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World's richest 500 see their wealth increase by $1T this year

theguardian.com

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Re: World's richest 500 see their wealth increase by $1T this year

#171

Post by jknoepfler »

This isn't interesting at all, and should not be a headline in a respectable newspaper. The wealth gains are on par with market gains. The absolute dollar value of the gains is almost certainly not headline worthy. The richest individuals lost trillions a few years ago in the crash, they gain trillions in a boom. That's exactly what one would expect.

I'm fiercely opposed to the regressive turn the economy has taken, but I'm just as fiercely opposed to hysterical garbage journalism. We won't correct the broken social contract by heaping nonsense upon injustice.

I'm all ears for constructive policies to tie earnings for the least wealthy to market gains, since the real problem is lack of ability to invest wages in the market, but I don't see that on offer here.

Re: World's richest 500 see their wealth increase by $1T this year

#172

Post by valuearb »

volgo wrote: post #126

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly…

In the U.S., your $120,000 of capital gains/dividends isn't taxed at a high rate to you, but is taxed at a high rate. First the company has to earn a profit, and out of that profit pay state and federal income taxes (35% + state). Then it pays whats left to you, where you pay your 15-20%, making the total tax rate usually over 50%.

Given that taxes on corporate income is a direct tax in investment, it's counterproductive, it reduces investment, and productivity gains that increase both wages and wealth. It would be far better to have a zero tax rate on corporate income, and tax capital gains* and dividends at personal rates. That restores not just investment incentives, but also progressively of our tax system, so that the person with $1M in dividends and capital gains is paying a higher rate than someone with $20,000 in income.

And this would probably raise more tax revenue in the long run. Corporate income taxes are a relatively small part of overall tax revenues, increasing dividend/capital gains rates offsets most of their loss if they are eliminated, and over time more investment will drive higher wages/income and increase tax receipts.

* If capital gains are taxed at ordinary income rates, they also need to be indexed to protect from inflation. If they aren't, we risk taxing phantom gains, i.e. if an investment is sold for 20% more than it's purchase price, but inflation was 25% during it's holding period, it was actually a loss, because it lost purchasing power. This is one of the reasons capital gains has special rates, but that's not a good protection. In the 1970s high inflation hurt investments because historical equity returns were money losers adjusted for inflation. Investors preferred high interest bonds to protect their principle.

Re: World's richest 500 see their wealth increase by $1T this year

#173

Post by eeZah7Ux »

volgo wrote: post #126

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly…

> In an ideal capitalism society, the most talented should earn the most

No: in a capitalist society wealth can create wealth - by definition of capitalism. That means the wealthiest will earn the most.

Re: World's richest 500 see their wealth increase by $1T this year

#174

Post by bluthru »

volgo wrote: post #126

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly…

>salary, which is taxed at a higher rate and more difficult to earn.

The fact that actual productivity is taxed at a higher rate than capital gains is our rulers just rubbing it in our face.

Re: World's richest 500 see their wealth increase by $1T this year

#175

Post by kbenson »

CodeMage wrote: post #167
kbenson wrote: post #150

Earlier quoted context omitted.

The question is, how much of the status quo your describe is because we're not in a self contained system, and actually outsource a lot of the problems to developing countries? If the system you describe was constrained to just the United States, and no goods or capital could enter or leave, would we expect a similar system? Because scaled up, that's the world in X decades. Unless we decide, and rely on, various insu…

> Unless we decide, and rely on, various insurrections, rebellions and regime changes to change the system in some countries such that there's always a third world economy to take advantage of. > (Unless we specifically cause it to be so through political maneuvering and war, but I like to think that's crackpot territory...). When you look at the history of the world and consider current geopolitical situation, what…

I'm not sure. I'm hoping it's not some combination of wishful thinking and denial. :/

Re: World's richest 500 see their wealth increase by $1T this year

#176

Post by valuearb »

coliveira wrote: post #27
twoodfin wrote: post #2

This article provides paragraph after paragraph of supporting data that the richest have gotten richer, but none that I can see supporting its claim that “billions of poorer people across the world have seen their wealth standstill or decline”.

