROTH and there's an income limit for ROTH. ~190k
  - smileysteve 9y ago
    For that, we have the Roth 401k. Certainly 401ks aren't limited to the 20%, but the 20% can certainly contribute more easily and get more nominal matching.

notacoward 9y ago

I'm not sure I agree with the author's policy prescriptions, but the figures on income growth among different segments are interesting. As much as we might be falling behind the top 1%, we 2-20% folks are still pulling away from the rest and that has important implications. A thought-provoking read overall.

sharemywin 9y ago
What I found most interesting is his point about licenses and degrees etc. Most doctors need to start over that are licensed in other counties. Try getting a professional license if your a felon(even a drug charge).

pdog 9y ago

I think the top 50 percent are really responsible for income and wealth inequality. Why should they have more than the bottom half?

droithomme 9y ago

> the top fifth of the income distribution—broadly, households with incomes above the $112,000 These are not rich oligarch industrialists at all. If your total household income, husband and wife together, is $112k, you're middle class in most of the country. In some areas like the Bay and Manhattan, you're lower middle class. You generally don't have access to subsidized rent and you don't get subsidies for health care. Making people at this level earn less so everyone will be more equal just means more fall into poverty. A better solution is to focus on returning skilled high pay jobs to the US in order to get more people into higher brackets. > Income growth has not been uniform within the top fifth, of course: a third of the income rise went to the top 1 percent alone. But that still left $2.7 trillion for the 19 percent just beneath them. 2.7e12/326.e6*.19 = $1574 increase each on average. For the income range discussed, this is just barely keeping up with the rate of inflation.

maxerickson 9y ago
Have you properly accounted for households vs people in your final calculation and comparison?
- droithomme 9y ago
  Yes I did and that was clear in my post. Much more interesting is "a third of the income rise went to the top 1 percent alone". Don't you think that is relevant? These folks received vastly more earned income raise than the rate of inflation. Should we consider unearned income as well?

jmaygarden 9y ago

If you define a class by the top 20% of income earners, then you can never have a "classless" society. You'll always have a mathematically top 20%. That's an entirely different idea than say nobles versus peasants or racial apartheid. I liked much of what the author had to say, but claiming that America has a more rigid class structure than a nation with a hereditary monarchy seems like a stretch.

pokemongoaway 9y ago
Correct... This classification system is not serving the "other" 80%!
tnzn 9y ago
Just wanted to point out that "You'll always have a mathematically top 20%" is only if we stay in the same system, which is kind of arguing in a circle... Plus if there's a huge gap between the bottom 10 and top 90%, this still means there's a class system of some sorts.
JSONwebtoken 9y ago
Why should I not deserve to be in the top 20%? I worked hard, studied diligently, and obtained rare and pragmatic skills so that I may live my life to a greater degree of contentedness than 80% of people. Why should I not I want my kids to grow up with the privileges of the top 20%? I worked the hours of 3 standard people over my lifetime to accumulate the wealth I want to pass onto my offspring to secure my genetic legacy. Aren't I just fulfilling what biology deems as life's most imperative mission? Why should I feel hated for cashing in the chips on a successful venture that would have failed 9 out of 10 other times? Starting a business already has negative expected value, so why is it on the 1 out of 10 times that I succeed, 40% of what I win gets taken away? Why should I want to live my life to the same degree of effort and reward as every else? What is the point of living life in such a manner, as governed by some impenetrable limiter of success and reward, it would be like being stuck for the rest of your life on tutorial island in Runescape, where you can't burn your shrimp on the campfire and you can't die to monsters, as that is where 100% of accounts begin their lives and where 80% of accounts never log back in.

rbcgerard 9y ago

I always get a little annoyed when people talk about benefits of some tax deduction accruing to the "rich". It's not that it's technically wrong but, but rather a sort of a truism - if you can take the max deduction and have a high marginal tax rate you will accrue more benefit (whether it's 529 or mortgage interest deduction). That being said, you also are likely to pay more taxes both nominally and proportionally if you are benefiting from a 529 deduction - so when you take the revenue side of the equation into account the proposition looks a lot less lopsided...

