Top 400 Taxpayers Paid Almost As Much in Federal Income Taxes in 2009 as the Entire Bottom 50%
We hear all the time that the "rich don't pay their fair share of taxes" (123,000 Google search results for that phrase). Here's an analysis using recent IRS data that suggests otherwise.
1. In 2009, the top 400 taxpayers based on Adjusted Gross Income earned $81 billion as a group, and paid $16.1 billion in federal income taxes (see chart above).
2. In 2009, the bottom 50% of taxpayers, a group totaling 69 million, earned collectively more than $1 trillion and paid $19.5 billion in federal income taxes (see chart above).
Bottom Line: A small group of 400 of America's most successful earners in 2009, about the number of residents living in a typical apartment building in Washington, D.C., paid almost as much in federal income taxes as the entire bottom half of America's 138 million tax filers, which is a population equivalent to the combined number of residents living in America's 29 least populated states, plus the District of Columbia. What makes this disparity possible is the fact that an estimated 47% of individual income tax returns filed in 2009 had a zero or negative tax liability.
When you have only 400 Americans paying almost as much in federal income taxes as the entire bottom 50% of American filing income tax returns, I think we can dismiss any notion of the rich not paying their fair share of taxes. In fact, the IRS should publish the names and addresses of the Top 400 (or to protect anonymity, agree to provide a forwarding service), so that we can all send them "Thank You" letters to express our gratitude for shouldering such a disproportionate share of our collective tax burden.
1. In 2009, the top 400 taxpayers based on Adjusted Gross Income earned $81 billion as a group, and paid $16.1 billion in federal income taxes (see chart above).
2. In 2009, the bottom 50% of taxpayers, a group totaling 69 million, earned collectively more than $1 trillion and paid $19.5 billion in federal income taxes (see chart above).
Bottom Line: A small group of 400 of America's most successful earners in 2009, about the number of residents living in a typical apartment building in Washington, D.C., paid almost as much in federal income taxes as the entire bottom half of America's 138 million tax filers, which is a population equivalent to the combined number of residents living in America's 29 least populated states, plus the District of Columbia. What makes this disparity possible is the fact that an estimated 47% of individual income tax returns filed in 2009 had a zero or negative tax liability.
When you have only 400 Americans paying almost as much in federal income taxes as the entire bottom 50% of American filing income tax returns, I think we can dismiss any notion of the rich not paying their fair share of taxes. In fact, the IRS should publish the names and addresses of the Top 400 (or to protect anonymity, agree to provide a forwarding service), so that we can all send them "Thank You" letters to express our gratitude for shouldering such a disproportionate share of our collective tax burden.
56 Comments:
I'm curious, can we find out what number of top taxpayers we'd have to reach to find an exact match in taxes paid to the federal government? Top 500? Top 600?
I'm curious, can we find out what number of top taxpayers we'd have to reach to find an exact match in taxes paid to the federal government? Top 500? Top 600?
Good idea, but I'm not sure it's possible. The IRS publishes the Top 400, and then the top 1%, top 5%, etc. I'm not aware of any way to get the Top 500, Top 600, Top 1,000, etc.
It's disturbing that the United States is so reliant on such a small tax base.
No wonder the government is so aggressive in preventing the rich from leaving the country that it has instituted a hefty exit tax.
Something seems off about the income for the lower 50%: using the numbers you gave, you get an average income of $15k in the lower 50%, which sounds suspiciously low when the median household salary is about $45k. I realize it's adjusted gross income, ie after certain deductions are taken out, but that still sounds too low. Can the 90% ever be convinced to cut govt spending and reduce taxes when they only pay 29.5% of federal income tax? Highly unlikely, which is why I suspect the only solution is exit.
