Fuck its silent in here.......

[Brownie]

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071101956.html?hpid=topnews

The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.

Great?

So wouldn't that mean that instead of owing money to the items you chose not to highlight that we'd just owe a shitload of money to China? How is that just glossed over?

Well, technically Simpson chose to make it the focus of his sentence, but anyway, I think he chose those because they are big-ticket items and they add up to 100% of federal revenue?  Moreover, all three of those are going to grow - a lot - in the coming years, as we all know.  And thus, any meaningful attempt at deficit reduction, let alone actually reducing the national debt, is going to have to realistically address those big-ticket items (i.e., not say "we'll just squeeze waste, fraud and abuse out of the system!").  Yeah, tax revenue is going to have to increase somehow... but spending is going to have to go down.

And so we are back to the endless arguments about how to do that.

We could solve this whole thing by simply agreeing that all debt purchased by China will be paid back in the form of the US sending Baby Boomers over there to work in forced labor camps.

CT for US Senate!

[Bort]

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071101956.html?hpid=topnews

The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.

Great?

So wouldn't that mean that instead of owing money to the items you chose not to highlight that we'd just owe a shitload of money to China? How is that just glossed over?

Well, technically Simpson chose to make it the focus of his sentence, but anyway, I think he chose those because they are big-ticket items and they add up to 100% of federal revenue?  Moreover, all three of those are going to grow - a lot - in the coming years, as we all know.  And thus, any meaningful attempt at deficit reduction, let alone actually reducing the national debt, is going to have to realistically address those big-ticket items (i.e., not say "we'll just squeeze waste, fraud and abuse out of the system!").  Yeah, tax revenue is going to have to increase somehow... but spending is going to have to go down.

And so we are back to the endless arguments about how to do that.

We could solve this whole thing by simply agreeing that all debt purchased by China will be paid back in the form of the US sending Baby Boomers over there to work in forced labor camps.

CT for US Senate!

BIPARTISAN SUPPORT.

[morpheus]

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071101956.html?hpid=topnews

The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.

Great?

So wouldn't that mean that instead of owing money to the items you chose not to highlight that we'd just owe a shitload of money to China? How is that just glossed over?

Well, technically Simpson chose to make it the focus of his sentence, but anyway, I think he chose those because they are big-ticket items and they add up to 100% of federal revenue?  Moreover, all three of those are going to grow - a lot - in the coming years, as we all know.  And thus, any meaningful attempt at deficit reduction, let alone actually reducing the national debt, is going to have to realistically address those big-ticket items (i.e., not say "we'll just squeeze waste, fraud and abuse out of the system!").  Yeah, tax revenue is going to have to increase somehow... but spending is going to have to go down.

And so we are back to the endless arguments about how to do that.

We could solve this whole thing by simply agreeing that all debt purchased by China will be paid back in the form of the US sending Baby Boomers over there to work in forced labor camps.

CT for US Senate!

BIPARTISAN SUPPORT.

I will only offer my support when CT signs the written "Jetsons Shit" pledge.

[Quality Start Machine]

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071101956.html?hpid=topnews

The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.

Great?

So wouldn't that mean that instead of owing money to the items you chose not to highlight that we'd just owe a shitload of money to China? How is that just glossed over?

Well, technically Simpson chose to make it the focus of his sentence, but anyway, I think he chose those because they are big-ticket items and they add up to 100% of federal revenue?  Moreover, all three of those are going to grow - a lot - in the coming years, as we all know.  And thus, any meaningful attempt at deficit reduction, let alone actually reducing the national debt, is going to have to realistically address those big-ticket items (i.e., not say "we'll just squeeze waste, fraud and abuse out of the system!").  Yeah, tax revenue is going to have to increase somehow... but spending is going to have to go down.

And so we are back to the endless arguments about how to do that.

We could solve this whole thing by simply agreeing that all debt purchased by China will be paid back in the form of the US sending Baby Boomers over there to work in forced labor camps.

CT for US Senate!

BIPARTISAN SUPPORT.

I will only offer my support when CT signs the written "Jetsons Shit" pledge.

[R-V]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I guess I'll just ignore the CBO, the Committee for a Responsible Federal Budget, Greg Mankiw, Mark Zandi, GDP numbers, and Alan Viard.

The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year.

How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018.

How about George W. Bush's CEA chair, Greg Mankiw, who used the term "charlatans and cranks" for people who believed that "broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue." He continued: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't."