rubyfan 9y ago
Also specific to the 529 issue, many of these families will go on to pay more out of pocket tuitions than the bottom 80% who benefit from all sorts of government money and aid.
mgkimsal 9y ago
"deduction", perhaps, but what about "reductions"? The AHCA had a provision to eliminate a 2% additional tax on dividend income (IIRC) for people earning over $200k. Removing that is, as far as I can tell, only a benefit to "the rich" (by some definition, maybe not yours).
- prostoalex 9y ago
  A very small segment of the rich who rely on dividend payments for cashflow and are not financially savvy enough to hold dividend-producing stocks in a trust or tax-shielded accounts. Special provision for higher tax on dividend income after a certain threshold (a) complicates the tax code (b) increases the cost of tax preparation, therefore removing disposable income that would be spent elsewhere from those sectors of the economy and (c) encourages companies to favor stock buybacks over dividend payments, which introduces its own distortions into the economy. And oh, by the way, it's completely avoidable if you suspect your income will exceed $200k and are willing to spend 10 minutes to rebalance your taxable accounts in favor of growth stocks, real estate and municipal bonds. Other than that it's an excellent provision in the tax code.
rayiner 9y ago

IanDrake 9y ago

"First they came for the Socialists, and I did not speak out— Because I was not a Socialist. ... Then they came for me—and there was no one left to speak for me." Now replace the socialist, trade unionist, and Jews from this famous quote and insert your income percentile to see what's going on here. I said this during the occupy movement. It's not the 1%, not the 2%, not the 10%, not even the 20% that need to be worried. For they will not satisfy those who have not achieved what they desire. What people who promote class warfare desire is financial results without work or risk because that's how they perceive those with money attained it. Expect to see articles about the top 25% and 30% next.

KozmoNau7 9y ago
"What people who promote class warfare desire is financial results without work or risk because that's how they perceive those with money attained it." Which also happens to be the truth. Sure, hard work and risk were involved, but generally not on the part of the people who ended up with the money.
- Para2016 9y ago
  As another commenter pointed out, to be in the top 20% a household only needs to earn $112k a year. That's like 2 teachers getting married, or 2 nurses, or 2 mid level office workers/government workers. And this college fund implies there are kids involved. So a household with $112k/year and kids should be taxed heavily as possible because they didn't earn it? If they live in a high cost area or have any debt/medical problems they'll be in even more trouble. It sounds to me like you want to tax and burden families such as that to move them back down into the income strata where there is uncertainty for housing/medicine/food/education/transportation. Why don't you like the idea of people working and earning an income in order to remove those uncertainties? That's all I want to do with my life. Is that such a terrible desire that when I finally get there I should have it taken away? By the way, I'm a recent medical graduate with 250k in debt from a lower-middle class family. If all goes well I'll be one of those evil 20% people after residency.
  - 9y ago

0x27081990 9y ago

A and B decide what C has to pay for D, while some of that tax money happens to fell into A and B pockets.

flexie 9y ago

The article says top 20 percent consists of the households making $112,000 or more. Many of those families live in places like New York or California where $112,000 is not much. The families I know in New York City making around $2-300,000 live paycheck to paycheck in tiny, old rented apartments. Both parents work until 6-8 PM, they barely see their kids except in weekends. They spent the first decade or so after college paying off student debt and now they have five figure credit card debt. Their life is void of luxury. No cars, no fancy vacations, no real estate, no savings, no shares, often no pensions savings either. Everything is spent on kindergartens, nannies, schools, rent etc. You may be upper middle class if your family makes $112,000 in Oklahoma. But it simply doesn't make sense to regard people in New York City or the Bay area with such salaries as upper middle class.

rarec 9y ago
Families making $200,000-300,000 lives paycheck to paycheck? Sorry, but just what in the everliving fuck are they doing with that money? Burning it for warmth?
- redblacktree 9y ago
  Paying interest payments it seems.
- dagw 9y ago
  Housing costs for a place in the nice part of town plus sending a couple of kids to the 'right' school will eat up much of that. Plus then (of course) you need the clothes and cars and vacations to match the the above lifestyle and that will eat up the rest of it.
- throwaway2016a 9y ago
  Can't speak for those people but our household makes roughly $200,000 and after paying: - Taxes - Mortgage - Interest on the mortgage - Property insurance - Our child's daycare so we can both work - Payments on loans for every appliance that unexpectedly broke - Saving Half those costs would go away if we didn't buy a big house. For example, we have two air conditioning units and the heaters and both heaters died in the past year and costs $2,000+ to repair. More money = more money tied up in assets and "good debt" = less actual discretionary money at the end of the mont It ends up being about the same as someone who makes significantly less BUT we have equity in our property and money in our retirement funds at the end. And I'm not going to lie. I enjoy a nice dinner ($500), a broadway play ($1,000 for good seats), or a Red Sox game ($900) once and a while.

