And this argument is garbage. Individuals accumulating massive amounts of wealth doesn't do any good for society.
1) They are competent at wealth accumulation, which indicates some level of aptitude and intelligence
2) They have a large mass of capital with which to fund new businesses and ventures, and are likely to pick good candidates because of 1)
So, I don't see the problem here. It seems to me like they have an enormous good thing to offer society.
Many people argue that it's the best mechanism we have for achieving whatever our actual goals should be, but few if any will claim that running businesses is itself the higher purpose of human civilization.
In order for this conversation to be productive, we'd all have to agree on some underlying moral framework prescribing what society ought to achieve. And then we'd have to evaluate whether ultra-wealth people allocate their capital in a way that achieves that outcome.
No small tasks! But I expect that in the course of such a conversation, we might discover that there are a wide variety of rich people who spend their wealth in a wide variety of ways. Some of those people will typify your caricature of the rich, and some of those people will typify Harvey-Specter's caricature.
Finally, as an aside, you put the ultra-rich on quite a pedastal. They're just people who decided they wanted to accumulate wealth and then did a good job at achieving that.
It's admirable to do so well in a competitive environment, but no more or less admirable than the top 1% in anything else (a sport, medicine, religious/military leadership, teaching, etc.). Being great in a competitive atmosphere is a good signal, but wealth accumulation is not the only place where great humans compete and wealth is not the only metric which great humans use to measure their life's work...
Yes. And the irony is that the wealth accumulators ultimately do so using achievements made by other people, who cared more about other things than accumulating wealth.
Also, I don't think that the top 1% should have all the benefits (winner takes all).
Just for fun, what is your underlying moral framework?
Mine would be population and economic growth, environmental protection, and disaster avoidance.
And #2 just sounds like a rephrasing of trickle down economics, which is economically questionable at best.
Taxes.
> Well what other "economics" are there if not "trickle-down" economics?
If the people have money you can make money by making things they want and selling to them.
For example, there is a good chance that said individual would invest the money in more regulatory-capture extraction schemes. In this case, we would be better off if those resources were just straight-up wasted by the government proper.
Of course there's also a good chance that the government would use it to fund their own citizen-hostile totalitarianism (eg the NSA). The point is that the general heuristic of government inefficiency is inapplicable.
A successful white-collar criminal can be said to be good at capital allocation, to make an extreme example.
My argument is not that wealth means someone is criminal (although I do think criminality has as a goal wealth rather than poverty, which is the inverse but relevant). However I do think there are lots of hidden costs that people advertently or inadvertently manage to get out of paying for, and taxes are meant to recognize that fact.
The bailouts of the great recession are good examples of this to me in some sense. The government saved certain businesses, or ameliorated their crash. Whether or not this was the right decision is one thing, but given that they did get bailouts (or outs), suggests that what we should expect is taxes and regulation to support these kinds of things. There are lots of other things like this that conveniently get glossed over, like hidden environmental costs, education and infrastructure, research, etc.
I find it incredibly manipulative, for example, for arguments to be made against net neutrality on the grounds that telecom companies somehow bootstrapped their way up from nothing, when the internet itself was a government invention, and much of their infrastructure is made possible by public right-of-way laws or other privileges given by municipalities.
I think the fundamental problem with US society today is an extreme form of survivorship or fundamental attribution bias, where we grossly overattribute success to individual characteristics and not other factors. Then we get locked into these strawman debates that pit extreme capitalism against communism, as if there's no moderated grey area, that our only choices are complete equality of wages etc. or winner-takes all gross inequality.
What I increasingly see in the US are the haves and the have nots, and I no longer believe that the haves, by in the large, deserve what they have in a way that the have nots do not. Income inequality, to me, is bad not just because of the disparity itself, but because it tends to exaggerate market errors in valuation.
We tend to have these conversations and HN and elsewhere where we look at these examples of downward mobility and point to everything someone did wrong, but then do not turn to management, administration, business, etc. and ask "did they really do everything right"? We also tend to act as if, if they really made an error, that is really worth the downward mobility they accrued.
96% of the population have a television. 90% have a cell phone. 80% have access to the Internet. Catastrophic healthcare is now capped, and low-income families are subsidized on health plans. Public education is mandated and provided everywhere. Public libraries are available in virtually every city.
Most of the things you've mentioned are at the top-half of Maslow's hierarchy of needs. For many, they are one pay check away from homelessness.
Public education, while mandated, is not equal, as property taxes pay for education across most of the U.S, which equates to, rich folks/better neighborhoods having access to better funded schools.
There was a hackernews comment some time ago that pointed out that the fundamental problem seems to be that over the years, the distribution of risk has moved from institutions to the individual. The individual bears the brunt of the risk, with cascading burdens tied to small emergencies.
The oft cited scenario of low-income folks losing their job due to car troubles, thus being on the brink of homelessness, due to non-payment of rent is becoming more of a reality for the middle class.
Cell phone? You can get those EXTREMELY cheap.
Define access to the internet?
> Catastrophic healthcare is now capped, and low-income families are subsidized on health plans.
This is simply untrue. Many changes Obamacare made have essentially been gutted by the current administration.
> Public education is mandated and provided everywhere. Public libraries are available in virtually every city.
Public libraries have been around decades as has public education.
