TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, August 9, 2017

NY Times: Our Broken Economy, In One Simple Chart

New York Times:  Our Broken Economy, in One Simple Chart, by David Leonhardt:


Many Americans can’t remember anything other than an economy with skyrocketing inequality, in which living standards for most Americans are stagnating and the rich are pulling away. It feels inevitable.

A well-known team of inequality researchers — Thomas Piketty, Emmanuel Saez and Gabriel Zucman — has been getting some attention recently for a chart it produced. It shows the change in income between 1980 and 2014 for every point on the distribution, and it neatly summarizes the recent soaring of inequality.

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Wait a minute! The 90 degree uptick must have happened during the Obama administration. Clearly, this chart is wrong. I'm positive the uptick started the day after Trump was elected.

Posted by: Dale Spradling | Aug 9, 2017 3:56:05 AM

The problem is that taxes are only one small part of this. One has to like at education, zoning, IP Law . . . and perhaps immigration as well. Taxes matter at the margin.

Posted by: mike livingston | Aug 9, 2017 4:14:27 AM

That's what globalization does. It increases the value of capital and decreases the value of labor. Welcome to competing with the Third World.

Posted by: ruralcounsel | Aug 9, 2017 4:16:30 AM

As far as the effect of tax goes, I am thinking that taxes are basically regressive at the very top (top tenth of one percent and above). Apart from the estate tax, as far as income tax is concerned, my guess is that very little of the economic income (consisting mostly of unrealised gains) of the hyper wealthy is included in the tax base at all.

Posted by: Victor Thuronyi | Aug 9, 2017 11:39:19 AM

Subchapter S and LLC income which in 1980 would have been C corpation income accounts for much of the high end. This is very hard to adjust for, and even harder if failing to adjust helps you tell the story you want to tell.

Posted by: AMTbuff | Aug 9, 2017 4:53:52 PM

The largest increase in inequality, as measured by Gini coefficient, occured in the 1990s during Bill Clinton's presidency. No way in hell he could get nominated today for president, using his 1992-1996 platform and posiitons. Lurch to the left, much?

Posted by: MM | Aug 9, 2017 7:28:17 PM

Mike and Rural, your points are well taken, but one dirty secret nobody wants to talk about is starting in 2009, the Fed pumped trillions into the stock market. The largest disparity in the country is in Manhattan.

Posted by: Dale Spradling | Aug 10, 2017 5:31:10 AM