ajuc 9y ago

I never understood that about USA. Free (or at least affordable) university education is one of the most cost-effective investments a state can make. I've seen it work wonders in Poland in the last 25 years. And I don't mean "education to become academic scientists" - that part sucks in Poland. I mean "education to become globally competitive in high-margin areas of economy". It's cheap, it benefits economy in many ways, and it lowers the inequality. If Poland can afford it (and could afford it when it had GDP per capita under 10 000 USD) - USA can too. Also - economy is not zero-sum. Yes, top 20% is always 20%, but if the division between incomes of top 20% and top 30% is negligible - why should we care about top 20%? And if your country has 20% of people that can compete on global market, but other countries have 40% or 60% - you're screwed. Well, I guess you can just import them instead of teaching your own, but what to do with these non-competitives you're left with?

briandear 9y ago

... likely to run into the solid wall of upper middle-class resistance, even those that simply require a slightly higher tax bill... What are the unintended consequences of this slightly higher tax bill? Does this writer not know of the Laffer Curve? The top 20% already pay the vast majority of income taxes in the United States And now he suggests they should pay more? Why not instead reprioritize spending, including cuts to programs that are proven not to work? The "War on Poverty" has not resulted in any significant change to US poverty rates yet money is still spent on those programs. Farm subsidies, social security and Medicare and Medicaid fraud and abuse and the defense department's propensity to bleed money-- there are many areas that can and should be addressed before simply raising taxes. And what about college cost inflation? College expenses have risen more dramatically than health costs. Could the influx of easy public money and loans have something to do with it? Look at the cartel's controlling textbooks and scientific journals! We lose our collective minds over Uber surge pricing but say nothing about $200 textbooks that were often written by professors working for public institutions. In universities you have countless Provosts and vice Provosts who pretty much add no value. You have administrators who simply administer other administrators. It's a racket of which the mafia could be proud. Adjunct professors barely scrape by while the "Director of Residental Student Diverisity Affairs" makes six figures. Many on the left like to complain about CEO pay yet let academia have a free pass to hand out titles and six figure non-teaching jobs out like candy -- all on the backs of students and indirectly, the taxpayer. If we want to expand educational access then the universities ought to start with themselves: cut the waste, lower the price. But they won't do that; the "liberals" in charge of universities actually perpetuate the educational inequality they purport to oppose. It certainly isn't conservatives in the Ivy League that maintain legacy based admissions or $80,000 per year price tags. The problem isn't that taxes are too low, it's that government does a bad job when it comes to budgeting and fiscal policy. I am not opposed to "left wing" proposals as much as I am opposed to "raising taxes and redistributing wealth" as the only means presented as the way to accomplish those proposals. Zero-based budgeting would be a good start. Then every year the government can better allocate money rather than just continually adding to whatever the previous year's expenditures happen to have been.

maxerickson 9y ago
The Laffer curve is a fantastic rhetorical device. Where's your data showing what the slope of it is for the current US tax regime? Oh, you don't have one? Why not? Afraid it might undermine the rhetoric? The fraud in Social Security and Medicare and Medicaid isn't that high. If you want to bitch about those programs, bitch that they don't pay market rates for the services they mandate, hiding a tax in the payments other people make for medical services.

NoGravitas 9y ago

The top 20% certainly do support problematic policies, and they do need to look at how their preferred policies are harmful to most Americans. But the real problem is still the 1% (or the 0.1%). It just hasn't caught up with the top 20% yet. Unless the arc of US politics changes radically, and I've seen no indication that it will, over the next 30 years, these people are going to be proletarianized the way the rest of us have been over the last 30. You can see it already in the decline of private medical practices as doctors become employees of hospitals and chain clinics. In the decline of tenured faculty at universities. The zottas are not going to tolerate that share of their wealth going to their high-skilled servants for any longer than they have to.

androck51 9y ago

Just on the funding level..... the top 20% pay 84% of federal income taxes .... So, maybe they should pay 100%, and 'feel' guilt free for the income tax category...