I.R.S. Says Americans' Income Shrank for 2 Consecutive Years

[varun]

http://www.nytimes.com/2004/07/29/business/29tax.html?hp

By DAVID CAY JOHNSTON

Published: July 29, 2004

The overall income Americans reported to the government shrank for two consecutive years after the Internet stock market bubble burst in 2000, the first time that has effectively happened since the modern tax system was introduced during World War II, newly disclosed information from the Internal Revenue Service shows.

The total adjusted gross income on tax returns fell 5.1 percent, to just over $6 trillion in 2002, the most recent year for which data is available, from $6.35 trillion in 2000. Because of population growth, average incomes declined even more, by 5.7 percent.

Adjusted for inflation, the income of all Americans fell 9.2 percent from 2000 to 2002, according to the new I.R.S. data...

[Warpy]

1. Jaysis, that's one hell of a dive!

At the same time, lots of "unessential" things like food, medicine, fuel, and shelter are inflating faster than the rate of inflation the Bush gang will admit to. The economy has gone right into the toilet, and Bush's tax cuts for the rich which resulted in higher state and local taxes for working people are the root cause.

People who don't have money to spend are creating less demand for goods and services which causes higher unemployment which exerts downward pressure on wages which gives people even less to spend.

I'm surprised that the great experts being churned out by economics departments in well endowed universities aren't noticing this, that the economic pump works from the bottom up and not from the top down. You'd think seeing this stuff happening in practice would torpedo the neoclassical economics model once and for all.

[philosophy77]

2. Income Shrinks

"The overall income Americans reported to the government shrank for two consecutive years after the Internet stock market bubble burst in 2000, the first time that has effectively happened since the modern tax system was introduced during World War II, newly disclosed information from the Internal Revenue Service shows."

Of course income has shrank since people are not reporting captial gains. What's your point?

[philosophy77]

3. economic pump

"I'm surprised that the great experts being churned out by economics departments in well endowed universities aren't noticing this, that the economic pump works from the bottom up and not from the top down. You'd think seeing this stuff happening in practice would torpedo the neoclassical economics model once and for all."

The reality is that the stock market drives the economy, not the other way around. The market cycles between boom to bust periods just like it has since records were first kept in the 1800s. The current market is in a correction, eventually it will bottom and cyle to a new bull market. All the so called "great experts" would tell you the same thing.

[newyawker99]

4. Hi philosophy77!!

Welcome to DU!! :toast:

[AP]

5. But the top 1% got something like 10% richer the last two years.

My friends, that's a wealth shift to the top that is being achieved by shrinking wealth.

For example, they're keeping your kids out of college so that their kids can have guaranteed wealth. They're cutting SBA loans, so that big businesses don't have competition. They're lowering your wages so that corporations have bigger profits. That's the strategy. It's not an accident. It's the intentional policy of Republicans.

The Republicans don't mind a smaller pie, so longer as their piece of the pie is much bigger than yours.