My takeaway from the graph is that overall, most states are "green" or are more or less evenly distributed. However these states stand out as "red" (more inequality), which seems to me due to the following industry outliers:
CA: tech industry
NY: financial industry
CT: financial industry
TX: energy industry?
FL: wealthy retirees?
I think most people have very different criteria for what would make them live in a place for half their lives, especially people who can afford to live anywhere. Nature and weather are not unimportant, but far from the topmost criteria for a lot of people. Having family, friends, community, and other relations is often much more important. As is having the ability to do what one loves. In many cases, all those things are missing. I bet after a month or two in sd or wy, most people are ready to leave and never come back. Plus they compete with other non income tax states like Washington, Florida, and Texas that have a lot more to offer.
Florida has been a popular destination for multiple large hedge fund owners from Connecticut, (Paul Tudor Jones, Eddie Lampert), and many ultra rich NYers are moving there as well. I wonder if CT and NY would get less inequal in the next few years as they have both increased taxes (CT in 2015), (NY in 2019) and the Trump limitation for property taxes write offs have made living there more expensive.
The difference of income between top 1% and bottom 1% in an area is as useful/relevant as talking about the _average_ income in said area. If some area has some very rich people (or very poor people) this difference is likely going to be higher but that's the wrong thing to focus on. What matters is what is the 50% income and the quality of life you can locally afford with it.
> In 2017, Texas grossed more than $264.5 billion a year in exports—more than the exports of California ($172 billion) and New York ($77.9 billion) combined.
> In 2002, the Port of Houston was 6th among the top sea ports in the world in terms of total cargo volume;[21] Air Cargo World rated Dallas-Fort Worth International Airport as "the best air cargo airport in the world".[22] The ship channel at the Port of Houston—the largest in the U.S. in international commerce and the sixth-largest port in the world.
> Texas has the most farms of all United States both in terms of number and acreage. Texas leads the nation in number of cattle, usually exceeding 16 million head.
Considering only trade revenue and export volume it would appear Texas is perhaps almost as wealthy as the rest of the country, comparatively speaking.
It seems like no control or adjustment is made for individual vs joint returns (and therefore none for household size). I’d expect a state with greater makeup of joint returns to have a lower reported percentage.
What I don’t have a good sense for is how different the splits are by state, but it seems like “per capita income inequality” is a lot more interesting than “per return income inequality”.
> It seems like no control or adjustment is made for individual vs joint returns (and therefore none for household size).
Adjusting for the latter doesn't require consideration of the former at all, and consideration of the former doesn't much help with the latter, so the “and therefore” makes no sense.
What you need for the latter is just consideration of the number of personal exemptions, not filing status.
Presumably the GP is referring to the "marriage penalty/bonus" phenomenon that can happen due to filing status for certain people, especially dual income joint filing households vs. single income joint filing households [1].
States with a higher proportion of dual similar-income joint filers with fewer children might hit the penalty more often (like a 2 doctor or lawyer household), and states with higher proportions of single or highly disparate income joint filing households (with a stay-at-home or marginally employed spouse) with more children would hit the bonus more often.
But as you mention that effect is usually dominated by the effect of personal exemptions, and not by the fact that tax bracket thresholds between individual and joint filers don't line up perfectly while normalizing for number of filers.
Correction: the marriage penalty/bonus has more to do with the disparity in spousal income than magnitude.
I'm much less interested in whether someone has 2 or 3 kids than in whether they have 1 or 2 income earners in the household. That's not arrived at from exemptions but is rather more closely approximated by filing status.
Concretely, if my wife and I decide to file "married filing separately", we become two returns and income inequality is reduced in the analysis (but not at all in the real world).
(I now see how “per capita income” led you to the conclusion you reached. That’s my bad.)
Or they're all poor, the data doesn't say either way and it's kind of the problem.
Suppose you have a well run society with good safety nets, high standard of living and 'investment in innovation' which leads to some great startups and a host of wealthy people. Well, you have 'inequality' ... but is that bad? Some might argue that, but I'm not so sure.
Now you have another state with bad social conditions, and the wealth generated is mostly through aggressive anti-union tactics, low wages, and power leveraging etc.. This is generally the kind of 'inequality' that nobody likes.