Our poorest people are in many ways wealthy compared to both people of times past and compared to people in poor nations. Homeless people can get apples and potatoes all year long, something even William the Conqueror couldn't have.
> The fact that you can purchase one for an amount of money
You can get TVs free off the sidewalk in most places. It is not an indicator of wealth.
> Our poorest people are in many ways wealthy compared to both people of times past and compared to people in poor nations. Homeless people can get apples and potatoes all year long, something even William the Conqueror couldn't have.
Homeless people are so wealthy...they don't have shelter? I think you're putting your foot in your mouth. Also can they get apples? With what money? Apples are available to purchase. That doesn't make them affordable.
So. I think that the idea that we should tax the high earners of their entire income is a very bad idea! Would it not destroy the motivation of those top earners to work hard, to keep innovating, and to strive for success? It also makes the assumption that, should we take the income away from the top earners, that the state will do a better job at putting that money back into the economy. I think that assumption is incorrect. A person who has figured out how to make 5M a year, whether it's through advertising or a manufactured product, is probably better at capital allocation than a bureaucrat or politician.
You also mention that "the root cause needs to be addressed." Unfortunately, we don't know what the root cause of wealth inequality is, and all historical attempts at "fixing the root cause" with wealth redistribution have ended in catastrophe; we really do need to remember that because your comment is quite similar to Marx's famous quote "From each according to his ability, to each according to his needs". In fact, unequal distribution of resources is a natural law, called the Pareto Principal, and it is everywhere: The height of trees, number of progeny of chimps, number of players that win Monopoly in a given game... Inequality is not an evil force, it is a natural force that has been fought historically at the great peril of the populations that decided to fight it.
Now, perhaps there is some variation of this progressive tax law that encourages investment. Perhaps that is even suggested in your comment. I would be open to something that allowed people to have 5M/year in income, but above that, they were heavily incentivized to invest.
Do you have any data showing that top marginal rate negatively correlates to economic growth?
I'm looking at the charts right now and, if anything, a high marginal rate appears to lead to greater growth.
I'm making a joke, but your analysis is exceptionally weak.
"My boy, not at all! What followed was one of the most prosperous times in the country!"
I'm not saying correlation, causation, blah, blah, blah. But such rates not only didn't "destroy a generation", it's a time many look back to fondly (in which case they're probably white and male).
FWIW I too am a jobless Millennial at the moment, so it's not like I am playing devil's advocate because of a nefarious hidden agenda.
EDIT: Spelling.
There's also the problem that there simply isn't very much money at that level. Just to put it into perspective, the top 1% of tax payers only had an AGI of about $2 trillion. Let me get even more extreme than what you propose. If you taxed at 100% over $1M/year, you'd only get $431 billion. So that would only add about $200 billion (about 15%) of Federal revenue per year since they're already paying about half of that on earnings over $1M/yr. Oh yeah, BTW, how would they pay local and state taxes out of that?
The long-term alternative is revolution where the rich are lined up against a wall and shot.
There is no natural law guaranteeing a right to private property. Nor is there anything guaranteeing wealth shall accrue to the wealthy. We could just as easily make it the law that accumulating net assets > $10m is punishable by death.
This same pattern has repeated itself many times. The people at the top accumulate all the money, the economy grinds to a halt, the 0.1% use propaganda and control of state power to suppress any attempts to change the status quo (whether violent or not), then eventually the system collapses under its own weight. The outcome is often quite bad for everyone but since the 90% have nothing to lose that hardly matters.
Unfortunately it was fear of communist revolution kept capitalism in check. Now nothing does. I fear we're going to continue our slow slide downward, with ever more cuts, voter suppression, and various fascist policies in an effort to control "the people" and prevent change. Without a relief valve pressure will just continue to build until it can't.
In other words, it is no problem that the rich have more money; the problem is them using that money against the rest of us. If you don't see how, try entering a game of Monopoly a few rounds after it has started.
- reinvesting into the business (cascades to more economic activity)
- paying for more employee benefits
- increasing employee compensation
- the cascading economic activity provides even more people with opportunities to make more money. virtuous effects.
Even if the personal tax was capped at 5M, it then doesnt make sense for personal distributions greater than 5m, so the money stays in the corporation for reinvestment.
Progressive taxation is good. Progressive taxation that only targets the top 0.1% isn't effective unless income inequality were much worse than it is.
To make a meaningful amount of more revenue via income tax without hurting the bottom 90% too much, we'd need to target the top 10%. That probably means the top tax bracket should kick in around $130K. Much lower than where it is now, but high by the standards of many other rich countries (in the Netherlands 52% kicks in at $63k/yr, in Denmark it's 60% at $55/yr).
We should add a VAT too. Possibly with a simple UBI-style system to offset its impact on the poor (since they consume more of their earnings than the rich)
It pretty clearly is, which is why each downward shift of the nominal tax burden in the US (stretching back to the income to payroll tax burden shift under Reagan) has had noticeable effects on accelerating inequality.
> The very rich have ways of hiding or deferring income.
Mostly, as a direct result of tax policy directly designed to frustrate tax progressivity, most notably giving preferentially low tax rates to kinds of income mostly earned by the rich (long term capital gains are a big example), and loading up extra taxes (on top of normal income taxes) on labor income.
Making taxes more progressive is less about increasing progressivity in nominal rates as it is about addressing those issues (though making the nominal rates more progressive may also be part of it.)