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Comment by mc32 | Hacker News Reader

I can dig it.

Living in a bad neighborhood exposes you to an in-ideal living atmosphere. The people you are around influence you in many ways and one of those ways is the wrong way --not because people in the neighborhood want bad things for their brethren --but because their way of life and expectations impinge on the growth of the new young people in the neighborhood with respect to the wider society.

Also, it's worth noting that widening inequality is a global phenomenon but not only between people but amongst nations. The inequality between let's say Mexico and Finland was different back in 1910 and what it is now. The inequality between poor and rich in the US was also less in the US back in the early 1900s.

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Actually, wealth inequality in the West was higher before World War One. They called it the 'gilded age' for a reason.

It only got a lot more equal because WW1, the Depression, and WW2 combined destroyed most of the stuff the rich people had.

Only recently has wealth inequality re-approached pre-WW1 levels.

Source: Piketty.

You're right. I had conflated GDP with disparity. GDP in the 1910s was more or less on par in Mexico, Finland, Portugal, Norway and Italy. That parity has dissolved and become disparity in the intervening years. On the other hand, in the age of the robber barons, you had the lower class and the wealthy, with little in between, so those not at the top were not as unequal as they are today. It's my impression it was more stratified (into two lobes). And given most people were rural and there were few in the professional class, I think it makes sense.

It only got a lot more equal because WW1, the Depression, and WW2 combined destroyed most of the stuff the rich people had.

Don't forget 92% marginal tax rates on income over $1 million/year.

That was slashed to 72% under JFK. But regional inequality only took took off after it was slashed to 50% then to 28% by Reagan.

Today the rich have lower tax rates than average Americans.

Was that 92% ever an effective rate of consequence? What kind of receipts did the treasury capture? Not that I'd be against that for the 2016 equiv in USD.

Those rates were basically fiction. All they led to (and the only reason they could be levied) was a huge system of fake on-paper money-losing schemes. People would arrange all sorts of business ventures and other schemes to appear to be losing money, and thus reduce their taxes.

The actual tax receipts as a percentage of income were very close to what they are today.

Reagan's tax deal with Congress was eliminate the tax shelters in exchange for lowing the top rate. The former has been forgotten.

The main goal of the 1986 tax deal was simplification, eliminating tax shelters was inherent to the plan, not something traded for lower rates. If there was any exchange for lower top rates, it was raising corporate and capital gains taxes to keep the plan revenue neutral.

Wealthy people do not care about tax simplification, they care about how much in tax they have to pay. So the trade was lower tax rates overall in exchange for giving up the low tax rates that made tax shelters extremely attractive.

Your position underestimates how pervasive tax avoidance using shelters was at the time. The wealthy were never going to give that up for simplification, after all, they could have simplified their taxes anyway by not investing in shelters if that was their issue.

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