That's why Mark Zandi, an adviser to John McCain's presidential campaign, estimated  (pdf) that a dollar spent extending the Bush tax cuts would generate .32 cents of taxable economic activity, while a dollar spent on unemployment benefits would generate $1.61 of taxable economic activity.

In 2000, federal tax revenues were $2,025.46 billion, nominal GDP was $9,951.5 billion. In 2003, these amounts were $1,782.53 billion and $11,142.1 billion. So GDP rose 12% and federal revenues fell 12%.

"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

[Chuck to Chuck]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

[morpheus]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

I am finding myself agreeing with the TAXOLIB HOMOCRATS around here on this one, as much as it pains me to do so... while the tax cuts did not result in a one-for-one loss in revenue (i.e., there was a strong positive effect on the economy from them which partially offset revenue losses from lower rates) there's no way they paid for themselves.  Now, when marginal tax rates were at 90% and they were cut, then maybe we could talk about such a strong supply side effect, but the Bush tax cuts were coming from levels much lower than that.

[R-V]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

I am finding myself agreeing with the TAXOLIB HOMOCRATS around here on this one, as much as it pains me to do so... while the tax cuts did not result in a one-for-one loss in revenue (i.e., there was a strong positive effect on the economy from them which partially offset revenue losses from lower rates) there's no way they paid for themselves.  Now, when marginal tax rates were at 90% and they were cut, then maybe we could talk about such a strong supply side effect, but the Bush tax cuts were coming from levels much lower than that.

morph agrees with me?

/thread

[Brownie]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

I am finding myself agreeing with the TAXOLIB HOMOCRATS around here on this one, as much as it pains me to do so... while the tax cuts did not result in a one-for-one loss in revenue (i.e., there was a strong positive effect on the economy from them which partially offset revenue losses from lower rates) there's no way they paid for themselves.  Now, when marginal tax rates were at 90% and they were cut, then maybe we could talk about such a strong supply side effect, but the Bush tax cuts were coming from levels much lower than that.

So... for all of you out there... Where should the marginal rates be? Should you pay more or less in federal income taxes? State income taxes? Capital gains taxes? Property taxes? Sales taxes? Estate taxes?

Because the economy is not static, how can you effectively measure the effect of any change in tax rates on tax receipts? I tend to agree that the tax cuts probably didn't maximize revenues, but I don't want my government maximizing its revenues (at the point of a gun, I may add). I want it minimizing expenses.

[Oleg]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

I am finding myself agreeing with the TAXOLIB HOMOCRATS around here on this one, as much as it pains me to do so... while the tax cuts did not result in a one-for-one loss in revenue (i.e., there was a strong positive effect on the economy from them which partially offset revenue losses from lower rates) there's no way they paid for themselves.  Now, when marginal tax rates were at 90% and they were cut, then maybe we could talk about such a strong supply side effect, but the Bush tax cuts were coming from levels much lower than that.

So... for all of you out there... Where should the marginal rates be? Should you pay more or less in federal income taxes? State income taxes? Capital gains taxes? Property taxes? Sales taxes? Estate taxes?

Because the economy is not static, how can you effectively measure the effect of any change in tax rates on tax receipts? I tend to agree that the tax cuts probably didn't maximize revenues, but I don't want my government maximizing its revenues (at the point of a gun, I may add). I want it minimizing expenses.

So, perhaps we shouldn't have gotten mixed up in two wars AND had our taxes cut at the same time?

[Yeti]

THI

The conventional wisdom is that Americans are fed up with their government. But our demands on policymakers are so inconsistent and irrational that we make governing nearly impossible. We hate big deficits, but oppose the actual tax increases or spending cuts that we need to dam the flood of the red ink. We are furious that government passed an $800 billion stimulus last year, but feel lawmakers are not doing enough to get the economy going. We want government to "do something" about the gulf oil spill but reject government interference in private business.

And that's just the beginning. Conservatives cry "states rights" when it comes to the new federal law requiring individuals to have health insurance, but are silent about the parallel federal requirement that insurance companies must sell to all comers. Liberals want to make Social Security benefits more generous, but only as long as they are paid for with higher taxes on the wealthy. Seniors oppose the "government take-over" of health care for those under 65, but will fight to the death to preserve their (government-run) Medicare.

