very high income

The Globalization of Inequality
by François Bourguignon
Published 1 Aug 2012

The existence of substantial rents and the nature of the financial sector’s activities have made 13 For a review of the ties between the development of finance and income distribution, see Asli Demirguc-­Kunt and Robert Levine, “Finance and Inequality: Theory and Evidence,” Annual Review of Financial Economics 1 (2009): 287–318. The Forces behind R ising Inequality 97 possible the very high incomes of certain operators and executive officers, via the microeconomic mechanisms described earlier. And, in fact, the overrepresentation of the financial sector among very high incomes is remarkable. In the United States, 13% of very high incomes are connected to the financial sector, this number being 18% in France and the UK, even though this sector represents only 5% of total jobs.14 The rise in CEOs’ and top executives’ compensation is also linked to the development of the financial sector.

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The number of people willing to pay any sum in order to catch a glimpse of these stars, and the vast amounts of money that companies will offer them to advertise their goods and thus reach out to their huge fan bases, are also significant sources of income. These superstars represent a significant segment of the very high income bracket. They have technological advances to thank for their superstar status, as these have allowed them to reach a truly global audience. Technical progress and globalization also explain the development of “winner-­take-­ all” dynamics.8 The same phenomena of scale explain the recent emergence of other “very high incomes.” In the financial sector, skilled financial operators are awarded bonuses at the end 8 Robert H. Frank, The Winner-­Take-­All Society: Why the Few at the Top Get So Much More Than the Rest of Us (New York: Penguin Books, 1995). 88 Chapter 3 of the year that are more or less proportional to the profits they generated for their company.

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Overall, globalization has thus most likely played a role in increasing inequality in most countries over the recent decades, although its impact will have varied depending on the country considered and each one’s specific context or policies. Yet, there are still other forces that have played a part in modifying the distribution of income, which we turn to now. Technological Progress, Superstars, Bosses, and Very High Incomes The vertiginous development of communication and information science and technology has profoundly transformed the modes of production of goods and services, while creating an increased demand for workers who know how to use these new technologies. As with the increased specialization in capital-­and skill-­intensive goods brought about by globalization, this transformation has contrib- 86 Chapter 3 uted to a rise in the relative remuneration of skilled labor in developed countries.7 But the very facts of globalization and of the spontaneous international spread of innovations have meant that this same phenomenon has been at work in developing economies too and represents another possible explanation for rising inequalities in these countries.

Capital in the Twenty-First Century
by Thomas Piketty
Published 10 Mar 2014

Indeed, in the United States, as in France and Europe, today as in the past, income from capital always becomes more important as one climbs the rungs of the income hierarchy. Temporal and spatial differences are differences of degree: though large, the general principle remains. As Edward Wolff and Ajit Zacharias have pointed out, the upper centile always consists of several different social groups, some with very high incomes from capital and others with very high incomes from labor; the latter do not supplant the former.39 FIGURE 8.9. The composition of top incomes in the United States in 1929 Labor income becomes less and less important as one moves up within the top income decile. Sources and series: see piketty.pse.ens.fr/capital21c.

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If we break this down even further and looked at the top thousandth (the best paid 0.1 percent) in the top centile, we find individuals earning tens of thousands of euros a month and a few earning hundreds of thousands, even in the Scandinavian countries in the 1970s and 1980s. Of course there would not be many such people, so their weight in the sum total of all wages would be relatively small. Thus to judge the inequality of a society, it is not enough to observe that some individuals earn very high incomes. For example, to say that the “income scale goes from 1 to 10” or even “1 to 100” does not actually tell us very much. We also need to know how many people earn the incomes at each level. The share of income (or wealth) going to the top decile or centile is a useful index for judging how unequal a society is, because it reflects not just the existence of extremely high incomes or extremely large fortunes but also the number of individuals who enjoy such rewards.

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The first of these two ways of achieving such high inequality is through a “hyperpatrimonial society” (or “society of rentiers”): a society in which inherited wealth is very important and where the concentration of wealth attains extreme levels (with the upper decile owning typically 90 percent of all wealth, with 50 percent belonging to the upper centile alone). The total income hierarchy is then dominated by very high incomes from capital, especially inherited capital. This is the pattern we see in Ancien Régime France and in Europe during the Belle Époque, with on the whole minor variations. We need to understand how such structures of ownership and inequality emerged and persisted and to what extent they belong to the past—unless of course they are also pertinent to the future.

Termites of the State: Why Complexity Leads to Inequality
by Vito Tanzi
Published 28 Dec 2017

It was another proof that the assignment of Nobel Prizes is inevitably influenced by the prevailing intellectual winds. The “normative” role of the state – that government involvement in the economy is essentially one of correcting the market for “failures,” including, for some economists and politicians, the “failure” of generating excessively uneven income distributions, high unemployment, and very high incomes for some individuals – was replaced, in the mind of a growing number of economists (among whom the most prominent and influential had been Milton Friedman, George Stigler, Robert Lucas, F. Hayek, James Buchanan, Gary Becker, and a few other winners of the Nobel Prize in economics), by a view that advocated a limited governmental role.

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In recent years some of the credit that was made easily and cheaply available to banks, governments, and some individuals, by novel policies of central banks, has been used by the managers of many enterprises to buy shares in their own companies, rather than to make real investments. These maneuvers contribute to raising the value of the shares and to reducing taxable profits, which, in turn, contribute to increasing the short run compensations of the managers, which are often linked to the short run values of the shares. This is one of many examples of how some of the very high incomes (those of the top 1 percent) have become increasingly disconnected from true, genuine market forces, and how compensation arrangements for managers have contributed to making markets more risky, by encouraging enterprises to follow short run maneuvers. In these maneuvers social objectives have often taken a backseat.

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However, ignoring the moral aspect of envy in normal situations, it must be recognized that some circumstances can generate what could be considered normal or understandable negative, psychologically based externalities to which it would be difficult and not smart for a society not to pay attention. A negative externality is definitely created for many hard-working but poorly paid workers when they become aware that there are individuals with very high incomes and consumption who are claiming all the country’s growth in income. This happens in democratic societies that keep repeating the notion that all human beings are created equal and that there are no divine rights for some to have a privileged status. The argument that, in a market economy, high incomes are always merited is not likely to impress many of those who work hard but receive incomes barely sufficient, or often insufficient, to support a dignified lifestyle for themselves and their children.

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future
by Paul Krugman
Published 28 Jan 2020

More recently, Representative Cathy McMorris Rodgers of Washington State took to Facebook to ask for Obamacare horror stories. What she got instead was a torrent of testimonials from people whose lives have been improved, and in some cases saved, by health reform. In reality, the only people hurt by health reform are Americans with very high incomes, who have seen their taxes go up, and a relatively small number of people who have seen their premiums rise because they’re young and healthy (so insurers previously saw them as good risks) and affluent (so they don’t qualify for subsidies). Neither group supplies suitable victims for attack ads.

