A huge study of 20 years of global wealth demolishes the myth of ‘trickle-down’

[wjfox]

A huge study of 20 years of global wealth demolishes the myth of ‘trickle-down’ and shows the rich are taking most of the gains for themselves

07 dec 2021

• It's no secret there's inequality across the economy, but a huge new report shows just how much.
• The 2022 World Inequality Report demolishes the myth that tax cuts for the rich will trickle down.
• The bottom half of the global population holds just 2% of all wealth, while the top 10% earns 76%.

Inequality has remained persistently high for decades, and a new report shows just how stark the divide is between the richest and poorest people on the planet.

The 2022 World Inequality Report, a huge undertaking coordinated by economic and inequality experts Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, was the product of four years of research and produced an unprecedented data set on just how wealth is distributed.

"The world is marked by a very high level of income inequality and an extreme level of wealth inequality," the authors wrote.

The data serves as a complete rebuke of the trickle-down economic theory, which posits that cutting taxes on the rich will "trickle down" to those below, with the cuts eventually benefiting everyone. In America, trickle-down was exemplified by President Ronald Reagan's tax slashes. It's a theory that persists today, even though most research has shown that 50 years of tax cuts benefits the wealthy and worsens inequality.

https://www.businessinsider.nl/a-huge-s ... hemselves/

[R8Z]

Forget taxes. It's all about the global inflation. 71 was the year this insanity started for good at it hasn't stopped yet. Every day the average global citizen loses more and more purchasing power. One could cut taxes to 0% to everyone and it would still continue and unless you know how to protect yourself in this "economy" you are the one losing money. In fact, modern governments don't need (and don't even really rely on) taxes from anyone to continue.

For a time I believed that cryptocurrencies would be enough to take us out of this quicksand pit but I am not so confident on them anymore. Even entire countries that tried to escape this were put down in the last decades. There's a clear reason the US spends so much money in its military.

[Ozzie guy]

Forget taxes. It's all about the global inflation. 71 was the year this insanity started for good at it hasn't stopped yet. Every day the average global citizen loses more and more purchasing power. One could cut taxes to 0% to everyone and it would still continue and unless you know how to protect yourself in this "economy" you are the one losing money. In fact, modern governments don't need (and don't even really rely on) taxes from anyone to continue.

For a time I believed that cryptocurrencies would be enough to take us out of this quicksand pit but I am not so confident on them anymore. Even entire countries that tried to escape this were put down in the last decades. There's a clear reason the US spends so much money in its military.

If you put your savings in safe investments it will grow faster than inflation.

[R8Z]

Forget taxes. It's all about the global inflation. 71 was the year this insanity started for good at it hasn't stopped yet. Every day the average global citizen loses more and more purchasing power. One could cut taxes to 0% to everyone and it would still continue and unless you know how to protect yourself in this "economy" you are the one losing money. In fact, modern governments don't need (and don't even really rely on) taxes from anyone to continue.

For a time I believed that cryptocurrencies would be enough to take us out of this quicksand pit but I am not so confident on them anymore. Even entire countries that tried to escape this were put down in the last decades. There's a clear reason the US spends so much money in its military.

If you put your savings in safe investments it will grow faster than inflation.

Yes, but the average person doesn't know about this. Additionally, the average person is not getting raises in their paychecks (or via other income streams) that are matching the aggregated inflation. It's a major wealth transference scheme from the poor to the rich.

[caltrek]

Forget taxes. It's all about the global inflation. 71 was the year this insanity started for good at it hasn't stopped yet. Every day the average global citizen loses more and more purchasing power. One could cut taxes to 0% to everyone and it would still continue and unless you know how to protect yourself in this "economy" you are the one losing money. In fact, modern governments don't need (and don't even really rely on) taxes from anyone to continue.

For a time I believed that cryptocurrencies would be enough to take us out of this quicksand pit but I am not so confident on them anymore. Even entire countries that tried to escape this were put down in the last decades. There's a clear reason the US spends so much money in its military.

On the contrary, in the United States the tax system is key. Sure, this needs to be analyzed alongside shifts in purchasing power, but that is different from concluding that taxes are therefore irrelevant. Consider:

“If You’re Getting a W-2, You’re a Sucker”
by Paul Kiel
April 15, 2022

https://www.propublica.org/article/if-y ... e-a-sucker

Introduction:

(PorPublica) Nikki Spretnak loved being an IRS agent. Being able to examine the books of different businesses gave her an intimate view of the economy. But over the years, she became more and more conscious of a chasm between the business owners she was auditing and herself. It wasn't so much that they were rich and she, a revenue agent in the IRS office in Columbus, Ohio, was not. It was that, when it came to taxes, they lived a privileged existence, one that she, a mere W-2 recipient, did not share.

Over the past year, along with a team of my colleagues at ProPublica, I’ve spent countless hours scrutinizing the tax information of thousands of the wealthiest Americans. Like Spretnak, I’ve seen behind the veil and witnessed the same chasm. Doing my own taxes in the past was never a thrill, but only this spring did I fully realize what a colorless and confined tax world I inhabit.

For me, and for most people, filing taxes is little more than data entry. I hold in my hand my W-2 form from my employer and dutifully peck in my wages. Next come the 1099 forms that list my earnings from dividends or interest, and again my finger gets to work. The IRS has a copy of these forms, too, of course, making this drudgery somewhat pointless. By the end of it, there, in black and white, is my income.

The financial reality of the ultrawealthy is not so easily defined. For one, wages make up only a small part of their earnings. And they have broad latitude in how they account for their businesses and investments. Their incomes aren’t defined by a tax form. Instead, they represent the triumph of careful planning by skilled professionals who strive to deliver the most-advantageous-yet-still-plausible answers to their clients. For them, a tax return is an opening bid to the IRS. It’s a kind of theory.

In that tax world, nearly anything is possible…

caltrek's comment: I briefly went through a period where I was a landlord. I was very much surprised by how that tax system works. Things like being able to charge depreciation of the value of your assets, when in actual fact your property was appreciating in value. Then there is inheritance. If you inherit vast sums of money, you are taxed on the income that inheritance produces, but most often not on the inheritance itself. If your parent invested $10,000 and grew to be worth a $500,000 dollars by the time you inherit that wealth, none of that difference is taxed as income.

The Basic Rule: Inheritances Aren't Taxed as Income

An inheritance can be a windfall in many ways—the inheritor not only gets cash or a piece of property, but doesn't have to pay income tax on it. Someone who inherits a $500,000 bank account doesn't have to pay any tax on that amount.

It doesn't matter how the property passes to the inheritor. Whether the property passes under the terms of a will or trust, or the inheritor was a designated beneficiary (for example, a payable-on-death bank account), it's not taxable income.

Source: https://www.alllaw.com/articles/nolo/wi ... money.html

So, as the ProPubica article points out, folks who have their income via ways reported on a W2 are treated as suckers. Yet, they are the real producers of wealth in the system. If that is not warped, then what is?