Also, looking at the above linked table, you realize why all the "tax the rich" verbiage is complete bullshit. The top 1% pulls in 16.9% of all AGI, about 30% more than the bottom 50% at $1.3 trillion, yet pays for 37% of federal income taxes already, more than twice their share of income. Obama makes a big deal of going after them, but it's really a ruse because he knows there's not enough money there. He will go after the top 25%, those making more than $66k in AGI, because he knows that's where all the money is, as the top 25% pulls in 65.8% of all income. I suspect a majority of them are cheering for him to do so, thinking it will all come out somebody else's pocket, all while he's planning on raiding them. I guess you get what you deserve.
The next card played will be the "but that does not include Social Sec and Medicare taxes", which is not the point of the data you displayed. Is is possible to Somehow include these two taxes and then do a comparison? How much would that reduce the percentages you cite. Not sure I have seen this comparison but seems like it would be instructive. Thanks!
gene-
even including fica, the US has the most progressive tax system in the oecd.
http://mjperry.blogspot.com/2011/03/us-has-most-progressive-tax-system-for.html
Sprewell: I checked the IRS numbers for the bottom 50% and they are correct. The income floor for the top 50% is $32,400, so it would make sense that the average income in the bottom 50% is about $15,000.
The combined AGI for the bottom 50% is just over $1 trillion for about 69 million filers, which is about $15,000 average per filer.
Given the number of deductions available to the middle class and lower income peole, I'm not at all surprised by a $15K average AGI.
Big deal. I PERSONALLY paid more federal income tax than the TOTAL net income tax paid by the bottom 40%.
And no, I'm not in the top 400. Or even the top 4,000,000.
Here's a good summation of our nation's income distribution:
http://en.wikipedia.org/wiki/Personal_income_in_the_United_States#Income_distribution
Send your heartfelt "thank you's" and donations to may Cayman Island account.
As long as we are being selective with which taxes we are counting perhaps you might also point out that the bottom 50% paid about 30,000 times as much in FICA taxes as the top 400.
As long as we are being selective with which taxes we are counting perhaps you might also point out that the bottom 50% paid about 30,000 times as much in FICA taxes as the top 400.
I think your math is off. Assuming the following:
1) From IRS data, the Total Wage Income of the Top 400 was $6.9B. On which they paid 1.45% medicare tax for just over $100M. Each one of them paid 6.2% on $106,800 for the SS portion of FICA for a total of of approximately $2.6M ... for grand total of $103M in payroll tax
2) The bottom 50% paid 7.65% on their entire collective income of $1.05T for a total of $80.3B
This is a ratio of just under 800:1 not 30,000:1.
Left out of your "rigorous" calculation is the fact that someone in the Top 400 will most likely not participate in medicare in spite of paying into it and will receive a return on their SS contributions somewhere in the ballpark of 0.0%.
Armed with the knowledge that the Top 400 receive essentially $0.00 in benefits from their payroll contributions we can say that the Bottom 50% receive INFINITELY greater benefits from their payroll taxes than the Top 400 do.
(I could be wrong I did the calculations on my iPhone calculator with its cracked screen while watching basketball)
We have what is arguably the most progressive tax system in the industrialized world. Certainly in the top three.
If we want to adopt European socialism (for a few decades until the pyramid scheme collapses), we'll need to adopt the European tax system.
IN ADDITION TO high and more broad-based income tax, we'll need a double digit VAT tax, plus major "sin taxes" on smokers, drinkers, improper eaters and, most of all, those evil people who drive combustion-driven vehicles. A 5 to ten-fold increase in gas taxes would be a start.
Itchy, While the bankers in the top 400 pay only a portion of the $16 billion in taxes, they collect $60 billion in tax payer funds. It's at least a $44 billion profit. How much wealth would have been lost through worthless stocks and options, if the funds from AIG and TARP were never paid to the i-banks.
Yes, if you want to bring FICA taxes into the debate then you've got to talk about benefits also.
So maybe it's true that the bottom 50% pays 1000 times as much in FICA taxes as the top 400. Assuming that's the correct number, then it's probably also true that the people who are currently in the bottom 50% will be getting something like 1000 times as much in benefits (throughout their lives) as the people who are currently in the top 400.
(Impossible to know exactly how the numbers will shake out, because there will have to be big cuts in Medicare and social security at some point).
