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Who Rules America: An Investment Manager's View on the Top 1%

sociology.ucsc.edu

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Re: Who Rules America: An Investment Manager's View on the Top 1%

#11

Post by cynest »

civilian wrote: post #5
arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

Wait, what's the problem that you're solving?

I'm assuming it's increasing the long term capital gains tax rate. According to http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United..., the short term rate is as arjunnarayan suggested, barring any differences in exemptions between capital gains and income tax rates.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#12

Post by torstesu »

Reminds me of the Citigroup reports on plutonomy that was allegedly leaked. The reports give an interesting, and to some degree offensive, look into the mindset of the plutocrats -- that is, the richest of the rich

http://dl.dropbox.com/u/810028/101001citigroup-plutonomy-rep...

http://dl.dropbox.com/u/810028/101001citigroup-plutonomy-rep...

Re: Who Rules America: An Investment Manager's View on the Top 1%

#13

Post by waterlesscloud »

Quarrelsome wrote: post #10
civilian wrote: post #5

Earlier quoted context omitted.

Wait, what's the problem that you're solving?

The idea that it is possible for those that earn vast quantities of money more than your "standard joe" to pay _less_ tax on that considerably larger cash pile. The line about lobbying for a new corporate exemption on "repatriating" cash from either tax havens or anywhere else abroad at the pitiful tax rate of 5.75% compared to the base 10% that someone that works at a diner has to pay illustrates the issue rather we…

A lower rate of tax, not less tax.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#14

Post by civilian »

cstross wrote: post #9
civilian wrote: post #5

Earlier quoted context omitted.

Wait, what's the problem that you're solving?

Tax avoidance. (The marginal rate of tax on capital gains is generally much lower than the marginal rate of tax on an equivalent earned income. The investment professionals who strike it big do so by engineering their income to arrive in the shape of capital. Tax it as income and suddenly a whole lot more tax revenue shows up ... and the Gini coefficient in the society in question drops a little bit.)

Taking advantage of capital gains might be tax avoidance from a certain point of view, but it's also a useful for helping grow wealth and the economy in general.

Having large sums of private capital helps the economy-- how does it help it? By making it easy to borrow money, like the VC that so many HNers are seeking.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#15

Post by swampthing »

civilian wrote: post #5
arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

Wait, what's the problem that you're solving?

My thoughts exactly - the problem the author is alleging isn't that these things exist, it's summarized in his last paragraph:

A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules.

In other words - the alleged problem is that you can't fix this tax stuff even if you wanted to because the people in control are the ones benefiting (and most other people aren't aware / don't care enough).

I'm not taking a position either way, just clarifying what the author is saying.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#16

Post by neuroelectronic »

noahth wrote: post #6
yummyfajitas wrote: post #3

The author of this article seems to be trying to confuse things: Membership in this elite group is likely to come from being involved in some aspect of the financial services or banking industry, real estate development involved with those industries, or government contracting. What does "involved in some aspect" mean? ...built a small company and was acquired with stock from a multi-national. Stock is often called a…

I agree that those examples are not great at conveying the main point he's trying to make, but let's consider for a moment that the top .1% evaluates to a larger number than 5. Maybe he was calling out notable exceptions, or maybe it's just a poorly edited piece of writing.

He was calling out notable exceptions...

| but it's infrequent to meet one whose wealth wasn't acquired through direct or indirect participation in the financial and banking industries.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#17

Post by neuroelectronic »

yummyfajitas wrote: post #3

The author of this article seems to be trying to confuse things: Membership in this elite group is likely to come from being involved in some aspect of the financial services or banking industry, real estate development involved with those industries, or government contracting. What does "involved in some aspect" mean? ...built a small company and was acquired with stock from a multi-national. Stock is often called a…

I think you're just confused.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#18

Post by numlocked »

Another client with a net worth in the $10M range is the ex-wife of a managing director of a major investment bank, while another was able to amass $12M after taxes by her early thirties from stock options as a high level programmer in a successful IT company. The picture is clear; entry into the top 0.5% and, particularly, the top 0.1% is usually the result of some association with the financial industry and its creations. I find it questionable as to whether the majority in this group actually adds value or simply diverts value from the US economy and business into its pockets and the pockets of the uber-wealthy who hire them.

This paragraph ruffled my feathers quite a bit. It's overreaching to say that a programmer who managed to make out like a bandit when their company hit it big is just "diverting value from the US economy". That scenario is quite a bit different than, say, profiting off of elaborate financial engineering.

And of course large amounts of money have "ties" to the financial industry. What the heck else are you going to do with the money? Equating a programmer who happened to strike it rich during an IPO (presumably) with an investment banker as both being tied to the financial services industry is ridiculous.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#19

Post by yummyfajitas »

Quarrelsome wrote: post #10
civilian wrote: post #5

Earlier quoted context omitted.

Wait, what's the problem that you're solving?

The idea that it is possible for those that earn vast quantities of money more than your "standard joe" to pay _less_ tax on that considerably larger cash pile. The line about lobbying for a new corporate exemption on "repatriating" cash from either tax havens or anywhere else abroad at the pitiful tax rate of 5.75% compared to the base 10% that someone that works at a diner has to pay illustrates the issue rather we…

If a non-US citizen works at a diner in a tax haven or anywhere else abroad, and brings money into the US, they typically pay 0% tax (to the US) on that money.

This is the analogous situation to non-US corporations (possibly owned by US corps) leaving profits overseas.

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