The Missing $1,000,000 Tax Bracket
fivethirtyeight.com
fivethirtyeight.com
Also, money never just "disappears" from the economy unless you destroy it. Who do you think buys the goods and/or services that your rich capitalists create, thereby enabling them to make new jobs and new products? In large part, it's the poor people. Or at least, the somewhat poorer people.
I can't make heads or tails of this. if oversupply occurs prices decrease.
There's a point at which the middle class being too poor puts the entire economy at risk. We are there now. Being an acolyte of supply side economics today is like being a communist in 1989 - you can keep believing in the true faith, but it's been refuted in the real world.
whose debt are you talking about? household debt or government debt? if the former it is up to people not to live beyond their means, if the latter the government is simply stealing from us. Where we are at now has nothing to do with the middle class and everything to do with government intervention in 1995 and again 2000 and 2001.
what the hell has modern macroeconomics done to our country? all over the place I see specious analysis such as this comparing numbers that either don't mean anything, are inaccurately measured, or can't be shown to be an indicator of other things.
edit: I pulled up some numbers
GDP in 1980: $2.7 trillion
GDP in 2006: $13.2 trillion
Population in 1980: 226.5 Million
Population 2006: 298.4 million
GDP per capita 1980: $11,920
GDP per capita 2006: $44,000
$11,920 in 2006 dollars according to the CPI: $28,824
we're not quite twice as wealthy, but we're far FAR richer now than in 1980. Income inequality means nothing.
The gains in GDP have more or less gone entirely to the top 10%, and in particular, the top 1% of the population. This makes everyone else feel like the pie isn't growing - because it isn't for them. Now that their stocks and homes are worth substantially less, and their credit is drying up, people have to spend less. And this fall in aggregate demand has disastrous consequences - not just here, but abroad as well, for all the countries that depended on exporting things to US consumers (Germany, Japan, and China).
Income inequality is of course not in itself a bad thing; it is the consequence of an economy where risk and work are rewarded. The question is extreme income inequality. Obviously this is a subjective matter. You may not think we have extreme inequality now, but when it's at the highest level it's been in 80 years, I'd venture that it is extreme. And extreme inequality often leads to falling aggregate demand and debt deflation. In short, a depression. If you think income inequality means nothing, you know nothing.
the amount the wealthy control has almost tripled, but the amount of overall wealth has almost quintupled.
imagine that the nation's wealth is represented by a dollar and I control 8% of it. Over time the wealth of the nation doubles but my percentage control has grown to 22%.
before I got 8 cents and the rest of the nation got 92 cents to share.
now we have 2 dollars that I get 22% of...44 cents.
the rest of the nation now has $1.56 to share. Discounting the fact that i'll probably reinvest part of my 44 cents, the nation is still much wealthier than before.
Be careful using such a broad brush.
What a great quote. Did you hear that from somewhere, or did you just come up with it?
I think you hit on a pretty good point about our economy - there is a very long tail of employers and producers in our country. When people think of the 'corporations' or the 'rich', they think of Exxon Mobile and Bill Gates, and fail to realize that the vast majority of our employers, 'rich', and GDP producers are not these companies or people but the small business owners. It's easy to sell higher taxes on Exxon Mobile and Bill Gates, but it's the local pet store owner, or community bank is who is ultimately affected the most by taxes.
but yes, I just came up with that fish bit, and will be using it again in the future :)
Speaking of equations, here they are: http://highered.mcgraw-hill.com/sites/0070891540/student_vie...
There's another aspect to hiring that we should consider. If you receive a tax break, you can pass the savings on to customers in lower prices or bring more customers in through advertising. You are right, just because you have the money doesn't mean go hire more people. Smart business owners know that hiring people should only be done when the value they could bring the business outweighs the cost. The point is that lower taxes can let you expand or market to more customers, and as business grows, you will employ more people to keep up with demand.
Very nice analogy. As a libertarian, its always created a little bit of cognitive dissonance in my mind when I've had a think about something and come to the conclusion that the government should engage in some wealth redistribution to achieve certain goals. This helps sort some of that out. Hope you don't mind if I borrow it the next time I defend my views in libertarian circles...
Now I am terribly sorry, I've tried mightily to resist, but in these polls, do you suppose most salmon polled would be for or against these new tax brackets?...apologies.
you heard the one about walmart taking $40 a month out of your paycheck and then giving you milk for 'free'? :)
If you make under $25,000, you pay no income tax. Everyone else pays 20%. You receive tax breaks for disabilities, children, educational spending, and charitable donations. Corporations would be taxed at 30%, but owners could take profits without being double taxed. Corporations could also receive up to 50% tax breaks through charitable works and/or donations (provides tax incentive for community projects, being 'green', or donating to a cause).