We oppose new spending, but happily support targeted tax subsidies that are economically no different. And governors of both parties demand more federal money to pay their teachers and fund their Medicaid programs, but would rather complain about the accompanying red tape rather than repair their budgets by rationalizing their own hopelessly outdated tax systems. 

We are, collectively, four. We want what we want, and we want it now. And we want somebody else to pay for it.

[J. Walter Weatherman]

http://www.cbpp.org/cms/index.cfm?fa=view&id=3036

Some critics continue to assert that President George W. Bush's policies bear little responsibility for the deficits the nation faces over the coming decade — that, instead, the new policies of President Barack Obama and the 111th Congress are to blame. Most recently, a Heritage Foundation paper downplayed the role of Bush-era policies (for more on that paper, see p. 4). Nevertheless, the fact remains: Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years (see Figure 1).

The deficit for fiscal year 2009 was $1.4 trillion and, at nearly 10 percent of Gross Domestic Product (GDP), was the largest deficit relative to the size of the economy since the end of World War II. If current policies are continued without changes, deficits will likely approach those figures in 2010 and remain near $1 trillion a year for the next decade.

Baseline projections depict the likely path of the federal budget if current policies remain unchanged. We base our estimates on CBO's latest ten-year projections, published in March 2010, with several adjustments to reflect what will happen if we continue current tax and spending policies.

Specifically, our baseline includes the budgetary effects of continuing the 2001 and 2003 tax cuts that are scheduled to expire after 2010, renewing certain other so-called "tax extenders" such as the research and development tax credit, and continuing relief from the Alternative Minimum Tax (AMT). Our baseline also assumes the effects of continuing to defer scheduled cuts in payments for Medicare providers, as has routinely occurred in recent years, and instead providing doctors with a payment increase based on the Medicare Economic Index. We also account for a gradual phase-down of operations in Iraq and Afghanistan. In all cases we based our adjustments on estimates published by CBO.

Meanwhile...

http://www.cbpp.org/cms/index.cfm?fa=view&id=3220



http://www.csmonitor.com/Money/Robert-Reich-s-Blog/2010/0713/After-recession-middle-and-working-classes-lose-ground

Missing from almost all discussion of America's dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June's decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.

...

America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.

...

What we get from widening inequality is not only a more fragile economy but also an angrier politics. When virtually all the gains from growth go to a small minority at the top — and the broad middle class can no longer pretend it's richer than it is by using homes as collateral for deepening indebtedness — the result is deep-seated anxiety and frustration. This is an open invitation to demagogues who misconnect the dots and direct the anger toward immigrants, the poor, foreign nations, big government, "socialists," "intellectual elites," or even big business and Wall Street. The major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the "establishment" and an increasingly mad-as-hell populace determined to "take back America" from it.

[R-V]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

I am finding myself agreeing with the TAXOLIB HOMOCRATS around here on this one, as much as it pains me to do so... while the tax cuts did not result in a one-for-one loss in revenue (i.e., there was a strong positive effect on the economy from them which partially offset revenue losses from lower rates) there's no way they paid for themselves.  Now, when marginal tax rates were at 90% and they were cut, then maybe we could talk about such a strong supply side effect, but the Bush tax cuts were coming from levels much lower than that.

So... for all of you out there... Where should the marginal rates be? Should you pay more or less in federal income taxes? State income taxes? Capital gains taxes? Property taxes? Sales taxes? Estate taxes?

Because the economy is not static, how can you effectively measure the effect of any change in tax rates on tax receipts? I tend to agree that the tax cuts probably didn't maximize revenues, but I don't want my government maximizing its revenues (at the point of a gun, I may add). I want it minimizing expenses.

Marginal rates: I think we should add some additional brackets at the high end, with higher rates. Right now all income over $372k is taxed at 35%. Just spitballing here, but I'd be in favor of income over $1M being taxed at 38%, and income over $10M being taxed at 40%. Wouldn't go much higher than that or you get into the confiscatory discussion.

State rates: At the very least, Illinois needs to institute tax brackets. The 3% flat rate is ridiculous - right now Yeti pays the same rate as morph. Haven't looked at the income distributions enough to make any kind of judgment on what the brackets should be, though.

You won't be surprised that I don't buy the starve the beast argument (neither does Bruce Bartlett).

Starve the beast theory has been the subject of much recent academic research, all of it showing that there is no truth to it whatsoever. Indeed, the literature shows that the effect is actually perverse; leading to higher spending because the tax-cost is reduced by tax cuts.

