Tag Archives: Income Inequality

New study: Taxing top earners will not reduce wealth inequality

Lets take a closer look at a puzzle
Lets take a closer look at a puzzle

New study! Here’s a report on it from Real Clear Markets:

The top 10% of Americans control roughly three-quarters of the nation’s wealth, and the minority of Haves are continuing to accumulate more than the majority of Have-Nots.

This is wealth inequality in the United States. And though it doesn’t attract as much attention as income inequality, it’s arguably far more important, imposing economic instabilities and social strife.

To decrease wealth inequality, pundits, politicians, and economists often suggest raising income tax rates on top earners to as high as 50, 70, or even 90 percent.

The idea sounds plausible, but according to a new study published to PLoS ONE it probably won’t work in practice.

[…]In their model, income inequality was tied to a metric called the Gini index, a statistical measure of inequality used for decades. They found that altering income inequality to a Gini index of 0.1 (very low inequality) resulted in the top 10% controlling 78.6% of wealth in 2030, while raising income inequality to a Gini index of 0.9 (very high inequality) resulted in the top 10% controlling 79.3% of wealth in 2030, hardly a significant difference.

Do you know what does work to help people – growing the economy so that everyone can find work. It’s actually been done before.

The conservative Heritage Foundation describes the effects of the Bush tax cuts from 2001 and 2003.


President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.

At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.

It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.

In 2003, capital gains tax rates were reduced. Rather than expand by 36% as the Congressional Budget Office projected before the tax cut, capital gains revenues more than doubled to $103 billion.

The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.

Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:

  • GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
  • The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
  • The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.

The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy.

Please note: revenues actually went up as a result of the tax cuts, because more economic growth means more taxes are collected on the income that is generated.

Whenever people with savings take risks to grow their wealth, there will be jobs created. The solution to helping the poor isn’t giving them someone else’s money. The solution to helping the poor is to let productive job creators keep their own earnings, so that they use their money to create more jobs. That way, people who want to work have multiple job offers and can pick the best one. Productive people are not the enemy. Productive people give you money to work for them. That’s good for you.

How well does socialism work in countries and cities that adopt it?

Socialism in Venezuela
Socialism in Venezuela

I noticed this article by Frank Luntz in USA Today, which talks about the political views of young people.


If you want to understand today’s young Americans, consider this: 58% of them think “socialism” is the most compassionate political system, compared with just 33% who pick “capitalism.”  Heck, 9% even voted for “communism.”

That’s right: Two-thirds in a poll I did last month say socialism or communism is more compassionate than capitalism.

[…]In our recent national survey of 1,000 first- and second-time voters ages 18 to 26, Republicans weren’t just off on the wrong track. They were barely on the radar with this Snapchat generation, as it is sometimes called.

[…]The younger generation and the Republican Party simply see the world, and America, very differently. For instance, 58% in our poll say that “America isn’t any better or worse than most other countries,”compared with a 42% minority that believes “America is exceptional. It’s better than every other country in the world.

So how to respond to this? Well, I think it is important for us to be aware of how other countries are doing, especially the ones that are implementing socialism.

Socialism abroad

Take Venezuela for example. They’ve had socialism for a good long time under Hugo Chavez, and now his socialist successor Nicolas Maduro.

The left-leaning The Economist explained what’s happening there:

The regime has greatly compounded the damage with policies that, though designed to favour the poor, end up impoverishing them and the state. Price controls—along with the shortage of foreign exchange—have led to acute shortages of basic goods, forcing people to queue for hours to buy necessities. Inflation is officially running at 141% as of September last year (the latest available figure). Analysts believe the true figure is at least 200% a year; some predict hyperinflation in 2016. The massive budget deficit, which the Central Bank finances by printing money, contributes to that risk.

[…]Recent surveys have shown that alongside the economy and shortages, security is a major concern. The government stopped publishing comprehensive crime statistics in 2005, though it does admit there is a problem. The attorney-general has said that Venezuela’s murder rate last year was 62 per 100,000 people, ten times the global average. The Venezuelan Violence Observatory, an independent research institute, says the rate is higher. The murder rate in Caracas is the highest in the region for a country’s biggest city. Countrywide, 90% of murders go unpunished.

