I received this vituperative comment:
1. What your graph fails to take into account is who is wealthy? Of the top 20% of wage earners, 73% of their kids fall out of that top 20%. Of the bottom 20% of wage earners, 60% climb out of that 20% and 60% of those climb at least two quintile. This means that 36% of the kids of the poor make it to at least middle class. And only 27% of the kids of the ultra wealthy stay there.
This means that your graph is flawed by the lack of what it shows.
2. The theft from the rich to give to the poor has NEVER worked. That is blatantly false. Every time tax rates have risen, the federal revenue has fallen and jobs have gone away in the long run. Tax cuts have always led to job growth, less poverty and more federal revenue.
3. Just who do you think that you that you would advocate theft from people who have worked and saved to get where they are? Taking from one citizen to give to another is unconstitutional, it is theft and it is wrong.
And do not think that this comes from greed. I give to charity a LOT. But that is not a role of government, it is against the law and it is radically immoral.
The graph is not mine, per se. It is “owned” by ConnectThe DotsUSA.com, and is based on U.S. Census data and the Congressional Budget Office.
As for social mobility in the U.S. (and as compared with other countries’), it’s less here than in Canada, the UK, and the Nordic countries. You can read the studies here and here. I’ve written about this here.
The evidence indicates that federal revenues were greater under higher tax rates. More on this in a moment.
I have previously posted this chart, what I called the “millionaire’s tax.” It was an attempt to answer the question, “How have changing tax rates affected the millionaire (in real dollars)?”
We’ll note that the IRS collected far more taxes from the millionaire in the 40s through the 80s than it does today. But what about total revenues? Here’s another chart previously posted that shows federal spending and revenues as a percentage of GDP over time.
Again, we’ll note that both spending and receipts were moving upwards, and nearly in parallel, from the end of the war to what I call ‘The Great Divergence,’ roughly coinciding with Reagan’s first term but continuing through successive administrations. We see that receipts lagged significantly behind expenditures, creating budget deficits and accumulating debts. (The source of these data are to be found on the Bureau of Economic Analysis website, NIPA table 1.1.5.)
It’s difficult to conclude from the data that lowering tax rates “have always led to job growth, less poverty and more federal revenue,” as the commenter avers. Tax rates were cut considerably during G.W. Bush’s terms, and they were cut even more under Reagan. So how have those cuts affected poverty and jobs?
The New York Times reported last fall that more people are living in poverty than in the last 50 years, or as long as the Census Bureau has tracked that datum. This despite nearly record-low tax rates.
What about jobs? Have lower taxes created higher employment? (You can view a chart here that shows jobs created and lost under Bush II and Obama.)
Previously, I posted the following chart, which shows the unemployment rate and the marginal tax rate.
We see that unemployment was generally lower when the marginal tax rate was at its highest. (Data from BEA and Bureau of Labor Statistics.)
As for the economy under varying marginal tax rates?
The economy was growing steadily during the 50s, 60s, and 70s, despite marginal tax rates well above 50 percent.
Regarding the issues of “theft” and unconstitutionality, that’s a debate worth having, but I don’t think that I could dissuade my commenter, who evidently holds fast to his beliefs. I would suggest, however, that the rich do not live in a vacuum. Their wealth required an entire economy, infrastructure, and a robust judicial branch to safeguard property. At least that’s what I hear from Bill Gates, both senior and junior.