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Some of the revelations are cultural: the hysteria over a video of AOC dancing in college says volumes, not about her, but about the hysterics. But in some ways the more important revelations are intellectual: the right’s denunciation of AOC’s “insane” policy ideas serves as a very good reminder of who is actually insane. The controversy of the moment involves AOC’s advocacy of a tax rate of 70–80 percent on very high incomes, which is obviously crazy, right? I mean, who thinks that makes sense? Only ignorant people like . . . um, Peter Diamond, Nobel laureate in economics and arguably the world’s leading expert on public finance. (Although Republicans blocked him from an appointment to the Federal Reserve Board with claims that he was unqualified.

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Some put it higher: Christina Romer, top macroeconomist and former head of President Obama’s Council of Economic Advisers, estimates it at more than 80 percent. Where do these numbers come from? Underlying the Diamond-Saez analysis are two propositions: diminishing marginal utility and competitive markets. Diminishing marginal utility is the common-sense notion that an extra dollar is worth a lot less in satisfaction to people with very high incomes than to those with low incomes. Give a family with an annual income of $20,000 an extra $1,000 and it will make a big difference to their lives. Give a guy who makes $1 million an extra thousand and he’ll barely notice it. What this implies for economic policy is that we shouldn’t care what a policy does to the incomes of the very rich.

Wealth, Poverty and Politics
by Thomas Sowell
Published 31 Aug 2015

Not only may capital gains that are turned into cash in a given year represent money earned over a number of previous years, but often a different number of years for different people, extending to decades for elderly people who retire and sell either a business or a home.a When the earnings of multiple years are treated as if they were earned in a single year, that statistically exaggerates the annual income of people who receive capital gains, making statistical comparisons of disparities between people with high and low incomes similarly exaggerated, when very high incomes are far more likely to be predominantly capital gains and low incomes far more likely to be salaries. Moreover, because the turnover of people in very high income brackets is even greater than the turnover of people in other income brackets, the illusion that we are comparing the same sets of flesh-and-blood human beings over time is even more false than with other comparisons of people in other brackets.

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While fewer than half of the people in the top one percent in 1996 were still there at the end of a decade, only about one-quarter of those in the top one-hundredth of one percent in 1996 were still there in 2005.19 While the average income of those initially in the top one percent fell by 26 percent during that decade, more than half of the people initially in the top one-hundredth of one percent had their average income cut in half or more during that same decade.20 The turnover is even faster among those taxpayers with the 400 highest incomes in the country— incomes far higher than among the top one percent as a whole. Fewer than one-fourth of the income tax filers with the top 400 incomes in 1992 were in that same bracket more than once during the years ending in 2000— and only 13 percent were in that extremely high bracket more than twice during those nine years.21 At very high income levels— whether the top one percent, one-hundredth of one percent or the top 400 incomes— that income is far more likely to come from investments than from salaries, and earnings from investments are far more volatile than salaries. Income from investments is not only more volatile than income from salaries, it also differs from salaries more fundamentally because capital gains received in a given year are not necessarily earned in that particular year.

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Most comparisons of high incomes with low incomes proceed as if similar things are being compared, but that is clearly not so when the very highest incomes are disproportionately capital gains and the lowest are predominantly salaries. Comparing annual incomes from salaries with multi-year incomes from capital gains received in a given year is comparing apples and oranges. Higher turnover rates in very high income brackets add to the distortions that exaggerate income disparities. When the actual flesh-and-blood individuals whose multi-year accruals of wealth put them in the highest income bracket, in the year when these accruals are turned into cash, keep disappearing from year to year, and being replaced by new individuals with one-year spikes in capital gains incomes, the exaggeration is even more pronounced.

The Millionaire Next Door: The Surprising Secrets of America's Wealthy
by Thomas Stanley and William Danko
Published 15 Nov 2010

According to our wealth equation, a $5 million earner who is thirty years of age should be worth $15 million or more. How many highly paid ball players have a level of wealth in this range? We believe only a tiny fraction. Why? Because most have a lavish lifestyle—and they can support such a lifestyle as long as they are earning a very high income. Technically, they may be millionaires (have a minimum net worth of $1 million or more), but they are typically low on the prodigious accumulator of wealth (PAW) scale. How many households in America earn $5 million in one year? Fewer than five thousand of the nearly 100 million households.

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We’re experts in redistributing wealth. We should decide where and how wealth is distributed. We are the pros. We have to start taxing wealth before all the millionaires transform themselves into nonmillionaires. Mr. Stern: What about all those famous people we read about in the newspaper? The ones who have very high incomes? Mr. Young: God bless them, Bob. They are our best customers. I love people who are big earners. Realized income is our salvation. I want you to study these types. But I also want you to find out how these other types can exist without realizing a lot of income. Some of them must live like monks.

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Some ask why they should waste time planning a domestic budget and investments when there is so much income to be made. Many high-income-producing UAWs feel this way. PAWs tend to have just the opposite feelings. To them, money is a resource that should never be squandered. They know that planning, budgeting, and being frugal are essential parts of building wealth, even for very high-income producers. Even high-income producers must live below their means if they intend to become financially independent. And if you’re not financially independent, you will spend an increasing amount of your time and energy worrying about your socioeconomic future. PLANNING AND CONTROLLING Planning and controlling consumption are key factors underlying wealth accumulation.

The Trouble With Billionaires
by Linda McQuaig
Published 1 May 2013

It is also an important tool for raising revenue. To achieve these goals, high marginal income tax rates should be applied to very high incomes. Our proposed higher rates are clearly much higher than the present top rate of 45 per cent that kicks in at £150,000. We believe that this rate should be increased back up to 50 per cent, where it was when it was introduced by the Labour government in 2010. In addition, we propose adding the two additional rates (60 and 70 per cent, mentioned above) to very high income levels. These additional rates might seem unrealistic in view of the fact that there has been a huge political battle over whether the present top rate of 45 per cent should be abolished altogether.

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Now that Thatcherism has been largely discredited for the harm it inflicted on the typical family, there is no reason why low rates on the rich should be regarded as the baseline for serious discussion of the appropriate tax rates. Indeed, we are simply suggesting moving closer to the tax rates that prevailed during the ‘Golden Age of Capitalism’, that early postwar period of widely shared economic prosperity. And now, as then, the higher rates would only apply to a relatively small number of very high-income individuals, who can easily afford to bear a heavier tax burden. In 1975, for instance, when the top rate was 83 per cent, it applied to incomes over £20,000 (about £190,000 in today’s pounds), substantially lower than the threshold to which we are suggesting a 60 per cent rate should be applied.