You are correct that we can't completely and accurately capture the effect of a change in tax rate - dynamic scoring is the ultimate goal. But tax receipts as a percentage of GDP is a decent enough measure to account for changes in the overall economy. And by that count revenues decreased after the Bush tax cuts.

[thehawk]

Senators Kyl and McConnell, who are Very Serious about the deficit, have informed me that a temporary increase in spending (unemployment benefits) must be offset, while a long-term decrease in revenue, does not need to be offset. Because if you just believe hard enough that tax cuts always increase revenue, it'll come true. Huzzah for tax cuts!

"That's been the majority Republican view for some time," Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. "That there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

I know!  Let's cut taxes to 0% and we'll have INFINITE REVENUE!!!!

In fact, if we had a negative income tax, we have MORE THAN INFINITE REVENUE!!!!

I am finding myself agreeing with the TAXOLIB HOMOCRATS around here on this one, as much as it pains me to do so... while the tax cuts did not result in a one-for-one loss in revenue (i.e., there was a strong positive effect on the economy from them which partially offset revenue losses from lower rates) there's no way they paid for themselves.  Now, when marginal tax rates were at 90% and they were cut, then maybe we could talk about such a strong supply side effect, but the Bush tax cuts were coming from levels much lower than that.

So... for all of you out there... Where should the marginal rates be? Should you pay more or less in federal income taxes? State income taxes? Capital gains taxes? Property taxes? Sales taxes? Estate taxes?

Because the economy is not static, how can you effectively measure the effect of any change in tax rates on tax receipts? I tend to agree that the tax cuts probably didn't maximize revenues, but I don't want my government maximizing its revenues (at the point of a gun, I may add). I want it minimizing expenses.

Marginal rates: I think we should add some additional brackets at the high end, with higher rates. Right now all income over $372k is taxed at 35%. Just spitballing here, but I'd be in favor of income over $1M being taxed at 38%, and income over $10M being taxed at 40%. Wouldn't go much higher than that or you get into the confiscatory discussion.

State rates: At the very least, Illinois needs to institute tax brackets. The 3% flat rate is ridiculous - right now Yeti pays the same rate as morph. Haven't looked at the income distributions enough to make any kind of judgment on what the brackets should be, though.

You won't be surprised that I don't buy the starve the beast argument (neither does Bruce Bartlett).

Starve the beast theory has been the subject of much recent academic research, all of it showing that there is no truth to it whatsoever. Indeed, the literature shows that the effect is actually perverse; leading to higher spending because the tax-cost is reduced by tax cuts.

You are correct that we can't completely and accurately capture the effect of a change in tax rate - dynamic scoring is the ultimate goal. But tax receipts as a percentage of GDP is a decent enough measure to account for changes in the overall economy. And by that count revenues decreased after the Bush tax cuts.

We already go to about 40% on the Federal side, once you take into account the fact that certain deductions are phased out once you go higher and higher from $372.

[morpheus]

A bunch of stuff purporting to show how terrible and unfair the economy is and how it's all Bush's fault

I'm sure if I quoted the Heritage Foundation or Cato I'd be ridiculed, so I will generically ridicule you for using data from the CBPP, which exists mainly to promote the idea that the US economy is unfair and needs to have massive redistribution forced upon it.

Now, with that out of the way: income distribution statistics that compare income buckets that don't take into account income mobility are misleading at best.  As an example, I was in the bottom quintile for the first few years of my career post-college, and I'm in the top quintile today.  I'm pretty sure that would not be captured in the CBPP's data.  Thomas Sowell elaborates here: http://www.investors.com/NewsAndAnalysis/ArticlePrint.aspx?id=517564

In terms of statistical categories, it is indeed true that both the amount of income and the proportion of all income received by those in the top 20% bracket have risen over the years, widening the gap between the top and bottom quintiles.

But Internal Revenue Service data following specific individuals over time show that, in terms of people, the incomes of those particular taxpayers who were in the bottom 20% in income in 1996 rose 91% by 2005, while the incomes of those particular taxpayers who were in the top 20% in 1996 rose by only 10% by 2005 — and those in the top 5% and top 1% actually declined.

While it might seem as if both these radically different sets of statistics cannot be true at the same time, what makes them mutually compatible is that flesh-and-blood human beings move from one statistical category to another over time.