And what about the part that says, “economists expect income going to the top 1% of taxpayers — currently, those with about $400,000 a year — will drop to somewhere between 15% and 19% of all income by 2010.”
First of all that’s a heckuva wide range. Second, if the fall is to the top of the range that “economist expect,” it would be far less severe than from 2000 to 2002, when the stock market also swooned. The top 1 percent’s share of total income dropped from 21.5 percent to 16.9 percent then, a 21 percent decline. If the 2007 number, 23.5 percent, drops to the higher end of the “expected” 15 percent to 19 percent range, it would be even less than that 21 percent previous drop—and it’s guesswork anyway. (UPDATE: See editor’s note below.)
Besides, the earlier drop was hardly permanent. Why should this one be? Readers would have benefited from some context.
Unmentioned in the Journal (See editor’s note below) is the fact that at the very top, the top tenth of one percent, incomes and income shares tend to rise and fall with the stock market. The best-off 0.1 percent of taxpayers had a whopping 12.8 percent of all income in 2007 (the best off 0.01 percent—14,988 families—had 6 percent), up from 10.9 percent in 2000, the end of the previous economic expansion, and more than the income share of the entire bottom half of taxpayers, according to IRS data not cited in either newspaper.
Given the severe drop in the stock market since 2007, and the other economic losses, the rich may fare worse than in the last recession. If, however, enough bets were placed on falling asset prices, then the losses would be mitigated and there might even be gains, at least among the top hundredth of one percent. The fact is we do not know, we can only speculate.
But why speculate? Why not instead do what newspapers are supposed to do: report the data we have, instead of largely ignoring them?
Editor’s Note added 9/11/09 at 3:43 p.m.:
Due to an editing error, in the paragraph (starting, “First of all that’s a heckuva wide range”) comparing drops in the rich’s share of total income after stock market crashes, an earlier version mistakenly compared the rich’s actual average income in one period to its average income share in the other. That’s now fixed to compare income shares in both periods.
Also, an earlier version of the story said neither the Times nor the Journal mentioned the correlation of rich people’s incomes to the stock market. In fact, the Times did mention it, including here:
One of the starkest patterns in the data on inequality is the extent to which the incomes of the very rich are tied to the stock market. They have risen most rapidly during the biggest bull markets: in the 1920s and the 20 years starting in 1987.
Also, while we say both papers left out significant information, and they did, particularly about the recent and stunning decline in non-rich people’s actual incomes, the Times did include a graphic with useful information about their shrinking income share compared to the rich.
"the equivalent of working fifty-two weeks but getting paid for only fifty-one"
Hmm...you mean like the education-industrial complex (teachers) who work (maybe) 40 weeks but get paid as if they worked 52...
Talk about omitting info...considering that the NEA is the major pillar of purchased political support for the Dems...
#1 Posted by cas127, CJR on Thu 10 Sep 2009 at 05:36 PM
Is that the best the critics can do - taking out after teachers - really big money makers in our society.
I like the fact that Cay Johnston demands context from the Wall Street Journal. It's in the context that the truth gets revealed.
#2 Posted by Roldo Bartimole, CJR on Thu 10 Sep 2009 at 07:12 PM
so right on the money. incomes of the wealthy track the stock market. and the wealthy, even with market drops, have cushions most don't have (offshore accounts? tax deductions?) so a drop in the markets doesn't nuke the basic wealthy class in a truly meaningful way, writ large. reading wealth solely against the stock market is wrong. david cay johnston is the only one who gets this basic point.
#3 Posted by ink-stained wretch, CJR on Thu 10 Sep 2009 at 09:23 PM
re my first post: please amend to read "the cited articles say that 'incomes of the wealthy track the stock market'. But even with market drops, the wealthy have cushions..."
#4 Posted by ink-stained wretch, CJR on Thu 10 Sep 2009 at 09:28 PM
i mean, duh: average working-class joes (might) invest in the stock market. but very wealthy people are much more likely to invest in hedge funds and other alternatives that mitigate against stock market drops...
#5 Posted by ink-stained wretch, CJR on Thu 10 Sep 2009 at 09:31 PM
"really big money makers in our society"
In aggregate, you don't think teachers account for a huge percentage of the tax burden?
Or that there is massive over-hiring/over-payment (on a per hour worked basis) in order to purchase political support?