It all seems reasonable to me. Maybe I'm missing something. This would also simplify the complicated and bloated tax code we currently have. It could also encourage more businesses and workers to move here, which would stimulate growth.
Note: I chose 20% because I saw somewhere else a chart that showed that the ultimate tax revenue the government took in regardless of tax rate over the past 50 years or so was 20% of GDP.
from the 2008 Wall Street Journal article titled "You Can't Soak the Rich": http://online.wsj.com/article/SB121124460502305693.html
The phenomenon is called Hauser's Law: http://en.wikipedia.org/wiki/Hauser's_Law
and intelligent criticism of the chart can be found here: http://www.portfolio.com/views/blogs/odd-numbers/2008/05/20/...
If you're making over $150k, then you're in the top 5% of households in the US by income.
If you're making over 100k, then you're in the top 10% of households in the US by income.
http://elsa.berkeley.edu/~saez/saez-UStopincomes-2006prel.pd...
There are some lines. I'd draw it at "top 5% by income."
I live in Denver, and within walking distance of my apartment I see homes ranging from $175k to $15M.
Should we subsidize the lifestyle to which you'd like to become accustomed - because you want to live in a nice area? I don't think so.
Likewise if you're a multimillionaire video-store owner who has a bad year and only makes $40K you're poor, and deserve some money from the mechanic?
What ever happened to the idea of treating each voter the same as every other voter? It seems to me like any kind of segmenting -- by income, by net worth, by religion, by race, by looks, etc -- starts to pit groups of people against each other.
I don't think there are lines, or rather I think drawing them is a really bad idea.
I think a better question is why shouldn't 'the rich' be paying a bigger portion of tax? You mention, 'minority group', but if you change that to 'the rich' (for a good definition of the word), the answer becomes imo that the rich can afford to pay more tax if they stop spending so much money. Many more people can live very with surprisingly less than what 'rich' people have. The answer should be to suck it up and deal with it.
Do they receive more of the benefit from their tax dollars? Probably not. National defense protects just about all citizens equally, public schools are hit and miss with tax dollars per student (which may be irrelevant because of private schooling for those who can afford it), and public services like libraries, roads, and protection are not distributed according to who pays more (except when you have higher income communities). If anything the rich receive less benefit per dollar taxed from them than any other group.
Now I'm all for helping out those in need, and giving those who don't earn as much a tax break, but in terms of justice and equality I think our tax system unfairly burdens the rich. But hey, they can handle it, right?
Therefore: whatever amount of taxation revenue you want to raise, and ignoring second-order effects (e.g., that higher tax rates reduce the incentive to work and increase the incentive to find ways to avoid/evade taxes) you will reduce the amount of harm done by collecting the taxes if you take more from the better-off and less from the worse-off.
Of course, once the differences between rates become very large, those "second-order" effects may no longer be small. If you ignore them entirely, I think the conclusion is that for maximum total utility you should tax + redistribute until everyone is equally well off, but long before you get there the "second-order" effects will be much more important.
Also, tax + redistribute until everyone is equal will never happen, even if there are no second-order effects, simply because people are different. Some are content to work x amount for $y, while others want to innovate, work harder, and do more.
The government should make the game equal, not the players.
Taxing the rich (for whatever definition of "rich") more doesn't mean believing that all rich people can easily afford to pay the extra, any more than not taxing the rich more means believing that all not-rich people can easily afford to pay the higher taxes they'll have to pay if the rich aren't taxed more. It just means believing that overall the population is better off that way.
(And yes, of course, tax+redistribute until equality is never actually going to happen, and a good thing too.)
A lot of people made off like bandits during this bubble. A 70% tax rate at income over a million is probably unavoidable. We can't just fleece the average tax payer for generations and leave the top 1%, many of whom profited during this time, undisturbed on their St.Barts vacations.
Also, how is the government fleecing the average taxpayer anymore than it is fleecing the rich? Aren't the rich not only taxed more (because they earn more), but taxed at a higher rate?
I never intimated that "the government is fleecing the average taxpayer more than it is fleecing the rich." (Although Warren Buffet has said just that.) And since we own the government, I find "fleece" to be a strange word. Yes, the rich pay a higher rate on some of their income. And what we're saying here is that there should be even higher rate for income over a million.
Hell yes. Take more money at the point of a gun, why not? They have more money than you do, the greedy bastards. They don't deserve it. You deserve that money, or you know somebody that does. Go for it!
