We’ve been measuring inequality wrong – here’s the real story (nuance that the far right will spin)

[LuckyTheDog]

NOTE: I almost didn't post this on Yonside because this study will no doubt be misused by the right and misunderstood by some on the left. But I think it's something we should know about and discuss.

Despite appearances to the contrary, this year’s presidential follies have managed to feature at least a few policy discussions amid all the name-calling.

Income inequality in particular has animated voters on both sides of the partisan divide, but the solutions advocated by candidates from each party are markedly different.

Democrats claim higher taxes on the rich and more benefits for the poor are the best ways to reduce inequality. Republicans argue what we really need is more growth, accomplished by lowering taxes to spur work and investment with, it seems, benefit cuts to make up lost revenue.

Remarkably, this debate has taken place based on partial and inappropriate indicators of U.S. inequality. Each party is dead certain about how to address inequality, yet neither knows what it is. Neither has a comprehensive and conceptually correct measure of inequality. The right measure is not how much wealth or income people have or receive but their spending power after the government has levied taxes on those resources and supplemented those resources with welfare and other benefits.

MORE HERE: http://yonside.com/weve-measuring-inequality-wrong/

[kristopher]

1. And you thought an economic study fm a right wing think tank ...

Last edited Mon Mar 14, 2016, 04:32 PM - Edit history (1)

...is worth posting here because....?

They are concerned mostly with how increasing marginal taxes incentivize people to work less, and they therefore make less money.

Really?


People are poor because they don't work hard enough due to an aversion to paying a higher marginal tax???

REALLY?????

ETA because I don't want to bump

The right wing think tank that produced the non-peer reviewed white paper:
NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138

[LuckyTheDog]

3. University of California at Berkeley and Boston University

Which is the "right-wing think tank"? University of California at Berkeley or Boston University?

[LuckyTheDog]

4. NBER isn't a right-wing think tank

If NBER is a "right-wing think tank," it's one of an odd variety whose employees give political donations exclusively to Democrats (see the link I pasted below).

Also, the academics who wrote the commentary for The Conversation (and the paper it's based on) are not known as looney right wingers. And they don't work for think tanks. They work for University of California at Berkeley and Boston University.

So, rather than try to discredit the commentary with baseless charges like that, you might want to address the content.

The basic findings are that there are a lot of people in this country who would be worse off if our social programs went away. And, boosting spending on social programs by itself won't make things much better. Those are both things that Bernie Sanders might say.

http://www.usnews.com/news/articles/2011/03/03/think-tank-employees-tend-to-support-democrats

[hfojvt]

2. I think that is a load of rot

the major message I got from it was that - taxes are high on the rich.

I don't buy it, and I don't even know how they measure it.

First, this line "a member of the top 1% only gets to spend 32 cents for ever dollar they earn".

I find that hard to believe, but it depends on what they mean by EARN.

Since dividends, interest, rent, and capital gains are not considered EARNED income, are they talking about those things? That's where the richer people get much of their income, and a) they pay no FICA taxes on that money and they pay lower income tax rates on them than people who work for wages. Dividends and capital gains are only taxed at 20%, not at the top rate for income.

And the state and local taxes are regressive in ALL 50 states. Many times the top 1% pays an average rate about 1/3 of somebody in the bottom 20%.

[angstlessk]

5. And the age group they chose 40-49

For example, a typical 40-49 year-old in any of the bottom three quintiles (poor to middle class) of our resource distribution will only get to spend about 60 cents of every dollar he or she earns. For the richest 1 percent in that age group, it’s just 32 cents.

Well, gee, by the time that 1% are 40-49 they have already bought and paid for their yachts, fancy cars, multiple million dollar homes...the ONLY money the need to spend is on LUXURIES (and of course politicians)

While that bottom three quintiles have re-mortgaged their homes for cash out, maxing out their credit cards, and they are still paying most of their "wealth" (aka income) for shelter and transportation....NECESSITIES.