Whatever the number is, you've got to consider benefits if you want to bring in FICA taxes.
Richard Rider,
I've seen a number of your comments over at WSJ.com (mostly related to tax issues).
I agree with Sprewell - something does not look right in the math. This means that while the bottom 50% earn about $15,000 each, the top 400 earn about $203million each. And the figures do not include the social security taxes paid by the bottom 50%, which the top 400 pay relatively nothing.
These 400 certainly are accepting somewhat higher "entitlements" than the bottom 50%, wouldn't you think? They are still "entitled" to split almost a full $trillion. I really feel bad about that. Perhaps we really should reduce their taxes.
Somehow, I can't seem to shed a tear.
Check the links to the IRS data, the numbers are absolutely 100% correct.
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Since America's richest 400 people has about the same wealth as the bottom 50% of Americans, they should paid more. Why, because the 400 can afford to give more to their country, than those bottom 50% just hoping to have enough money to put food on the table.
The real issue is the fair taxation of disposable income, not how many people fall into each tax bracket.
Any tax burden can make-or-break the finances of the majority of hard-working Americans; whereas, for 400 mentioned here it's a matter of whether or not they can buy a second private island.
The nearly one third of Americans now included in the U.S. Census Bureau's new Measure of Poverty certainly can't contribute anymore, so if not those individuals and corporations that can afford it, be they the 10%, 1%, or the 0.00013% in this article, then who?
The bottom 50% can barely afford to put food on the table? LOL!!! With a median income of $45K in this country?
What are they eating? Caviar and Dom? Which they order off the internet from their iphones?
If you're going to stretch the truth, it's usually a good idea not to make a joke of yourself by stretching it to breaking point.
One of the problems with increasing high income taxes that the Left never talks about is that the top taxpayers have highly variable income (as we also see with the previous post), since they make their money from things like investments as opposed to the hourly wages most of us are used to.
So the more you rely on them, the more your revenues drop when the economy has a bad year and the income of the Top 400 drops 50%. I'm OK with taxes rising on everyone a little (i.e. pre-Bush), but this is largely a spending problem causing unsustainable dependency that cannot be solved by taxing the rich.
If not them then who? Nobody. Politicians spend too much money. There is an enormous amount of government waste. In fact, government is mostly waste. So much waste, that even if you confiscated not only all the income (which you'll get to do exactly one time) but also all the wealth (let's pretend that the assets creating that wealth will be as valuable in the hands of others as they were in the hands of the 400 - they won't. Not even close), you will be able to run government for a few months. Then whose property will you expropriate? Whose income will be left to confiscate? More importantly, who would ever be dumb enough to create taxable wealth? I realize nobody is calling for expropriation, but if going to that extreme measure is not going to help meaningfully, then what do you think just jacking up the tax rate is going to do besides provide incentives to retire and redirect investments toward tax exempt muni bonds and increase the incentive to engage in rent seeking?
Look, they've already tried that whole "tax them more because they can afford it" thing in Europe and all it did was reduce innovation and create a brain drain. More progressive taxes don't actually bring in more revenue because the people earning the most income are generally the people with the most options. So, the tax base in European countries is generally much broader - everyone pays a lot more in taxes than Americans do. And it turns out that the taxes there are far less progressive than they are in the United States.
So, you can opine about who can afford what, but those very people you're seeking to force to subsidize your lifestyle and your preferred level of government don't really want to do that and they'll very successfully find ways to avoid it and they have the ability to avoid it - even if it means just quitting and kicking back.
I'm OK with taxes rising on everyone a little (i.e. pre-Bush), but this is largely a spending problem causing unsustainable dependency that cannot be solved by taxing the rich.
I'm much more okay with government cutting spending a lot. I'm really not okay with being forced to fund politicians' cronies.
