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To Understand Rising Inequality, Consider Janitors
371–380 of 694 posts
Re: To Understand Rising Inequality, Consider Janitors
#372We should tax wealth, not income. [1] The majority of income the top 0.1% make is from investments and gets taxed as capital gains, only about 15% of their income is taxed as ordinary income. [2][3] We have an economic system where it's dramatically easier to make money the more money you already have. If you have $50M, you can park it in an index fund to get 4% returns and make $2M every year just off of your invest…
Wealth tax is a good idea that’s very hard to implement effectively. Many countries have tried it only to give up on it (Germany, Sweden). France has a comprehensive wealth tax but it raises less than 2% of total tax reciepts, suggesting it’s not doing much. It’s very difficult to prevent the wealthy from finding ways to hide wealth.
This is part of the reason some want to tax consumption more aggressively. "Wealth" that isn't used is really just a collection of expensive large numbers. Sooner or later, when that wealth is used, it can be taxed as consumption and/or real property.
Re: To Understand Rising Inequality, Consider Janitors
#373Earlier quoted context omitted.
Reagan didn't get rid of all of the tax shelters. But the idea that tax havens (i.e. tax shelters) are relatively crummy investments remains. The reason Apple, etc., invest a lot of their cash overseas is not because those are better investments, but because the US corporate taxes are so much higher those foreign investments become more attractive. Level the taxes, and the money will be reinvested back in the US.
Media keeps telling us Apple is not investing, but hoarding cash overseas to avoid the taxation. Care to elaborate how and what they are investing in?
The media consists of people with journalism degrees, not economics. Such journalists commonly believe in the "cash hoard" theory.
To know what they are investing in, consult the Apple Annual Report, which says. Even if the balance sheet says "cash", what they mean is "bank deposits". Bank deposits get loaned out to others, and those others spend it.
Nobody borrows money in order to hoard a pile of currency.
Re: To Understand Rising Inequality, Consider Janitors
#374Earlier quoted context omitted.
Is paying for your kids education inheritance? Are pre-paid company contracts for a lifetime inheritance? etc etc. There are some definite difficulties in implementation. But even then, my argument is that it could be a really harmful tax if it could be applied at all.
The evidence is that allowing large inheritances is harmful to society at large. It allows for an accumulation of economic influence within too few hands, and the creation of an entrenched elite. The "Founding Fathers" of the US were particularly opposed to it for this reason. One would have to balance the "harm" caused to the children of wealthy people for not inheriting wealth (mostly when they are around 50-60 yr…
What evidence?
> One would have to balance the "harm" caused to the children of wealthy people for not inheriting wealth (mostly when they are around 50-60 yr old themselves), with the harm caused to society at large.
I wonder if we could think of other examples of how harming a minority of people can be good for society at large. But regardless of the moral standpoint of the remark you said, you also have to account the harm it does to society to make people spend extra time hiding their wealth and spending it more frivolously.
Re: To Understand Rising Inequality, Consider Janitors
#375We should tax wealth, not income. [1] The majority of income the top 0.1% make is from investments and gets taxed as capital gains, only about 15% of their income is taxed as ordinary income. [2][3] We have an economic system where it's dramatically easier to make money the more money you already have. If you have $50M, you can park it in an index fund to get 4% returns and make $2M every year just off of your invest…
I completely agree, but for totally different reasons.
If a major function of government is to protect our property (land, savings, boats, cars, etc...), then it could be said the more property we have the more we benefit from government protection and the more we should pay.
Another function of government is to facilitate trade. For this service, ALL transactions should be taxed (including payroll).
If you look at the totality of this, the actual tax rates would be nominal for every "normal" individual, thus it wouldn't necessarily be regressive. We're talking about a 1% tax rate on property and ALL transactions.
To me this makes sense on so many levels. It captures money from everyone participating in the system and it captures it relative to the person's level of benefit from the system.
The hardest part would be tracking. However, if the tax is nominal and the punishment for cheating is high, then it seems like it wouldn't need outrageously intrusive controls.