When More Is Not Better: Overcoming America's Obsession With Economic Efficiency
by Roger L. Martin
Published 28 Sep 2020

This one is aimed at moderating Pareto outcomes that already exist. As such it is inherently less effective, but I believe that it should be part of the overall agenda for policy makers. It is time to accept that the current, four-decade-long experiment with historically low marginal effective tax rates on very high incomes hasn’t produced the promised results. Let me begin with a brief recap of the history of personal income tax in the United States. Federal income tax, with a top rate of 15 percent, came into existence in 1916, but the top rate rose rapidly to 77 percent by 1918 in order to fund US participation in World War I.

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In the modern economy, high-end talent is becoming ever more capable of extracting high pretax earnings by utilizing that talent.26 When that is combined with a personal-income-tax regime that allows that talent to keep a much larger percentage of its pretax income (relative to rates that prevailed during America’s greatest period of sustained growth), a Pareto distribution of income and wealth is the unsurprising and persistent outcome. While far from the only factor driving the current Pareto distribution of wealth in America, the historically low marginally effective tax rate on very high incomes has undoubtedly been a contributor to increasing inequality, and that contribution will continue. Policy makers simply must increase the tax rates at the high end of incomes. Since 1987, at the federal level, the top marginal personal-income-tax rate has been below 40 percent and has averaged 36 percent—in contrast to the half-century preceding 1987, during which the rate averaged 80 percent.27 This is by no means an untried, experimental idea.

Business Adventures: Twelve Classic Tales From the World of Wall Street
by John Brooks
Published 6 Jul 2014

Men of inherited wealth, some of them given to the denunciation of government in all its forms and manifestations, have shown themselves to be passionately interested in the financing of state and municipal governments, and have contributed huge sums to this end. Weddings between persons with very high incomes and persons with not so high incomes have tended to take place most often near the end of December and least often during January. Some exceptionally successful people, especially in the arts, have been abruptly and urgently instructed by their financial advisers to do no more gainful work under any circumstances for the rest of the current calendar year, and have followed this advice, even though it sometimes came as early as May or June.

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Particular subcategories of the rich and the well-paid can avail themselves of various other avenues of escape, including corporate pension plans, which, like stock options, contribute to the solution of the tax problems of executives; tax-free foundations set up ostensibly for charitable and educational purposes, of which over fifteen thousand help to ease the tax burdens of their benefactors, though the charitable and educational activities of some of them are more or less invisible; and personal holding companies, which, subject to rather strict regulations, enable persons with very high incomes from personal services like writing and acting to reduce their taxes by what amounts to incorporating themselves. Of the whole array of loopholes in the Code, however, probably the most widely loathed is the percentage depletion allowance on oil. As the word “depletion” is used in the Code, it refers to the progressive exhaustion of irreplaceable natural resources, but as used on oilmen’s tax returns, it proves to mean a miraculously glorified form of what is ordinarily called depreciation.

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The low cost of high-income people’s charitable contributions, whether in the form of works of art or simply in the form of money and other property, is one of the oddest fruits of the Code. Of approximately five billion dollars claimed annually as deductible contributions on personal income-tax returns, by far the greater part is in the form of assets of one sort or another that have appreciated in value, and comes from persons with very high incomes. The reasons can be made clear by a simple example: A man with a top bracket of 20 per cent who gives away $1,000 in cash incurs a net cost of $800. A man with a top bracket of 60 per cent who gives away the same sum in cash incurs a net cost of $400. If, instead, this same high-bracket man gives $1,000 in the form of stock that he originally bought for $200, he incurs a net cost of only $200.

Global Inequality: A New Approach for the Age of Globalization
by Branko Milanovic
Published 10 Apr 2016

Third, the rebalancing has a counterpart in the distribution of personal incomes worldwide in the sense that it changed the shape of the global income distribution from being strongly twin-peaked (having many people at very low incomes, then practically nobody in the middle, and finally more people at very high income levels) to being fuller in the middle, such that the global income distribution is now beginning to look like the distribution of a single country. We are, of course, still far from that point, but we are certainly closer to it in 2011 (or today) than we were in 1988. This trend, too, was merely reinforced during the crisis.

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I argue that the outbreak of World War I and thus the reduction of inequality subsequent to that war are to be “endogenized” in the economic conditions predating the war, by which I mean that domestic inequalities played an important role in the run-up to the war. In making this argument I go back to an older, and in my opinion, most persuasive, interpretation of the outbreak of World War I. According to this interpretation the war was caused by imperialist competition, embedded in the domestic economic conditions of the time: very high income and wealth inequality, high savings of the upper classes, insufficient domestic aggregate demand, and the need of capitalists to find profitable uses for surplus savings outside their own country. In the early twentieth century, finding an external investment outlet for the surplus savings meant being in physical control of a place, and making such investment profitable required that other possible competitors be excluded even at the cost of a war.

Good Times, Bad Times: The Welfare Myth of Them and Us
by John Hills
Published 6 Nov 2014

Figure 4.9: Components of income for a couple with one child, 2010–11 Figure 4.10 shows, for the same kind of family, what that meant in total in terms of what is officially called their ‘effective marginal deduction rate’ – how much of any extra £1 of earnings did they lose? We are used to hearing the arguments about whether people on very high incomes should face Income Tax of 45 per cent or 50 per cent on their top slices of income, but the rates shown in the figure are far higher for those with low earnings. In fact, the rate was 75 per cent or more for all of the earnings range shown, up to nearly £560 per week, that is, around median earnings.

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However, for the poorest fifth the loss was nearly three times this, 1.4 per cent. For the other groups, the loss was just below the overall average. The top group is shown as having had the largest average percentage loss from changes in taxes and cash benefits, but that is partly the product of averaging out the losses for the small very high-income group right at the top across the whole of the top fifth, most of whom did much less badly. Within all of these changes women might be expected to have done worse than men – given that the changes in taxes and benefits most severely affect families with children (and single-parent families in particular) and that cuts to public services have larger effects on families and on older pensioners using social care.

Value of Everything: An Antidote to Chaos The
by Mariana Mazzucato
Published 25 Apr 2018

Third, personal distribution of income and wealth has become more and more unequal. In both the US and the UK, and in many other OECD countries, those with the highest incomes have enjoyed an increasing share of total national income ever since the 1970s, as can been seen in Figure 10. Furthermore, income distribution is extremely skewed towards very high incomes, not just the top 10 per cent and 1 per cent, but especially the top 0.1 per cent.45 Wealth distribution reveals a similar pattern. A 2017 Oxfam report, An Economy for the 99%, found that in 2016 eight men own the same wealth as the poorest half of the world's population. In a report published a year earlier, An Economy for the 1%, Oxfam calculated that the club of the wealthiest 1 per cent of individuals globally shrank from 388 members in 2010 to just sixty-two in 2015; in other words, the very richest were getting even richer relative to others who were also by any sensible standard very rich.