This "defend the wealthy" attitude that prevailed in this country for the last 30 years has nearly ruined this country and served only to further increase the economic inequality between the rich and the poor.
If you think that what makes this country great is that the rich are allowed to walk all over the poor then fuck you. Now give me your wallet you greedy bastard, you can skip the steak so someone else can get some health care.
Your self-righteous attitude is disgusting, do you live at a subsistence level funneling all of your extra income to the needy around the world? If not, then how can you demand that others skip their steak to provide health care for someone else.
Extreme income inequality is bad because it's bad for society as a whole and at some point society as a whole becomes more important than the individual.
Your self-centered fuck the rest of the country it's my money attitude is equally disgusting. We aren't talking about the whole world, we're talking about our country, because that's what our social contract obligates us to support with our taxes. I pay my taxes, don't cheat on them, and don't whine about it and call it stealing like a self centered narcissist who thinks his right to property matters more than someone else right to life. It doesn't, not even in the natural world; people would just kill you and take your property by force to survive.
If, as a collective, society decides to limit the maximum wealth an individual is allowed to obtain and funnel it back down to limit the amount of poverty, thus capping both extremes and making life generally better for the vast majority of people, well... I'm good with that as are the vast majority of people.
Inequality is not bad, you have to let people reap rewards for their efforts, up to a point, but not to the point that it damages us all.
What an interesting statement. Sounds to me like you're saying the individual is there to serve the societal structure, instead of the other way around.
As a simplification, I would certainly hate to live in a place where society made decisions for me. I'd much rather live in one where I made decisions for society. In other words the government is made legitimate by the informed consent of the natural legislature -- the people. The people do not exist to serve the government. Individuals exist just fine without governments, but not the other way around.
The entire structure of a democracy is that, at the end of the day, it is the person that is ultimately sovereign. Democracy isn't some club used by the majority to tyrannize the minority. If we were talking about Jim Crow laws, this would be immediately evident -- you can't simply take things from people because a greater number of voters want to. But somehow because we're talking about rich people the message doesn't sink in.
Okay. I allowed myself to get sucked into this. Sorry. I know better. It just seems like you guys are so close, yet I know in my heart you're not going to come to any kind of understanding.
No, I think one can't exist without the other, but what I'm saying is things like trade and property don't exist outside the social structure setup by society in today's world.
> Individuals exist just fine without governments, but not the other way around.
Actually, no, they don't, because there are no individuals, there are just lot's and lot's of people and we can't get along without some form of government. With no explicit government in place, crime rules. We can all agree that criminal rule is not "getting along fine", and in fact we have, it's why we create governments to begin with.
No man is an island, we are tribal creatures, and always have been even before we were man.
> Democracy isn't some club used by the majority to tyrannize the minority.
Actually, it is exactly that. We've put protections into place in many circumstances to force a super majority to be required, but it very much is tyranny of the majority. Look at the laws around us we're all forced to obey and tell me it isn't?
America is NOT a society based on individual liberty and freedom, it IS a society based on the moral whims of the majority. If this were not the case, there would be no victimless crimes and the default position of everything would be legal and getting something made illegal would be a huge battle. This is the exact opposite of what were are now.
Interesting and enjoyable comments from you though, thanks.
I could go on -- at length -- about various places where people did just fine without government structure. In the old west, for instance, marshals might not make it through town but once every couple of months. Didn't seem to slow down westward expansion that much. European traders worked all over the world just on a handshake and a promise for centuries.
Anthropologists studying tribes tell us that there are a few things that distinguish true tribes from modern cultures. One of those is the idea of private property: what is mine is mine and you can't take it from me unless under very unusual circumstances. In very primitive societies, the chief or the tribal elders can come around and just take what they want. It's only after we had the concept of private property and contract law that we saw significant economic and cultural growth. It was observing this state of nature that eventually created the political theory that is the bedrock of the country.
In communist China, just after the revolution, they would have "people's courts". These courts basically consisted of a mob of people who would bring in rich people, describe at length how they "exploited" the workers, and then strip them of all their goods. Sometimes for good measure they'd send them to jail or kill them. It was great political theater -- the crowds loved it -- but what were the results?
This was not a time of record growth, or even a time when the lives of the average citizen got that much better. All they really ended up doing was just replacing the folks who got rich signing contracts and respecting property rights with the folks who got rich being politically connected and doing whatever they liked.
Just some things for you to consider. I know I don't want to see any version of people's courts here in my lifetime.
Yes, for short periods of time small groups of people can get along without a government. That is not relevant, we're talking about a country here and you aren't really suggesting that we could get by just fine without a government are you? Government means any ruling body, not just the feds.
