Saturday, July 07, 2007

3948

There's a reason for income inequality

It's called a pay off for education.
    "In 1980, an American with a college degree earned about 30 percent more than an American who stopped education at high school. But, in recent years, a person with a college educa­tion earned roughly 70 percent more. Meanwhile, the premium for having a graduate degree increased from roughly 50 percent in 1980 to well over 100 percent today. The labor market is placing a greater emphasis on education, dispensing rapidly rising rewards to those who stay in school the longest." The upside of income inequality
And how do liberals want to "correct" this income inequality, which is really the result of having a better educated populace? They want to tax people into staying at a lower level of achievement.
    "raise taxes on high income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same indi­viduals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education? We think not. Yet shifting the tax structure has exactly this effect."

2 comments:

Anonymous said...

This is actually an interesting subject and as I am coming from a social democratic country, I might have an other opinion (if I understand you correctly!)

I think the households with higher income also have the ability to contribute more to mutual social cost such has health care and education. But then again those expensive should be free for all inhabitance!

Norma said...

In the USA, the highest income households pay most of the taxes, the lowest pay none--in fact, a minimum wage person actually gets about $20,000 a year because of all the gov't benefits. However, our gov't taxes income, not wealth, so the very, very wealthy, like John Edwards, John Kerry (and rich wife), and various celebrities, and many democrats who lobby for higher taxes for "the rich" pay very little in taxes.

The studies are done by quintile, and we have been in 4 of the 5, but because we are retired, we're back in the bottom quintile, which really skews results, since we are definitely wealthier than when we were 20 years old.