[PEN-L:3943] Re: Say it ain't so, Max

[Rob Schaap <rws@xxxxxxxxxxxxxxxxxxxxxxxxx>]

G'day Penners,

Uchitelle's argument seems clear-cut to this econo-ignoramus.  If 0.01% of
the population receive 18.1% of the pie (up 3.5% in three years, btw), they
pay 37% of income tax.  If the top 0.01% had not got richer over the last
three years (cashed-in stock options being taxable as income), many
billions of dollars would not have been there to be taxed at the highest
rate, and the surplus would have been (according to U's arithmetic) a
deficit.

Pumping Wall St with social security monies and various privatisations - in
short, making the rich richer - seems the only way to keep the federal
purse healthy - the richer the rich, the richer those who depend on
government for welfare (and not a few of them are rich anyway, I s'pose -
making them yet richer and therefore yet more able to help their poorer
comrades along).  It's all so clear to me now ...

In that respect, I like the article's conclusion:

'But income inequality, offspring now of the stock market, has acquired a
certain respectability: the budget surpluses depend on it.

Or, as the CBO said in its January report, "The more unevenly income is
distributed, the higher the effective tax rate will be." '

And, as U. warns, if we're talking fragile bubble, we're talking fragile
federal budget projections and fragile social security plan.  But are we
more likely to be talking fragile bubble if we don't talk social security
plan - if Clinton does not pump bull-inspiring/bear-inhibiting public money
into the well of public welfare that is Wall St?

Wassastory, Max?

Cheers,
Rob.

_________________

Mike had written:

>Some time ago, I asked Max S. to what extent the surplus depended on
>capital gains in the stock market.  He dismissed my concern.
>
>I just looked at Uchitelle's article in Sunday's times.  He says,
>"Bluntly put, if stock prices fall sharply, the budget surplus
>disappears."
>
>I rely on Max for such information.  Could he be wrong?  Impossible...
>
>--
>Michael Perelman
>Economics Department
>California State University
>Chico, CA 95929
>
>Tel. 530-898-5321
>E-Mail michael@xxxxxxxxxxxxxxxxx