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* From a St. Louis Post-Dispatch editorial…
A democracy cannot long survive as a democracy if it’s for sale to the highest bidder, ignoring the interests of ordinary members of society in favor of those wealthy enough to influence the election outcomes.
And make no mistake: The interests and preferences of the wealthy elite are far different than those of ordinary Americans. That seems self-evident enough, but it was confirmed by a 2013 survey of the richest 1 percent of Americans. The study found that the priorities of America’s elite differ markedly from the those of the rest of the nation — and that the rich are far more likely to win those policy arguments.
For instance, while 52 percent of all Americans believe the rich should be heavily taxed, only 17 percent of the wealthy agree. Taxes on the highest-earning Americans are far less than half of what they once were, with little chance they’ll be going up anytime soon.
A strong majority — 59 percent of Americans — believe that Social Security should be expanded rather than cutting benefits and raising the eligibility age. Only 3 percent of America’s wealthiest agree. Despite the fact that simply eliminating the cap on income subject to Social Security taxes would be enough to guarantee the program’s solvency well into the future, there is no serious proposal to lift the cap, currently set at $118,500.
More than three-quarters of Americans believe that the minimum wage should be high enough that a full-time worker can earn his or her family out of poverty. Only 40 percent of the wealthiest agree. The federal minimum wage hasn’t gone up since 2009.
In essence, the study found that the United States is more oligarchy than democracy. Policy decisions at the local, state and federal level too often reflect the will of the wealthy rather than the will of the people.
The poll the Post-Dispatch relies on was also used in a recent New York Times article on the governor’s election.
But the survey wasn’t of rich Americans, it was of rich Chicago-area residents.
From the poll…
The pilot study as a whole yielded a total of 104 interviews. After a brief false start in the autumn of 2010, during winter and spring 2011 NORC interviewers used the refined sampling design (described above) to contact, win the cooperation of, and interview 83 Chicago-area respondents, who provided the data for most of the analyses reported here.
Emphasis added. If you look at the accompanying charts, there’s always “n=83″ at the bottom, meaning 83 is the number of people interviewed.
* Back to the poll…
Most of our respondents fell into or near the top 1 percent of US wealth-holders. Their average (mean) wealth was $14,006,338; the median was $7,500,000. To give a further idea of their economic standing: respondents’ average income was $1,040,140. About one third of them (32.4 percent) reported incomes of $1,000,000 or more.
* BGA…
In 2014, Illinois had an estimated 265,000 millionaires, according to Phoenix Global Wealth Monitor, a market research firm.
But that’s based on assets, not incomes. It’s also statewide, not just in the Chicago area. I can’t find better numbers, though, so assume the target interview size is half that and it’s 132,000 people or so. Maybe somebody else can find better numbers on the interwebtubes and I’ll update.
Raise your hand if you think 83 people out of a group of difficult to contact, very private people is a sufficient sample size to emphatically state that this poll “found that the United States is more oligarchy than democracy.”
I’m not saying the finding is wrong. You can calculate a margin of error for that sample size and target population. I’m just saying that I don’t have a huge amount of confidence in it.
posted by Rich Miller
Friday, Dec 4, 15 @ 9:51 am
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It’s an admittedly small sample, to say the least. But does ‘800-1000′ respondents to a phone survey adequately reflect the will of 11 million people? I’m not nearly the fan of statistics that many people are, but if one size fits, the other seems ’statistically probable’ as well. That said, I’d love to see other similar surveys in other parts of the state. They can’t all live in Chicago (or maybe they do).
Comment by Not quite a majority Friday, Dec 4, 15 @ 9:59 am
While it’s true that taxes on the highest earning Americans are less than half of what they once were, it should be noted that the top tax rate used to be over 90%. I don’t know that most people would support a tax bracket near that high today.
Comment by Anon Friday, Dec 4, 15 @ 10:01 am
If you are a single individual earning poverty wages in the United States, about $19,000 per year, you are among the top 10% of income earners in the world. If you make $45,000 per year you are in the top 1% of income earners in the entire world.
Americans are the global 1%. Ignoring trivialities such as borders, what separates our moral duty to the global 99% as is suggested that America’s 1% owes to its own 99%? That is to say, why is the global poor not entitled to our wealth in the same way that some feel entitled to the wealth of America’s 1%?
What is our “fair share?”
Comment by Jack Kemp Friday, Dec 4, 15 @ 10:02 am
Regardless of the somewhat dubious data and sample size, such a poll does not reveal anything interesting or relevant.
Majorities of Americans often espouse one-dimensional, emotional opinions that belie more their lack of issue awareness than deep seeded beliefs.
Of course the Post Dispatch bias is all too evident too. It seems to imply that because majorities answer a certain way in a poll that the country should follow those policies but are only thwarted by the “oligarchy.
Let me posit another scenario for the left-leaning writers:
Similar majorities oppose expanded immigration opportunities like a path to citizenship and higher legal immigration quotas. But those numbers tend to reverse the higher you go on the education and income scale.
Would the Post Dispatch agree we should embrace the xenophobic views of the masses or should the better educated and more enlightened guide our policy here? Same goes for gay marriage. It is much more popular among the wealthy than among low income.
One man’s “oligarch” is another man’s limousine liberal.
The lesson again–Doubt every poll…and disregard polling analysis by biased media.
Comment by Adam Smith Friday, Dec 4, 15 @ 10:03 am
I’ve always struggled with economics can someone help me with the question of; If “the minimum wage should be high enough that a full-time worker can earn his or her family out of poverty”, then doesn’t minimum wage become the new poverty level?
