Comment by Projectiboga | Hacker News Reader

Comment by Projectiboga | Hacker News Reader

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This is why John Stewart Mill and Adam Smith advocated for steeply progressive taxes beyond a floor. The income multiplier for the top end of the income spectrum is very low compared to the bottom 40%. From a 1980a text book, the lower income multiplier was 11x, meaning someone earning a subsidence wage will spend it quickly, locally and it will multiply. The top 10%, I dont recall exactly other than a smaller band at top that included high salary taxpayers, not just the wealthy, had a multiplier of 0.4. When one gets to such high assests and income one stops consuming quickly and the resources become stagnent. This is an example of that, this "auction" might genetate some salary for the staff but lots of these millions are just being shifted between wealthy folks with little real world economic effect. This has been slowly strangling amy growth in real income for a majority of Americans ever since the tax code was altered in the 1980s. There have been other cuts in the 90s, 2000s and 2017. The only things delaying the serious effects were the tech advances and rapid population growth, masking this economic drag.

>This is why John Stewart Mill and Adam Smith advocated for steeply progressive taxes beyond a floor.

That is not correct.

>...Smith's first maxim of taxation, from Wealth of Nations, is that the "subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."

>Taxation in proportion to revenue is not progressive taxation. It is proportional taxation—in modern terminology, a flat tax.

https://reason.com/2023/06/04/adam-smith-wasnt-a-progressive...

In terms of Mill, I think he advocated for inheritance taxes, but in terms of "steeply progressive taxes" he wrote:

>...To tax the larger incomes at a higher percentage than the smaller is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours.

https://oll.libertyfund.org/titles/mill-principles-of-politi...

> ...To tax the larger incomes at a higher percentage than the smaller is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours.

Must be nice to live in a time when this either was true or when people genuinely thought this was true.

Slowly strangling any real growth?

https://fred.stlouisfed.org/series/MEHOINUSA672N

Is there a way to add cost of living increases to that graph?

That’s what “real” means, it accounts for increased costs due to inflation.

If you’re worried that more income is being consumed by necessities, real disposable income is also on a steady upward trend:

https://fred.stlouisfed.org/series/A229RX0

And yet, people have moved from often single income households, to double income households, and still struggle to buy homes...

So there is a disconnect between those real/disposable income numbers and the actual market realities, no?

No. The “vanishing middle class” is a convenient political myth supported by anecdotes and misleading charts.

Most of the middle class that “vanished” became part of the upper classes, at least as they would have been defined in real economic terms a few decades ago. Look at college graduation rates, or # of workers above $100k comp (real, not nominal), or the net worth of retirees, or …

America is vastly richer than it was even in 1990. Those riches may be modestly less evenly distributed—though there are demographic forces at work there as well as raw economic ones—but the median American along any number of axes is much, much better off.

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