The Economist is up in arms with the new Britain "let's tax the rich too" , for instance -out of many articles- http://www.economist.com/opinion/displaystory.cfm?story_id=1...
If you can pay $1 million in income tax in a single year, I figure you're doing fucking amazing out of life and it's where any entrepreneur should want to be in life.
If my company paid me, they are poorer by $1.
If the government paid me, the aggregate citizenry is poorer by $1.
If the government printed it, the total value of US dollars in circulation has decreased by $1.
Technically, activities like mining precious metals or gems could count as creating wealth, but obviously basing an economy on an arbitrarily-priced material as silver or gold is a bad idea. Anybody who believes gold isn't a fiat currency is mad.
The most successful way that governments seem to have found to tax the wealthy is inflation, which is a "tax" on liquid currency. But there's ways for the wealthy to avoid inflation which aren't available to the working class, such as buying various foreign currencies. A direct tax, rather than "stealth" taxes, is a healthier and more sustainable choice.
Gold is not wealth. It is only because it can be exchanged for a good or service that can be consumed that it has any value.
And where is it written that the "working class" aren't allowed to buy foreign currencies? Given that I'll be flying out of the US tomorrow on holiday I was hoping I'd be able to buy some foreign currencies at the airport...
Yes. But presumably when you earned that dollar you somehow contributed to making something that somebody wants. Now that thing is slightly more common, so it should be slightly easier to obtain than it was. Thus you've given a tiny little bit of value to everybody who participates in the same economy that you do. When millions of people do this we get modern civilization.
Weirdly the answer is always "make those who contribute the most contribute more" and not "make some of the rest pull their weight".
After all, when the top 20% are taking over 80% of the money
10% of the population controls 85% of the wealth.
1% of the population controls 40% of the wealth.
More here: http://taxprof.typepad.com/taxprof_blog/2007/10/top-1-pay-mo... "The new data shows that the top-earning 25% of taxpayers (AGI over $62,068) earned 67.5% of the nation's income, but they paid more than four out of every five dollars collected by the federal income tax (86%). The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns."
Is your solution to move the rich from being rich to being poor? The rich should stay rich. You don't punish the rich to bring the rest of society up.
My opinion is that no matter what you call the oligarchy of corporate wealth and public influence that runs the United States, you can't call it fair. The playing field is tilted toward those with power to tilt the playing field. People are profiting from the unfairness in the playing field.
So the moral thing to do is to tilt it back. You don't have to nationalize Nabisco or send millionaires to debtor's prison to improve the situation. But you can tax them disproportionately compared to the poor, and use the money on social programs.
Put another way, above the line of FU money, the marginal value of the millionaire's last dollar is lower. It takes more of their dollars to make a proportionate impact on their income, compared to the impact of the payroll, property, and income taxes on the middle-class salary.
As for social programs, if you give a man enough money to live for a day, he's not going to work for a day. Welfare encourages people to do absolutely nothing.
The rich and their multi-national corporations, evading taxes and lobbying for sweetheart deals from the government, are doing a lot of damage to the American lower class and middle class. I don't have to look far to rip examples from the headlines. The health and drug systems are messed up. The corporate welfare for Wall Street is messed up. Education is messed up. In all cases the poor are disadvantaged to the benefit of the wealthy. They are literally paying taxes for the excesses of powerful corporations and lobbies.
Maybe I used the wrong term, but I consider education a social program. We spend far too little on it. We were hemming and hawing about funding HeadStart not too long ago. We underpay our teachers and then lower our taxes and call it a balanced budget.
There are social programs that are important beyond welfare, so just ignore that one if it is distracting you from the main point.
http://taxprof.typepad.com/taxprof_blog/2007/06/warren-buffe...
I am in pretty good company with this argument I think. We should have a more progressive tax system. There is a lot of room to make it more progressive without damaging incentives to become rich.
There are so many incentives to become rich that it's laughable to say that you could destroy them all through a carefully calculated welfare program.
Ignoring the bit about "fair", that's true, but you don't understand what it means, especially as it relates to "fair".
> So the moral thing to do is to tilt it back.
If it was possible to tilt it back, it wouldn't be tilted. (Reread the first paragraph quoted.)
If you insist on giving govt power, that power will favor those who are the best equipped at tilting govt power to their benefit.
You can't keep them from tilting things in their direction - you can only affect whether there's anything to tilt in their direction.
If you're satisfied with crumbs, keep shoveling power at govt, but stop complaining that others are getting a full meal. If you want to stop them from getting a full meal, you've got to get govt out of the food biz. Yes, you'll lose your crumbs, so you get to make a choice.
Here is a fun bit of trivia.
Q: What was the top personal income tax during the largest expansion of the US middle class on record?
A: It ranged from 92-93%.
That's right. During the post-war boom of the 1950s, the marginal tax rate on income over $1 million/year (in 1950s currency) varied from 92-93%. Oh, and massive increases since the 70s in the numbers of wealthy people, and degree of their wealth have coincided with a long-term decline in the earning power of the middle class.
Of course cause and effect is never provable in cases like this so you can't prove anything from this example, but it certainly doesn't fit with trickle down theory.