Comment by Kevin Highland Friday, Dec 4, 15 @ 10:07 am
Illinois democracy has been for sale to the highest bidder for decades.
Comment by Formerly Known As... Friday, Dec 4, 15 @ 10:13 am
Just a clarifying point, sample sizes might seem wildly different from survey to survey but their isn’t just some random person thinking somewhere that 100 or 500 or 1000 sounds correct. Instead statisticians use something called a power test, which can be something like a two-sample t-test, to determine the minimum sample size. That’s why determining the confidence interval–and as a result, the variation–is important.
Comment by Anon Friday, Dec 4, 15 @ 10:14 am
I agree with the results.
Comment by illinoised Friday, Dec 4, 15 @ 10:15 am
==In 2014, Illinois had an estimated 265,000 millionaires, according to Phoenix Global Wealth Monitor, a market research firm.==
If you own more than 200 acres of farm land in Illinois you’re most likely a Millionaire, at least on paper. 75 acres if you’re in Douglas, Champaign, Piatt, Moultrie, etc…
Comment by Gruntled University Employee Friday, Dec 4, 15 @ 10:15 am
I’m quite concerned about the drastic expansion of Welfare State among the elitists. Especially since there are no revenue offsets. Since some individuals who receive assistance to buy food are drug tested, those who are on Mortgage Welfare getting Government Entitlements in the thousands of dollars should also be subject to the same testing.
Comment by Jack Stephens Friday, Dec 4, 15 @ 10:19 am
Jack,
It isn’t just about moral duty. It’s also about systemic health. If you are not troubled morally with inequality, contrary to the tradition of the American Revolution and all of American politics through the Civil War, fine. But how can you have sustained economic growth without broad income distribution? While as individuals it looks bad on the balance sheet, as a class its actually in the interest of the wealthy to pay higher taxes because its about economic growth and consumer spending. Who has been complaining about persistent low interest rates? Had half the economic stimulus not been wasted on tax cuts for the wealthy with nothing to invest in, interest rates and economic health would have returned a long time ago, and the wealthy, ironically, would be BETTER off then they are now.
As for the world, in fact as China moves hundreds of millions into the middle class, that too is good for producers everywhere.
Jigging the system to benefit the wealthy isn’t even good for the wealthy. (Please don’t for a second assume that rising income inequality reflects some kind of “natural” market forces, because that would be stupid.)
Comment by History Prof Friday, Dec 4, 15 @ 10:21 am
The cap on Social Security was put in place for stability and predictability purposes because the wealthy typically have the most volatile earnings over a career. And since the weighting mechanism in Social Security already benefits low income/short career workers, a redistribution of wealth already occurs. Keep in mind you don’t have to be “wealthy” to come out on the short end of Social Security. Ask anyone who is self-employed.
Since Social Security is treading down the inevitable path of being a mere welfare tax, why not just come up with a new wealth redistribution tax? Maybe 3% SS “supplement” on wages above the SS limit? Or raise the upper income tax bracket?
You read all these news stories about no one saves enough for retirement. But every year of their career, the govt takes 6.2% of your wages + an equal employer match and gives you a horrible return. Maybe if that 12.4% was invested similar to a state pension, with the same guarantees, folks would have a retirement account that was sufficient.
My wife and I both put in over 12% of our wages into 401ks. So nearly 20% of our wages are gone before we pay dime-one in fed/state/property taxes. And a 3rd of that deduction goes into the SS hole from which we will be lucky to get anything back.
Tax the wealthy all you want, but that won’t address mine and a good chunk of the taxpaying population in the same boat.
Comment by nixit71 Friday, Dec 4, 15 @ 10:22 am
An article on streetdirectory.com refers to the “annual Affluent Market Research Program (AMRP).” Of the top 10 wealthiest counties, they list: “2. Cook County, Illinois: Cook County, which includes Chicago, has 171,118 millionaire households forming 40 % of such households in Illinois and 2 % in the nation.”
http://www.streetdirectory.com/travel_guide/73297/real_estate/top_10_us_counties_with_the_most_millionaires.html
Comment by #5 Friday, Dec 4, 15 @ 10:22 am
The key to all of this is how do you define “millionaires and billionaires”. Our politicians many times conflate the two as if most farmers or small business owners have anything in common with hedge fund guys.
Many of our state retirees fall into the millionare category if you account for the present value of a 6 figure pension.
If we don’t create incentives for Individuals to save and invest our economy will not grow and employment will suffer.
The number 1 problem in this country and Illinois is average wages for our middle class workers have been declining for decades.
Comment by Lucky Pierre Friday, Dec 4, 15 @ 10:27 am
@history:
You’ll get no argument from me. Time for draconian cuts in Welfare for the Wealthy!
Comment by Jack Stephens Friday, Dec 4, 15 @ 10:28 am
US Census says 2.1 million people over 18 in Chicago, so taken literally, the 1% of Chicago is 21,000 people. This tracks roughly with US Census info on income: 5.5% of Chicagoan households (55,000) make over $200,000 per year. If income is distributed equally in that bracket, then the top 1% of Chicago earners are in about 10,000 households (and I assume making way, way more than 200K a year).
Using your link, margin of error is 11%, both for your initial guess of 132,000 people, or for the 21,000 people in Chicago’s 1%.
Comment by Century Club Friday, Dec 4, 15 @ 10:29 am
The 23 pages of the poll will take some time to digest, but will be have to be reading for the weekend.
Jack Kemp - I think you are being disingenuous with the comparisons you are making.