So in the former case, we want to see surpluses from such innovation 'help everyone' and they usually do: for example Netflix for $10/month is one of the most massive consumer surpluses imaginable, it's such a great deal for consumers. Innovators usually only capture a small chunk of the surpluses they create.
So while we can still argue that 'asset/income inequality' is a problem in the former case, it becomes more difficult.
But it gets worse. I hinted at 'consumer surpluses' which are the 'profits' individuals make when the exchange money for something more valuable than that money i.e. the thing they buy. For most people, Netflix is worth vastly more than $10/month. The delta between 'that upper range value' and $10, is called the 'consumer surplus' and it's never measured! Essentially, societies can get really rich, without any monetary measure of such wealth at all!
Suppose the founders of Netflix, and employees weren't making that much money ergo you maintain basic asset/income equality with the rest of the population. But regions that have access to Netflix are materially wealthier than regions that don't have access to Netflix - because they can watch 100's of movies on demand for dirt cheap - but again, that differential in surplus is not measured at all, it's nowhere to be seen in the GDP or on our books! (Caveat: we 'kind of measure' the increase in real value of a product with inflation. If tomatoes one year are 'riper, fresher, redder' than the previous year, they try to account for that. But for most products it's just impossible).
A more extreme case is vaccines. A nation with strong vaccination stays healthy, a nation without gets sick and that direct measure isn't really part of the GDP. In fact the sicker nation might require more healthcare spending ... which increases the GDP in a really perverse way. Due to the odd artefact that vaccines are priced irregularly (people will only pay a few dollars for a vaccine which could save their lives, over $100's of thousands for a cure once they have the disease), they don't work well on the free market: it makes more sense to make expensive cures than cheap preventative vaccines, even though in the later case the surpluses are much, much more vast.
Raw measures of inequality are only rough data points and they really don't say a whole lot.
We need to understand more qualitatively how that wealth is distributed, how fairly, and the kinds of surpluses being generated by those in higher income brackets: are they just capturing rent on labour, or are they really 'growing the pie'.
There is no particular significance to that number, it was chosen because I had seen similar metrics before but always for the whole country, or the entire world, and it usually was a measure of wealth not income. Example:
To anyone else frustrated by the lack of year-by-year images, you can click on the animation and pause it on whichever year you wish to more closely analyze.
Is there a good source anywhere of median or percentile-bracketed individual post-tax income in the U.S.? I can get the aggregate number for the whole country in a couple places, but can't seem to find it by state.
Has tax data aggregated by zip. You can get the median zip code in a state from it because it only has totals so you can only calculate averages otherwise.
Without inequality you'd also have to give up Teslas, SpaceX, and all those initiatives Bill Gates is investing in. Keep in mind that something like 37% of Federal Income taxes come from the 1%. Eliminate the 1%, and who is going to make up that money?
That’s true! Those lousy Norwegians, free riding on American innovation...
I wish we had been smart enough to nationalize our oil and gas industries back in the day as well. I wouldn’t have had to spend so much of my adult life hearing wonks go on about about slashing benefits for the elderly or things like Medicaid block grants.
Sure, but I’m talking about the history of these industries’ private ownership and it’s impact on US history and politics. For example, imagine the US without the Koch brothers or any of the other fossil fuel dynasties. Or if radical labor movements had seized on Norway’s model in the 19th century.
I’d prefer a Sweden in the 70s, but where they succeeded in turning industries over to workers and put the IKEA guy in prison for tax dodging and helping Nazis escape prosecution. And yes, the neoliberal turn that actually happened has been going bad for most everyone but the rich, but I’d take even where they are today.
As usual, you are cherry-picking wildly and implying stuff that just aren't there. The welfare state of Sweden and the Nordic countries that have laid the foundation of these states success is being dismantled rapidly by right-wing politicians bent on neoliberal policies. This have recently led to a crisis in health-care, education, and a burst in increased inequality. The reputation of Swedish welfare state that you are trying to associate with neoliberal policies is just blatantly dishonest.
