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And as long ago as the 18th century Scots and English rich elites willingly paid higher taxes than was the case in the 17th century. Why? Because they perceived that they received substantial government services for the pounds they paid in taxes. Arthur Herman (2001), How the Scots Invented the Modern World , New York, NY: Three Rivers Press, p.58-59.

Appendix chapter 4

Piketty and income inequality: a closer look

There are at least three reasons that reduce the credibility of Piketty’s results. First, the results pertain to the evolution of pre-tax income over time. That is, the author does not take into account the effects of existing taxes, direct transfers from government to individuals (welfare payments, social security payments). The use of pre-tax income as the measure of inequality is difficult to understand in a book intended to be policy relevant, particularly since the data on post-tax, post-transfer income (at least in the U.S.) is readily available. This is a significant issue given the degree of progressivity of effective rates in the U.S. federal tax and the pro-poor effects of government transfer payments.

First consider federal taxes. Table 4-1 shows that average tax rates paid by the top decile of the income distribution are nearly 12 times that of the lowest quintile. The share of total taxes paid by the top 1% is___ times that of the lowest decile.

In an era of high, and probably growing, pre-tax inequality of income, it should not be surprising that the share of the one percent most highly paid Americans has grown sharply: in 1979 the top 1% paid 18% of total income tax. By 2013, the share of the top 1% had grown to 46%, while 40% of households paid no income tax at all ( Economist, September 20, 2014, p.13). These figures suggest that, at the very least, the tax system has had some moderating effects in reducing post-tax income inequality.

*Average of 90th to 99th percentiles

Source: Congressional Budget Office, “The Distribution of Household Income and Federal Taxes, 2011”. Washington, DC, 2014, p.16.
Table 4-1
Average Federal Tax Rates, by Before Income Tax Group, 2013 Projected
(Under 2013 Tax Rules)
2013 Multiple of Top 1% to Lowest Quintil
Lowest Quintile 2.9% 11.5
Second Quintile 8.0% 4.2
Middle Quintile 12.3% 2.7
Fourth Quintile 16.4% 2.0
Highest Quintile 25.5% 1.3
Top Percentile
Top Decile* 23.8% 1.4
Top 1% 33.3%

A comprehensive report from the Congressional Budget Office in 2014 presents an exhaustive account of the effects of taxes and transfers in the United States from 1980 to 2010, closely corresponding to the period 1970-2010, a period of increasing income inequality reported by Piketty.

This study concludes that, when taxes and transfers are taken into account, income inequality has increased, but not as sharply as one would conclude from the Piketty results According to the CBO study, the Gini Coefficient in the U.S. increased from 0.48 to 0.59 from 1980-2010, if taxes and transfers are omitted in the definition of income.

Taking into account taxes and transfers, the Gini also increased over the same period, but from 0.37 to 0.44, an increase of 19%, compared to an increase of 23% when taxes and transfers are not included in income. This study helps confirm that income inequality in the U.S. has increased since 1980, but not by as much as would be indicated in studies utilizing before-tax income, including that of Piketty.

Questions & Answers

what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
characteristics of micro business
for teaching engĺish at school how nano technology help us
Do somebody tell me a best nano engineering book for beginners?
s. Reply
there is no specific books for beginners but there is book called principle of nanotechnology
what is fullerene does it is used to make bukky balls
Devang Reply
are you nano engineer ?
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
what is the actual application of fullerenes nowadays?
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
what is the Synthesis, properties,and applications of carbon nano chemistry
Abhijith Reply
Mostly, they use nano carbon for electronics and for materials to be strengthened.
is Bucky paper clear?
carbon nanotubes has various application in fuel cells membrane, current research on cancer drug,and in electronics MEMS and NEMS etc
so some one know about replacing silicon atom with phosphorous in semiconductors device?
s. Reply
Yeah, it is a pain to say the least. You basically have to heat the substarte up to around 1000 degrees celcius then pass phosphene gas over top of it, which is explosive and toxic by the way, under very low pressure.
Do you know which machine is used to that process?
how to fabricate graphene ink ?
for screen printed electrodes ?
What is lattice structure?
s. Reply
of graphene you mean?
or in general
in general
Graphene has a hexagonal structure
On having this app for quite a bit time, Haven't realised there's a chat room in it.
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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