Gruntled - you are absolutely correct. My brother now owns our 230 acre family farm in Southern Illinois, yet there are 3 different families in my small community that own and farm in excess of ( at least from reliable sources ) 10,000 acres in many counties throughout Southern Illinois. Last week a 100 acre farm without having the best soil sold for $5000 per acre and other recent sales in this area have sold in the $6 to 7,000 range.
Comment by illini Friday, Dec 4, 15 @ 10:30 am
While I applaud the efforts of the scholars who wrote this article, they 1) note themselves that there may be sampling error due to the fact that they only have information from wealthy Chicagoans (which may disproportionately represent the U.S.) and 2) discuss how their study doesn’t actually provide support for the argument that politicians only listen to the wealthy. Rather, they state that the “evidence supports the long-standing finding that the affluent participate disproportionately in politics.”
But why do they? I would imagine (and of course now I’m speculating) that the wealthy participate more in politics because they have more time and resources to do so. Wouldn’t most people participate more in politics and attempt to influence public policy if they had more time and resources? I know I would.
Lastly, just a question for thought: if you worked really hard to make a lot of money (say you made it into the top 1% in America), would you feel like you now needed to give a large portion of your money back to the U.S. for any number of U.S. programs? Or, would you feel like since you’ve now worked for your money, you should be able to keep most of the money you earned?
Comment by Jacob Tomlinson Friday, Dec 4, 15 @ 10:31 am
A great case of finding some numbers which resonate with what you wanted to say about America in the first place.
I wouldn’t even fall into the trap that this might say something about our Gov’s personal crew. We don’t really know who he hangs out with, and how seriously he might take any of their opinions.
Comment by walker Friday, Dec 4, 15 @ 10:31 am
Seems like the Post is trying to tie a few recent articles by other media outlets together to get to the oligarchy conclusion. According to the study by Phoenix (http://blogs.wsj.com/economics/2014/01/16/where-are-the-u-s-s-millionaires/ ), the assets don’t include real estate. If that were included, there would be a lot more, especially those that own farmland.
The major problem is that those that have built their asset base to millionaire and beyond through investing their investments to grow only dollars for their personal accounts (including foundations and trusts), but do very little to grow other sectors of our country, are just a different type of hoarder. Before I get blasted away at, my main point is that money that is not circulated is money wasted. I’m not talking about freebies and handouts. I’m talking about constructive, useful, paying-it-forward projects than will grow our country and world. Some with the means are doing so or have plans to do so. Others, not so much.
Comment by Anon221 Friday, Dec 4, 15 @ 10:31 am
Just another verbal dance selling the defective story that all our problems will be solved by taxing ‘other’ people.
Comment by plutocrat03 Friday, Dec 4, 15 @ 10:32 am
I think the sample size shows they called enough people to support the views they wanted and stopped calling. Who wants to hear something they don’t agree? I don’t. So don’t respond to this comment.
Comment by jeffinginchicago Friday, Dec 4, 15 @ 10:37 am
From CARE International if you want some global numbers fun:
http://www.globalrichlist.com/wealth
Comment by Anon221 Friday, Dec 4, 15 @ 10:42 am
==One man’s “oligarch” is another man’s limousine liberal.==
Adam Smith, whole comment well said.
Note how both sides leverage envy of others’ wealth as part of their cartoon characterizations. It’s a crude message that sells.
Comment by walker Friday, Dec 4, 15 @ 10:43 am
== I’m talking about constructive, useful, paying-it-forward projects than will grow our country and world. Some with the means are doing so or have plans to do so. Others, not so much.==
I agree. But we should extend this to institutions as well. The top 3 Ivy League schools have $80 billion endowments derived from wealthy alums who also receive tax write-offs for these contributions.
Comment by nixit71 Friday, Dec 4, 15 @ 10:46 am
Note the qualifier “investible assets.” Farmland isn’t that fungible. But overall, the story in the Times dovetails relatively effectively with others, including that detailed Princeton survey as well as detailed theoretical work going all the way back to Christopher Lasch 20 years ago at the end of his life, that shows how disembodied elite views have become from mass needs. Which, when you consider how they live, isn’t surprising. The elite live their lives far more separate from everyone else than a generation or two ago, in addition to having gained almost all new wealth in the country over the past couple of decades. By way of stacked corporate fiduciary laws, favoring shareholders over all other stakeholders, and by fraying the safety net, impairing collective bargaining and other regulatory changes, we have created a new aristocracy every bit as impenetrable as the old British one we revolted against 240 years ago.
Comment by Angry Chicagoan Friday, Dec 4, 15 @ 10:48 am
“Policy decisions at the local, state and federal level too often reflect the will of the wealthy rather than the will of the people.”
Although this poll does not really support this conclusion other than by explaining the political leanings of the wealthy, there is much evidence that it is true particularly at the federal level. If that means the US is more of an oligarchy than a democracy, then I would agree with that conclusion. The wealthy have the means, the access and the campaign finance laws in place to continue to make this happen.
Comment by Anonymous Friday, Dec 4, 15 @ 10:48 am
Illinois Tax return data suggests that there are approx. 19,000 households with income greater than $1 million. A sample of 83 at a 95 percent confidence level yields a confidence interval of +/- 11 percent.