But since there is more money to be made telling the rich what they want to hear than what they don't, inconvenient facts like these never get reported in the political debate...
You've heard of three-martini lunches, right? You know that they existed because the cheapest way to drink was to make it a business expense (paid for with pretax dollars) instead of a personal expense (after-tax dollars). At a 92% tax rate, it's 11X as expensive to drink personally as to drink professionally--so the tax policy you laud had the wondrous result of making a decent fraction of American executives half-drunk by noon.
How could this be a win over high taxes? Simple. You would donate an asset that had appreciated for the full value of the asset, which was less than the purchase price. As long as you had a supply of rapidly appreciating assets, your effective tax rate was much lower.
The most popular kind of asset to donate for this purpose was art. The most popular place to donate it was to foundations run by the rich families in question. And appreciation was easy to guarantee when everyone else was following the same strategy.
So the idea is buy 5 Monets for $1 million. A couple of years later donate a million to the family run foundation, the foundation uses that million and buys one Monet from you. You then donate 4 more Monets at the new found valuation of $1 million each. For $2 million in expenses you have now canceled out $5 million in income.
The most lasting legacies of this tax loophole are insanely high art prices and public museums full of extremely expensive art.
That doesn't mean they should pay 80% though - in a world where people and capital can move, the price you can charge people and businesses to be in your country is subject to market pressure. And assuming proper pricing, markets are the best way to efficiently allocate scare resources.
In other words, the top 20% aren't benefiting at the sacrifice of any one else... they are creating new wealth. And, it's frankly none anyone else's concern, in general, how much wealth they choose to create for themselves.
Consider if you would, yourself living on your own remote property. Suppose you have an excellent system of agriculture and infrastructure that you engineered yourself... which is immensely productive. Now suppose another individual migrates to that location and you then create rules b/w you and said person to respect each other's property. All the sudden, are you benefiting from your new society's system of rules and his agreement not to harm to you? No; you are benefitting from you own ingenuity and labor, as you were before he arrived. You are profiting from your own freedom and the use of your own mind, as you did before.
In this context you can call it rent. However extend that to an entire country with a ruling class, and you may rename it taxation. When democracy emerges and the ruling class becomes the people, then we are back where we started.
While I disagree any implication that the sole basis of taxation should be an assessment of "how much have you used"; I agree that this should be a part of it. If Google benefits from publicly funded UK/Irish IT infrastructure, then it is fair to tax them for the benefit recieved.
Let's say you make an agreement that this neighbor that you'll give him food throughout the year in exchange for him repairing your infrastructure at the end of the harvest. If he takes the food but then doesn't help you when you need it, what do you do? You either have to fight him or cease dealing with him and absorb the loss. Either way you're worse off.
Lets say your skill is canning and preserving food. Bartering with food producers is easy since you fill a mutual need with each other, but bartering with blacksmiths, bankers, and people that provide other services is much harder. You have to trade your services to people that value it less, or spend a lot more of your time to make arrangements. Any of which could be reneged on (see previous paragraph).
Hence government monopoly on force, contract law, and currency. Three things we've had for so long that we forget they're there. Three (of many) intangible things that you gain increasing benefit from the wealthier you are.
Warren Buffet, Bill Gates, or Michael Bloomberg would not have become billionaires living in the 1500s, nor if they were born in Zimbabwe (well, I guess they could have been trillionaires in Zimbabwe but you know what I mean).
Actually, the US federal income tax rate is far more "progressive" than that. If you're at/below median income, you're probably not paying any federal income tax. (You are paying social security, but you get that money back with a decent return. The rich don't.)
Problems arising from taxation shouldn't be solved by complicating the taxation process, they should be resolved after taxation. If you take 10% of everyone's wages then the top 20% will be paying 80% of the nations income tax. Distribution to people below the poverty line can be implemented (as in most countries it is) after taxation.
I get one vote, I should be getting one tax, just like everyone else.
IIRC there was an article from Warren Buffet in which he ponders why he pays less tax than his secretary, even though he earns far more than her.
That doesn't imply that they aren't taxed. (In the US, dividends come out of a company's post-tax profits, so they've already been taxed. Plus, there's an off-again/on-again tax on dividends paid by the recipients.)
> IIRC there was an article from Warren Buffet in which he ponders why he pays less tax than his secretary, even though he earns far more than her.
Buffet doesn't "pay less tax than his secretary". He pays taxes at a lower rate on some of his income than she pays on her wages.
Buffet is fond of advocating taxes on other people, using himself as an example even though he'll never pay the tax in question. For example, he pushes the estate tax, never mentioning that his estate is set up so it won't pay a dime. He just happens to own companies that make a lot of money off of people who will owe estate taxes.
Even if that weren't true, using Buffet as an example is a bad idea. He has the money to get around almost every tax law. Laws supposedly aimed at him end up hitting other people.
It's also dishonest - politicians talk about going after the "super rich", but they end up passing laws that hit folks a couple of rungs down. This is understandable, there's more total money a couple of rungs down and those folks don't have the political pull to do anything about it, but ....
Note that the super-rich get to decide where they'll be taxed. Buffet can take his income elsewhere. If he does, his US secretary loses her job.
Weirdly, he has not done so.