I'm especially not okay with it since the Fed is forcing down the interest rate and forcibly reducing reward for a given level of risk. To reduce it further with a 5 percentage point increase in taxes (which I do not consider "small") on top of the 2.5% increase for investment income written into Obamacare is appalling. I'm really not okay that politicians, who prance around on private jets at our expense, who become appallingly wealthy collecting bribes from cronies whom we are forced to fund are now looking for new ways to extract from us that which we toiled and risked to earn. I'm not okay with any of it.
I am stunned. Some here act as if they get NOTHING for the taxes they pay. Is having a globally deployable Army and Navy patrol the globe and intervene where 'necessary' not worth the taxes you pay? If we dispose of those service men, who will 'protect' your precious dollars? Let's ask the top 400 taxpayers how many members of their families have served in the US armed forces? (Let's also ask our Congress, full of millionaires, some other time.) You ought to think of it this way: Basically the rich pay more in taxes because they serve their country less than those who pay less taxes. You act as if national defense and the use of our military for the expansion of 'capitalism' is free. Just because you don't see it everyday...the protection (and expansion) IS there and doesn't come cheap. The 'profits' that result from the expansion of 'free' markets more than make up for what is paid in taxes.
Please, folks, as much as this stupid comment from RobertP123 may irritate you, please do not encourage him by replying. I cannot imagine that anyone here would want to have a discussion about which group of Americans sacrificed more during wartime.
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mehtinks-
i agree but might frame it a bit differently.
politicians spend money without regard to return. if i were gettign fantastic value for my money and thought the system was fair, i'd happily pay tax.
but i'm not and it's not.
i suspect that most of these "we need more taxes" clowns never pay nay.
if they ever had to write a mid six figure tax check to the IRS, i suspect they would rapidly change their tune.
the goods and services provided by the us government probably seem like a great deal if you pat $3000 a year in income tax.
hell, i'd happily pay twice that and call the deal OK.
but at 100 times that, well, the deal starts to look pretty crappy.
the basket of services you get gets worse as you get wealthier. i'll never use medicaid or welfare or even unemployment. i get no special loans to buy a home.
but i pay far more than those who use those things ever will.
let's say the package of goods provided by the feds is a audi.
at a price, an audi a6 is a great deal.
for $3k, the line for them would be out the door.
but to downgrade me to an a4 then ask me to pay the price of a lamborghini aventador, well, that's not a really attractive deal.
the clowns who argue about what a great deal government services are may well be right for themselves as they pay almost no tax.
but the 1% that bears 40% of the burden is getting nothing like value for money.
that's why this argument is so intractable.
each sees, in their own experience that they are right, and they are. at $3-10k, it's a killer deal. at $300-500k, it sucks.
but the notion of 10% paying 70% offends fairness and destroys democracy. how can you possibly control spending when half the electorate pays no tax ans sees each program as free and another 40% see's each program as a good deal because they pay almost no tax.
this system has too many farmers and too few michcows.
Good advice, Jet Beagle. As stunning as it is, it's difficult to figure out which tail of stupid to attack first as you stare down the swirling pit of the unenlightening circular logic that awaits you.
Morganovich,
If writing six figure checks chaps your hide imagine the rage at seven figures to the Feds and six to the state.
I put zero value on the basket of goods the government provides because that basket primarily contains poo. Even the "services" provided to welfare recipients are not as good as you would imagine. My family was on welfare for a few months when we arrived in this country (we qualified right away as Soviet refugees and we hopped off the moment my mother found a job changing old people's diapers. Anything to get off welfare).
And let's not forget that for the most efficient government programs, only about $0.10 of every dollar actually makes it to the intended recipient. The rest goes to feed the bureaucracy.
How much more efficient, transparent and less expensive welfare would be if we just cut all of them checks.
But, mostly, what government confiscates it does not spend on the people it confiscates in the name of. Mostly, it is handed out to cronies in a myriad of different ways and it is used to grow completely useless bureaucracies. Well, they do pour sand in the gears of people attempting to be productive, but I don't consider that a useful activity.
The people who cheer for more government confiscation from OTHER people simply don't realize the price they themselves are actually paying for a good or services that either never materializes or they wish it never materialized after experiencing it because it is not readily apparent to them what the cost is. Seen and unseen.
