Tax changes / proposals - discussion

Finance Tax
887

I disagree.

For the most part the income inequity increase we’ve seen is at the top 0.5-1% income levels.
Its really not about specially trained doctors etc out pacing carpenters and simply doing more.

And on that topic, Is there any real evidence that doctor productivity has actually out paced carpenter productivity in the past 40 years?

Yes becoming a doctor is very hard and expensive and thats why doctors are highly compensated.
This was the case in the 70’s and 80’s too.
Barrier to entry for simple labor jobs is minimal and they’re not compensated highly.
This was the case in the 70’s and 80’s too.

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888

Here is the historical trend :

If you look at that graphic you can see that all income groups saw similar increases in incomes for multiple decades from 1950-1980’s.

Then in the 80’s things started to diverge. The incomes of the top 5% grew at an accelerated pace while the incomes of the bottom half stagnated.

What changed in the 80s?

Its not as if occupations themselves fundamentally changed.

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889

The doctor example is not a good one. Most doctors I know are debt slaves like the rest of the country. If you want to look at the top 5%, there may be a few doctors in there, but not many.

890

You probably mostly know young doctors just starting out.

Doctors in general are not “debt slaves”. Neither are most college grads.

891

Sure, 50 years old and working for more than two decades? If you work till 80 then I guess you are closer to starting out than finishing up.

Getting to the point of the discussion. Do you have some data pointing to how many doctors are among the top 5% who is winning in the growing income divide?

892

We are talking about different things here, as I am referring to the overall time that it takes physicians to practice now, which frequently means more specialized training (more fellowships), more time and money involved in obtaining and maintaining board certifications, etc…

It’s about all of those things. It’s also about the fact that what the income inequality data does not take into account is the fact that in my example above, a carpenter has been working and making money for some 15 years, whereas a cardiothoracic surgeon has been studying and taking on loans, which have been accumulating interest during that entire period (this is only slightly mitigated by the slave wage that residents receive).

[quote]Yes becoming a doctor is very hard and expensive and thats why doctors are highly compensated.
This was the case in the 70’s and 80’s too. Barrier to entry for simple labor jobs is minimal and they’re not compensated highly. This was the case in the 70’s and 80’s too.[/quote]

The educational costs have far outpaced the rate of inflation, the educational demands have significantly increased (see my post above about fellowships), the accreditation requirements have gone way up (see my post above about the board certifications), and the liability risks have also increased.

Again, though, you first to identify a problem that you are trying to solve to come up with a solution. In my example above, if the cardio thoracic surgeon’s compensation is now higher than that of the carpenter and the difference in their salary is larger than it was some 30 years ago, is this a problem? If you invent something that has a transformational effect on people’s lives, and you become a billionaire as a result, is this a problem (if you had a transformational idea in the '70’s, without the internet and the technology your idea just did not have the ability to reach nearly as many people, so you didn’t make as much money)?

To me, what is a problem is people not having the same opportunities as others. This is something that I think should continue to be addressed regardless of whether we have income inequality or not. Likewise, simply taxing the highest earners more to “reduce income inequality” does nothing to create the same opportunities for others, which is the reason that it is more about campaign slogans than about anything else.

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894

The top 5% of households earn an annual income of $214,462 or higher, according to the Census Bureau. How Much Income Puts You in the Top 1%, 5%, 10%?

That’s two engineers, or a pediatrician married to a teacher, or two blue collar workers with a lot of overtime in a high cost state, etc…

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895

Again nothing has changed in this respect over the decades.
Carpenters always started making dough at age 18 and doctors always entered the workforce a decade later usually with debt.

I disagree that there is a particular good reason for doctors to have their incomes go up significantly higher pace then the rest of the workforce.

We can disagree on your example/analogy.

I don’t think its specifically bad thing that doctors have high incomes nor incomes increasing faster. Thats not the problem. The problem is that the carpenter, waitress, teacher, nurses aide, etc have had their wages stagnate.

