Monday, June 11, 2007
Lowest Quintile
Here's a (surprisingly, for the NYT) good piece about class wage inequality in America. (For the record, I think the same thing is happening in Canada, though the article specifically points out that it's not as big a problem in the UK or Scandanavia).
Choice quote:
And that's exactly what we're doing BTW. Check out your tax return form for a good example:
[ table c/o wikipedia ]
Notice how our tax brackets stop mysteriously at 118k? Admittedly, 29% is a pretty hefty tax rate, but there are a LOT of people in Canada making annual incomes in excess of 118k! [I can't find any stats one way or another in a quick search. Maybe some of you readers will know where I could find a stat about how many Canadians make more than 118k/year and what the distribution is after that as well - like how many people make in excess of 150k, and 200k and 300k, etc ]
It seems to me on first glance that we could easily shave a few percentage points off the two lowest-but-not-zero brackets and create a new bracket for those who make 200k+.
Also you'll notice the difference from the first bracket to the second is quite large at 15.25%, and then grows at an increasingly slower rate after that. This leaves effectively means that if you're in bracket 2 at 15.25% and you find a way to somehow make enough money to fit into the next tax bracket your 'penalty' is greater than if you make the same move from the 4th to the 5th bracket. Does this seem backwards to anyone else? Shouldn't the brackets be at least an even distance apart? It's like there's an incentive for staying in a lower bracket!
I know I'm not an economist and there's probably really good reasons for setting things up this way but it seems completely counterintuitive to me. Another choice quote to put this into perspective a bit:
And now we really need to do something about it. As the article says:
Choice quote:
"Americans care about “fairness” more than about “equalness.” We boo athletes suspected of taking steroids, but we admire billionaires."This is going to become a huge issue if we (North Americans) continue to do nothing about it.
And that's exactly what we're doing BTW. Check out your tax return form for a good example:
| 2006 | $0 - $8,839 | $8,839 - $36,378 | $36,378 - $72,756 | $72,756 - $118,285 | over $118,285 |
|---|---|---|---|---|---|
| 0% | 15.25% | 22% | 26% | 29% |
Notice how our tax brackets stop mysteriously at 118k? Admittedly, 29% is a pretty hefty tax rate, but there are a LOT of people in Canada making annual incomes in excess of 118k! [I can't find any stats one way or another in a quick search. Maybe some of you readers will know where I could find a stat about how many Canadians make more than 118k/year and what the distribution is after that as well - like how many people make in excess of 150k, and 200k and 300k, etc ]
It seems to me on first glance that we could easily shave a few percentage points off the two lowest-but-not-zero brackets and create a new bracket for those who make 200k+.
Also you'll notice the difference from the first bracket to the second is quite large at 15.25%, and then grows at an increasingly slower rate after that. This leaves effectively means that if you're in bracket 2 at 15.25% and you find a way to somehow make enough money to fit into the next tax bracket your 'penalty' is greater than if you make the same move from the 4th to the 5th bracket. Does this seem backwards to anyone else? Shouldn't the brackets be at least an even distance apart? It's like there's an incentive for staying in a lower bracket!
I know I'm not an economist and there's probably really good reasons for setting things up this way but it seems completely counterintuitive to me. Another choice quote to put this into perspective a bit:
"Kevin Hassett, of the American Enterprise Institute, estimates that a family of four earning $50,000 pays exactly the same share of its income (30 percent) on taxes as one earning $150,000."But, as the article points out, although tax policy is important, the issue shouldn't be about punishing the rich (which is one way this could be seen) but more about "raising" the folks who are at the bottom. And it just hasn't been happening the way everyone predicted in the '80s when Regan cut taxes and Mulrooney signed NAFTA (which TOTALLY F-ed the lower class), both being good little conservatives and predicting confidently that all the wealth they were creating 'at the top' would mean good things for poor folks too. Someday. It didn't happen.
And now we really need to do something about it. As the article says:
"Hamburger flippers simply don’t command a high wage. We can pass laws to change that — a minimum price for cheeseburgers, maybe — or we can, finally, invest in teaching the flippers to do something else."Anyways, read the article, it's great.