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But the scale of the financial sector and of financialization generally has increased value extraction to the point where two critical questions must be answered: where is value created, extracted and even destroyed? And how can we steer the economy away from excessive financialization towards true value creation? Proposals such as taxing away very high incomes and accumulations of wealth may treat some of the symptoms of excessive finance. They do not, however, treat the causes, which lie deep in a system of value extraction which has grown up over the last forty years or so. If the objective is long-term growth, the private sector must be rewarded for making decisions that target the long-term over the short-term.

The Economics of Inequality
by Thomas Piketty and Arthur Goldhammer
Published 7 Jan 2015

Katz, eds., Differences and Changes in Wage Structure, pp. 265–306. Chicago: University of Chicago Press. Erikson, R. and J. Goldthorpe. 1992. The Constant Flux: A Study of Class Mobility in Industrial Societies. Oxford: Clarendon Press. Feenberg, D. and J. Poterba. 2000. “The income and tax share of very high income households.” AER 90 (2): 264–270. Feldstein, M. 1995. “The effect of marginal tax rates on taxable income: A panel study of the 1986 Tax Reform Act.” JPE 103 (3): 551–572. Fleurbaey, M. 1996. Théories économiques de la justice. Paris: Economica. Freeman, R. 1973. “Changes in the labor market status of Black Americans, 1948–1972.”

The Limits of the Market: The Pendulum Between Government and Market
by Paul de Grauwe and Anna Asbury
Published 12 Mar 2017

In this reformist scenario forces arise in society which put a brake on the rush of capitalism towards its limits. Let us first talk about income inequality. In this scenario great pressure is placed on governments to raise taxes on the top incomes and wealth. The fundamental pressure to achieve a more fair distribution forces governments to raise taxes on very high incomes and wealth, making inequality less extreme and more acceptable to society once again. This is in fact the scenario which occurred from the s in those parts of the world which did not convert to communism. Tax rates of ninety per cent and above on top incomes were the rule at the time in countries such as the UK and the US.

The Accidental Theorist: And Other Dispatches From the Dismal Science
by Paul Krugman
Published 18 Feb 2010

The important contribution of Wolff’s book is that it reinforces the evidence that much of the important action in American inequality has taken place way up the scale, among the extremely well-off. Wolff focuses on wealth rather than income—on assets rather than cash flow. This has some advantages over annual income as an indicator of a family’s economic position, especially among the rich. Someone with a very high income may be having an unusually good year, while it is not unheard of for wealthy families to have negative income if they make a bad investment; in each case their assets will be a better clue to where they really fit in the rankings. More important, however, wealth is in some ways a better indicator than income data of what is happening to the very successful—simply because it is so narrowly held: In 1989, the top 1 percent of families owned 39 percent of the wealth but received only (a still impressive) 16 percent of the income.

Unsustainable Inequalities: Social Justice and the Environment
by Lucas Chancel
Published 15 Jan 2020

We used detailed information from the WID.world database on income inequality at the summit of the social pyramid, then combined this with figures for direct and indirect emissions in different parts of the world, while making several assumptions about the link between carbon and income (adjusting elasticity values as necessary), in order to attribute to each social class a share of total emissions. In the end we were able to simulate the emissions of more than 90 percent of the world’s population. Improvements can still be made to the methodology—with regard both to adequately accounting for very high incomes and to expanding the measure of carbon dioxide to include all equivalent greenhouse gases—but the results so far obtained are illuminating. Three principal conclusions can be drawn at this point. First, it is apparent that CO2e emissions inequality decreased across countries but increased within them between 1998 and 2013 (Figure 5.3).

Good Economics for Hard Times: Better Answers to Our Biggest Problems
by Abhijit V. Banerjee and Esther Duflo
Published 12 Nov 2019

It might even be part of the reason why workers’ salaries were rising when top tax rates were high. So the point of the very high top tax rates of the 1950s and 1960s, which applied only to extremely high incomes, was not so much to “soak the rich” as to eliminate them. Almost nobody ended up paying the top rates, because those very high incomes had all but disappeared.58 When the top tax rates went down to 30 percent, ultra-high salaries became attractive again. In other words, high top tax rates may actually lead to a reduction not just in inequality after taxes, but also in inequality before taxes. This is important because, as already discussed, a large part of the reason for the divergence in inequality between Europe and the United States in recent decades comes from pre-tax inequality.

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A silver lining of the 2008 crisis is that it reduced the appeal of the financial sector for the brightest minds; a study of career choices of MIT graduates found those who graduated in 2009 were 45 percent less likely to choose finance than those who graduated between 2006 and 2008.63 This may lead to a better allocation of talent, and to the extent finance’s salary levels infect every other sector, it could further reduce income inequality. All in all, therefore, it seems to us that high marginal income tax rates, applied only to very high incomes, are a perfectly sensible way to limit the explosion of top income inequality. They would not be extortionary, since very few people will end up paying them; top managers will simply not get these kinds of income anymore. And from all we see, they won’t discourage anybody to work as hard as they can.

Just Keep Buying: Proven Ways to Save Money and Build Your Wealth
by Nick Maggiulli
Published 15 May 2022

All the Buffett, Bogle, and Bernstein in the world wouldn’t have made a difference. Compare this to someone with $10 million in investable assets. If they were to see just a 10% decline in their portfolio, they would lose $1 million. Do you think they could save $1 million in a year? Highly unlikely. Unless they have a very high income, their annual savings just can’t compete with the regular fluctuations in their investment portfolio. This is why someone with $10 million has to spend a lot more time thinking about their investment choices compared to someone with only $1,000. These examples illustrate that what you should focus on depends on your financial situation.

Deep Utopia: Life and Meaning in a Solved World
by Nick Bostrom
Published 26 Mar 2024

In particular, new consumption goods may be invented that cost a lot, or we may undertake very costly social projects. We may also find ourselves compelled to spend more on arbitrarily expensive status symbols to maintain or enhance our relative standing in a zero-sum rat race. These sources of motivation could continue to operate even at very high income levels. Let us examine each in turn. New needs and niceties First, there may be new consumption goods. It is conceivable that there could be an unending series of ever more exquisite—and ever more expensive— market goods that enhance leisure; so that no matter how high your hourly salary, it is worth allocating a third or more of your waking hours to working, for the sake of being able to enjoy the remainder at a higher level of consumption.

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I think there’d be a prima facie case for this in the case of a conscious digital mind, though I don’t think consciousness is necessary for moral status. For the purposes of the present discussion, probably nothing essential hinges on this point. Okay, let’s press on. We have a lot of stuff to get through. The desire for more I mentioned a third reason why we might continue to work hard even at very high income levels: namely, that our appetites may be relative in a way that makes them collectively insatiable. Suppose that we desire that we have more than others. We might desire this either because we value relative standing as a final good; or, alternatively, because we hope to derive advantages from our elevated standing—such as the perks attendant on having high social status, or the security one might hope to attain by being better resourced than one’s adversaries.