I don't want to see those kinds of kangaroo courts in place either, but the privilege of property, and it is a privilege, is not absolute and never has been. When necessary, we've always had some means of seizing it for the good of the many over the whims of the individual. This is as it should be. We should respect property rights as much as possible up to the point that they start hurting the many too much.
Each voluntarily gives up some sovereignty to create a minimal set of rules so that a transaction can take place.
Government (at whatever level) consists of each of us voluntarily giving up some of our sovereignty so that we can have private property and contract law. The protection of our property -- our lives, our housing, our money, etc -- is the goal here. Without that protection, and without our voluntary surrender of power, government becomes something you do to somebody else. It becomes a tool of control. Jefferson was against the U.S. Constitution, for instance, for just that fear -- that by removing politicians from the people at some point you lose the heart of a democracy.
Now of course we have to have a national defense, and therefore we're going to have taxes. I don't think anybody wants zero government. In fact, government can do lots of cool things, like a space program or promote clean energy. But the key question remains: are people voluntarily giving up sovereignty for freedom to transact? Or are they stuck with no choices? Is government something for maximizing freedoms, or something for equalizing property? Are we still getting equal representation for our taxation? Is government something we create, or something that we're stuck with?
If property is a privilege to be taken at the whims of the majority, then we're back to the caves again.
You can only look back in history so far before you see the world was so vastly different that comparisons aren't valid anymore. Government is already something past generations has done to us and there's no going back, it's already a tool of control, Jefferson already lost.
> But the key question remains: are people voluntarily giving up sovereignty for freedom to transact? Or are they stuck with no choices?
The question does not remain, we've been stuck with no choices for decades if not generations. No natural born citizen alive today joined the U.S. voluntarily, we were all born stuck with it.
It's not if property is a privilege, property is a privilege, period. The government can seize it, destroy it through inflation, or whatever else we let them do and they've been doing it for a long long time.
Your arguments are all so academic and what if'y, man I'm talking about reality here. The government can seize your property for suspicion of drugs, lose the case, and keep your property. They can seize the ultimate personal property, your own body, and imprison you because of what you chose to put into your own body. That's life in this country.
This idea that government is some voluntary agreement between the government and the governed just isn't the real world anymore, the days of overthrowing the government are long gone. You're talking about what government should be, I'm talking about what it is, so what's your point again?
I'm talking about the theory of governance, which doesn't go anywhere. Some things work and some things don't. There is a reason why the United States became such an economic powerhouse. Those first principles don't ever disappear.
So when you say something like you do not earn anything outside the platform society provides for you: it's demonstrably false both in historical and current terms, it reverses the role of the individual and society, and it adopts a wealth redistribution principle that has failed over and over again.
Other than that, it's a great idea. I'll leave you to it.
If that is demonstrably false, then please do demonstrate, because I don't believe that for a second if we're talking about the real world and not some abstract ideal government.
Governments have a monopoly on the markets I'm allowed to trade in and will jail me if I try to trade outside of their markets, so they clearly provide the platform and law and rules upon which all trade is based.
This is to my benefit, without those laws and rules someone could just take my property by virtue of being bigger and badder. The government is at least the big bad that I have some say in how it's structured rather than some random company which I have no control over.
Conservatives like to point out how redistribution of wealth has failed over and over again, but look around man, the entire civilized world is liberal, heavily liberal in American terms, so it certainly has not failed as far as I can see.
This idea that America has somehow succeeded where others have totally failed is something I just find absolutely absurd. Not being number 1 is not failing. Every other government in the world is not a failure.
As far as I'm concerned the measure of the success of a country is how happy it's people are, not how much money it cranks out. Happiness is not measured in dollars.
America is certainly not even a contender for richest country, and as you state, many countries, especially in Europe, are showing that socialism works quite well. It's the reason we're moving to that model with healthcare.
> the measure of the success of a country is how happy it's people are, not how much money it cranks out
Exactly. And countries with more smaller gaps between the rich and poor are almost exclusively much happier. I've been to two countries which are very similar (I won't state which to avoid offending anyone here), but Country A was depressing and sad, old women drunk in the streets -- I couldn't leave fast enough. I went to Country B and, although it was poorer, the people seemed much happier. It was much more alive and upbeat. I found out later that Country A has a huge disparity in wealth, Country B very little. I credit this with being the single strongest contributing factor to the quality of life in these countries, and a huge factor generally in the quality of life in any country.
The current income tax we have now is worse than the serfs had, @least they only had to work 1 or 2 days on the fields for no pay. We have to do that on our income, let alone all the other taxes and fees we need to pay.
There must be some kind of sensible middle road...