Comment by foltik
6 hours ago
Clearly that's not a good proxy either then... even the article itself says:
> Ultimately, concerns over inequality should focus on differences within labor compensation rather than the split between labor and capital.
The main issues I can see are:
- This "labor share" includes multi-million dollar executive pay packages, so it's heavily skewed towards the 1%
- It also completely ignores unrealized capital gains and loans against them, which is how the ultra-wealthy actually fund their lifestyles tax-free, with a tiny income on paper
Do those factors meaningfully change the picture? For example, total compensation for Fortune 500 CEOs is only $8.5 billion, which is a rounding error compared to total labor income. And CEOs at the bottom of that range make a few million, so it’s unlikely that CEOs in non-Fortune 500 companies are making the eye popping salaries you’re talking about.
Similarly, what percentage of wealthy people take loans against their assets to fund their lifestyle? You should be able to quantify this if it’s happening at scale.
The income share of the top 1%—so including run of the mill doctors and lawyers—has grown from 15% in 1970 to 21% today: https://ourworldindata.org/grapher/income-share-top-1-before.... There is no way that delta is enough to eat up all the income growth since then.
Some numbers
https://www.sciencedirect.com/science/article/abs/pii/S00472...
"The income tax base captures 60 % of economic income of the top 1 % of wealth-holders.".
I would love if only 60% of my income was taxed. Heck I'm now even taxed on used junk I sell using Paypal (that I bought with taxed income dollars and paid sales tax on). But a tax that includes that other 40% of the top 1%'s economic income, guys, we can't do that. But don't forget to file your Paypal taxes or waves at threat of prison.
"Focusing on the top 1 %, while total borrowing is substantial, new borrowing each year is fairly small (1–2 % of economic income) compared to their new unrealized gains" "1 % of wealth-holders (above $14 million in 2022)"
1-2% of $14,000,000 is $140,000 to $280,000 a year. The median personal income is $45,140. They are benefiting untaxed to the tune of 3-6 times the median American income.
1-2% of 100 million is 1-2 million dollars a year untaxed benefit (44x median income). That is substantial.
I would love to benefit annually by that 'insignificant' amount goin untaxed. We should either exclude all economic income below $140,000 to $2,000,000 from taxation or change to tax this loan scheme that allows the top 1% to avoid their share on income 44x the median and even higher.