Greg Mankiw tries to rewrite David Leonhardt, but may well done a relative poor job of it. David’s argument (search the link provided in Greg’s post) remains a sound economic debate, maybe best summarized by this Quote from David:
Since 1980, as union membership has 1. dropped sharply, the share of economic output going to corporate profits has more than doubled. The share going to workers’ compensation, meanwhile, fell to a 41-year low last year.
Here is the real Problem. Wages have been rising rapidly for Managers and Professionals, and the natural rate of unemployment has been dropping as well, but Employment Participation has been in decline and Labor has been losing Long-term Employment, Benefits, Pensions, and Wages Increases keeping pace with the Standard of Living. The natural rate of unemployment would not have declined without a drop in the Employment Participation rate; it would have actually increased. It would be nice if some nice energetic young Economist would create a comparison model of Hours worked per decade split by Class of employment, adjusted to a constant Year dollar; this would tell Us if American labor was, or was not, losing their economic position in the World economy.
I agree with Warren Buffett that he should have to pay more than 17.7% tax on his $46 million income, especially after he wouldn’t give a fellow Nebraskan like me the $10 Million Cash Award for being Handsome (they actually threw me out after I came asking for it, before I could meet with him. That Receptionist of his is tough!). My reason for the belief in a higher Tax rate for his kind of financial wizard is probably summed up in this previous Post of mine. The real erosion of Labor Wages comes in the shift of the Tax Load–Local, State, and Federal–downwards onto Laborers.
Laborers must pay the Social Security taxes, which is right and just, but Congress and President utilizes these Contributions to finance both lower Taxes for the Wealthy and much of their deficit spending. Business evades Property taxes by Enterprise Zone and Development Grants freeing them from Property taxation, while Home-owners pay ever increasing assessments. State Sales taxes are geared to free Business from impact, while higher Incomes often avoid such taxation by purchase of luxury Products granted Price reductions on account of the Sales tax. State Income taxes are most often set as percentages of Federal taxation, when only higher Incomes can utilize the multitude of Tax exemption systems. I do not possess Numbers readily at hand, but estimate a probable 12-14% Shift of the Tax load downward since 1963. lgl