The Numbers Game: The Commonsense Guide to Understanding Numbers in the News,in Politics, and inLife
by Michael Blastland and Andrew Dilnot
Published 26 Dec 2008

The next chart shows the distribution of income in the UK for childless couples—two people living together, their incomes combined. Half have net incomes (after tax and benefits) of less than £18,800 (about $38,000) (marked as the median), but the average for the group is around £23,000 (about $46,000), pulled up by the relatively small numbers of very high incomes. That is, most are at least 18 percent below average. The highest incomes are far too high to fit on the chart, which would need to stretch yards to the right of the edge of the page to accommodate them. The most common income is around £14,000 (about $28,000), roughly 40 percent below average.

A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression
by Richard A. Posner
Published 30 Apr 2009

An alternative that is receiving increasing attention, probably rightly so, is "claw back": part of the employee's bonus is placed in an account, and if he has a bad year the account is reduced. This is an effective method of fitting pay to performance if the employee is solely or primarily responsible for specific transactions involving measurable profits or losses. Consideration should perhaps be given to increasing the marginal income tax rate of persons who have very high incomes, in order to reduce their appetite for risk-taking. Such incomes typically contain a good deal of economic rent. Think of the boxing champion who makes millions but whose next best job would be as a bouncer in a strip joint, paid the minimum wage. Taxing economic rents is efficient because it has, by definition (and in my example), minimal substitution effects.

Getting Better: Why Global Development Is Succeeding--And How We Can Improve the World Even More
by Charles Kenny
Published 31 Jan 2011

And technology has created urgent problems for the planet—climate change, the risk of outright planetary annihilation through global thermonuclear war. Nonetheless, it has also brought immense benefits for people rich and poor in countries North and South. That technology has made quality of life ever cheaper means that very high incomes—and their associated environmental costs—are less and less a necessary element of the good life. Africa’s not-inconsiderable progress also gives the lie to notions that the region is suited for nothing but recolonization. Around the world and across the ideological spectrum there is a great deal of confidence that we “know” the cause of what ails Africa (even though Right and Left disagree on what it is we know).

Inequality and the 1%
by Danny Dorling
Published 6 Oct 2014

Accordingly, in their view, any attempt to alleviate poverty requires that ‘they’ change their ways. Robert B. Reich, former US Labour Secretary, 201464 The alternative to putting the young into debt is to tax the rich. In late 2013 the International Monetary Fund (IMF) cast doubt on the UK government’s claim that taxing the rich at only 45 per cent on their very high incomes raised more tax than would a higher tax rate, for the dubious reason that the rich apparently then hide less of their money. The IMF concluded that a better top rate of tax would be 60 per cent, and that this would raise an extra £4 billion a year just from the 1 per cent.65 The rich have become richer by cutting the tax rates that apply to them (see Figure 5.7), and directly and indirectly increasing taxation on others – including the new student loan regime.66 Only the very rich appear to benefit from such policies.

Progress: Ten Reasons to Look Forward to the Future
by Johan Norberg
Published 31 Aug 2016

A recent review of 878 observations from 103 empirical studies between 1992 and 2009 concluded that there are several such income turning points: ‘Results indicate the presence of an EKC-type relationship for landscape degradation, water pollution, agricultural wastes, municipal-related wastes and several air pollution measures.’25 This gives us hope for many poor countries that are rapidly approaching such incomes. However, there is one important exception: the emissions of carbon dioxide from fossil fuels, which does not begin to decline until very high income levels are attained. This is worrying, since more CO2 and other so-called greenhouse gases in the atmosphere make the global climate warmer and more unstable than would otherwise be the case. What this will result in is hotly debated. There is a broad spectrum of possible outcomes, from minor and even beneficial changes all the way to global disaster, and a lot of it depends on how much temperatures will rise.

The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality
by Branko Milanovic
Published 15 Dec 2010

In one case, she is married, in the other single. But then in both cases, the next step, love or marriage, is to take her to a much higher level of wealth. Mr. Karenin’s income is not mentioned anywhere in the book. However, from his conversation with Anna’s brother, Stepan Oblonsky, we find out that he considers 10,000 rubles a very high income, an income, as we find elsewhere in the book, earned by bank directors.2 We also know that a high government salary amounts to 3,000 rubles and that Stepan Oblonsky, also in the employ of the government, but at a lower level than Mr. Karenin, is making 6,000 rubles.3 So we can surmise, given Mr.

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay
by Emmanuel Saez and Gabriel Zucman
Published 14 Oct 2019

These solely profit-driven individuals will innovate more boldly—faster and faster, making it harder and harder for regulators to catch up, or for people to learn about their fraud before falling for a new one. If low top tax rates encourage innovation, they must galvanize rent extraction. Among the many policies that can curb the power of established wealth and contain rent-seeking, the quasi-confiscatory taxation of very high incomes historically has proved effective. But it faces a major limitation: as we’ve seen, it’s become too easy for the very rich to own a lot of wealth while reporting little taxable income. Reinstating a 90% top marginal income tax rate would not make a meaningful difference to the tax bills of many of America’s billionaires.

Financial Market Meltdown: Everything You Need to Know to Understand and Survive the Global Credit Crisis
by Kevin Mellyn
Published 30 Sep 2009

Until the Sixteenth Amendment was passed in 1913, the Constitution effectively limited Congress’s ability to impose a national tax on income. In fact, until about a century ago, taxation was almost entirely limited to consumption taxes and customs revenues. Governments everywhere only presumed to tax people’s income in time of war and then only people with very high incomes and for limited periods of time. THE GREAT TEMPTATION Now it is common for people in places like New York to work half the year and more just to pay taxes. The sovereign moral excuse for this forced taking of people’s labor and human capital is a notion of fairness that ignores the skill, effort, and sacrifice required to create wealth.

The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality
by Roland Berger , David Grusky , Tobias Raffel , Geoffrey Samuels and Chris Wimer
Published 29 Oct 2010

I think on a globally competitive basis it should probably be around 25%, and my guess is that receipts from corporate taxation would actually go up. I think that capital equipment and software should be expensed on day one, again not buildings because building can appreciate in value, but equipment that is wearing out from the minute you put it into service. If you want to deal with the issue of very high incomes, then just graduate the income tax rate up. I think what you would find is that people will have much more propensity to invest. By the way, I think that capital gains is a big part of this. You can’t go back on capital gains. If people aren’t going to take their income in these huge compensation packages, you’ve got to Part 2: Interviews 111 give them some incentive to put their capital to work.

