A new study by the treasury department, summarized in a Wall Street Journal article, refutes the long-proselytized talking points of Democratic (and black-sheep Republican) presidential hopefuls such as Mike Huckabee and John Edwards- that the rich are getting richer and the poor are getting poorer. The study, which analyzed income tax returns from 96,000 Americans from 1996 to 2005, shows that upward mobility exists, as it always has in a free economy, and by and large EVERYONE is getting richer (except the richest 1%)…in terms of inflation-adjusted real income.
In fact the poorest people (those in the lowest tax bracket) experienced the greatest gains, with 58% reaching the next higher tax bracket in the ten year period. Nearly 25% of the poorest moved up two tax brackets or more, and 5.8% of the poorest Americans working full-time jobs reached the highest tax bracket. Inflation-adjusted median income for the poorest Americans increased 90.5% in only 10 years.
In the second poorest group (those in the second lowest tax bracket), nearly half moved up at least one tax bracket…while only 17% dropped into the lowest tax bracket. Inflation-adjusted median income for the second poorest Americans increased 34.8% in only 10 years.
Relatively speaking, higher-earning Americans increased their income much less than lower income Americans. The top quintile of earners saw only a 10% increase in inflation-adjusted income over the ten year period. The only group that saw a decline in overall spending power were the richest 1% of Americans. They lost 25.8% of their income. And more than half of them dropped into a lower tax bracket during the period.
Overall these patterns demonstrate two things:
(1) America is a place where the opportunity for wealth creation exists for everyone who is willing to work. The statistics of this new study mirror those of studies measuring the upward mobility of Americans in the 60’s, 70’s, and 80’s. Meaning it’s not any more difficult to get ahead now than it was 40 years ago. In fact, its probably easiser: with the rise of immigrants and young workers flooding the low-income job market in the past 10 years, the data should be skewed against a trend in upward mobility.
(2) Any politician who reads this study, accepts its methodology, and still cries “growing income disparity,” is spewing populist propaganda. Overwhelmingly, the poorest Americans improve their real income and quality of life by a much wider margin than wealthier Americans. And the richest of the rich, those arrogant billionaires than nearly anyone can resent, by and large are able to earn significantly less over time.
The irony – Distributivists (Socialists’ awkward cousin), in the name of creating income equality, propagate tax hikes and other measures that kill the pioneering incentive required for people to increase their wealth in the first place.
America is still the land of opportunity…
Right on!! Great info!! I’ve always thought this was true.
Free Markets…limited government…creative solutions…more production…greater opportunity…more to give–
another excellent post
Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST 1% HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts to make the world a better place can not possibly succeed. Any ‘humanitarian’ progress made in one area will be lost in another. EVERY SINGLE TIME. IT ABSOLUTELY CAN NOT WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So don’t fall for any of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductible contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah Winfrey, Ellen DeGenerous, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. No offense fellow citizens. But we have been mislead by nearly every public figure. WAKE UP PEOPLE. THEIR GOAL IS TO WIN THE GAME. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Reaganomics. Their idea. Loans from China. Their idea. NAFTA. Their idea. Outsourcing. Their idea. Sub-prime. Their idea. High energy prices. Their idea. Obscene health care charges. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. The multi-million dollar endorsement deal. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. Brainwash plots on TV. Their idea. Vioxx, and Celebrex. Their idea. The MASSIVE campaign to turn every American into a brainwashed, credit card, pharmaceutical, love-sick, celebrity junkie. Their idea. All of the above shrink the middle class, concentrate the world’s wealth and resources, create a dominoe effect of socio-economic problems, and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, executives, entrepreneurs, attorneys, and politicians. IT MAKES THEM RICHER. So don’t fall for any of their ‘good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP. In many cases, the ‘charitable’ contribution is almost entirely offset. Not to mention the opportunity to plug their name, image, product, and ‘good will’ all at once. IT MAKES THEM RICHER. These filthy pigs even have the nerve to throw a fit and spin up a misleading defense with regard to ‘federal tax revenue’. ITS A SHAM. THEY SCREWED UP THE EQUATION TO BEGIN WITH. If the middle and lower classes had a greater share of the pie, they could easily cover a greater share of the federal tax revenue. They are held down in many ways because of greed. Wages remain stagnant for millions because the executives, celebrities, athletes, attorneys, and entrepreneurs, are paid millions. They over-sell, over-charge, under-pay, outsource, cut jobs, and benefits to increase their bottom line. As their profits rise, so do the stock values. Which are owned primarily by the richest 5%. As more United States wealth rises to the top, the middle and lower classes inevitably suffer. This reduces the potential tax reveue drawn from those brackets. At the same time, it wreaks havok on middle and lower class