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Why would anyone need more than 400k a year for himself in the first place though ?
To invest in 2 hippies starting a personal computer company in 1976. To invest in 2 guys in starting a search engine in 1996. To invest in a kid in Harvard making a social network in 2004....
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What incentive would anyone have in making more then 400K a year if you were going to be taxed at 90%?
This is the correct answer, I don't know why you're being downvoted. This would cause people to either (a) leave the country or (b) work until they made their 395k and then stop working for the year. It's actually quite terrifying that people would advocate for taking up to 90% of someone's income. We need to work on solving inequality but this simply isn't the answer. Edit: It's also important to remember that takin…
Interestingly, the top U.S. tax rate from 1951–1963 was >90%, and it was >50% during the half-century from 1932–1986 – https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
And then Kodak died. How many high paid janitors do they have in their upstate NY headquarters now?
Indeed. If only they hadn't given their janitors paid vacation, they'd be in Apple's position right now!
Six figures in the bay area is less than 79k in Rochester when it's cost of living adjusted. This article is just wrong in many ways.
Earlier quoted context omitted.
Why would anyone need more than 400k a year for himself in the first place though ?
To invest in 2 hippies starting a personal computer company in 1976. To invest in 2 guys in starting a search engine in 1996. To invest in a kid in Harvard making a social network in 2004....
Apple got initial funding of only 250k, and that was split between equity and loan, very feasible even with a 400k yearly cap. (And I'd also note that 10% of "any money over that" still adds up given some of the salaries paid to top execs)
Secondly, Google's initial funding was only 100k in 98` dollars. The significant 25m round was from kleiner perkins and sequoia, and I certainly imagine that corporate funds for investment would not be held to the same limits as personal income tax.
Finally, facebook was bootstrapped out of their own pocket until they got a 500k invesmtent from thiel in 04 $'s. Once again the "big" investment a year later came from a firm.
In all of these cases the initial seed/bootstrapping money would come FAR under the 400k limit expressed, adjusted for inflation, and that assumes people wouldn't both save over multiple years, or that we wouldn't see more reliance on companies rather than individuals in early stage investment if the tax code shifted such that it was more advantageous.
I defend this largely because in my own readings of history I've attributed a large amount of the current economic state to events of the late 70's and 80s, the tax code changes being a major one of them, and I think your points unfairly detract from the validity of reintroducing such tax structures.
And then Kodak died. How many high paid janitors do they have in their upstate NY headquarters now?
The underlying cause of this whole issue is the changes in tax policy instated in the Tax Reform Act of 1986, previously income was taxed at higher rates unless deductions were utilized which forced those earnings back into the economy creating jobs funding research, etc.. As it's become easier to retain more earnings there's little incentive not to optimize an entire corporation solely with the purpose of generating…
Earlier quoted context omitted.
To invest in 2 hippies starting a personal computer company in 1976. To invest in 2 guys in starting a search engine in 1996. To invest in a kid in Harvard making a social network in 2004....
True, but also for multiple homes, fancy cars, world travel, etc. When I worked at a hardware store we had a brochure we could order in a gold-plated Ducane grill for $4 million. That recent graph showing the top 1% having a 6% wealth growth rate is wholly unsustainable for any society. So there's something to be said for trying to level it off.
The underlying cause of this whole issue is the changes in tax policy instated in the Tax Reform Act of 1986, previously income was taxed at higher rates unless deductions were utilized which forced those earnings back into the economy creating jobs funding research, etc.. As it's become easier to retain more earnings there's little incentive not to optimize an entire corporation solely with the purpose of generating…
The real issue is that the fundamental structure of our economy aggregates wealth towards the top. Employees who add millions of dollars in value per year to a company get paid a fraction of that. Look at per-emoloyee profits for all of the major corporations. Our economy very heavily favors people who own capital over people who do work on the ground floor.
If you want to fix income inequality, you have to look at structures like the stock market, like corporate equity distribution, and pretty much everything we have in place in society that allows the rich to increase their wealth without actually working.
Increasing taxes is like taking aspirin to cure Ebola. Sure, you feel better, but it's not going to make you healthy.
This story reminded me of something I've often wanted to know when people start talking about economic inequality metrics, namely, how many of those in poverty when entering the workforce will remain in poverty their whole life? To me the longitudinal information here is the most significant metric i.e. what does wealth movement look like for individuals over their lifetime. Virtually everyone in their teens and earl…
I've heard from smarter people than me that your parents' level of economic attainment is the best predictor of your economic attainment. Everyone may be broke in their twenties, but some of those 20 somethings presumably got a leg up from being in a good (pre, elementary, secondary, post-secondary) school and can ask mom and pop for help on the down payment for a home, etc. Suspect that's still the case, though the…
See: http://www.emilkirkegaard.dk/en/wp-content/uploads/Intellige...