I'm citing to article's describing Sweden's economic regulations, corporate taxation regime, history of privatization, and educational system. These aren't "cherry-picked examples"--they're basic pillars of a country's policy that you look to in deciding whether to characterize a country as "socialist" or "capitalist."
In the 1970s and 1980s, Sweden experimented with a mixed economy, with a large public sector and extensive price controls. That experiment was a failure:
> In the 1970s, policy became more anti-capitalist. In 1983, Sweden even decided to implement a partial socialization of company profits, the so-called wage earner funds. Economic problems grew more and more severe, and when the boom of the 1980s turned into recession in the early 1990s, Sweden was hit much harder than other countries.’
In the 1990s, Sweden changed course. It deregulated industries, cut corporate taxes, and privatized large sectors of the economy. When people point to the "Nordic model" today, they are pointing to the ability of countries like Sweden to have strong economic growth combined with a robust welfare state. But the "Nordic model" is starts with a capitalist foundation not a socailist one:
> The history of Sweden, however, also shows that the financing of a generous welfare state requires a highly competitive business sector. The best way to promote a combination of prosperity and equality is not to fight capitalism with high capital taxes, but rather to use capitalism as an engine of growth and combine it with a well-designed welfare state that provides a social safety net while preserving the incentives to work and provide for oneself.
To give you a concrete example that illustrates the larger approach: if you take the subway in Stockholm, you're riding in train cars owned and operated by private companies. If you take the subway in New York, you're riding in a government owned-and-operated system. The Swedish approach is to rely on market forces when possible, not government command-and-control. It isn't to demonize the private sector, but to unleash it.
To put it differently, the term "democratic socialism" means you start with a socialist economy and make it more democratic. The Nordic model does the opposite. It starts with a capitalist economy, and makes it more democratic, by taxing the wealth generated by the market to provide welfare services. That's the "Nordic model" today. Of course maybe there are unrepentant socialists who pine for the 1970s, but the Swedes have doubled down on capitalism and deregulation and have been perusing that strategy for almost 30 years now, after having tried alternatives.
This is such dogmatic bullshit that I can't be arsed. The "source" you're referring to is linked directly to the neoliberal thinktank Timbro. All your examples are a recent development that's exactly my point.
Please don't stoop to this level even if someone else is completely wrong, or you feel they are. Maybe you don't owe them better personally (though why not?), but you definitely owe this community better if you're posting here.
You're right. Apologies. But surely I would get rightfully warned if I'd suggest that the US Army is a great example of successful Stalinism and link to my favourite commissar confirming my articulate trolling?
I'm not sure I understand the question, but for sure we don't care whether the comments that break the site guidelines are for or against any particular side.
I'd never claim we do a perfect job of being unbiased, because most bias is unconscious, but what I can say is (a) we have many years of conscious practice at it, which must count for something, and (b) most of the time when people interpret moderation as picking on their side, it's a mechanical response (similar to how sports fans feel the refs pick on their favorites) that's not grounded in what we actually do, and doesn't see the cases where the 'other side' got moderated the same way. Does that make sense?
I guess you're saying that the earnings of the 1% stifle the earnings of the 99%. Do you know how we can go about verifying this, as well as finding out what upper percentile of earners stifle the earnings of others? For example do the earnings of the top 10% stifle the earnings of the top 90% as well?
I'm saying hypothetically you can take the top richest people's incomes and redistribute it to everyone. Since everyone else would then have more income, everyone else would be paying more in taxes; counter-balancing the loss in taxes the richest people would no longer be paying.
The federal income wouldn't perfectly balance though, as some of that re-distributed income would be taxed at lower tax brackets. However, the government could always re-adjust the tax brackets as necessary to make it zero-sum.
Anyhow, the broader point is that inequality isn't a requirement when it comes to federal taxes.
60 comments
[ 2.5 ms ] story [ 139 ms ] threadhttps://news.fsu.edu/news/business-law-policy/2019/08/08/fsu...
> In 2017, Texas grossed more than $264.5 billion a year in exports—more than the exports of California ($172 billion) and New York ($77.9 billion) combined.
