the haves and have-nots
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the haves and have-nots
| Mon, 10-20-2008 - 3:19am |
this is from 2007 so it is a bit dated, but i thought it was interesting and addresses some of the issues that have been discussed on the board recently. i only posted the first segement.

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Very interesting. Thanks for posting.
Chrissy
mom to Aidan 8/21/03
Grayson Blaine 12/30/07
Let me start with the graphs at the end. The first graph shoes the upper middle is experiencing the same issue as the middle and bottom - and Obama's plan is to tax the upper middle more. I'm in the upper middle. If Obama was only talking about taxing the upper class more, the Oprah's and Warren Buffets - the real people who have the majority of the wealth in that top group - I would not complain about that.
The top group makes 1/2 the income, they also pay 1/2 the federal income tax. So that seems fair to me. The bottom two groups should be paying no income tax, and some get tax credits that result in money back on top of paying no income tax.
>>>>To get a sense of how the very wealthy have prospered over the past generation, consider this: The share of total income going to the top-earning 1 percent of Americans went from 8 percent in 1980 to 16 percent in 2004.<<<<
Yes, the Oprah's and Warren Buffets have more. From where I sit they also create a lot of jobs, give an awful lot to charity, invest in the market a lot. There is a big difference between the upper middle that gets lumped in with the top 5% and Oprah.
>>>One reason: gains in the stock market. Affluent people own more stocks, and executives are often paid in stock or stock options. So when the market does well, their wealth accelerates quickly. Over the past 10 years, for example, the S&P 500, a broad proxy for the market, has increased 86 percent.<<<<
Like you said, this is a big outdated. I believe the gains of the last 10 years were just erased. Adjusted for inflation I believe anyone investing in them market in a big way the last 10 years is worse off for it. My husband gets stock options, they are currently worthless. We invested some money the last few years - at the high point, which is in hindsight a terrible financial move. Those people who recently joined the upper middle class have not done as well as the paragraph above would suggest, their wealth had declined rather than accelerated. That's fine because they have good incomes, but "accelerated wealth" is not what that group is experiencing today unless you want to say accelerated decline.
>>>>At the same time, the people at the very top saw their incomes surge: In the 1970s, corporate chief executives earned 30 times as much as the average worker. Ten years ago, CEO compensation was 116 times the average. CEOs now earn close to 300 times as much as the average worker.<<<<
Those CEO's running huge companies are in the top 1%, not the top 5%. There is a gigantic cap between someone making $250k and someone earning millions, so one context point could be the huge cap within the top 5% as well as the gap between the top 5% and everyone else.
>>>>>This widening gulf between the haves and have-nots has been a consistent trend for a generation or more. Economists largely agree about the primary underlying reasons. New technology has made many jobs obsolete, while creating dramatic opportunities for wealth in computers, finance, and media and entertainment. Global competition has done the same. As middle-class assembly-line jobs vanish, and routine white-collar work gets outsourced overseas, the value of education and special skills rises. The power of unions continues to decline.<<<<
Yet as recently as the Carter and early Reagan years unemployment was over 11%.
>>>>For people in the broad middle class, the economic picture over the past decade has been mixed. Unemployment has been low and inflation largely contained. But behind those reassuring trends, you'll find a lot of volatility in labor markets — what economists call "churn." In short, there's more hiring and firing going on.<<<<
I wonder if anyone has evaluated the "churn" for the upper middle. I would think it's the same problem, lots of volatility so someone who makes it to the upper middle may not stay there long, and can be kicked back down overnight. That's because the upper middle doesn't usually have enough wealth to live off of. Those who live off wealth are in the top 1%.
I got this from wikipedia but it is references to the US census bureau:
"The notion that the middle class is shrinking is controversial because the economic boundaries that define the middle class vary. Households that earn between $25,000 and $75,000 represent approximately the middle half of the income distribution tables provided by the U.S. Census Bureau. Over the past two decades, the number of households in those brackets decreased by 3.9%, from 48.2% to 44.3%. During the same time period, the number of households with incomes below $25,000 decreased 3.5%, from 28.7% to 25.2%, while the number of households with incomes above $75,000 increased over 7%, from 23.2% to 30.4%." http://en.wikipedia.org/wiki/American_middle_class#cite_note-Income.2C_Poverty.2C_and_Health_Insurance_Coverage_in_the_United_States:_2006-43
If the bottom group is shrinking (number of households in that group are less) and the middle is shrinking and those households over $75k are increasing, that would be one reason there is "less wealth" in the lower half and "more wealth" in the upper half - people are moving up.
