Inequality and Risk
paulgraham.com
paulgraham.com
This part always has particularly far-reaching consequences.
The problem here is not wealth, but corruption. So why not go after corruption?
People like to assail lobbyists and the super-rich corporations that supposedly buy favorable policy, and of course, everyone then blames the rich for it. But it's not the rich that deserve the fundamental blame. It's the politicians that directly create policy, and can enforce that policy at gunpoint. No amount of money gives you legal authority to stick a gun in someone's face.
It's the government, and only the government that make the laws - not the lobbyists and not the rich. Economic power is not the same thing as political power.
Which is why transparency (which PG also speaks about) is so key.
So, the government can lower the risk for founders in a meaningful way. I'm not saying that socialism is awesome or anything, just that certain social programs reduce the risk of doing a start up.
Aaron Swartz (of reddit fame) once wrote an essay on this topic arguing this point: http://www.aaronsw.com/weblog/prostartup
The lack of a social safety net requires founders to be in a good position - good health, no dependents (spouse, kids), etc. - or get enough VC that they can afford to go in that direction.
It's clearly not the only issue - investment dollars still need to come from somewhere and this doesn't change that risk (other than lowering the amount initially needed since the VC wouldn't have to pay for things like health insurance), but personally it would go a long way for risk-averse me.
For some people, though, the financials aren't even considered. Some people just want their freedom and they want to create, and taxes aren't going to dissuade them.
Others, like VCs, do get into this game with the express goal of making a pile of money. If the payout is less, the risk they're going to be willing to take on is less, and that means less development. With companies that bootstrap, this may not be as big a concern, but many companies simply wouldn't exist without the VCs willing to take on the risk. It's not an ego thing for them, it's all about the Benjamins.
what you're actually saying is that a certain minimum level of education should be publicly funded. Who decides what metrics we use to judge education? It would seem that we're currently doing a terrible job at this.
Why? These aren't automatically available in nature. They require work, and the application of the mind, to acquire. Health Care is a service provided by individuals. People have a "right" to health care only inasmuch as those who are capable of delivering said health care are willing to do so (that is, voluntarily).
The same goes with food gathering/storing/preparation and building manufacturing. Someone has to provide these services, and to state that because someone "deserves it" that those services must be rendered (without concern for rendering individual's agreement), well, that's the master-slave relationship.
The (American) slaves were given basic provisions for life, even some leisure time. Their fundamental problem wasn't the money or their lifestyle, it was the lack of choice. They didn't have the right to say "no, I refuse to serve you."
This is already the case, actually. Working at certain emergency rooms obligates one to care for those that come through the door, regardless of whether they can pay. This hardly makes the doctors & nurses who work there slaves.
Similarly, in the US we citizens have a right to council, and if you can't afford an attorney, one is provided by the state. Does that make court appointed attorneys slaves?
It turns out the answer to your question doesn't require empathy for your fellow man to understand. (Of course, if we were assuming this, the answer to the question would be largely obvious.)
A lot of things aren't automatically available in nature. Police, the military, public schools, and your broadband connection all come to mind.
It turns out that governments and society work based on this concept you may have heard of called a "social contract." Look it up. Saying there's a "master-slave" relationship implied by citizens deserving to have their basic needs met is either really ignorant or very disingenuous. Every citizen of this country is part of the contract, whether you realize it or not.
If you allow a large enough part of the society to become a desperate underclass, you'll find that they'll become dangerous to the rest of the society. Dealing with these problems will cost you more in taxes than simply improving infrastructure at large as a preventative measure.
Or, put more bluntly: the safety of the rich and upper middle class isn't automatically guaranteed in nature either. If you really want to take the nihilist approach you imply, then you'll find that poor people won't just walk idly by your house in despair; they'll just kill you and take your money. Or they'll get so sick that you have no choice but to start paying for their health care lest you catch the plague. In "nature" no one cares how well you code, only how well you can fend for yourself in the wild. Is that really the society you want?
- you have a right to trial by a jury of one's peers, but people have better things to do than sit around and listen to you defend yourself or slag on the accused...you don't see people clamoring at the bit for jury duty, do you?