Radically leftist NPR notes:

Last week, opposition lawmakers in Venezuela declared a “food emergency.” That’s because Venezuela is facing widespread shortages of milk, meat, bread and other staples. Critics blame the government’s socialist economic policies. But instead of changing course, President Nicolás Maduro is calling on Venezuelans to help feed themselves — by starting urban gardens.

[…]In addition, falling prices for oil — Venezuela’s main export — mean the government has fewer dollars to import food. There’s also a severe shortage of imported farm machinery and supplies, says Vicente Perez, director of FEDEAGRO, Venezuela’s main farm organization.

“There is nothing — just like there’s no food, there are no seeds, no herbicides … and no medicines to vaccinate farm animals,” says Perez.

Phil Gunson, who is based in Caracas for the International Crisis Group, warns of a pending humanitarian crisis.

“At least one in 10 people is eating two meals a day or less. There isn’t starvation. We are not talking about famine,” Gunson says. “But we are talking about malnutrition, particularly in the case of children.”

If you’re looking for a country that’s embraced socialism, you can’t do much better than Venezuela. Maybe Argentina, but they are also in serious economic trouble. Do you know any young people who are not being told about that?

Well, what about closer to home? How are the major cities in the United States doing?

Socialism at home

This article from Investors Business Daily takes a look at it.


America is awash with troubled, dysfunctional cities that have been electing Democratic mayors for decades.

  • Detroit last elected a Republican mayor in 1957. It is now the model of urban failure — it’s recognized more for its poverty, crime, rot and bankruptcy than the great cars that it turned out into the early 1970s. It is the poorest big city in the nation, with almost 40% of the population living below the poverty line. The website Law Street actually ranks Detroit ahead of Flint as the country’s most dangerous city. Either way, it’s clear that both cities have institutionalized crime problems.

Detroit is also a pit of political corruption. Just in recent years, one mayor, Kwame Kilpatrick, was convicted of corruption and sent to federal prison for 28 years, while building inspectors have been indicted on federal felony bribery charges and a former city council member was investigated in a bribery and kickback scandal.

  • Chicago’s last GOP mayor was elected in 1927. The nation’s third-largest city is home to some of the worst inner-city violence imaginable. More than 2,300 people were shot there last year, and nearly 400 lost their lives to homicides.

Its finances are just as grim. “Chicago is so broke,” IBD contributor Stephen Moore explained months ago, “that its bonds are junk status, and Mayor Rahm Emanuel had to go hat in hand last week to the state capital, Springfield, for bailout money to pay the bills.” Things have been rotten enough, Moore said, to send “a record number of people … fleeing Cook County, home to Chicago.” Only a little more than half of the city’s pension liabilities are funded.

  • St. Louis has been electing Democratic mayors since 1949. The Gateway to the West has become the gateway for crime. Law Street says that it’s the fourth most dangerous city in the country, Forbes says it’s the second. It had the sixth-highest poverty rate among big cities in 2014.
  • The last GOP mayor of Philadelphia left office in 1952. A few years ago, Moore identified it as a favorite to follow Detroit into bankruptcy.
  • Both Baltimore and Oakland had Republican mayors as late as the 1960s. In the era of Democratic rule, both are now more well known for their crime and poverty problems than for their charm and character.
  • Newark, N.J., hasn’t had a GOP mayor in more than a century. It was ranked as the fifth-worst city to live in in 2015. Detroit, of course, was first.

When Democrats are in control, cities tend to go soft on crime, reward cronies with public funds, establish hostile business environments, heavily tax the most productive citizens and set up fat pensions for their union friends. Simply put, theirs is a Blue State blueprint for disaster.

If you want to know how well Democrats do at running things, why not look to the places where Republicans have been out of power for decades and decades?

If you don’t tell the young people you know about socialist countries and socialist cities, then how will they ever learn how socialism actually works in practice? They are learning that socialism is wonderful from their unionized public school teachers, Hollywood elites, the mainstream media, artists and musicians and Democrat politicians. Are you doing your part to educate them with real facts?

New study: incomes of the poorest 20% of households are much lower than in 2007

Is Barack Obama focused on protecting the American people?
Does Barack Obama’s knowledge of policy match his confidence?