Comment by Natalie Friday, Dec 4, 15 @ 10:57 am
Inequalify will always exist and statistics can always be manipulated. Allowing companies to pay employees so little that the employees qualify for social service benefits indicates a need to raise the minimum wage so we aren’t subsidizing Walmart & McDonalds. The wealthy and the poor will never have enough if you ask them…
“We just bought property behind the Great Wall. On the good side.” ~AC
Comment by Al Czervik's Golf Bag Friday, Dec 4, 15 @ 11:00 am
I’ve never understood the argument about the poor in the US being in the 1% worldwide. As long as they live HERE, they’re subject to the prices of STUFF HERE. Whether they’d live like kinds in Somalia is pretty irrelevant since that isn’t where they live…
Comment by Johnny Pyle Driver Friday, Dec 4, 15 @ 11:02 am
Nixit71, the >12% that you and your wife invest in a 401k is not “gone”. Unless you are making some outrageously bad investment decisions, that money is growing in a tax-advantaged account that will reward you well later in life. Good for you; you and your wife are good savers. You are fortunate / deserving enough to be earning enough to be able to afford that saving rate.
It’s worth noting that while SS redistributes wealth downwards, tax deferred programs, such as 401ks, are not feasible for low-income tax payers and redistribute wealth upwards in a powerful way by redistributing the tax burden downward.
Comment by X-prof Friday, Dec 4, 15 @ 11:03 am
Too much math for me, but I do think that we are moving towards an Oligarchy, though we may not be there quite yet. Rather than for math reasons or the opinions of those with money, but rather, as a result of things like Citizen’s United, the Koch Brothers and our current Governor. Now, if the study was based on the percentage of money the 1% throws into the elections compared to the rest of us, I think its conclusion could be supported. Union money is a drop in the bucket comparatively, but at least it allows the lesser income levels to have some impact.
Comment by burbanite Friday, Dec 4, 15 @ 11:09 am
I think it’s important to note it was asset based rather than income; a farmer or small business owner can be considered a millionaire even though their income is significantly (less than $100,000) This definition they used makes me question the outcome along with the small sample size.
Comment by Anna Friday, Dec 4, 15 @ 11:09 am
Other political scientists have previously found that the policy preferences of affluent Americans are far more likely to be enacted than the policy preferences of the middle class and poor. It is hardly a surprise that the richest Americans generally don’t want to pay higher taxes, Warren Buffet being a notable exception.
Comment by nona Friday, Dec 4, 15 @ 11:11 am
== This definition they used makes me question the outcome along with the small sample size.==
Better yet, how did they value a state pension annuity?
Comment by nixit71 Friday, Dec 4, 15 @ 11:13 am
Ultimately, the issue is what does society (which I would say is the totality of the people) want government to do. Once that is known, it needs a cost estimate and then a revenue source to fund it. At that point, the Dillinger principle takes over and one has to go where the money is. That 90% rate referred to earlier, was on the upper bracket of income, not the entirety of income, and was in effect during the Eisenhower (rumored to be a Republican) administration. Progressive income taxation is the practice in most developed countries because it is generally understood that regressive taxation inflicts too much pain on the general populace compared to the wealthy. Recall the “widow’s mite” story from the scriptures.
Comment by JackD Friday, Dec 4, 15 @ 11:15 am
Rich-actions speak louder than words just look at what the 1% advocate for and it is not policies that empower the middle class, in fact quite the opposite. Citizen United put our democracy up for sale and it is slowly being purchased by phony front groups like IPI and others that convince the uninformed to support policies that work against their own self interest. It is disgusting.
Comment by Obamas Puppy Friday, Dec 4, 15 @ 11:15 am
JPD- Very true. I just posted the CARE site for a global perspective, especially if you factor in a $500 million private purse as opposed to a $150,000 or below.
Comment by Anon221 Friday, Dec 4, 15 @ 11:19 am
Thanks, Natalie, for some objective analysis.
These days, we have extreme income inequality (by orders of magnitude) even between the 95th percentile and the top 1%. $202,000 household income gets you into the 95th percentile in IL. Compare that to the mean $14 million cited for the poll’s respondents or to BVR’s ~$60 million. Or Ken Griffen’s … Anyone who can’t see that plutocracy has come to IL with Rauner’s rise isn’t paying attention or isn’t willing to.
Comment by X-prof Friday, Dec 4, 15 @ 11:19 am
I think the data is pretty valuable and the survey is interesting. I would hesitate to make any broad claims about the population as a whole, however you can use the N=83 value to establish a confidence interval for your survey results and create a margin of error.
And I see that Natalie has already done so — and while +/- 11% isn’t really ideal, and the claim the article is making shouldn’t be made, it can be assumed that the wealthiest 86% to 97% of wealthy Illinoisans are against the expansion of social security.
So, again, not my survey, not my report, it would have been written better if it were, but I think there is merits in the numbers, even with only 83 respondents.
Comment by Anon Friday, Dec 4, 15 @ 11:24 am
Oops, sorry, the $14 million number was wealth, not income. Still, my overall point holds.
Comment by X-prof Friday, Dec 4, 15 @ 11:24 am
I have long wished to pay $1,000,000 a year in federal income taxes. I would even agree to a 10% increase in the highest marginal rate for the privilege of paying that much federal income tax.
Comment by steve schnorf Friday, Dec 4, 15 @ 11:25 am
The NW authors acknowledge the limitations of their study and I think they have some interesting data (small as it is). A major problem I see is- by virtue of their education, wealth, political connections etc, the ultra wealthy have the opportunity to exert undue influence on public policy. They have the ability (which they frequently use) to advocate for public policy changes that match their personal interest & beliefs, but that are not in the best interest of the majority of citizens. It does beg the question of who holds the power and control in the formulation of public policy.
Comment by Former Hoosier Friday, Dec 4, 15 @ 11:25 am
Johnny, it’s fairly simple. The argument on the left seems to be summed up best by Margaret Thatcher when she said that they would be fine if “the poor were poorer, provided that the rich were less rich.”