Or that myths (pitiable compensation...pay no attention to per hour pay or benefit structures though...) are cultivated by the politically powerful unions in order to dupe the public...
Hang hedge fund managers for all I care but don't delude yourself that they are the only scam artists in the modern economy...
#6 Posted by cas127, CJR on Fri 11 Sep 2009 at 07:49 AM
How much of "investments" are private wealth, and how much is public pension and temporal tax receipts parked by governments?
The great danger of static or down markets is that there is no way to gain interest on collected public monies for future guaranteed payouts, and deficits have to be made up by further tax collections. That is about to decimate the Oregon budgets in the coming years, as per PERS. That PERS is about to once again become the major budget item in public wage and salaries is discouraging, and does not foster good feelings about the ever increasing chasm between private and public total wage packages, where private benefits decline, and the public is expected to pay ever more for the public employee benefit package and then increase their salaries and wages in recession times.
There is no way that the appetite of the public tapeworm can be diminished in a liberal state by increased taxation of the rain makers, the people who provide the capital to the private side. The wealth of the rich, ever protected by charitable giving, tax forgiven public investments, and tax supported chosen investments in utility and green projects, all from the Democrat majority in both houses in Oregon and the Congress, with Democrat administrations, is there and to deny the left's support of the wealthy in fact, in practice, is disingenuous.
#7 Posted by bear bait, CJR on Fri 11 Sep 2009 at 11:20 AM
David Cay Johnson has said it so clearly yet again, "The bottom 90 percent...the equivalent of working fifty-two weeks but getting paid for only fifty-one...while the top 1 percent [saw an average salary incrase of] $145,300, which is more than four times the average income of each taxpayer in the bottom 90 percent." Thank you David.
#8 Posted by Jody Wiser, CJR on Fri 11 Sep 2009 at 11:21 AM
Excellent point, Cas127. To focus on the top earners, when the leeches of our society - the cops and firefighters and military members, for example, who get wonderful pensions after careers far shorter than anything the average working stiff can dream of - go ignored is ridiculous. All these scam artists should be identified as such.
#9 Posted by Mdan, CJR on Fri 11 Sep 2009 at 01:29 PM
Context is what journalism can and should add to the flood of information out there.
Media critics hate context. They prefer "just the facts" and see no reason to place them in context, since doing so shows a bias towards people with really weak arguments.
All facts should be treated equal, these generally conservative critics say. How else could you allow a balanced debate between the small percentage of people who dispute global warming, and the vast majority who believe it's true?
Context also makes it harder for slower people to follow along. It tends to produce gray where less intellectually gifted people want to see only black and white. A “you are either for us or against us” kind of world is far easier to understand.
I appreciate the context the author provided. I even appreciate the context, however immaterial to the issue, Mr. 127 provided in his comment about the NEA. In the marketplace of ideas, I am able to separate valid context from bitter, partisan foolishness and no harm is done.
Like Mr. Wilson's "You Lie" statement, weak context actually helps me identify the more rational and fact-based argument.
#10 Posted by SamA, CJR on Fri 11 Sep 2009 at 02:27 PM
"In aggregate, you don't think teachers account for a huge percentage of the tax burden?"
Do they? I don't know that they do.
I form opinions based on facts that I know, not assumptions that I 'think.'
You're the one asking the question.
If teachers are really that much of a burden on society, show us proof.
"How much of "investments" are private wealth, and how much is public pension and temporal tax receipts parked by governments?"
I don't know, bear bait, how much?
Look, you guys are making these arguments, stop asking everyone else to substantiate them for you.
Very Hannityesque of you... "well, I can't be bothered with substantiating my own argument; but still, doesn't it just feel true?"
#11 Posted by Hardrada, CJR on Fri 11 Sep 2009 at 02:55 PM
One quibble with Johnston's quibbles: When he complains about the reporters' use of the verb "will," and suggests they should have used a formulation like "was expected to be," he ignores what their sentence actually says:
Mr. Saez and other economists expect income going to the top 1% of taxpayers — currently, those with about $400,000 a year — will drop to somewhere between 15% and 19% of all income by 2010. (my emphasis)
The uncertainty DCJ is looking for is already there. The sentence doesn't say Saez et al. know income will fall.
#12 Posted by scarpy, CJR on Fri 11 Sep 2009 at 03:43 PM