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
by Martin Sandbu
Published 15 Jun 2020

The empirical criticisms are also weaker than they may seem at first glance. Adjusting the comparison of income groups over time to be more “like-for-like” and looking more closely at which countries contribute most to the characteristic shape end up buttressing the original interpretation of the data: that the global middle and the very richest enjoyed very high income growth while those in the lower part of rich-country income distributions suffered relative stagnation. See Martin Sandbu, “The Charting of Inequality Deserves Greater Scrutiny,” Financial Times, 13 September 2016, https://www.ft.com/content/9d6f9c3c-799a-11e6-a0c6-39e2633162d5; and Martin Sandbu, “Shooting an Elephant,” Financial Times, 14 September 2019, https://www.ft.com/content/6465d860-79c3-11e6-97ae-647294649b28. 4.

Rule of the Robots: How Artificial Intelligence Will Transform Everything
by Martin Ford
Published 13 Sep 2021

If you already have significant income that comes to you automatically, without any need for work or action on your part—if you receive a pension, Social Security or substantial investment income—then I think it would be reasonable to phase out or eliminate a UBI payment accordingly. Active income that results from work or direct management of a business would not affect the UBI, except perhaps at a very high income level. Many would perceive this as unfair, but the idea behind a basic income is, after all, to provide everyone with at least a minimal guaranteed income floor. If you already have access to such a payment, then arguably you don’t need the UBI. No policy initiative is ever going to make the world completely fair.

The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It
by Timothy Noah
Published 23 Apr 2012

—Frank Capra’s It’s a Wonderful Life (1946) THE DECLARATION OF INDEPENDENCE says that all men are created equal, but we know that isn’t true. George Clooney was created better-looking than me. Stephen Hawking was born smarter, Evander Holyfield stronger, Jon Stewart funnier, and Warren Buffett savvier at playing the market. All these people have parlayed their exceptional gifts into very high incomes—much higher than mine. Is that so odd? Odder would be if Buffett or Clooney were forced to live on my income, adequate though it might be to a petit bourgeois journalist. Lest you conclude my equanimity is some sort of affectation, Barbara Ehrenreich, in her 2001 book Nickel and Dimed, quotes a woman named Colleen, a single mother of two, saying much the same thing about the wealthy families whose floors she scrubs on hands and knees.

Social Class in the 21st Century
by Mike Savage
Published 5 Nov 2015

The strange GBCS sample skew The imprint of this ordinary wealth elite takes strange and surprising forms. We can return to reflect on the strange GBCS sample skew which we first discussed in the Introduction. There is a fascinating and hugely revealing finding here. The more that people belonged to some kind of ‘elite’ category, in any of the dimensions we might measure – e.g. earning very high incomes, attending elite universities, living in the most wealthy areas – the more likely they were to do the GBCS. Furthermore, this is not an incremental addition, but an exponential one. The most elite were much more likely to do the GBCS compared to those who were simply moderately wealthy. For instance, graduates from Oxbridge were twice as likely to do the GBCS as graduates from any other university.10 CEOs were twice as likely to do the GBCS compared to any other professional or managerial group (though we can also see another striking spike among journalists and some cultural professions).

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century
by Ryan Avent
Published 20 Sep 2016

Prior to the 2000s, global income followed a bimodal, or two-peaked, distribution, with lots of people in the rich world clumped together around high incomes and lots (and lots) of people in the developing world clumped together around low incomes. Now there is something like a global middle class, and a graph of the global income distribution is just one big hump, with many people earning moderate incomes while a small share of the global population earns very high incomes. THE DIGITAL DIVERGENCE The great emerging-market boom is now over. In 2015, emerging markets grew at their slowest pace since 2001 (excepting the global-recession year of 2009). The pace of catch-up with American income levels, in terms of GDP per person, has slowed to practically nothing.

The Weightless World: Strategies for Managing the Digital Economy
by Diane Coyle
Published 29 Oct 1998

Land is in fixed supply; the supply of M&A jobs — or demand for lawyers — is growing. The fact that not all of them become stars does not imply that there is an inefficiently large number of lawyers. If there were, pay for lawyers at the bottom of the heap would decline. Fear of Flexibility 117 The book’s conclusion — that very high incomes should be very heavily taxed — plays well in some political circles. It would be an interesting proposition to put to the voters — should incomes over, say £100,000 a year, be taxed at 75 per cent or some equally punitive rate? Governments that tried it would probably find many of their superstars emigrating, as pop stars have long done.

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth
by Michael Jacobs and Mariana Mazzucato
Published 31 Jul 2016

The chapters by Joseph Stiglitz and Colin Crouch look at two of the major gaps between orthodox economic theory and the reality of modern capitalism. Stiglitz addresses the growth of inequality over the past thirty years. He takes on the neoclassical view that wages and salaries reflect the marginal productivity of workers, showing that the very high incomes of corporate executives in fact reveal a form of ‘rent-seeking’, in which rewards are extracted without relation to productivity or economic desert. Moreover he points out—again contrary to the orthodox view—that such inequality is not the price that has to be paid for greater economic prosperity, but actually retards growth.

The Myth of Capitalism: Monopolies and the Death of Competition
by Jonathan Tepper
Published 20 Nov 2018

This has enormous impacts on the ability of new companies to start and compete, the ability of workers to get higher wages, and the ability for consumers to access goods cheaply. Figure 10.9 Markups in Advanced Economies Have Been Rising since the 1980s SOURCE: International Monetary Fund. Given Piketty's diagnosis is incorrect, his solutions of very high income taxes and a wealth tax are also not the appropriate responses. It is like recommending opiates to a cancer patient. It may numb the pain, but it does not attack the cause of the distress. The appropriate solutions are not higher taxes or the growth in government. The appropriate solution is more competition and more capitalism, not less.

Hustle and Gig: Struggling and Surviving in the Sharing Economy
by Alexandrea J. Ravenelle
Published 12 Mar 2019

They probably think I’m going to be confidential because I’m cooking for them or something. I guess it provides them anonymity to a degree. It’s great. It’s great.” As much as Randall stressed that these experiences are “great” or that he didn’t care, the fact that they came up so readily in our conversation suggests that perhaps a part of him did care. In the United States, very-high-income employers tend to utilize “an American version of the ‘upstairs, downstairs’ segregation of master and servant” that involves a level of distance.24 Yet Randall is a professional, not a servant, and his sense of uncertainty about the rules of secrecy and familiarity came up when he discussed how the clients “probably think” their behavior warranted confidentiality owing to the cooking relationship.

Creating Unequal Futures?: Rethinking Poverty, Inequality and Disadvantage
by Ruth Fincher and Peter Saunders
Published 1 Jul 2001

As a first step, the NATSIS indicators of poverty and correlates of poverty are calculated for households ranked by the overall distribution of equivalent income using the Income Distribution Survey. Despite the relatively small number of indigenous households and families in the top quintile of Australian incomes, the broad results indicated above remain unchanged. That is, over one-quarter of very high-income indigenous households and families have members with long-term health problems and about 10 per cent of members have been arrested. BENCHMARKING INDIGENOUS ARREST RATES AND CHRONIC HEALTH PROBLEMS AGAINST THE WIDER COMMUNITY The NATSIS is an extraordinarily rich survey of the multidimensional nature of indigenous poverty.