communities and increases the need for financial aid. Not to mention the spike in crime because of it. There is a dominoe effect to consider. IT CAN’T WORK THIS WAY. But our leaders refuse to acknowledge this. Instead they come up with one trick after another to milk the system and screw the majority. These decisions are heavily influensed by the 1% club. Every year, billions of federal tax dollars are diverted behind the scenes back to the rich and their respective industries. Loans from China have been necessary to compensate in part, for the red ink and multi-trillion dollar transfer of wealth to the rich. At the same time, the feds have been pushing more financial burden onto the states who push them lower onto the cities. Again, the hardship is felt more by the majority and less by the 1% club. The rich prefer to live in exclusive areas or upper class communities. They get the best of everything. Reliable city services, new schools, freshly paved roads, upscale parks, ect. The middle and lower class communities get little or nothing without a local tax increase. Which, they usually can’t afford. So the red ink flows followed by service cuts and lay-offs. All because of the OBSCENE distribution of bottom line wealth in this country. So when people forgive the rich for their incredible greed and then praise them for paying a greater share of the FEDERAL income taxes, its like nails on a chalk board. I can not accept any theory that our economy would suffer in any way with a more reasonable distribution of wealth. Afterall, it was more reasonable 30 years ago. Before Reaganomics came along. Before GREED became such an epidemic. Before we had an army of over-paid executives, bankers, celebrities, athletes, attorneys, investors, entrepreneurs, developers, and sold-out politicians to kiss their asses. As a nation, we were in much better shape. Strong middle class, free and clear assets, lower crime rate, more widespread prosperity, stable job market, lower deficit, ect. Our economy as a whole was much more stable and prosperous for the majority. WITHOUT LOANS FROM CHINA. Now, we have a more obscene distribution of bottom line wealth than ever before. We have a sold-out government, crumbling infrastructure, energy crisis, home forclosure epidemic, 13 figure national deficit, and 12 figure annual shortfall. The cost of living is higher than ever before. Most people can’t even afford basic health care. ALL BECAUSE OF GREED. I really don’t blame the 2nd -5th percentiles in general. No economy could ever function without some reasonable scale of personal wealth and income. But it can’t be allowed to run wild like a mad dog. ALBERT EINSTEIN TRIED TO MAKE PEOPLE UNDERSTAND. UNBRIDLED CAPITALISM ABSOLUTELY CAN NOT WORK. TOP HEAVY ECONOMIES ALWAYS COLLAPSE. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. The American dream will be shattered. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. THERE IS NO SUCH THING AS A MULTI-MILLIONAIRE HUMANITARIAN. EXTREME WEALTH MAKES WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman.. Of course, they will jump to small minded conclusions about ‘jealousy’, ‘envy’, or ’socialism’. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.
Bart,
First, please post your sources.
Second, perhaps you should read every article in the WSJ on this issue. I’m looking at one right now, “How U.S. Health System Can Fail Even the Uninsured,” Nov. 16, 2007. Unless an individual has an unlimited source of funds, the system can fail them. It cost 1.5 million for a young person I know to survive a terrible medical syndrome last year. What’s the limit on your insurance? How much would you have to save every month to pay for the life of your daughter in a similar situation?
Third, you may have had serious medical problems that weren’t a financial burden for you, but many people have. Five years ago I had no debt, a home, two vehicles, had put two children through college, had an excellent position which required advanced degrees, an IRA and savings. Even today, I am definitely better off than most, but debt is my buddy now. However, I’m alive, and I’ve been given the opportunity to work far beyond my retirement years.
My challenge to you is to make out a budget for a family living in each quintile as reported by the U. S. Census Bureau. You may also want to read “The Two-Income Trap…” and “Saving Capitalism from Corporatism” by John David Rose. Yes, sadly our country is the land of opportunity…for companies like Citigroup to financially rape the lower 99%. Where do you stand?
mmr
my sources are hotlinked in the post. The WSJ took its numbers directly from the treasury study which can be found at the U.S. Treasury Website.
This post was about income disparities, not health care. Of course the health care system can fail people. The health care system needs major overhauling.
As for your third point, yes, medical expenses are the number one cause of personal bankruptcy, that’s why we need to reduce the cost of catestrophic care. Again, that neither confirms nor disconfirms my points about upward mobility. I’m sorry to hear you are your family have suffered from illness and financial strain.
As for Citigroup…last I checked it wrote off billions in mortgage-related losses and ousted it’s CEO — mortgages it owned to people who didn’t pay them. I’m not saying Citigroup or any other large financial company is a benevolent helper of the common man…but these companies aren’t raping most common men…they can’t because of that great concept called competition. And those record profits (when they aren’t losing billions) go to their shareholders. The lower 99% can own Citi for about $27/share as of this writing.
Now, a despotic government – like the one in North Korea…an entity like that…with NO competition, can rape the lower 99%
I like to rant…