April 24, 2009

Wealth Chart

The chart shows the rise in American after-tax income by income group 1979-2006. Some say that this shows a radical redistribution of wealth in the United States. I don't think so... or at least I think a lot of other factors need to be considered. We all know, for example, that we are part of the Baby Boom generation... so in 1979 a lot us were flipping hamburgers, digging ditches, working on the line... learning our trade. 27 years later, you bet a lot of us are making more. A large part of our population (us) moved from the lowest fifth up to the forth or top fifth or above. The median age in America is now up around 36 years old, that's quite a bit higher than it was in 1979... a large group of the population (us) are further along in their careers. Also, for those who file a joint return, how many of us baby boomers were married in 1979? Two incomes certainly look better than one these days.

I'm not saying that the rich didn't get richer... I'm just saying there are a lot more social factors associated with that than just tax policy. I certainly don't see that chart being related to any distribution of wealth toward the wealthy -- how can anyone see it that way when the wealthy pay more taxes than the non-wealthy? Any redistribution is going the other way. In as much as the top one percent of earners in America are earning 256% more than they were 30 years ago, good on them, and I hope to join them one day, and if my numbers are correct, I'm earning around 2200% more than I was in 1979, how about you?

Update: I should also mention that when someone develops a chart like the one above, he (or she) picks a start date for the chart. In this case, 1979. Odd start dates like 1979 are always suspect... consider what was going on in 1979, we were in the depths of the misery index, the Carter years... I might guess that 1979 was a low point, which is why, perhaps, it was chosen for the chart.

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