Rise of the Robots: Technology and the Threat of a Jobless Future
by Martin Ford
Published 4 May 2015

Our taxation scheme should be restructured to mirror the income distribution. Rather than simply raising taxes across the board or on the highest existing tax bracket, a better strategy would be to introduce several new higher tax brackets designed to capture more revenue from those taxpayers with very high incomes—perhaps a million or more dollars per year. Everyone a Capitalist While I believe that some form of guaranteed income is probably the best overall solution to the rise of automation technology, there are certainly other viable ideas. One of the most common proposals is to focus on wealth, rather than income.

The Great Escape: Health, Wealth, and the Origins of Inequality
by Angus Deaton
Published 15 Mar 2013

Top Incomes in the United States The study of income inequality was transformed by a 2003 study by two economists, Thomas Piketty, now of the Paris School of Economics, and Emmanuel Saez of the University of California at Berkeley.24 It had long been known that the data on incomes from household surveys were not very useful for looking at very high incomes; there are too few such people to show up regularly in nationally representative surveys. (Even if approached at random, they might also be less likely to answer.) Piketty and Saez greatly extended a method that had been originally used in 1953 by Nobel laureate economist Simon Kuznets, who worked with data from income-tax records.25 The rich, like everyone else, have no choice but to file tax returns, and so they are fully represented in the income-tax data.

Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class
by Paul Pierson and Jacob S. Hacker
Published 14 Sep 2010

Heim, “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data,” working paper, Williams College, Office of Tax Analysis (March 17, 2009). 39 There is a connection between the previous discussion of tax policy and the current discussion of executive compensation. The sharp fall in true tax rates on very high incomes may have stimulated the rise in executive pay, since the recipients capture so much more of any rise in compensation. Carola Frydman and Raven Saks estimate that “had tax rates been at their year 2000 level for the entire sample period, the level of executive compensation would have been 35 percent higher in the 1950s and 1960s.”

The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

With a few exceptions—France, Japan, Spain—the top 10 percent of earners in most advanced economies raced ahead, while the bottom 10 percent fell further behind. But the trend was not universal, or inevitable. Over these same years, countries like Chile, Mexico, Greece, Turkey, and Hungary managed to reduce (in some cases very high) income inequality significantly, suggesting that inequality is a product of political and not merely macroeconomic forces. It is not true that inequality is an inevitable byproduct of globalization, the free movement of labor, capital, goods and services, and technological change that favors better-skilled and better-educated employees.

Slowdown: The End of the Great Acceleration―and Why It’s Good for the Planet, the Economy, and Our Lives
by Danny Dorling and Kirsten McClure
Published 18 May 2020

Debts rose during the American Civil War and during both world wars, but tended to be paid down afterward. However, from the early 1970s onward, the U.S. government chose to raise less money in taxation and more through borrowing. In particular, top tax rates were reduced from nearly 70 percent on very high incomes in the 1970s to 50 percent in the 1980s, to as low as 25 percent in the early 1990s, and in recent years they have stood at about 35 percent.14 By borrowing from the rich, rather than taxing the rich, the U.S. government got itself into huge debt. It also borrowed greatly from abroad. In effect, when the United States could no longer afford to pay for goods from China, it began to borrow money from China to buy those goods!

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

Rapidly rising inequality is one reason why rapid credit growth is needed to generate adequate demand in high-income countries. If so, income could be redistributed through the tax system to people who would actually spend it. The French economist, Thomas Piketty, recommends substantially higher taxes on very high incomes as well as a global wealth tax, beyond the land tax alone. This is unquestionably too ambitious. But movement in these directions is desirable and should even be possible.18 Not least, that would be a way to force the winners from globalization and technological innovation to provide some compensation to the losers.

The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State
by James Dale Davidson and William Rees-Mogg
Published 3 Feb 1997

The rewards for rare skills have increased and are increasing. This has been noted with displeasure by conventional thinkers. Consider, for example, The Winner-Take-All Society, by Robert H. Frank and Philip J. Cook.7 It documents the growing tendency for the most talented competitors in many fields in the United States to earn very high incomes. Equally, the opportunities for middle skills are falling; a substantial number of low skills now fall outside the range that is rewarded with a comfortable living, though they may still find a place in small-scale services. If the Information Age demands higher skills both at the top and bottom end, everyone except for the top 5 percent will be relatively at a disadvantage, but the top 5 percent will gain tremendously.

Evil Geniuses: The Unmaking of America: A Recent History
by Kurt Andersen
Published 14 Sep 2020

A supply-side premise—that tax rates at some very high level tend to persuade people to work less—is true. “Of course,” a pair of prominent left economists from UC Berkeley and MIT wrote recently, “increasing upper income tax rates can discourage economic activity…and potentially reduce tax collections.” Yet as Krugman says, “the optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.” Economic research shows convincingly that the self-defeating level of taxation is much higher than our highest federal income tax rate has been for the last forty years—apparently the disincentive effect doesn’t kick in until you get up to a top marginal rate of at least 48 percent and maybe not until 76 percent or higher.

The Price of Inequality: How Today's Divided Society Endangers Our Future
by Joseph E. Stiglitz
Published 10 Jun 2012

In chapter 4, I explained that, contrary to the assertion of the Right, we could have a more efficient tax system that is, in fact, more progressive. Earlier I cited studies that showed, on the basis of the response of savings and labor supply, that the top tax rate should be well in excess of 50 percent, and plausibly in excess of 70 percent.6 And these studies have not fully taken into account the extent to which very high incomes arise from rents.7 Create a more effective, and effectively enforced estate tax system, to prevent the creation of a new oligarchy. The restoration of a meaningful estate tax would help in the prevention of a new American oligarchy or plutocracy, and so would the elimination of the preferential treatment of capital gains.

Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition
by Kindleberger, Charles P. and Robert Z., Aliber
Published 9 Aug 2011

The awkward handling of derivatives and unclaimed deposits by Bankers Trust and the money laundering for Russia by the Bank of New York suggest that standards are not much higher today than they were, say, in the 1920s. In the boom years of the second half of the 1990s, everyone – well, nearly everyone – was getting rich. The major investment banks had very high incomes from the fees associated with underwriting new issues of stocks and bonds, especially those of firms associated with information technologies and bio-genetics. The traditional ‘Chinese wall’ between the investment banking activities of these firms and their asset management activities was supposed to be retained after the repeal of the Glass-Steagall Act, which had become law in the early 1930s to force the separation of the traditional commercial banking activities of firms from their investment banking activities.