If it is true that the 1% owes a share of their wealth to the 99%, simply by virtue of having more, in the US, then why is this not true universally? Why is it that the American middle class feels it is entitled to a share of the wealth of America’s billionaires, but those people on Somolia are not? For a movement that claims to be driven by its opposition to greed, this seems awfully greedy.
Wealth is relative. Today, and indeed, throughout all of history post-Industrial revolution, America’s poorest have a higher standard of living than most everyone else in the world. What we take as our standard of poverty it would take the average person in China 20 years to make.
So again, why not, just by virtue of having more, do we have the same obligation to them that our billionaires supposedly have to us?
Comment by Jack Kemp Friday, Dec 4, 15 @ 11:28 am
Puzzling why wealthy people would not want minimum wage earners to be self-sufficient, as opposed to getting taxpayer funded help to meet living requirements. Having people take care of themselves, as opposed to having the government taking care of them, is a good thing, isn’t it? Or is that just the middle class’s responsibility to help the poor while the wealthy skate freely? Why oppose a wage that enables that? Same question goes for people begrudging an average public pension of 45K, while they bring in multiple hundreds of thousands or millions. Don’t get it. Is it simple selfishness and greed?
Comment by AnonymousOne Friday, Dec 4, 15 @ 11:29 am
I agree with the general thread of the survey, that the wealthy have an impact on policy well in excess of their population share.
I do note that all the questions amount to: Should you pay much more in taxes.”
The minimum wage question received the most support, and may reflect the likelihood that all 83 were tax payers, but only some were employers. I doubt many have minimum wage earners in their close contacts.
Comment by Any Mouse Friday, Dec 4, 15 @ 11:34 am
The Randian Objectivism espoused by some above has never been taken seriously by even conservative economists, but I guess it provides its disciples with some basis on which to defend the status quo. I’m not convinced the results of this survey are reliable, but the anecdotal evidence seems clear in Illinois. #askbruceandkenny
Comment by veritas Friday, Dec 4, 15 @ 11:35 am
If one wants to consider assets, then I’m a millionaire, barely. If they polled me I would skew their results as I am a strong believer in social safety nets.
But, perception is everything, and a more extensive poll, covering numerous demographics would probably reveal the same results.
A number of citizens in this country believe we are more of an oligarchy than a democracy. I’m one of them.
Comment by efudd Friday, Dec 4, 15 @ 11:36 am
Jacob Tomlinson, You assume that wealthy people earn their money without relying on public services themselves and not relying on the public services that make it possible for their workers and customers to be who they are (education etc) and where they are (road etc.) So you look at it as if wealthy individuals “earn” it. And I think the answer to that is that they “sort of” earn it but only in a social context with huge collective costs. They also take advantage of a system that channels money in all sorts of ways. Changing the way the system channels money in no say “takes money away” from anybody. It merely channels it elsewise. It isn’t your money until after you pay your bills, which includes your taxes. If under a new tax regime you would rather not take over a company, break it up, and sell the pieces, then don’t do that. As long as you are aware of the tax policy ahead of time, nothing has been taken from you.
Comment by History Prof Friday, Dec 4, 15 @ 11:41 am
One needs only to look at recent history to realize that we have been living in an oligarchy for some time. How many banksters have gone to jail??? I don’t even recall any perp walks. They even got to keep their bonuses after the middle class bailed them out. How about federal legislation regarding PERSONAL bankruptcy. Hedge fund entities can walk away unscathed but people? Hey! I thought someone told me, as a friend, that corporations are people. I don’t get it. Oligarchs have it so good that for status they will purchase sports teams and then threaten to move them if the cities don’t build them new stadiums.
Comment by Triple fat Friday, Dec 4, 15 @ 11:42 am
JK, I don’t find much value in a “they’re better off than many people living in impoverished countries” argument. So what? It sounds very superficial to me, much like Sam Kinison’s proposed solution for the problem of starving people living in drought-stricken areas of Africa. He, however, was satirizing the issue, mocking simplistic solutions. I think you’re serious: by most people’s standards, the poor in America are doing fine.
Comment by steve schnorf Friday, Dec 4, 15 @ 11:44 am
In other words, the game is rigged!
Comment by Triple fat Friday, Dec 4, 15 @ 11:46 am
Much of the discussion here involves federal tax policy. In the context of Illinois state and local revenue, the main focus of this blog, the question is whether the income of the most wealthy should be taxed (in total: income, sales, property) at a similar rate to the average tax-payer, rather than about half. If that issue were addressed by any of a variety of reforms, we would have a budget surplus and enough funds to pay down the debt over time and cut property taxes, for example. About 1/4 of IL income now goes to the top 1%, and their total state and local tax rate is about 5%. So undertaxing them by a factor of 50% is significant.
In IL, we don’t need to tax the wealthy at a higher rate to fix the state’s fiscal problems. Just less regressive would do it.
Comment by X-prof Friday, Dec 4, 15 @ 11:48 am
Jack Kemp,
Your write, ”
Johnny, it’s fairly simple. The argument on the left seems to be summed up best by Margaret Thatcher when she said that they would be fine if “the poor were poorer, provided that the rich were less rich.”"
But that is not the argument on the left. You assume that to be the argument because it is easy for you to knock it down. (Straw man.) But we can’t have a conversation here unless you address the ACTUAL arguments presented here.
By the way, several commenters assumed envy on the part of proponents of progressive taxation. That is another handy and self-serving assumption. I don’t think it bears out. (I personally have no interest in car elevators and multiple vacation homes. Just not interested. Y wife hates my ‘97 Mazda with duck tape covering the rust, but I actually think it reflects good values. Our kids are thriving.) Again, such straw men as “envy” only serve to shield you from facing the ACTUAL arguments made.