http://openlettertobarack.blogspot.com/
Let me start with the graphs at the end. The first graph shoes the upper middle is experiencing the same issue as the middle and bottom - and Obama's plan is to tax the upper middle more. I'm in the upper middle. If Obama was only talking about taxing the upper class more, the Oprah's and Warren Buffets - the real people who have the majority of the wealth in that top group - I would not complain about that. the "upper middle" in this chart is not necessarily refering to class. but percentage. it is broken into groups of 20%. this chart: http://commadot.com/income-breakdown-in-us/
>>>you are in the top 20%, not the upper middle. double check me on that, as i am not sure if i am reading the charts right.<<<<
According to my research (I linked this in another thread I believe, not sure which one though) the upper middle is generally those making over $100k who are working class, who don't have wealth to live on. The upper class is defined as those who have wealth to live off of, have a great deal of business or political power (all I did was google the definitions of upper middle and upper class and read various sources). The upper class is reportedly the top 0.05% though it looks like that doesn't match up with your graph.
>>>>link?<<<< regarding gains in the market the last 10 years:
Sorry that should have been 5-year low (http://money.cnn.com/2008/10/07/markets/markets_newyork/index.htm?eref=rss_topstories), I don't know what that translates into when adjusted for inflation (if you invested 5 years ago and it's worth the same today, you've lost money). Those who were in 10 full years ago might be okay, but the OP said wealth was increasing the last 10 years, those joining the upper middle class and investing for the first time were investing at a high point, it's now at a low point. Some of my discussion was about my personal experience, so I don't have a link for that.
"Those CEO's running huge companies are in the top 1%, not the top 5%. There is a gigantic cap between someone making $250k and someone earning millions, so one context point could be the huge cap within the top 5% as well as the gap between the top 5% and everyone else. >>>>>>link? i'm not sure what you are trying to say in this paragraph. <<<<
Because upper middle is defined as people like upper level managers. Those running huge companies who have millions are not upper middle, they are upper class (http://en.wikipedia.org/wiki/American_upper_class and http://www.answers.com/topic/aristocracy-1). As your graph shows there are very few people at the very top. I think the difference between those in the top 5% making $250k and those in the top 1% making millions is obvious. Making $250k you can afford a nice home, to invest some money, save for your kids college and save well for retirement. Making millions and being able to use your wealth to generate more wealth is much different. I wouldn't lump them together. Taxing the top 1% poses different issues because you are taxing income from wealth, not income from earnings, they are different issues and concerns. I said "cap" above I meant 'gap.'
>>>In the 30 years between 1975 and 2005, U.S. households in the bottom 80 percent income bracket saw their share of national income actually fall. Those in the bottom 40 percent saw a drop in their incomes when adjusted for inflation. Only the top 20 percent of households experienced an increase their share of the total national income; much of that went to households in the highest 5 percent of the income bracket.<<<<
I guess the question is what is the fix? Jobs, education, opportunities or the government spreading the wealth around? Between 1975 we've had both Democrats and Republicans in control and if it's declining over that entire period we can't pin it all on Bush, can we? (no link for this, it's a question to anyone who wants to debate it).
http://openlettertobarack.blogspot.com/
Yes, we are in the top 5%, I agree. The top 5% includes some of the upper middle. I think if you split out that first section on the graph, you'd see the group that is really going up is the top 1%. When the upper middle (making $300k or so) gets lumped in with the upper class (making millions) then it's easy to assume what's happening to the upper middle is the same phenomenon that is happening to the top 1%. I am not sure that the information in your table does anything to prove or disprove this point.
I believe in the progressive tax rate. I'm not sure the top rate should stop at $350k. Why don't we have a different tax rate for those making $800k? Or $1,200k?
I need to read more about trickle down. What do you think would NOT be trickle down? We should tax the upper middle and upper how much? If you taxed me at 60% would it not be trickle down? 70%? Isn't Obama's 39.6% still trickle down? The 39.6% came from Reagan, didn't it? (no links, I will look for some after I pick up all the toys and switch out the laundry).
http://openlettertobarack.blogspot.com/
Pennsylvania Mom
http://openlettertobarack.blogspot.com/
<<So given all that, how do we know what the right marginal rates are? What would lead us to believe that Obama's plan are the right marginal rates?>>
i dont know, no one knows for sure. thats why this is such a mess, because we dont know whats going to work. i believe that obamas rates will work better because it will provide money for much needed investment in programs/policies to strengthen the economy. i dont support mccains plan of tax cuts for the wealthy and corporations because i have no reason to believe that they are reinvesting their money in our economy, not to mention those tax cuts will increase the deficit
$1 - $50,000
92,594,960
71.185%
You do realize those in this catagory would include people on Social Security, a group that is getting larger by the day.
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