Maggie Mahar
Fellow at The Century Foundation

Maggie Mahar

Maggie Mahar is a fellow at The Century Foundation where she writes HealthBeat blog . She is the author of “Money-Driven Medicine."

Sharing Growth

Sometimes a picture is worth a million words. Take a look at this graph from the Center on Budget and Policy Priorities to understand why it makes sense to tax the very rich to help finance health-care reform.

It shows how much the wealthiest 1 percent of all households benefited from income gains as the country grew wealthier from 1946 to 1976 --and the degree to which the very rich shared in the nation's prosperity from 1976 to 2006.

During the thirty years following World War II, the wealthiest 1 percent enjoyed 20 percent of the gains, which is to be expected. It takes money to make money. Wealthier Americans are in a position to pay for education that will help them leverage their talents and they have the deep pockets to take advantage of the best investment opportunities -- buying stocks, real estate, businesses and other assets when prices are low.

But the vast majority of all Americans -- the lower 90 percent on the income ladder -- also did very well, taking in 80 percent of the wage benefits that came with the nation's growth.

By contrast, in more recent years growth was no longer widely shared. From 1976 to 2006, the mega-rich enjoyed 232 percent of the gains while the bottom 90 percent saw only 10 percent of the benefits. And in the ten years ending in 2006, the trend accelerated.

The share of the nation's income flowing to the top 1 percent rose from 15.8 percent in 2002 to 20.0 percent in 2006. "Not since 1928, just before the Great Depression, has the top 1 percent held such a large share of the nation's income," the Center observes.

When growth is no longer widely shared, things are out of whack in a way that threatens both the economic stability and the social solidarity of a nation. Asking the very wealthy to help finance health care for all is a step in the right direction.

By Maggie Mahar  |  July 16, 2009; 12:25 PM ET  | Category:  Taxes Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Why should those who work hard have to pay for those that don't? I just dont understand that. The more you take away from those who work hard, the less desire there is to work hard. What happens then? If we teach our country to expect handouts we are going to be in real trouble. Great idea Obama.

Posted by: tootaloos | July 22, 2009 5:22 PM
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Andy - I don't if what follows is correct, but it does match up with figures I have seen.

In the first case, when she talks about the top 1% she means income while for the bottom 90% she means wages (not all income)

In the second blooper, I think 232% was supposed to be 23.2% and it doesn't have to add to 100% because she is comparing the top 1% with the bottom 90%.

Make sense?

Posted by: lensch | July 21, 2009 10:12 PM
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This particular article is either poorly written or drastically misleading. The author's statistics don't add up, which would lead one to believe that they are made up or propaganda.

The obvious typo where 1 percent of Americans made 20 percent of the gains whereas 90 percent of Americans made 80 percent of the gains is forigiveable (where is the rest of the top 10 percent of earners), but the comment of 232 percent of the gains going to the rich and 10 percent going to the poor is not. The second statistic must have a sum of 100 percent.

If I understand the two statistics (the apples and the oranges) correctly, it is the same as me saying that I make 20,000 percent of what I made 10 years ago (when I was a camp counselor), but my gains are only .00001 percent of the gains that all Americans have made in that time.

It is a drastically unfair comparison to make and misleads readers.

Posted by: andygoldman | July 21, 2009 11:54 AM
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Those who prosper and benefit most in our nation should be asked, and be willing, to bear a larger share of support for the public policies that keep the country healthy, growing and strong. That includes national defense and the basic social-services safety net of which health care is clearly a part.

It's ridiculous to assert that a modest increase in income-tax rates will discourage hard work or business initiatives. Americans did quite well after World War II when tax rates were much higher than now.

A small tax surcharge on high incomes is a perfectly acceptable way to help finance an expansion of basic health care for those who lack it now. An overhaul of the federal tax system to restore more progressivity would be even better but that's plainly not going to happen this year.

Posted by: cjohnson1 | July 20, 2009 12:43 PM
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"Sharing" as part of the liberal mantra is unidirectional and revenue-based: take from people that earn and give to those that do not. What about sharing on the cost, i.e. tax, side of the equation? What about sharing on the personal responsibility side of the equation? What about sharing on the family planning side of the equation? You don't make others successful by trampling all over those that have success.

Another liberal favorite is this statistic about how middle class wages stagnated from 1976-2006. This coincides with the baby boomer generation's rise in the work force. It's simple supply and demand. The baby boomers have caused displacement all along...they're now causing massive unfunded liabilities in existing medical entitlement programs. How about a plan where each generation needs to pay its own bills, and not stick it to generations before and after?

Posted by: antisocialist | July 19, 2009 9:16 AM
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