Rentier Capitalism: Who Owns the Economy, and Who Pays for It?
by Brett Christophers
Published 17 Nov 2020

Workers experienced ‘disempowerment, blacklisting and victimization whenever they posed a challenge to the non-union structure of industrial relations’.59 ‘In no other sector of British industry’, Harvie wrote, were the unions ‘put so firmly in their place’.60 It is true that some industry workers, in key specialist and management roles, are well remunerated; but it is also true that the deeply and inherently unequal rentier wage model that I outlined in the Introduction – very high incomes for those who create or capture assets; precarious and low-paid employment for those who sweat them – very much persists. Employee turnover rates have always been high. In recent years, moreover, a number of significant workplace protections and conditions have been eroded.61 Zero-hours contracts have proliferated, pension provision has been reduced – and the fact that UK employment law only applies within twelve miles of the shoreline means that those working further from shore can be, and sometimes are, paid less than the national minimum wage.

Alpha Trader
by Brent Donnelly
Published 11 May 2021

This means the average income difference between a person with an IQ score in the normal range (100) and someone in the top 2% of society (130) is currently between $6,000 and $18,500 per year. Figure 3.1 from data blogger Jonatan Pallesen shows the relationship between IQ and income using 10 years of data. You can see the relationship slopes up and to the right and the very high incomes are much more common in the top right quadrant than in the top left quadrant. If we are defining success as income, IQ is an important predictor. Figure 3.2 offers a nice clear visual. Pallesen breaks IQ into three groups (low, middle, high) to show how the median and right tails of the income distribution relate to IQ: Source: https://jsmp.dk/posts/2019-06-16-talebiq/ IQ also correlates with most other measures of success like mortality, longevity, crime and (somewhat obviously) academic grades: I included a chart of academic grades vs.

The Making of Global Capitalism
by Leo Panitch and Sam Gindin
Published 8 Oct 2012

The growth in the volume of US exports in the two decades up to 2007—even as the trade deficit accumulated—averaged a very robust 6.6 percent, leaving it only marginally behind Germany and China, the world’s largest exporters; it was the relative expansion of US imports that was the source of the growing deficit.66 The deficit, in other words, primarily came from increased US consumption, which grew faster than in other advanced capitalist countries. This was partly linked to the very high income growth and conspicuous consumption of the most well-off segments of the US population, but it was also due to much faster population growth than in Europe and Japan, the longer hours worked by much of the US population, and, very significantly, their increased consumer debt. This was supported by the international flow of funds into the US despite the size of the trade deficit.

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century
by Walter Scheidel
Published 17 Jan 2017

At the same time, tax evasion is rife, partly because of distrust in government and partly thanks to the large size of the informal sector. The average exemption level for income tax is about twice mean per capita GDP for the region as a whole, and in several countries, progressive rates apply only at very high income levels. Lack of state revenue thus severely limits the potential for transfers. To make matters worse, some welfare schemes are conducive to net inequality. Pensions and unemployment insurance disproportionately benefit those in the top quintile of the income distribution, primarily urban workers in formal employment arrangements, and discriminate against the rural population and those in the informal sector.

City for Sale: The Transformation of San Francisco
by Chester W. Hartman and Sarah Carnochan
Published 15 Feb 2002

The tax-exempt feature of such bonds, while resulting in considerable savings to the agency in terms of the lower interest rates they produce, at the 430 / Notes to Pages 197–199 same time creates one of the income tax system’s greatest loopholes. The recipients of state and local bond interest income (and hence of the tax shelter they provide) are persons in very high income brackets. See David J. Ott and Attiat F. Ott, “The Tax Subsidy through Exemption of State and Local Bond Interest” in The Economics of Federal Subsidy Programs, A Compendium of Papers Submitted to the Joint Economic Committee, Congress of the United States, Pt. 3, “Tax Subsidies,” 15 July 1972, 305 – 16. 23.

The Rise and Fall of the British Nation: A Twentieth-Century History
by David Edgerton
Published 27 Jun 2018

The Conservative opposition wanted tariffs to fund both the armed forces and the social services while the Liberals wanted income taxes and excise duties instead. The budget went through, ignoring these views and entrenching taxes rather than tariffs as sources of state income. The best-known increases in taxes were those on very high incomes, a proposed land value tax and death duties, which affected only the very rich. In fact, the increase in these was roughly matched by increases in excise duties, paid largely by the working class. The so-called People’s Budget financed the controversial 1909 naval programme. The Liberal government had first proposed starting four battleships in the 1909–10 financial year.

Austerity Britain: 1945-51
by David Kynaston
Published 12 May 2008

Yet the fact was that a significant part – perhaps even the majority – of the respectable middle class, and indeed of the respectable working class, simultaneously condemned and used the black market, without which they would have been hard pressed to maintain an even barely recognisable quality of life. Some even found themselves succumbing to the temptation of coupon fraud. ‘I suspect there’s more dishonesty in this country today than for many years,’ Hodson reflected in May 1946. ‘Rationing, controls of material, very high income tax [9 shillings in the pound], a feeling of despair at the state of the world – all these contribute to it.’ Returning servicemen could, in this as other ways, find it particularly difficult. Thomas Hanley, 28 and just married, decided to try his luck in Devon. Half a century later, his memories were still sharp and painful: I found business, even in a small seaside resort [probably Paignton], was run on chicanery and spivvery.

A People's History of the United States
by Howard Zinn
Published 2 Jan 1977

A “wealth tax”—something not yet done as national policy, but perfectly feasible—could retrieve that trillion dollars, for instance, at $100 billion dollars a year for ten years, and still leave that 1 percent very, very rich. In addition, a truly progressive income tax—going back to the post–World War II levels of 70–90 percent on very high incomes—could yield another $100 billion a year. Clinton did raise taxes on the super-rich, by a few percentage points, changing the top rate from 31 percent to 37 percent, and corporate taxes from 34 percent to 35 percent. But this was a pitifully small step in view of the need. With the four or five hundred billion dollars gained each year by progressive taxation and demilitarization, there would be funds available to pay for a universal health-care system funded by the government as Medicare is administered, as the health-care system in Canada is handled, without the profit-taking by insurance companies.

Bourgeois Dignity: Why Economics Can't Explain the Modern World
by Deirdre N. McCloskey
Published 15 Nov 2011

North Korea, again, shows what can be achieved by truly idiotic governance. Mao’s Great Leap Forward beginning in 1958, with its communal kitchens and backyard blast furnaces, caused thirty to forty million deaths from starvation. It was gross misallocation, idiocracy. It may be possible, that is, to reduce even a very high income to $1 a day if the government goes completely insane, as governments have with some regularity been doing since they first came into existence. Witness Assad’s Syria, or Nero’s Rome, or the conquering Mongol’s original plan (they soon came to their senses) of turning the rich agricultural fields of China into depopulated grazing grounds for their horses.