Re: To Understand Rising Inequality, Consider Janitors
#376Earlier quoted context omitted.
I would suggest that we currently don't do nearly enough saving as a nation, on average, and probably shouldn't further disincentivize that.
Those who can afford to save do, those who can't don't. There isn't someone out there making $50k/yr raising a family saying "if capital gains rates were just a little lower I would save so much of my paycheck". I on the other hand am going to put my money in the markets whether the capital gains rate is 15% or 30% because I have used up all my tax-advantaged account space and still have extra money.
It's not as simple as "those who can afford to save, do". There are also a huge number of people living well above their means, and the percentage of people with no savings is much, much higher than the percentage of people who don't make enough to save.
The F-150 is the best selling vehicle in the US, and they're certainly not all going to people in the construction industry.
And $50k/yr is more than enough to save money in most parts of the country. That's a good salary.
Re: To Understand Rising Inequality, Consider Janitors
#377Earlier quoted context omitted.
They don't have to be. A "death tax" for example that takes 100% of a persons estate at death would be both simple, non distortive, and in terms of equality level the playing field every generation.
"Non distortive" You can't imagine a way a tax like that would change people's behavior? People would give their money to their children before they die, or spend it all on themselves, and maybe some would work less because they were previously motivated by building up assets to give to their children.
I never understand why someone working less is considered a bad thing. If a person works less that leaves a vacuum for their services which will then be filled by another market actor.
Re: To Understand Rising Inequality, Consider Janitors
#378What strikes me the most when looking at many of the comments here is the blatant disregard for human suffering that extreme inequality and the resulting poverty cause. The current economical status quo is accepted as a given and all the harm it causes is dismissed with the shrug of a shoulder. "It can't be helped, the poor sods should have made better life choices to avoid ending up as janitor" is the attitude by wh…
It's not surprising that those who have bought into Rand and her ego stroking 'superman' ideology are sociopaths.
These highly individualist supermen don't need society or anyone else for their success. They stand alone. Celebrating themselves while seeing others suffer and blaming them for their suffering is simply the natural order of things. Empathy is completely absent in this impoverished binary world view of success and failure.
But life and human beings cannot just be reduced to a primitive ideology of success and failure, especially when the successful are riding on generations of privilege. It's obscene for those starting a 100M race at 90M to lecture others on achievement.
While these self centred achievers stroke their egos millions if not billions of human brains are wasted just trying to survive, their intellectual output never given the opportunity to shine. And its not just their loss but a social catastrophe because its only leisure and stability that allowed our tryst with science to begin.
Re: To Understand Rising Inequality, Consider Janitors
#379Earlier quoted context omitted.
Doing janitorial work is not a mistake, but being a janitor for 40 years certainly is. It's not the core job, it's the fact that there's zero growth or mobility even possible that is the issue.
>It's not the core job, it's the fact that there's zero growth or mobility even possible that is the issue. Not everyone is a 'striver.' Some folks just want to pay their bills and enjoy what time they can with their family and friends.
Even those 'non-striver' people would prefer to have growth over time, in their position, wage, and skills. Humans are not static - we like to learn and we get very frustrated when we can't improve over time.
Re: To Understand Rising Inequality, Consider Janitors
#380Earlier quoted context omitted.
The real problem though isn't wealth inequality, it's income inequality. If someone has a billion dollars that's invested in various stocks, and never tries to withdraw that money, leave him alone. The day he decides to sell his investments and start buying private jets, that's the time to tax him on his income. The argument against a wealth tax, is that it penalizes savers, and rewards spenders. Which is not what we…
The argument against income tax is that it penalizes earners, and rewards not working. Sure, that is a reductionist argument but so was yours. The real argument against taxing wealth is that it isn't really feasible; you'd just encourage banking in other countries or buying up a lot of land. I also agree that capital gains being taxed at a lower rate is insane and makes sense only when you realize that's how politici…
Assuming wealth is earned, why would you want to tax it? It already was taxed when the individual was working.
Inherited wealth is another matter.