Now, many American voters like to think that if the President expresses concern about things like poverty and income inequality, then that means that whatever he does to “fix” it will automatically work to benefit the poor. Is it true?

Here is an article from Investors Business Daily, which talks about a study from the respected, leftist Brookings Institute.


President Obama’s upbeat assessment of the economy is not likely to sit well with low-income families living in major urban or metro areas. For them, economic decline is a harsh reality, not “fiction.”

In his State of the Union speech, Obama declared that “anyone claiming that America’s economy is in decline is peddling a fiction.”

But a new report from the liberal-leaning Brookings Institution finds that incomes among the poorest fifth of households was significantly lower than it was in 2007. Of the 100 cities it examined, incomes fell an overall average of 12%, according to the report’s data. In some, the drop was huge — 34% in Stockton, Calif., 31% in New Haven, Conn., and 30% in Lakeland, Fla.

At the other end of the spectrum, the top 5% of households saw incomes climb, but not by much. The average income for this group was basically unchanged over those years.

As a result, income inequality has increased, but not — as Obama, Bernie Sanders and the chorus of liberal Democrats would have you believe — because the rich are getting richer.

“It’s really about the poor losing ground rather than these upper-class households pulling away,” Brookings senior fellow Alan Berube told AP.

[…]Added to this, many of the cities that saw the biggest increases in income inequality — like Boston; New Orleans; Providence, R.I.; New Haven, Conn.; San Francisco, Washington, D.C. — have been bastions of “spread the wealth around” liberalism.

Another example of this would be Obamacare. Obama got up in front of his teleprompters and told everyone that he was going to make changes to health care policy. He promised that it would not add one dime to the deficit, that we could keep our doctors, that we could keep our health plans and that our health insurance premiums would go down. Every single one of those promises were lies.

We don’t know if Obama knows that he is lying when he says these things. I prefer to think that he is just too stupid to know what he is talking about. He says things that make him feel good. Things that would have pleased his professors in college. But since he has no practical experience of achieving results in any of these areas, he fails again and again. He is confident because he assumes a knowledge of how to obtain results that he does not actually have, owing to his lack of experience. And yet we elected him, then re-elected him.

He is in his own little world, where the people around him carefully insulate him from a reality where all his confident prescriptions have failed to produce what he intended.

Could it be that the free enterprise system of economics that was “built in” to America at the founding actually works better than the failed systems of socialism and communism that Obama was taught in college? Could it be that if we just stuck with the free enterprise system that made us the most powerful economy in the world, that things would be better for the poor than in places where capitalism is rejected for socialism?

We don’t have to guess at what the economic policies of the left produce. You can see it with your own eyes in socialist countries like Venezuela, Cuba, North Korea, Argentina, and so on.

Democrat policies hurt the poor, and actually increase income inequality

Two articles from Investors Business Daily. The first discusses how big government tax policies actually encourage poor people not to work. The second one looks at major cities, and finds that 9 out of the top 10 cities with the most “inequality” are run by Democrats.

Let’s start with the first article.

It says:

The nonpartisan Tax Foundation has put out a new report titled “Income Tax Illustrated .” OK, cue the jokes. But it isn’t boring. Really.

[…]”As low-income households earn more money, not only do their tax burdens grow rapidly, but they also receive fewer benefits from federal social assistance programs,” the report said. “In fact, individuals who move to higher-paying jobs sometimes end up with less overall disposable income, after taxes and transfers.”

The report uses two examples, as noted by the Washington Beacon. In one, a single parent earns $4,800 in salary before taxes. That’s not much, but because of entitlements such as Medicaid, Temporary Assistance for Needy Families, the Children’s Health Insurance Program, food stamps, and Housing Choice Vouchers, that person’s take-home pay for the year jumps to $22,090 — not a lot, granted, but it’s more than 4-1/2 times greater than what that person actually earned working.

That compares to someone who earns $21,000 before taxes but, because of taxes and entitlements, takes home $24,057 for the year.

Yes, that person earns $16,200 more from work, but takes home just $1,967 more, thanks to the tax code and generous benefits to those with less income.

“As low-income households earn more money, not only do their tax burdens grow rapidly, but they also receive fewer benefits from federal social assistance programs,” the report said.