Government is a sham. It is synonymous with corruption and violent coercion. The more centralized the government, the more this is true.
The fundamental problem with progressive income taxes is that the bottom 50% plus 1 has every incentive to raise the taxes on the rest. And the amount to be raised is always the same -- MORE.
All votes count the same in an election which is the fatal flaw in majority rule.
Indeed, the best description ever of "democracy" is "Two wolves and a lamb voting on what to have for lunch."
Oh, and I wouldn't be happy to pay taxes even if government's return on confiscated wealth were not persistently negative.
The government robs you of your options. I value the option to take my business and my capital elsewhere. That option has value to me and even in the presence of a positive return and I would feel ripped off without it.
Of course, that's a big reason why the government doesn't produce positive returns. It doesn't have to and people who can can create positive returns can also find private capital. It's only people who can't (Solyndra!) that need government to confiscate money that would be refused them by people who had a choice. It's only projects that destroy wealth that are undertaken by government because no sane person would ever invest his own capital. And since, as a taxpayer, you are forced at the point of a gun to hand over that which you toiled and risked to earn, there is absolutely NO reason for government to ever undertake positive NPV projects.
Creating value is anathema to government. It only destroys.
The census measure of poverty does not count most government subsidies. An astute family of three making only one minimum wage income ($14-$16K) can have a total after-tax income equivalent to such a family making $60,000 that pays taxes on the salary while lacking the taxpayer subsidies.
States differently, a breadwinner making $15K has little incentive to earn more, as the more they make, the less in govt benefits they receive.
We PAY people to stay poor (or to work "off the books"). Too often, it works.
Richard Rider: "We PAY people to stay poor (or to work "off the books"). Too often, it works."
Absolutely and frustratingly true.
Richard,
I'd put that differently. We pay people not to stay poor (at $60K, it's a stretch to call these people poor) but to under-produce. Across the board, the government creates incentive to remain as unproductive as possible.
"I put zero value on the basket of goods the government provides because that basket primarily contains poo"
this seems a little extreme.
business law and courts are useful. police. fire. protection from invasion. there is some useful stuff out there.
but yeah, it's mostly poo. i hear you.
"Government is a sham. It is synonymous with corruption and violent coercion. The more centralized the government, the more this is true."
and this is absolutely true. the further they are away from you, they less they know of what you want/need and the easier they find it to steal from you.
mehtinks-
"
The government robs you of your options. I value the option to take my business and my capital elsewhere. That option has value to me and even in the presence of a positive return and I would feel ripped off without it. "
mostly yes, but also no.
government is the most effective way to protect rights. having police and freedom to walk down the street is better than having to hire my own mercenaries to protect me from thieves and invaders.
having a common body of contract law and a place to adjudicate it is also of value, but only because they can enforce decisions.
to my mind government should:
protect our rights.
enforce contracts.
defend the borders.
stay out of the freaking way.
once it goes beyond this, the returns start to drop like a rock. but the returns on those functions are VERY high and not easily achieved individually.
methinks-
"If writing six figure checks chaps your hide imagine the rage at seven figures to the Feds and six to the state."
i have had that pleasure. it's why i moved out of California.
starting a company that gets bought is awesome until you realize you live in cali.
Moganovich-
this seems a little extreme.
Value is subjective. But, that's how little I value government goods.
business law and courts are useful. police. fire. protection from invasion. there is some useful stuff out there.
I actually increasingly find the police to be more a source of terror than protection. Also, it's not that I don't value those things, it's jut that I don't value government providing them because I think government provides those things poorly compared to the alternative. I didn't always think this way and it is my own assessment with which you are obviously under no obligation to agree.
government is the most effective way to protect rights. having police and freedom to walk down the street is better than having to hire my own mercenaries to protect me from thieves and invaders.
I don't really notice government protecting my rights so much as eagerly violating them at every opportunity. I mean, just civil asset forfeiture is up six-fold. I'm yearly forced to prove my innocence (at my expense) to the IRS and state government and now I am going to be forced to buy health insurance or else.
