Is The Economic Crisis related to the disparity of income distribution

Except "Federal Income Tax" is not the same as "Tax Tab".

And if the top 1% was making 20% of the income and paying 30% of the income tax and goes to making 30% of the income and paying 35% of the income tax, then no, it doesn't leave the other group paying less.

 

Probably not, but you could certainly make an indirect connection if you really wanted to.

Tax cuts for the wealthy is supposed to encourage more risk-taking to grow the economy.

Excessive risk-taking is what caused this mess.

Draw the dots. Take the housing mess, for example. Lower cap gains rains makes home flipping more attractive. That could very well have brought more house-flippers into the market, causing the bubble to grow more rapidly.

 

That would be a very indirect connection. The overriding cause for this crisis is the credit bubble, which has been in place for a long time.

Arguing about lower cap gain is pretty much silly in a housing market that was growing double digits every year.

 

How's the weather in London these days?

 

I never said it wouldn't be hard for us to live on 50K, I said we could make it. We keep to a fairly tight detailed 3-page budget every month. I know exactly where our money goes, and where we'd slash first. Believe me, we've looked over what our budget would be if my wife stayed home to watch the kids. Just off the top of my head, I can name several things we'd cut to save over half of what my wife brings home.

 

To be honest I live ok. My wife and I made a little over $30,000 between the two of us, and we have a child. We have 2 cars(2007 Civic Hybrid, 2009 Versa), a house, & all normal luxuries(cell phone, internet, DirecTv). All of that is within our means. No missed payments, no late payments.

 

Just out of curiousity do you live in the USA or abroad?

 

Bingo! What's scary is the idea that our economy's continued growth is dependent on consumers spending above their means. Look what happened as soon as we pulled back a little, discretionary businesses like Circuit City, Linens N Things, Kay B Toys, Whitehall Jewelers, Bennigan's, etc. all out of business.

IMO this is not correlational. What's the cause? Someone else mentioned it people are slaves to rent, mortgages, and basic necessities. There is no discretionary income left. The only reason we had the boom we had in the 2000's was because of HELOC's. The consumer is tapped out. All of his money is going to his mortgage, insurance, healthcare, and consumer staples.

Inflation is rising much faster than wages, period. The income disparity is so much money in so few COMPANIES hands. Go look at Exxon, Microsoft, Walmart, Merck, they're doing fine and raking in BILLIONS each quarter. The prices keep rising and there is nothing left for discretionary companies like a Circuit City.

In 1965 the average home cost about $13k and average income was like $6k. In 2005 someone in this thread mentioned average income was about $50k, the average home cost $250K!!!! Does anyone else see a problem with that? I know homes have gotten bigger so they should cost more. But look at all of the other expenses we are incurring now. Internet, cell phone, cars, longer commutes, higher fuel prices, higher healthcare and insurance costs, etc. Not to mention the record number of people workign two jobs and dual earner households. Quality of life? HA!

The consumer IMO is not living above his means he is trying to catch up with prices rising and salaries stagnant.

 

Very bad for aston martins, it is a real shame. But hey, I bought the aston, and it is my responsibility to keep her running.

 

Uh yeah, if you're making 50k, you should be spending 110k on your house...just like in 1965.

People aren't keeping up with wages and prices, they're keeping up with the Jones'.