> In 2002, the Port of Houston was 6th among the top sea ports in the world in terms of total cargo volume;[21] Air Cargo World rated Dallas-Fort Worth International Airport as "the best air cargo airport in the world".[22] The ship channel at the Port of Houston—the largest in the U.S. in international commerce and the sixth-largest port in the world.
> Texas has the most farms of all United States both in terms of number and acreage. Texas leads the nation in number of cattle, usually exceeding 16 million head.
Considering only trade revenue and export volume it would appear Texas is perhaps almost as wealthy as the rest of the country, comparatively speaking.
What I don’t have a good sense for is how different the splits are by state, but it seems like “per capita income inequality” is a lot more interesting than “per return income inequality”.
Adjusting for the latter doesn't require consideration of the former at all, and consideration of the former doesn't much help with the latter, so the “and therefore” makes no sense.
What you need for the latter is just consideration of the number of personal exemptions, not filing status.
States with a higher proportion of dual similar-income joint filers with fewer children might hit the penalty more often (like a 2 doctor or lawyer household), and states with higher proportions of single or highly disparate income joint filing households (with a stay-at-home or marginally employed spouse) with more children would hit the bonus more often.
But as you mention that effect is usually dominated by the effect of personal exemptions, and not by the fact that tax bracket thresholds between individual and joint filers don't line up perfectly while normalizing for number of filers.
Correction: the marriage penalty/bonus has more to do with the disparity in spousal income than magnitude.
1. https://www.investopedia.com/terms/m/marriage-penalty.asp
Concretely, if my wife and I decide to file "married filing separately", we become two returns and income inequality is reduced in the analysis (but not at all in the real world).
(I now see how “per capita income” led you to the conclusion you reached. That’s my bad.)
Suppose you have a well run society with good safety nets, high standard of living and 'investment in innovation' which leads to some great startups and a host of wealthy people. Well, you have 'inequality' ... but is that bad? Some might argue that, but I'm not so sure.
Now you have another state with bad social conditions, and the wealth generated is mostly through aggressive anti-union tactics, low wages, and power leveraging etc.. This is generally the kind of 'inequality' that nobody likes.
So in the former case, we want to see surpluses from such innovation 'help everyone' and they usually do: for example Netflix for $10/month is one of the most massive consumer surpluses imaginable, it's such a great deal for consumers. Innovators usually only capture a small chunk of the surpluses they create.
So while we can still argue that 'asset/income inequality' is a problem in the former case, it becomes more difficult.
But it gets worse. I hinted at 'consumer surpluses' which are the 'profits' individuals make when the exchange money for something more valuable than that money i.e. the thing they buy. For most people, Netflix is worth vastly more than $10/month. The delta between 'that upper range value' and $10, is called the 'consumer surplus' and it's never measured! Essentially, societies can get really rich, without any monetary measure of such wealth at all!
Suppose the founders of Netflix, and employees weren't making that much money ergo you maintain basic asset/income equality with the rest of the population. But regions that have access to Netflix are materially wealthier than regions that don't have access to Netflix - because they can watch 100's of movies on demand for dirt cheap - but again, that differential in surplus is not measured at all, it's nowhere to be seen in the GDP or on our books! (Caveat: we 'kind of measure' the increase in real value of a product with inflation. If tomatoes one year are 'riper, fresher, redder' than the previous year, they try to account for that. But for most products it's just impossible).
A more extreme case is vaccines. A nation with strong vaccination stays healthy, a nation without gets sick and that direct measure isn't really part of the GDP. In fact the sicker nation might require more healthcare spending ... which increases the GDP in a really perverse way. Due to the odd artefact that vaccines are priced irregularly (people will only pay a few dollars for a vaccine which could save their lives, over $100's of thousands for a cure once they have the disease), they don't work well on the free market: it makes more sense to make expensive cures than cheap preventative vaccines, even though in the later case the surpluses are much, much more vast.
Raw measures of inequality are only rough data points and they really don't say a whole lot.
We need to understand more qualitatively how that wealth is distributed, how fairly, and the kinds of surpluses being generated by those in higher income brackets: are they just capturing rent on labour, or are they really 'growing the pie'.
