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  • - [Instructor] The goal of this video

  • is to understand how median per capita income after taxes

  • has trended in the United States

  • in comparison to some other countries over a 30-year period.

  • And the 30-year period for this chart is from 1980 to 2010.

  • For example, in this first comparison,

  • the United States is compared against Canada,

  • and you can see at the beginning of this time period,

  • the median per capita income after taxes

  • in the United States was higher than that of Canada,

  • but then over the course of this 30-year period,

  • it looks like they've gotten pretty close to each other.

  • So you could say that the rate of increase in Canada

  • over that period has been higher for this group,

  • and so that's what got them to parity.

  • In Norway, we're looking over that same time period again,

  • from 1980 to 2010, and we're seeing

  • a similar story in Norway.

  • There was actually a fairly large gap

  • between the median per capita incomes after taxes

  • between the two countries in 1980, and that gap has closed.

  • Now on one level, you might say,

  • hey, the rate of increase of median per capita income

  • after taxes in Norway is greater,

  • but on another level, you could say,

  • well, even at the end point,

  • someone making that median per capita income after taxes

  • in the United States will still be better off

  • even at the end of our time period, at 2010.

  • And we see that generally true for all of these countries.

  • They all have steeper curves, so a higher rate of change,

  • but the United States, on an absolute level,

  • has stayed higher, although the gap has gotten smaller

  • for most of these.

  • So you could interpret it either way,

  • but it's probably leading to other questions.

  • You might say, all right, this is just

  • for those folks in that 50th percentile,

  • the people in the middle, the median per capita income.

  • What about people at other points in the distribution?

  • What we just saw is for the median year,

  • and you can see the U.S. curve in this burgundy type color,

  • and then, instead of showing the median over and over again

  • over that time period, it just plots the other countries

  • right over here, so you can see trend in Canada.

  • At the beginning of the period, the median per capita income

  • after taxes was lower than that in the United States,

  • and then it closes the gap.

  • And then we can see the other countries, Norway,

  • Netherlands, Britain, Sweden, so on and so forth.

  • And this is useful, because you can see,

  • even though the rate of improvement is deeper

  • for these other countries, at least for the median,

  • you're still better off being in the United States.

  • But the picture does change a little bit depending on

  • which countries you look at and which extreme you look at.

  • You can see that for that fifth percentile,

  • there are countries like Germany,

  • where if you're in that fifth percentile,

  • you were better off in 1980 and in 2010,

  • relative to the United States,

  • but the rate of improvement is actually similar,

  • and I'm speaking in very rough terms,

  • to that of the United States.

  • And then you have countries like Ireland where,

  • at the beginning of the period,

  • you would've been worse off if you were

  • in the fifth percentile being in Ireland,

  • and at the end of the period,

  • it looks like you were slightly better off.

  • And then, we can see that trend for the 10th percentile,

  • 20th percentile, so on and so forth,

  • and the benefit of being in the United States

  • over that time period, and the improvement

  • in inflation-adjusted after tax income over time,

  • seems to be more dramatic in the United States

  • as you get to the higher percentiles.

  • When you see this 95th percentile,

  • the United States was already better off

  • than everyone else in 1980, and the gap between

  • those 95th percentiles has only increased.

  • Now there's several takeaways that you could have from this.

  • One is that the rate of improvement

  • in some of these other countries is steeper,

  • but on the other hand, for example,

  • if we look at Ireland or Spain,

  • the rate of improvement is steeper,

  • especially for some of the lower percentiles,

  • but folks still have finished up at an absolute lower level.

  • So even in 2010, you'd be better off

  • being in the United States.

  • Another question that some of you might be asking

  • is why do you see this phenomenon in the United States

  • that the rate of growth in inflation-adjusted

  • after tax income over time seems to be highest

  • for the upper income folks in the United States.

  • It could be because of tax policy.

  • The U.S. does have, relative to many of these countries,

  • a lower effective highest marginal tax rate.

  • So for the people in the highest incomes,

  • they're paying a lower percentage of their taxes

  • than people in other countries,

  • even though many of them might be paying a higher percentage

  • relative to some of the other income brackets.

  • You could also say that it might not be a fair comparison.

  • The United States has a much larger economy

  • than most of these countries.

  • The only ones that come even close

  • to the United States out of these would be Germany,

  • but their economies are still

  • less than one-fourth the size of the United States.

  • Now there could be other dynamics at play

  • that we talk about in other videos,

  • but it's at least interesting to know

  • what the data tells us.

- [Instructor] The goal of this video

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B1 median united income percentile period time period

Comparing income trends across countries

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    林宜悉 posted on 2020/04/15
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