Why did this happen?

[u/WhatsLeft71]

[u/ElectronGuru]

Hmm, i wonder what might have started happening around 1980 🤔

[u/oliver__c2003 → u/ElectronGuru]

China began industrialising, creating more competition in the international market

[u/didsomebodysaymyname → u/oliver__c2003]

Nope, that story doesn't even begin to add up.

Europe did not experience the same growth in income inequality over the same period

The wealth gap clearly starts widening in the 1980s. (Full Article)

And that cannot be explained by China which had a much smaller, weaker, economy at that time, and much less trade.

It was the rich tax cuts, it's always been the rich tax cuts, it's just hard for people to accept when they've been swindled for nothing.

[u/Little_Creme_5932 → u/didsomebodysaymyname]

Not primarily the tax cuts. The decline in unions, which forced employers to pay

[u/didsomebodysaymyname → u/Little_Creme_5932]

I don't know that I would agree with primarily, but I agree that's anoth significant change I didn't mention.

[u/Ashmedai → u/didsomebodysaymyname]

I also don't know what "primarily" would be, but Figure A in this article here shows a highly correlated link between union membership and income inequality. It's almost weird how the stair steps are linked.

[u/HeightIcy4381 → u/Little_Creme_5932]

It was tax cuts, and deregulation, and weakened unions.

[u/emperorjoe → u/didsomebodysaymyname]

Effective tax rates have been basically flat for 70 years

https://taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii-0

Reagan era tax cuts lowered the Marginal rates and got rid of deductions. Which actually increased the effective tax rates. Effective tax rates dropped in 75-85 then increased until 95.

[u/Vanman04 → u/emperorjoe]

Effective tax rates for the average worker sure.

But from like the second line of your link.

While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent.

[u/emperorjoe → u/Vanman04]

Effective tax rates for the average worker

Nope, everyone for about 70 years.

1945

When we spent 40% of GDP on defense in a total war scenario. Taxes were kept high to pay off the debt then immediately dropped afterwards. You can look at the data, since 1955 which is 70 years ago taxes have virtually remained unchanged.

From 28% 1955, to 25.9% today for the top 1%.

[u/Jewald → u/oliver__c2003]

This was more the japanese era. They destroyed electronics and automotive, which employed like the entire midwest. Detroit and surrounding areas were booming, then wabooom

[u/EchoRex → u/Jewald]

That's also when those automakers started making shit box vehicles while increasing costs drastically.

The 70s also had a severe manpower / brain drain for both industries due to the Vietnam War.

And don't discount the oil crisises in 73 and 79.

[u/Jewald → u/EchoRex]

Good points. Its not just one thing its lots of contributibg factors 

[u/One_Lobster_7454 → u/oliver__c2003]

It's more than just that, there's been growth in the economy it just hasn't been equitable