Perhaps why I've never really understood all the uproar about income inequality. Maybe it's just less of a problem here.
https://www.cnbc.com/2017/11/14/richest-1-percent-now-own-ha...
https://www.dolthub.com/repositories/Liquidata/irs-soi/
Has tax data aggregated by zip. You can get the median zip code in a state from it because it only has totals so you can only calculate averages otherwise.
Without inequality you'd also have to give up Teslas, SpaceX, and all those initiatives Bill Gates is investing in. Keep in mind that something like 37% of Federal Income taxes come from the 1%. Eliminate the 1%, and who is going to make up that money?
Sounds great. I’d rather have Nordic-style social democracy.
I wish we had been smart enough to nationalize our oil and gas industries back in the day as well. I wouldn’t have had to spend so much of my adult life hearing wonks go on about about slashing benefits for the elderly or things like Medicaid block grants.
Nationalizing that industry isn't going to be a bonanza for the government.
Norway and Sweden also have more billionaires per capita than the United States: https://www.insider.com/countries-ranked-by-billionaires-in-...
Sweden has never been socialist. It got rich through lassaiz-faire capitalism: https://elgar.blog/2014/09/09/embracing-capitalism-the-real-...
In the 1970s and 1980s, Sweden experimented with a mixed economy, with a large public sector and extensive price controls. That experiment was a failure:
> In the 1970s, policy became more anti-capitalist. In 1983, Sweden even decided to implement a partial socialization of company profits, the so-called wage earner funds. Economic problems grew more and more severe, and when the boom of the 1980s turned into recession in the early 1990s, Sweden was hit much harder than other countries.’
In the 1990s, Sweden changed course. It deregulated industries, cut corporate taxes, and privatized large sectors of the economy. When people point to the "Nordic model" today, they are pointing to the ability of countries like Sweden to have strong economic growth combined with a robust welfare state. But the "Nordic model" is starts with a capitalist foundation not a socailist one:
> The history of Sweden, however, also shows that the financing of a generous welfare state requires a highly competitive business sector. The best way to promote a combination of prosperity and equality is not to fight capitalism with high capital taxes, but rather to use capitalism as an engine of growth and combine it with a well-designed welfare state that provides a social safety net while preserving the incentives to work and provide for oneself.
To give you a concrete example that illustrates the larger approach: if you take the subway in Stockholm, you're riding in train cars owned and operated by private companies. If you take the subway in New York, you're riding in a government owned-and-operated system. The Swedish approach is to rely on market forces when possible, not government command-and-control. It isn't to demonize the private sector, but to unleash it.
To put it differently, the term "democratic socialism" means you start with a socialist economy and make it more democratic. The Nordic model does the opposite. It starts with a capitalist economy, and makes it more democratic, by taxing the wealth generated by the market to provide welfare services. That's the "Nordic model" today. Of course maybe there are unrepentant socialists who pine for the 1970s, but the Swedes have doubled down on capitalism and deregulation and have been perusing that strategy for almost 30 years now, after having tried alternatives.
https://news.ycombinator.com/newsguidelines.html
I'd never claim we do a perfect job of being unbiased, because most bias is unconscious, but what I can say is (a) we have many years of conscious practice at it, which must count for something, and (b) most of the time when people interpret moderation as picking on their side, it's a mechanical response (similar to how sports fans feel the refs pick on their favorites) that's not grounded in what we actually do, and doesn't see the cases where the 'other side' got moderated the same way. Does that make sense?
If by eliminate, you mean equalize the inequality - then the remaining 99% will contribute more as they'll be making more money...
I'm saying hypothetically you can take the top richest people's incomes and redistribute it to everyone. Since everyone else would then have more income, everyone else would be paying more in taxes; counter-balancing the loss in taxes the richest people would no longer be paying.
The federal income wouldn't perfectly balance though, as some of that re-distributed income would be taxed at lower tax brackets. However, the government could always re-adjust the tax brackets as necessary to make it zero-sum.
Anyhow, the broader point is that inequality isn't a requirement when it comes to federal taxes.
I imagine it would look a lot less dramatic if the scale was from 0% (bright red), to 100% (bright green).
It would also be interesting to have a slider to adjust the threshold point (it's currently fixed at 50%).