Comment by History Prof Friday, Dec 4, 15 @ 11:50 am
I don’t think it’s envy to long for an even playing field.
Comment by Triple fat Friday, Dec 4, 15 @ 11:50 am
steve schnorf - glad you picked on my earlier comment. Yet, it comes to the hypocrisy of this point ” I think you’re serious: by most people’s standards, the poor in America are doing fine.”
Comment by illini Friday, Dec 4, 15 @ 11:52 am
Steve Schnorf
AMEN!
On the issue of Social Security being paid past the $118,000 level, two thoughts.
#1 OK by me to pay past the maximum level now, maybe at a reduced rate past the $250,000 level.
#2 For incomes above a certain level, maybe $500,000.00 per year as an example, you would no longer pay into Social Security, but you also may not collect Social Security when you reach 65-66. After all, SS was intended to be a safety net, not an additional income to the wealthy. As suggested by many of the super wealthy that we need to invest in the market instead of paying into SS. That is exactly what they should do, yet preserve SS for those who need the income when no longer able to work. Note: I did not say retire, most of the poor among us never get to retire, they keep working until they drop….
Comment by Anonymous Friday, Dec 4, 15 @ 11:57 am
So how did these pollsters identify and contact people who are ‘rich? That’s pretty intrusive.
Comment by Formerpol Friday, Dec 4, 15 @ 12:11 pm
When is the tax code going to start valuing monetary gains and wages earned equally? Really - gains should be taxed more than wages. People will still invest.
Comment by Triple fat Friday, Dec 4, 15 @ 12:12 pm
I realize this may not get past you, Rich… But… The trickle down theory has proven itself to be… Those who have relieving themselves on those who don’t.
Comment by Triple fat Friday, Dec 4, 15 @ 12:19 pm
As a casual observation, it appears that the pollsters obtained the desired result.
Comment by Keyser Soze Friday, Dec 4, 15 @ 12:35 pm
History Prof, I’m not sure how I’ve made a strawman argument. I’ve merely proposed a question, and so far there hasn’t been any attempt to answer it. Why does the 1% have an obligation to the 99% here, but not everywhere?
You say that it is not about moral obligation; but this explanation falls flat when we investigate the facts. How can an economy grow with such enormous concentrations of wealth in the hands of so few, you ask. How indeed. Because many of even the most vocal critics of America’s income inequality will plainly admit that the total share of the wealth in the hands of the 1% is relatively unchanged over the past century.
The wealthy already pay high taxes. They pay the lions share of the income tax burden. The top 1% of income earners pay over half of all income taxes–more than the bottom 90% combined. So supposing that way you say is true, and it’s good for the wealthy as a class to pay higher taxes, then this must explain perfectly why the wealthy are doing so well today.
Comment by Jack Kemp Friday, Dec 4, 15 @ 12:40 pm
Formerpol 12:11 pm, the study’s available online, Rich links to it. see pp 52-53 in particular. It is of course correct that there could be a regional bias here. Note that for example the Midwestern millionaires and billionaires sampled were fairly pro-more regulation of Wall Street and about 50/50 on regulating the oil industry (p. 51). Sample a bunch of New York billionaires or Texas billionaires, and I wouldn’t be surprised if you got different results.
There’s a -second- big study out there however where the “oligarchy” argument comes out more, however, which depends on the separate work of Martin Gilens of Princeton University. Ben Page (author of study above) has linked up with Gilens recently, but the baseline work is all Gilens’s. I’ll link to -that- one here:
https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf
This one is the one that tries to show real gaps not just in the preferences of upper-income Americans vs lower ones, but also how these correspond to policy responsiveness in Congress. But, there are some tradeoffs. Gilens -does- pull from a nationwide, nationally representative sample … but, because there’s very little sampling still nationwide of the “1%,” Gilens expands it to the top -decile-, so the preferences of the top 10% of Americans.
As he would be first to admit, there’s probably a whole heck of a lot of difference between someone making, say, $125,000, and Ken Griffin. But because of sampling issues, the big “oligarchy” study had to package them together.
Comment by ZC Friday, Dec 4, 15 @ 12:46 pm
Jack Kemp 12:40 pm
>>Because many of even the most vocal critics of America’s income inequality will plainly admit that the total share of the wealth in the hands of the 1% is relatively unchanged over the past century.
I honestly don’t know what you mean by that.
Are you talking -globally-, like the 1% , worldwide?
Because there’s a ton of evidence now that the share of American wealth in the hands of just the American 1% (and really more the .01%) has gone up in recent decades.
Are you familiar with the names “Pikkety and Saez”?
Comment by ZC Friday, Dec 4, 15 @ 12:51 pm
“Why does the 1% have an obligation to the 99% here, but not everywhere?” Perhaps morally they do but not legally. They are subject to the laws of this government and its subdivisions. There is, as yet, no world government although there are various international agreements under which wealthy nations, including the U.S. pay more than do poor ones and those payments come out of domestic tax receipts. As others have pointed out, the wealthy receive many benefits from our government not the least of which is protection of their wealth overall and providing conditions allowing them to make and increase it.
Comment by JackD Friday, Dec 4, 15 @ 12:51 pm
I don’t mind the super-wealthy (100-500 million and up) making the argument that “I play plenty in taxes!” What irks me is when someone earning 50K comes to their defense in the mistaken belief that someday they’ll be one of Marco Rubio’s “soon to haves”.