I also live in a house in which I installed a killer security system, including a fence a gate, and impact glass that can't be shattered even with an axe. The cost of private security is preferable to me than a police that is increasingly making a habit of abusing its power and using swat teams to violently break into homes to apprehend drug dealers - often at the wrong address.
I value enforcement of contract, but private arbitration is already widely used and it works well. You know, the reason that the court system works is not because they have the power of violent force to enforce the contract (nobody is going to jail for breaching a private contract), but because people comply. They recognize the authority of the court. There's no reason that court has to be government-run. Private arbitration, for example, works as well as courts and it's much less stressful and expensive. I don't mean to imply that arbitration is necessarily the only alternative, just that alternatives exist and this is an example.
That said, if government restrained itself to your short list of activities, I wouldn't find it worth the trouble to worry about. Alas, like The Blob, it is the nature of government to grow and swallow everything in its path.
Mark, I'm not saying you got the IRS numbers wrong, which I was able to double-check in the link I gave, but that something seems off about that number of $15k. Even with a ceiling of $32k, one would expect the average to be closer to $23k if the distribution of earners between $0 and $32k looked like the tail of a normal curve, ie it dropped off from $32k and there was a tail down to $0. If it was a completely uniform distribution, ie the same number of people at roughly every salary below $32k, the average would be at the halfway point, $16k, but this is even below that. Perhaps there are a lot of people making nothing who file tax returns anyway- you'd think the truly poor wouldn't bother- and they drag the average down, but I wonder what the distribution really looks like.
Steve, I suggest you actually look at the chart that Mark posted. The top 400 don't make as much as the bottom 50%: they make 8% of the income but pay almost as much in taxes. Perhaps you meant they have a lot more asset wealth, as you did say "wealth," but I don't think that has been shown or is anywhere near likely. The wealthiest, like Warren Buffett, don't tend to pull out much income, which is why he doesn't pay as much in taxes as these top 400, and mostly roll it all back in to try and build some more wealth.
"Since America's richest 400 people has about the same wealth as the bottom 50% of Americans, they should paid more"...
So steve the successful should be punished by having more of their wealth extorted from them via the government while the losers should be to continue to leech off the backs of the successful?
"Any tax burden can make-or-break the finances of the majority of hard-working Americans; whereas, for 400 mentioned here it's a matter of whether or not they can buy a second private island"...
Ahhh, so kevin carter also thinks its OK to leech off the successful...
"The nearly one third of Americans now included in the U.S. Census Bureau's new Measure of Poverty certainly can't contribute anymore"...
Says who? BTW why should anyone take the Census Bureau's poverty line at face value?
RobertP123 said: "I am stunned. Some here act as if they get NOTHING for the taxes they pay. Is having a globally deployable Army and Navy patrol the globe and intervene where 'necessary' not worth the taxes you pay?"...
No, what's really stunning here is your inability to understand that sixty plus cents of every extorted tax dollar goes to one of the myriad pander to parasites programs floated by the federal government...
Steve's reasoning is even worse than that, Juandos.
A wealth tax (which is what taxing people more because they own more assets is) discourages capital formation. Those people don't keep their wealth in the form of money stuffed into mattresses. It is invested in productive ventures, including the companies the rest of America depends on for employment. If people are punished for making such investments, they won't make them and everyone is worse off.
People who favour such soak the rich policies (usually based on an idea of "fairness" where it's only fair that someone else subsidizes them) are children. Young children often don't understand that behaviours have consequences and believe that it's only fair that everyone around them sacrifice to cater to the child's every whim.
"A wealth tax (which is what taxing people more because they own more assets is) discourages capital formation. Those people don't keep their wealth in the form of money stuffed into mattresses. It is invested in productive ventures, including the companies the rest of America depends on for employment. If people are punished for making such investments, they won't make them and everyone is worse off."...
Ahhh yes, a most excellent point (as is your usual habit) methinks...
