How much of a problem is this?

You'll see a lot of this kind of discussion in the liberal press. For example, the Center on Budget and Policy Priorities, claimed with great anguish at the end of July that the concentration of income is the highest it has been since 1928. The picture is from the Institute on Taxation and Economic Policy a left of center policy group. Fair taxes in their vision means steeply progressive. (Although the group claims to be a non-profit, non-partisan research and education organization that works on government taxation and spending policy issues." Their vision is that we live in a static society and we need government redistribution to help solve the "problem." That is not a vision I share.

Look closely at the states that are in this group. What do they have in common? First, some of them have the problem of small populations and an extractive economy. Concentration in those states is based on the enormous wealth that comes from prospecting in all sorts. One way to solve the problem would be to lower the cost of what is being extracted. Second, the rest are states with a high number of entrepreneurs. California's budget deficits are caused in part by the way we structure our tax system - some of these people make immense rewards periodically. For example, our state budget benefitted from tax payments from ONE company to the tune of $400 million a few years ago. Some people in those states make large amounts of dough but as the cycle of innovation extends the wealth payoff begins to disperse through society. Third, many of the states in the list contain a high percentage of immigrants. Presumably people come into the economy and work their way through the economic ladder.

Look at the states which are not highlighted. Is there anything you can say about the variations in their economies? Two things come to mind. First, their economic development departments spend a lot of tax money trying to attract the entrepreneurial class - which would raise the variations in incomes. Second, many of the states have a fairly uniform population which means not much chance for variability.

I am also struck by the number of states in blue which have highly progressive tax systems. Many of the states at the top of the list have some of the highest tax burdens and are ones where the take of taxes far outpaces economic growth.

The point here is not that there are wide discrepancies in income in some states. The point is whether the difference is temporal or permanent. In other words, if the differences lock people into their situations over generations then these maps are important. If these differences are temporal, then they are not.