I think its a problem that the bottom half has not shared in the success of our nation in the past 4 decades. That is the problem.

How do people lack opportunities?
How does giving people opportunities help the wages of the bottom half keep up?

896

It’s not really being skewed by the top 5% or even the top 1%. Most of the growth is at the very very top. See the 3rd chart here:

You can attribute this to many things, but it’s pretty clearly not ideal. In my opinion, it’s in significant part due to the advent of supply-side economic policy.

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897

You’re describing the bottom of the top 5%.

The top 5% to 5.5%.

And you’re spinning it to paint them as near average joe middle class.
Its the very extreme RARE exception that 2 blue collar workers gross $200k.

The top 5% also includes many doctors making 7 figures, business owners making 8 figures, etc.

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898

It should be pretty self evident that the top 5% also includes the top 4.9%, the top 3%, the top 2%, and the top 1%, etc, so I am not quite following the point that you are trying to make.

899

My point is that the top 5% has little representation of blue collar workers as you seemed to try to imply with your examples. And the top 5% isn’t mostly averages Joes down the street or the humble honorable pediatricians.

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900

You keep saying this, even though it is simply not true. I’ve mentioned a number of significant differences above.

If those in the top 1%, or whatever other percentage you want to use, had their taxes increased by 50%, would the carpenters’, waitress’, teachers’ and nurse’s aid’s career opportunities improve?

What if those top 1%, or whatever other percentage you want to use, were simply making half as much as they are. would would the carpenters’, waitress’, teachers’ and nurse’s aid’s wages be any less “stagnant?”

Again, I think that we should continue to work on improving their opportunities regardless of whether the top 1% make just as much as they do now, or half as much as they do now.

[quote]I think its a problem that the bottom half has not shared in the success of our nation in the past 4 decades. That is the problem.
[/quote]
Sure, but why has this happened? If people have acquired their wealth improperly or illegally, then the solution isn’t to tax them more, but to prosecute them criminally. On the other hand, if people have worked hard, have done all the rights things, and have been fortunate enough to have made money, should we tax them more just because others haven’t been as fortunate, all in the name of “reducing income inequality?”

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901

Possibly. Read the article I posted above. There’s some reason to believe that very high marginal rates on extreme incomes dissuades wage bargaining at the top, which frees up money to flow to more useful places economically. And it seems very unlikely to me that it would do anything to discourage these people from contributing economically.

902

I think its a problem if the bottom half of earners see their wages stagnate or go down over decades.
Especially when things like huge health care increases erodes net disposable incomes.

I’m not saying the solution to income inequality is to tax the rich. But its one way to spread the wealth.
I’d prefer better solutions. Anyone got one?

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903

Physician salary trend :

https://www.medscape.com/slideshow/compensation-2017-overview-6008547#3

Average is now $294k in 2017 and its up a drastic 43% in just 6 years.

Physicians are squarely in the top 5%.

In fact 16% of the top 1% are medical doctors. (source on that)

Note that physician income depends on specialty and pediatricians and family medicine is making a lot less than others.

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904

Again, I am not sure that I understand the point that you are trying to make, or the distinction that you are trying to draw. There are relatively few multi-multi-millionaires or billionaires in this country, so the top 5%, which is comprised of households making a little under $215K, is actually made up of significantly more average Joe’s in two earner households, which includes humble pediatricians, than the ultra wealthy.

I can’t find the most recent data, but as of 2011 people and households earning $1MM or more annually made up just 0.1%, or just over 235,000, of the 140 million tax returns filed in 2009. Just 8,274 returns were filed by people making $10MM or more: IRS: 235,413 million-dollar earners - POLITICO

Again, though, why is this significant?

905

Because they represent a large portion of tax revenue. And absorb a large portion of income growth. Of course it’s significant.

906

I think this kind of confirms the point. Top 5% and Top 1% are very different. Where I live, 214k or 294k is not considered rich at all.

907

Sure, but wouldn’t this be a problem regardless of whether income inequality existed?