The issue is simple to understand: as population grows and technology grows even faster, there should be a steady stream of wealth increase. This has been observed as is obvious to everyone. However, if we allow the bulk of this wealth to be controlled by a tiny part of the population, we are creating a huge problem to current and to future generations. A hereditary oligarchy can be terrible to our civilization, and…

You have offered no evidence for any of your assertions for the ill effects.

When Elon Musk becomes obscenely wealthy by creating affordable electric cars and space flight, everyone else gets the benefits of affordable electric cars and space flight. Not talking trips to mars, but constellations of satellites offering super cheap worldwide internet.

Re: World's richest 500 see their wealth increase by $1T this year

#177

Post by BearGoesChirp »

manigandham wrote: post #168
volgo wrote: post #126

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly…

How does someone having wealth stop anyone else from acquiring theirs? You may start out with less but there's nothing stopping you. Also all those capital investments are helping the companies and funds they're invested in, one of which could be your very own employer/startup/pension fund, etc.

>How does someone having wealth stop anyone else from acquiring theirs?

Through lobbying of laws that increase their wealth more than others. Tax breaks that give scraps to the poor while giving massive benefits to the wealthy. A legal system that only the rich have a chance of truly navigating.

Ideally it shouldn't matter. One person being rich doesn't make another person poor. But politicians have been for sale for some time, and even basic concepts such a free speech and the open exchange of ideas are strongly tied to wealth in a way that ends up being bad for the little guys.

Re: World's richest 500 see their wealth increase by $1T this year

#178

Post by nofilter »

bko wrote: post #48
nofilter wrote: post #45

Earlier quoted context omitted.

How well does that argument hold up tho'? I mean, there is always _someone_ who does it cheaper. Always. In fact I know of a web developer, who actually does quite decent work and is available for as little as $5 per hour. Does that mean everyone in that skill level should get paid so little?

How would you allocate work? Suppose you are paying a “fair” wage above the market wage, so you have 5 equally qualified candidates apply. They are not allowed to compete on price since you already decided to pay what you consider a fair wage. How do you decide who gets the work?

I would hire whoever produces the best quality of work for that amount of money, but if they all produce the exact same quality of work, I would hire the one who takes the least amount of money.

Re: World's richest 500 see their wealth increase by $1T this year

#179

Post by volgo »

valuearb wrote: post #172
volgo wrote: post #126

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly…

In the U.S., your $120,000 of capital gains/dividends isn't taxed at a high rate to you, but is taxed at a high rate. First the company has to earn a profit, and out of that profit pay state and federal income taxes (35% + state). Then it pays whats left to you, where you pay your 15-20%, making the total tax rate usually over 50%. Given that taxes on corporate income is a direct tax in investment, it's counterproduc…

That argument doesn’t make sense because when you receive a salary, the same taxation is passed through the company as well. Companies have to pay corporate taxes before they pay you too.

The only difference is the “last mile” tax of when you receive the money from the company. For capital gains it’s 15% federal, for salary it’s 28%

Re: World's richest 500 see their wealth increase by $1T this year

#180

Post by freyir »

manigandham wrote: post #168
volgo wrote: post #126

As capitalism matures, it's clear to anyone with a thread of financial literacy that most wealth is created through capital gains rather than salary. We're approaching a state (at least in developed countries) where productivity is so high, that you can literally park your money in 500 of the biggest businesses and you're almost guaranteed a 7% annual return (if you hold stocks for the long term). Using the commonly…

How does someone having wealth stop anyone else from acquiring theirs? You may start out with less but there's nothing stopping you. Also all those capital investments are helping the companies and funds they're invested in, one of which could be your very own employer/startup/pension fund, etc.

> How does someone having wealth stop anyone else from acquiring theirs?

The wealthy person (a) does not need a 9-5 job to subsist and can devote all their time to a launching a business, (b) has a lower tax burden via capital gains, (c) can afford to fail multiple times, (d) can buy their way into a top school if they don't get in on merit, (e) tends to have better family connections, (f) etc.

Then the question is then whether startups exist in a competitive environment, which of course is true. Tech, and the web especially, often approaches a zero-sum game.

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