Comment by Jocko Friday, Dec 4, 15 @ 1:03 pm
==America’s poorest have a higher standard of living than most everyone else in the world==
What exactly is your point? That they should be happy they are poor in the US and not somewhere else? That they are living high on the hog compared to China’s poor? That is probably one of the most asinine things I think I’ve every heard anyone say.
Comment by Demoralized Friday, Dec 4, 15 @ 1:08 pm
Really need to keep this in perspective. When adding up my investments I am a millionaire. But I am also near retirement age and will still need every penny if I live another 20 years.
Comment by Dinsdale Friday, Dec 4, 15 @ 1:11 pm
Also @Jack Kemp, can you honestly say with a straight face that there isn’t some problem with the increasing gap between the wealthy and the rest of society? You don’t see it as good public policy to attempt to close that gap at least somewhat?
Comment by Demoralized Friday, Dec 4, 15 @ 1:11 pm
Jack Kemp: You cite the federal income tax, when this site is concerned with Illinois taxes. There is no question that the 1% pay a much lower effective tax rate in state and local taxes than do the middle class or the poor.
Comment by nona Friday, Dec 4, 15 @ 1:28 pm
jack kemp - I think you have missed the fact that the American middle and working classes have already ponied up for the betterment of the poor in other countries. They have watched their good jobs march away to Mexico, China, Indonesia through the guise of “free trade” while their new service or “gig” economy jobs came no where near replacing their incomes and benefits. And the super rich — they got to become super-richer paying foreign labor low wages, but better than what they were used to. The American worker has helped bring millions out of abject poverty around the world — and their thanks has been a kick in the teeth by the ultra-rich who would like to further reduce their status and lifestyle.
Comment by kimocat Friday, Dec 4, 15 @ 1:28 pm
ZC, no, I’m talking about the United States.
Refer to Table 4: http://www2.ucsc.edu/whorulesamerica/power/wealth.html
According to Domhoff, the percentage of the nation’s wealth held by the top 1% in 1922 was 36.7%. In 2010 it was 35.4%.
@Demoralized, that’s not exactly what I’m saying, but sure, close enough. It is better to be a poor person in America than to be a “middle class” person in, say, Venezuela. Isn’t that remarkable?
The point is that if there is some obligation of the haves to the havenots, then as we point out fingers we should be cognizant of the three pointing right back out ourselves. Americans are the global 1%. So if the 99% is entitled to a portion of what belongs to the 1%, then I don’t see why we should stop at our own border. How “fair” is that?
Comment by Jack Kemp Friday, Dec 4, 15 @ 1:29 pm
Jack Kemp 1:29 pm, that’s something else that occurred to me you might be saying, but I kind of hoped you weren’t, frankly.
Yes, it is of course perfectly true that there was a high percentage of wealth held by the top 1% in 1922 … similar to today.
What that leaves out, of course, is there’s a -massive- drop inbetween 1922 and 2010. It’s a U-shape. Wealth inequality dropped markedly in the United States, post World War II … then started going back up again.
So your statement that it’s “relatively unchanged” over the course of the century, should be amended, “It went down a lot, and then now recently it’s been going back up, a lot.”
In a similar fashion I suppose if you want to say that the planet’s temperature is “relatively unchanged” - or maybe it’s even cooler - because the surface of the Earth used to be a lot hotter than it is today, I won’t begrudge you that logical statement. But it also won’t stop me from worrying a lot, in the present, about the most recent trendlines.
Comment by ZC Friday, Dec 4, 15 @ 1:38 pm
Adam Smith,
This might be the nub of our disagreement: “Because many of even the most vocal critics of America’s income inequality will plainly admit that the total share of the wealth in the hands of the 1% is relatively unchanged over the past century.”
We may have returned to those historically unsustainable levels of income inequality, but at mid-20th Century, when you went to college virtually for free in all likelihood, income inequality was far far less. And that has to do with how we got out of the problems of inequality that led to the collapse of demand that led to the great depression. Levels of income equality HAVE changed significantly. And high income inequality is a drag on huge drag on demand.
Comment by History Prof Friday, Dec 4, 15 @ 1:46 pm
ZC, what you’re saying is objectively false. The data shows no “marked drop” post-WWII. The total percentage still lingered around 30% in those years (29% in 1945, 27% in 1949). It rose back up to the lower 30-percent range through the 60s. The most significant drop recorded was in the late 1970s (19.9% in 1976, 20.5% in 1979). But it was back up above 30 again by 1980 and it has hung there ever since.
Hardly a “U-Shape.” If anything, there is a dip for a period of 3-6 years and then right back to historical levels. If anything, those years are the exception and not the rule. (The mean average of the 90 years shown is 34.2%.)
That its remained relatively unchanged is a matter of fact. And in case there were any doubt, Figure 5 (which is directly below the data you should be referring to) charts said data. Not a “U” in sight.
Comment by Jack Kemp Friday, Dec 4, 15 @ 1:50 pm
I thought Jack Kemp died…
Comment by Triple fat Friday, Dec 4, 15 @ 1:53 pm
Is the domain Illigarchy.com taken? Illigarchy.gov?
Comment by Excessively Rabid Friday, Dec 4, 15 @ 1:55 pm
JK. From the Christian Science Monitor, 11/10/2014…
2014, but when it comes to wealth inequality in the United States, it’s starting to look a lot like 1929.