“In fact, individuals who move to higher-paying jobs sometimes end up with less overall disposable income, after taxes and transfers.”

[…]Believe it or not, this bizarre distortion gets worse when you consider a married couple with two kids.

Because the Earned Income Tax Credit is phased out at higher incomes, a family of four making $48,000 faces a marginal tax burden of 43.7% — an absurd disincentive to work harder and earn more for families.

When Republican presidential candidates like Jindal, Cruz and Rubio talk about simplifying the tax code, their intent is to solve these perverse incentives that keep poor people dependent on government. We have make changes to the tax code so that people who are able to work can do better by working, rather than by not working. Republicans are in favor of encourage people to work, marry and have kids. Democrats… just want them to keep voting for dependence on big government.

On to the second article.

Which states have the most income inequality?

The Washington Post looked into the numbers and found that 5 of the top 7 states are decidedly blue — New York, Connecticut, California, Massachusetts and Rhode Island.

And Washington, D.C., which is ground zero of big government liberalism, has the highest level of income inequality of all.

At the other end of the spectrum, the three states with the lowest levels of income inequality are solid red: Utah, Wyoming and Alaska. Nebraska comes in fifth and Nevada ninth.

And what about down at the city level?

The liberal-leaning Brookings Institution looked at inequality by city, and the results show that 9 of the top 10 are run by Democratic mayors — including San Francisco, Boston, D.C., New York, Chicago, Los Angeles and Baltimore.

In contrast, 7 of the 10 least unequal cities are run by Republican mayors, and 9 of 10 are in red states.

And what about Obama, has he helped to reduce income inequality, or has it increased under his watch?

Now take a look at the national level. As the chart above shows, income inequality as measured by the Census Bureau was flat over the course of the George W. Bush years. But under President Obama, it’s been on the rise.

Under Obama, the poor have gotten poorer and the rich richer. Incomes for the bottom 20% have fallen in each of the past four years and are now 8% below where they stood when Obama took office. Meanwhile, incomes of the wealthiest 5% have climbed under Obama, after adjusting for inflation.

IBD had a nice graph for that last point:

The Gini index measures income inequality
The Gini index measures income inequality

So, why is this happening? Why does taking money from “the rich” and giving it to “the poor” makes income inequality worse?

IBD explains:

As we’ve seen over the past seven years, higher taxes, vast new regulations and sharp increases in spending primarily benefit a relatively small number of well-connected people and those companies that can afford an army of lobbyists. In other words, the rich.

At the same time, higher taxes, more mandates and onerous new regulations stifle innovation and make it harder to start up new companies — the sort of companies that create new jobs and new opportunities. The Kauffman Index of business startups, for example, has been below average since 2011.

Incomes are down, because there aren’t enough job creators. We have a 38-year LOW in labor force participation. People rise when there are lots of job offers from job creators. The more people looking to hire, the more people can shop around and get the most salary and benefits for their labor. But wages have not gone up under Obama. He punished job creators with taxes and regulations, so they are creating fewer jobs. Fewer jobs means less competition. Less competition means lower wages and fewer worker benefits.

Mitt Romney: Hillary’s Clinton Foundation Uranium One scandal “looks like bribery”

What looks like bribery? Well, read this story from the radically leftist New York Times, of all places. It should be the end of Hillary’s campaign.


The headline in the website Pravda trumpeted President Vladimir V. Putin’s latest coup, its nationalistic fervor recalling an era when its precursor served as the official mouthpiece of the Kremlin: “Russian Nuclear Energy Conquers the World.”

The article, in January 2013, detailed how the Russian atomic energy agency, Rosatom, had taken over a Canadian company with uranium-mining stakes stretching from Central Asia to the American West. The deal made Rosatom one of the world’s largest uranium producers and brought Mr. Putin closer to his goal of controlling much of the global uranium supply chain.

But the untold story behind that story is one that involves not just the Russian president, but also a former American president and a woman who would like to be the next one.

At the heart of the tale are several men, leaders of the Canadian mining industry, who have been major donors to the charitable endeavors of former President Bill Clinton and his family. Members of that group built, financed and eventually sold off to the Russians a company that would become known as Uranium One.

