Monday, February 04, 2008


Michael Broder


This is indeed interesting data and suggests a certain dynamic within the economy that is positive over the '96 - '05 period.

However, I'm trying to reconcile it with another study of IRS data that was reported on by the NY Times back in October (http://www.nytimes.com/2007/10/12/business/

This study for the period 2000-2005 showed that 95% of tax filers had declines in real pre-tax income over the period. The next 4% of filers had a paltry 0.1% increase in pre-tax incomes and the top 1% had a 1.5% increase.

The study also looked at after-tax real income. All groups had increases in after-tax income.

The message here is that tax cuts were the only source of income growth for nearly 99% of tax filers. This was during a time of economic expansion (except for the brief recession around 9/11) and rising fiscal deficits.

Since Personal Consumption Expenditures (PCE) make up 70% of our economy, I question the health of a system that relies on borrowing from future generations to fund current period expenditures and economic growth. Something is wrong when nearly 99% of tax filers don't have growth in pre-tax income over five years.

Network Marketing

Hi!I got valuable information on economic mobility, Money measures the intensity of desire and the utility of a commodity to a consumer. Money facilitates production by stimulating saving and investment. It gives mobility to capital and helps in capital formation. It enables the harnessing of various factors of production, so that the entrepreneur is able to maximize his profit.

alex tolley

Couple of points:

1. Why the 1996 - 2005 time period? That spans 2 different administrations with differing policies?

2. Other studies have shown an accelerated decline in real incomes for the lower quintiles since 2000. (See point 1).

3. Studies of income mobility across countries now show the US lagging the EU.

4. The Piketty/Saez study confirmed the increasing income disparity in the US. Also real incomes have mainly increased for the higher quintiles.

5. The conclusion is unwarranted. There is no reason to suggest that income redistribution via taxes would affect income mobility as stated in the study. It assumes that income mobility and taxes are in some way linked, with no data supporting that link.

The comments to this entry are closed.

Twitter Updates

    follow me on Twitter

    Enter your email address:

    Delivered by FeedBurner

    Recent Readers

    Some of the Blogs I Like

    May 2021

    Sun Mon Tue Wed Thu Fri Sat
    2 3 4 5 6 7 8
    9 10 11 12 13 14 15
    16 17 18 19 20 21 22
    23 24 25 26 27 28 29
    30 31