In the late 1920s, the top 10 percent of Americans possessed 84 percent of the country’s wealth. Since then, wealth inequality in America has followed a U-shaped trajectory, declining through the Great Depression until the mid-1980s, then steadily increasing since then. Now, the richest Americans have a share of the country’s wealth almost big enough to rival those in the late 1920s, according to a new study
Comment by Triple fat Friday, Dec 4, 15 @ 2:11 pm
According to an analysis of data sourced through 2012 – including detailed data on personal income taxes and property tax – Professors Saez and Zucman found that the richest 0.1 percent of Americans have as much of the country’s wealth as the poorest 90 percent. Both groups control roughly 22 percent of total wealth, but while the average wealth of the bottom 90 percent is $84,000, the top 0.1 percent were comprised of 160,700 families with net assets above $20 million, according to their study.
An even closer look at their data has shown that while the growth of the American middle class has been restricted by modest income growth and soaring debt –thanks in large part to the 2008 mortgage crisis – the super-rich have been making significant gains in income and wealth.
Comment by Triple fat Friday, Dec 4, 15 @ 2:15 pm
Triple fat, the data set and graph are available just a few posts above. They’re from an academic source, and one that is most certainly bias in your favor rather than mine. The U-shape is a myth. If you’re not willing to take clear and concise evidence to demonstrate this simple fact, then I believe this discussion has reached its end.
Comment by Jack Kemp Friday, Dec 4, 15 @ 2:21 pm
JK, I have dropped the microphone and left the stage. I believe you owe ZC an apology. Her statement is quantitatively true.
Comment by Triple fat Friday, Dec 4, 15 @ 2:23 pm
http://gabriel-zucman.eu/files/SaezZucman2016QJE.pdf
Comment by Triple fat Friday, Dec 4, 15 @ 2:34 pm
Ah, I see. My posts have invariably referred to the top 1%. The chart that you provide maps the share of total household wealth owned by the top 0.1%. I will assume this is an honest error on the part of you, and the Christian Science Monitor (which refers to the top 10 percent).
Comment by Jack Kemp Friday, Dec 4, 15 @ 2:48 pm
What I -will- concede, is that cropping the “y-axis” in a lot of the data, like what Triple fat posts (which is good data), doesn’t help. Obviously if you bound your y-axis from 20-55% (see 2:34 pm link) then that “U” is gonna look bigger. In general I don’t approve of cropping the data in that way, because it opens you up to charges of manipulating the images to make them look more scary.
But … we’re no longer if I understand it even debating whether wealth inequality in the US -did- go down, then back up again. We’re only “haggling about the price,” as Churchill might say … how -much- it needs to have gone down, then up, to count as “significant.”
In your 1:29 post you said it used to be 36.7 percent, and by the late 70s you yourself write (1:50 pm) it got under 20 percent. Now is that a “big” decline? A “small” decline? What is “U-worthy”? We’re not going to solve that, so I will take a pass.
But I never said there’s never been a time when the top 1% didn’t own far, far more of the U.S.’s assets than the bottom 99%. That -basic- point, I agree has been constant. But man, it’s gotten a lot more uneven than it used to be 30-40 years ago.
And with that, I think we’ve probably reached point of diminishing returns, so I hope you’ll understand JK if I’m off to other things.
Comment by ZC Friday, Dec 4, 15 @ 2:55 pm
… Sorry, one more point! I think we overlapped posts. JK it’s got 1% too, they break it down by lots of different percentiles, go back and check. You want page 49.
Comment by ZC Friday, Dec 4, 15 @ 2:57 pm
I’ve seen a poll or two in which millionaires support being taxed more–not sure, though, if this includes those in the so called 1%.
I do not support scapegoating wealthy people in regards to taxes and making them bear the entire burden when we have fiscal problems. I absolutely support millionaires paying a higher state income tax in Illinois, raising the top capital gains rate(s) and closing some state/federal loopholes/ending subsidies if the money is used for jobs, education, infrastructure, debt repayment, etc.
Comment by Grandson of Man Friday, Dec 4, 15 @ 3:20 pm
I can’t believe many people think wealthy people should “bear the entire burden”. I do believe what many, if not most people want is for those who have much to contribute more than they do. After all, how much more can those with little and just enough contribute to make a difference to the state before they end up needing assistance from the state and using tax dollars, not giving tax dollars? You can’t squeeze blood out of a turnip, can you? If you want more money, you have to look to where the money is, don’t you?
Comment by AnonymousOne Friday, Dec 4, 15 @ 3:58 pm
It is not about anybody “bearing a burden!” Poor and middle class people have to work, so taxes are in fact a burden on them. But if an activity at the high end is suddenly taxed at a higher rate, wealthy people still have the choice whether or not to engage in that activity. High levels of taxation at the high end are never a moral problem. They are never an issue of fairness. The only question is whether excessively high rates of taxation on this or that type of income would lead to other negative consequences, like lower rates of investment. Until you hit that number, you are in the clear.
Dear wealthy people,
if you think this or that activity is taxed too highly, stop doing it. No one is forcing you to purchase hedge funds or whatever it is that you are currently doing to earn money. If pot becomes legal, you can invest in it. And if credit default swaps become illegal you can’t invest in them. If pot is taxed at a certain rate, pay it or don’t smoke. If the marginal income tax is too high for you to bother to earn more, don’t bother. Basta.
Comment by History Prof Friday, Dec 4, 15 @ 4:09 pm
Grandson summed up it nicely:
“I do not support scapegoating wealthy people in regards to taxes and making them bear the entire burden when we have fiscal problems. I absolutely support millionaires paying a higher state income tax in Illinois, raising the top capital gains rate(s) and closing some state/federal loopholes/ending subsidies if the money is used for jobs, education, infrastructure, debt repayment, etc.”
I don’t blame millionaires for anything. I simply hate knowing that nearly every working man is paying a higher percentage of their income toward taxes than the millionaires.
Comment by CrazyHorse Friday, Dec 4, 15 @ 4:31 pm