It’s absolutely true that rational discussion requires clear definition of terms. Where you go into the weeds is in your insistence that your definition is the one and only correct definition.

That’s not the crux of my point, though. The POINT here is that government ownership of the means of production is entirely different than shared services. The entire economic model is different, and consequently the entire governmental dynamic is different. Ergo, using the same term to encompass both is simply an incorrect use of language. An apple cannot be an orange.

So, do you want to discuss socialism under your terms or do you want to discuss redistribute policies?

Socialism isn’t on the horizon for the US, so it’s more germane to discuss shared services.

You mention “Nordic-style Socialism”; the only case of the government controlling the means of production in the Nordic countries is Norway’s handling of its North Sea oil assets. Can you cite any other cases?

My point is that there is no Nordic-style socialism, regardless of what some on the US Left believe.

Gee, now you’re emulating Mr. Trump’s use of denigrative appellations. Are you a fan of Mr. Trump?

No. I happen to believe both men have a screw loose.

Starting in the 1950s, the right labeled anything they didn’t like as ‘communist’. This continued until the collapse of the Soviet Union; since ‘communist’ no longer had any power to evoke fear, they shifted to ‘socialist’.

I’m not denying that. In fact, I specifically stated that I call out the right over their misuse of terminology as well.

But the usage of the term ‘socialism’ in modern American politics is not a lie.

Yea, it kind of is.

I’m going to abandon attempting to compare the American health care system with the European systems, as you show no interest in that comparison.

I’ve lived under both, and spent a good deal of time studying both. But, it is a bit of a digression.

On the matter of taxation, you consider only income tax. You do not take into account Social Security taxes, sales taxes, inheritance taxes, or any other of the taxes.

Of course. We were discussing marginal rates of taxation. I am more than happy to move the discussion to effective rates and the total tax wedge, if you prefer.

It is simply not possible to come up with a single measure of the progressivity of the entire tax system.

Hmmmm. It’s all math, so it is indeed possible. It’s just complex. And the largest factor in its complexity is usually the local differences in the US. HERE is where the OECD economists have done that work, calculating to the best of their ability the all-in personal tax burden in different OECD nations.

Nor do you address the immensely complex system of government subsidies, some of which increase the effective progressivity of the overall system, and some of which decrease the effective progressivity.

They are in the same table, in the column marked “less cash transfers”.

Your lengthy analysis of the relationship between marginal income tax rates and the Gini Index does not address the point I am making, namely, that the overall system of taxes and subsidies favors the wealthy.

Well :-) OK….but how would you create a tax system that does NOT favor the wealthy, considering that the wealthy already pay such an unusually high (for an OECD nation) percentage of the overall taxes?

I mean, it’s one thing to claim “the system favors the wealthy”; it’s entirely another thing to know how to change it. If we ever want European-style social services in the US, the tax burden on the middle income and up has to rise substantially. If that were to be suggested, the Democrats would scream that we were lessening the progressivity of the system (true), but it’s the only way we could ever possibly raise the money we need (also true).

So, what’s the fix? Seems like we’re destined to have a less progressive system, not a more progressive one.

The reduced progressivity of the income tax implemented by the Reagan Administration definitely contributed to this trend

Hmmmm. Quiz Time. How is it that “reduced the progressivity” of the tax plan, but the GINI ratio did not accelerate?

Answer is that the Reagan packages lowered the marginal rates, but also closed the legal tax shelters that the upper middle class and above used to lower their AGI’s. Thus, the EFFECTIVE rates of taxation really didn’t change all that much from Carter to Bush I. Take a look here:

Let’s start with the second table from the top, marked “Total Individual Income Tax Rate”. The top 1% of earners were paying 22.9% during the last year of the Carter rates, and 20.4% in the last Reagan year. Now, that’s a tax drop, to be sure, but it’s nothing close to the scale of the marginal rate drop from 50% to 28%.

More broadly, the top quintile started the period at 16.6%, and ended up at 14.9%. And the effect rate cut was broad; the bottom quintile was paying .4% prior to the Reagan packages; at term end, they were getting a 1.9% rebate.

Now, we can argue all day if the Reagan packages were a good idea or not; having financed my first house on at 16% ARM in 1980 (that I felt lucky to get), and having experienced the double digit unemployment during the first two years of the 1980’s, my sense has always been that something had to change from the 70’s. But, that’s perhaps another topic for another day.

violates the basic concepts of multivariate statistical analysis as well as common sense: if you reduce the amount of money you take from a group, they get richer.

We can violate any concept you like. The fact of the matter is that the upwards slope of the GINI did not change during the Reagan period. I quite agree that it is counterintuitive.

You offer as an alternate hypothesis that automation and globalization have driven the increase in the Gini Index.

A hypothesis which most certainly did not originate with me, and which is quite commonly talked about, it should be added.

However, European nations have not experienced the same increases in Gini Index that the USA has experienced, and they use computers, too, and they have kept up with globalization just as well as the USA.

Yes. Interesting, eh?

While this does not prove that tax system progressivity determines the Gini Index, it does confute the claim that automation and globalization are primary drivers of the Gini Index.

It’s actually kind of hard to find a professional nonpartisan economic analysis that DOESN’T point to automation and globalization as primary drivers. Even the always-generic Wikipedia lists as follows. Taxes are a component part of the final bullet item. To quote:

  • the globalization hypothesis — low skilled American workers have been losing ground in the face of competition from low-wage workers in Asia and other “emerging” economies;[21]
  • skill-biased technological change — the rapid pace of progress in information technology has increased the demand for the highly skilled and educated so that income distribution favored brains rather than brawn;[21]
  • the superstar hypothesis — modern technologies of communication often turn competition into a tournament in which the winner is richly rewarded, while the runners-up get far less than in the past;[21][22]
  • immigration of less-educated workers — relatively high levels of immigration of low skilled workers since 1965 may have reduced wages for American-born high school dropouts;[23]
  • changing institutions and norms — Unions were a balancing force, helping ensure wages kept up with productivity and that neither executives nor shareholders were unduly rewarded. Further, societal norms placed constraints on executive pay. This changed as union power declined (the share of unionized workers fell significantly during the Great Divergence, from over 30% to around 12%) and CEO pay skyrocketed (rising from around 40 times the average workers pay in the 1970s to over 350 times in the early 2000s).[24][25]
  • policy, politics and racemovement conservatives increased their influence over the Republican Party beginning in the 1970s, moving it politically rightward. Combined with the Party’s expanded political power (enabled by a shift of southern white Democrats to the Republican Party following the passage of Civil Rights legislation in the 1960s), this resulted in more regressive tax laws, anti-labor policies, and further limited expansion of the welfare state relative to other developed nations (e.g., the unique absence of universal healthcare).[24]

It is the net effect of these policies that has driven the increase in the Gini Index.

I believe I am on solid ground when I state that the belief that tax policy is the primary driver of inequality is a minority opinion among economists.

It’s interesting, is it not, that the Great Society, which markedly increased transfer payments from the rich to the poor, actually kicked off the period of increase in GINI?

Another counterintuitive.

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

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