It isn't a fallacy that the poor don't pay taxes. If a poor person pays X to the government and gets Y in social services and Y>X then they are a net tax eater.
Your assertion that the poor pay more taxes as a percentage of income is so ludicrous that I don't even know how to respond.
A lot of people conveniently forget about sales tax (and potentially other sorts of government fees, like vehicle registration fees) when saying "poor people don't pay taxes." Sales tax is an incredibly regressive form of taxation, as are gasoline taxes, cigarette taxes, etc.
okay let's say we have a consumption tax of 10%. By definition your tax rate can not exceed 10% (it will be 10% if you spend all your money).
this is peanuts. the tax rates for the top 2 quintiles range from 25% to 32%, and that's straight income before paying all those same consumption taxes.
frankly, your argument is flawed from the get go. if we're going to assume a decreasing marginal utility of money (which is what theft from the highly productive is usually justified with) we can't use straight up percentages of income as our metric since the whole thing relies on the idea that taking 10% from a poor person is worse than taking 10% from a rich person.
But if we do that we have a whole new problem on our hands. How do we determine the rate at which the utility of money decreases?
The total easily comes to 40% (15% + 6% + 13% + 10% sales tax, not even including state taxes), well exceeding the 25-32% paid at the top. Because the top earners spend a much lower percentage of their income, they are far less effected by sales tax proportionally. Medicare and social security top out at 100k income. So the top earners pay 32%, and that's it (actually less when you include the tax breaks a good accountant can find you).
And that's how you can say that the poor pay more taxes than the rich.
Sales tax is equivalent to income tax for a poor person (albiet at a discount rate given that their rent, and in some cases food, is not taxed).
Sales tax is not the equivalent for a rich person, who can save the bulk of their income.
Therefore it is fair and not misleading to include sales tax as an additional part of income taxes for the poor. And it's correct to say that poor people pay more than the rich in taxes.
Because of the way the tax system is structured, someone making around 100k a year is taxed most heavily, then less and less in either direction away from that point.
A poor person making $30k/year is paying 34% of their income to the federal government, before any other taxes. It's not all officially named "income tax", but it's paid as a percentage of income which meets the definition of an income tax. (http://www.google.com/search?q=define%3Aincome+tax&ie=ut...)
You can argue that the employee indirectly pays the employer's portion as well, but you specifically said that 15% comes "from your paycheck," which is wrong.
For the record, I think even my numbers are unconscionably high.
I may have read the tax table wrong, because I got a 4% higher tax rate for federal income tax. My bad - looks like it's as you say.
While it should already feel a little weird to pay slightly less (percentage-wise) than someone who makes $30k/year with a seven figure income, you actually paid far more than someone who regularly makes that amount would. You had far less incentive and time to set up tax shelters. A "regularly" rich person would pay an even lower percentage of their income.
I was also basically saying that the whole "your argument is so ludicrous I won't dignify it with a response" thing was a cop-out. Just assuming they must receive more in social services than they pay in taxes, without any attempt to quantify either number, doesn't make for a compelling argument.
If we're talking purely about direct social programs like welfare or housing vouchers or medicaid, then homeless people will definitely receive more benefits than they pay in taxes, and people earning $30k year will almost certainly not.
If instead you include all that other stuff like defense and highway spending and assume everyone receives a roughly equal share of those benefits then the argument becomes pointless; the average person pays less than 1/300 millionth of the overall tax revenue but receives 1/300 millionth of the benefits.
"If you want to reduce economic inequality instead of just improving the overall standard of living, it's not enough just to raise up the poor. What if one of your newly minted engineers gets ambitious and goes on to become another Bill Gates? Economic inequality will be as bad as ever."
What about your newly minted teachers and other middle-class citizens? Does everyone who rise from poverty become super rich?
I don't understand economics well, so I can't really counter his overall argument, but this seemed a little offhanded.
Kind of confused by the first part. Was that about progressive tax rates or communism?
I don't know anyone who has ever declined an opportunity to make money just because the tax on the profit was too high. Does anyone have specific examples?