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A lot of things happened. Reagan lowered taxes, increasing the incentive to move money out of your buisness and into other investments. Globalism startedly pic

A lot of things happened. Reagan lowered taxes, increasing the incentive to move money out of your buisness and into other investments. Globalism startedly picking up, meaning a lot of wage growth for the lower classes was outsorced to other countries instead of kept in America. The graph doesn’t capture how total employee compensation has risen a bit more than in that graph due to the explosion of costs in the American Medical sector eating up a lot of the potential compensation increase. Perhaps most importantly, Reagan began the attack on unions, resulting in there being less ability on the employee side to argue for increased wages. You could argue the massive money printing starting with the Iraq wars and going through the 2008 crisis has led to a massive funneling of that created money to the upper class, further increasing the inequality, and further exacerbated again by the death on unions meaning workers had less advocates in washington arguing for the lower classes to get a piece of that pie.

gruez 6y ago
> increasing the incentive to move money out of your buisness and into other investments how does lower taxes incentivize moving money out of businesses? What investments were they moving into?
- NineStarPoint 6y ago
  Higher taxes on income, dividends, and realized gains incentivize money being reinvested in the business instead of distributed to shareholders. If taking money out of a company creates taxable income, stockholders have an extra reason to press companies to find ways they can use that money to increase value instead. Basically, an extra incentive for companies to hire more people and do more research instead of do things like stock buybacks.
monoideism 6y ago
This is a good summary of what happened. I'd add a few more: the wealthy invested more and more into the political system in the past 30-40 years, culiminating in the millions pouring in each year following Citizens United. They use their influence to co-opt government power, allowing them to use regulatory capture to fend off competitors, capture big government contracts from forever wars, and loosen regulations to benefit their own interests. It's a vicious cycle, and if we just use the benefits of a wealth tax to build a larger federal government, that apparatus will only be used against the poor/middle class and for (most of) the wealthy. We have to redistribute this wealth back down to the individual and community level for it to have an effect, since it's harder for ultra-wealthy to co-opt thousands of communities and millions of free-thinking individuals than to co-opt centralized gov power (although manufacturing consent can come into play here).

gruez 6y ago

> increasing the incentive to move money out of your buisness and into other investments how does lower taxes incentivize moving money out of businesses? What investments were they moving into?

NineStarPoint 6y ago
Higher taxes on income, dividends, and realized gains incentivize money being reinvested in the business instead of distributed to shareholders. If taking money out of a company creates taxable income, stockholders have an extra reason to press companies to find ways they can use that money to increase value instead. Basically, an extra incentive for companies to hire more people and do more research instead of do things like stock buybacks.

monoideism 6y ago

This is a good summary of what happened. I'd add a few more: the wealthy invested more and more into the political system in the past 30-40 years, culiminating in the millions pouring in each year following Citizens United. They use their influence to co-opt government power, allowing them to use regulatory capture to fend off competitors, capture big government contracts from forever wars, and loosen regulations to benefit their own interests. It's a vicious cycle, and if we just use the benefits of a wealth tax to build a larger federal government, that apparatus will only be used against the poor/middle class and for (most of) the wealthy. We have to redistribute this wealth back down to the individual and community level for it to have an effect, since it's harder for ultra-wealthy to co-opt thousands of communities and millions of free-thinking individuals than to co-opt centralized gov power (although manufacturing consent can come into play here).