I'm guessing you saw/read this story: America Lost 129,000 Millionaires in 2011
Now obviously in this story people didn't lose their status due to a wealth tax (yet!) but to stocks losses...
Stock losses can be made up over time and these 128K can and will get back into the investment game...
That can't be said if people lose their millionaire status if their wealth is expropriated by government via some taxation scheme...
Your comparison of 'people who want to soak the rich' to children is priceless...
Love it, do you mind if I burrow that argument?...:-)
sprewell: " if the distribution of earners between $0 and $32k looked like the tail of a normal curve, ie it dropped off from $32k and there was a tail down to $0"
Why would you expect that? The overall distribution of income is certainly not anything like a normal curve.
Think of all the unskilled parttime workers in the U.S., and all the fulltime minimum wage workers. Those workers shold be clustered in the $5K to $15K range. And remember the many incentives our governments give unmotivated workers which keep earnings below the poverty level.
sprewell: "you'd think the truly poor wouldn't bother- and they drag the average down"
Well, by law the very low income workers cannot simply "not bother". Also, a low income worker cannot collect earned income tax credits if he doesn't file the return.
sprewell: "you'd think the truly poor wouldn't bother- and they drag the average down"
One more point about the low income workers: illegal immigrants tend to file tax returns so that they will someday have proof of being employed in the U.S. for ten years.
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Juandos,
Thank you. I did not read that story, but your comment(and, in fact, the whole thread) made me once again think of Ludwig Lachmann's The Market Economy and Distribution of Wealth to which I was introduced in a post written by Don Boudreaux at Cafe Hayek.
The whole essay is short and very much worth reading (and rereading). Some excerpts:
"Ownership is a legal concept which refers to concrete material objects. Wealth is an economic concept which refers to scarce resources."....
"Not ownership but use of resources is the source of income and wealth."....
"In a world of unexpected change the maintenance of wealth is always problematical; and in the long run it may be said to be impossible."....
"The market process is thus seen to be a leveling process. In a market economy a process of redistribution of wealth is taking place all the time before which those outwardly similar processes which modern politicians are in the habit of instituting, pale into comparative insignificance, if for no other reason than that the market gives wealth to those who can hold it, while politicians give it to their constituents who, as a rule, cannot."
Thanks for the link methinks...
'The market process is thus seen to be a leveling process'...
That's it in a nutshell, right?
People 'freely exchanging' bits of their personal wealth for goods and services offered by others and voila!
Everyone is making more personal wealth...
Now a days though in this country at least what will the externalities countering 'free market' forces I can't help but wonder if the last true really free market is black market bartering...
Well, yes, but what Lachmann is really talking about in his essay relates to capital flowing to where it can earn the highest return - and away from lower uses, making wealth fleeting, not enduring. It is always flowing to those who can hold it. Those who can make the best use of resources.
Even a person who starts out inheriting great wealth from his parents can lose it all very quickly if he mismanages it.
This essay is probably a better fit for Mark's post about people entering and dropping out of the group of top earners and I'll post another link to it in such a thread if Mark Perry decides to blog about it again.
Sprewell're probably right, there's likely a bunch of minimum-wage and other low-skilled workers clustered below $16k and the distribution probably looks nothing like a normal curve. I just wonder what the actual distribution looks like. I'll note that we're talking about AGI here, so certain deductions apply but other personal, itemized deductions don't. It seems that once you start talking about taxable income, after taking out all deductions, the total drops another 30% from total AGI. It would be interesting to see all three distributions charted: gross, adjusted gross, and taxable income. Not sure what would stop the IRS from releasing general charts like that, as opposed to tabulated percentile numbers like this, which were created as a good way to summarize data for a pre-internet era.
Um, that should read, "Jet, you're probably right," not sure why it got screwed up like that.
The critical number here is not the gross amount that the top 400 pay, but the PERCENTAGE of their income they pay to taxes. They pay a higher gross amount of taxes because they are earning more than 50% of the entire income in the country. What would be truly interesting to know is the RATE of tax they pay on all their income - including all their investments, dodges, etc.
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