Beyond mines in Kazakhstan that are among the most lucrative in the world, the sale gave the Russians control of one-fifth of all uranium production capacity in the United States. Since uranium is considered a strategic asset, with implications for national security, the deal had to be approved by a committee composed of representatives from a number of United States government agencies. Among the agencies that eventually signed off was the State Department, then headed by Mr. Clinton’s wife, Hillary Rodham Clinton.

As the Russians gradually assumed control of Uranium One in three separate transactions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chairman used his family foundation to make four donations totaling $2.35 million. Those contributions were not publicly disclosed by the Clintons, despite an agreement Mrs. Clinton had struck with the Obama White House to publicly identify all donors. Other people with ties to the company made donations as well.

And shortly after the Russians announced their intention to acquire a majority stake in Uranium One, Mr. Clinton received $500,000 for a Moscow speech from a Russian investment bank with links to the Kremlin that was promoting Uranium One stock.

At the time, both Rosatom and the United States government made promises intended to ease concerns about ceding control of the company’s assets to the Russians. Those promises have been repeatedly broken, records show.

[…]The path to a Russian acquisition of American uranium deposits began in 2005 in Kazakhstan, where the Canadian mining financier Frank Giustra orchestrated his first big uranium deal, with Mr. Clinton at his side.

The two men had flown aboard Mr. Giustra’s private jet to Almaty, Kazakhstan, where they dined with the authoritarian president, Nursultan A. Nazarbayev. Mr. Clinton handed the Kazakh president a propaganda coup when he expressed support for Mr. Nazarbayev’s bid to head an international elections monitoring group, undercutting American foreign policy and criticism of Kazakhstan’s poor human rights record by, among others, his wife, then a senator.

Within days of the visit, Mr. Giustra’s fledgling company, UrAsia Energy Ltd., signed a preliminary deal giving it stakes in three uranium mines controlled by the state-run uranium agency Kazatomprom.

[…][T]he company’s story was hardly front-page news in the United States — until early 2008, in the midst of Mrs. Clinton’s failed presidential campaign, when The Times published an article revealing the 2005 trip’s link to Mr. Giustra’s Kazakhstan mining deal. It also reported that several months later, Mr. Giustra had donated $31.3 million to Mr. Clinton’s foundation.

[…][T]he ultimate authority to approve or reject the Russian acquisition rested with the cabinet officials on the foreign investment committee, including Mrs. Clinton — whose husband was collecting millions of dollars in donations from people associated with Uranium One.

Romney, in his interview with Hugh Hewitt, explained that because Bill and Hillary are married, their assets are co-mingled.

So what’s the problem with this deal?

The national security issue at stake in the Uranium One deal was not primarily about nuclear weapons proliferation; the United States and Russia had for years cooperated on that front, with Russia sending enriched fuel from decommissioned warheads to be used in American nuclear power plants in return for raw uranium. Instead, it concerned American dependence on foreign uranium sources. While the United States gets one-fifth of its electrical power from nuclear plants, it produces only around 20 percent of the uranium it needs, and most plants have only 18 to 36 months of reserves, according to Marin Katusa, author of “The Colder War: How the Global Energy Trade Slipped From America’s Grasp.”

“The Russians are easily winning the uranium war, and nobody’s talking about it,” said Mr. Katusa, who explores the implications of the Uranium One deal in his book. “It’s not just a domestic issue but a foreign policy issue, too.”

It’s a national security issue. We shouldn’t be selling uranium companies to countries like Russia who not only invade their neighbors, but also sell long-range missiles to Iran – and a host of other nasty things, too. This country is not friendly to us.

Hillary Clinton: secretive, entitled, hypoctritical
Hillary Clinton: secretive, entitled, hypoctritical

What was Hillary’s response? It’s a distraction invented by the vast right-wing conspiracy:

That’s some vast right-wing conspiracy that makes its way onto the nation’s most respected leftist national newspaper.

So, does this explain why Hillary Clinton deleted tens of thousands of e-mails and then wiped her private e-mail server clean? We’ll never know, because she destroyed all the evidence. But one thing is for sure – there is no reason to vote for this candidate for President, although some people will:

That’s the only “reason” that people will vote for her, because on the merits, she’s a stinker.

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