So be it. Can't find a job that offers a living wage? We provide a social safety net and increase taxes on the wealthy to pay for it.
Make more than a million dollars a year? 95% marginal tax rate. Tax rates are the lowest they've been in the history of the US, and all we've seen is a disgusting level of income equality.
That is just a bad plan. You are essentially outlawing income over a million.
If you didn't apply it to capital gains, you are just fucking over lawyers, bankers, consultants, and CEOs. It would actually lower tax revenue. Because all that money that is getting taxed over a million a year would disappear. And the truly mega rich would actually be better off. No more having to pay high priced lawyers, bankers, and CEOs.
If you tried to place that restriction on capital gains, everyone ounce of capital in the this country would flee.
> If you tried to place that restriction on capital gains, everyone ounce of capital in the this country would flee.
Feel free to take your capital out of the country. It'll be taxed with an expatriation tax. Attempting to evade the tax will allow the IRS to confiscate assets anywhere in the world the US has a tax treaty with (ie everywhere).
Would you take a bet on a coin flip, if when you lost you paid a dollar, but when you won you'd get a nickle.
Banks would implode. The credit market would stop. Any business survive on a line of credit would just fail immediately.
Best case scenario, you'd just replace American rich for foreign rich.
[1] if you tried to tax foreign capital gains on American assets, you'd just destroy the entire economy. There would be huge lack of capital.
Your plan is insanity.
Edit: And some country would be creative and end tax treaties with the US just to get a couple trillion of capital flowing through their economy.
Great. Then what? Everyone currently making over $1m a year will cut their salary to $1m. Then you gotta start taxing the upper middle class -- what rate do you want to tax people making over $500k? $250k? $100k? Those are the ones that will pay for this program.
As much as you want to tax "the wealthy", there really aren't enough wealthy people to pay for everything, and it comes down to how much you want to tax the moderately successful person who is trying to pay for their 2 kids' college expenses while saving to have a retirement.
Do wealthy individuals in other countries with a heavier tax burden (Europe, Scandinavia to be specific) do this? Would be nice to see evidence of this behavior before outright dismissing raising taxes.
And of course, there are lots of deductions. You could give that $20 million to a charity and the government would get none of it. You wouldn't get any either, but you could certainly get a lot of indirect value out of giving away $20M.
And so we keep closing loopholes.
Here's the top couple using France: http://www.forbes.com/sites/chrisconover/2012/07/23/flight-o...
http://www.theguardian.com/world/2014/dec/31/france-drops-75...
The point isn't to make them pay for everything. The point of taxing them is to mute the inflationary effect of letting them keep their money.
The primary noticeable effect of taxing the wealthy on the rest of us would be to make property more affordable once again.
What? How is it inflationary to let "the wealthy" keep their money vs. artificially raising the wages of the minimum wage workers?
"The primary noticeable effect of taxing the wealthy on the rest of us would be to make property more affordable once again."
Also--what? Being that we're on Hacker News, the majority of people here are probably making $100k+ a year and are solidly in the top 10% of wage-earners in the country. We're the ones driving up housing prices on a macro scale across the country, not the few people that have hundreds of millions to spend.
Because they spend it.
>We're the ones driving up housing prices on a macro scale across the country, not the few people that have hundreds of millions to spend.
Both are. The few people with hundreds of millions of dollars will buy large properties in central locations in multiple cities, shrinking the available housing stock for the rest of us.
So does everyone, they just spend it differently. Bill Gates' money isn't sitting in a checking account, it's in stock certificates. High net-worth people don't put money under their mattresses, they spend it, albeit in different ways. I don't know how to compare consumer spending vs. investments, so I can't say if one is "better" than another, but that money isn't just sitting in bank accounts.
Available housing stock on the whole is just fine in the US. Sure, you and I probably can't afford to live on Park Avenue or overlooking Central Park, but that's because those properties attract worldwide money. We're not there yet. San Francisco's housing problems aren't as simple as "some people have money". Taking money away from people isn't going to solve this.
Yes, and the wealthy spend more, so the effect of their spending is more inflationary.
>Bill Gates' money isn't sitting in a checking account, it's in stock certificates. High net-worth people don't put money under their mattresses, they spend it, albeit in different ways.
Quite. This is why the price of property is absurd and P/E for the stock market is so low. Unfortunately the middle and working classes get hit by this just as much as they get hit by rises in the price of milk or eggs.
>Available housing stock on the whole is just fine in the US. Sure, you and I probably can't afford to live on Park Avenue or overlooking Central Park, but that's because those properties attract worldwide money. We're not there yet. San Francisco's housing problems aren't as simple as "some people have money". Taking money away from people isn't going to solve this.
Oh yes it would. Hit the wealthy with huge taxes and they would end up selling those properties to pay off their tax bill. That would lead to a spiraling decrease in San Francisco and New York property prices as well as a stock market decline.
Note that an increase in the speculative value of real estate is NOT inflation - inflation incorporates the cost of housing (rent or owner-equivalent rent), not the speculative value of land. Similarly, it's not inflation if FB or MS goes up.
By the way, if you believe that money going into the hands of the wealthy is the best way to cause inflation, it therefore follows that the best economic stimulus is tax cuts for the wealthy. Do you favor such cuts during times of recession?
In a recession, you want to stoke demand. Inflation isn't a worry, deflation is. You therefore give tax cuts to the people who are going to spend (ie not the wealthy).
"Overall, tax cuts for the bottom 90% tend to result in more output, employment, consumption, and investment growth than equivalently sized tax cuts for the top 10% over a business cycle frequency."
http://www.forbes.com/sites/taxanalysts/2015/04/24/tax-cuts-...
But if crdoconnor disagrees and also is logically consistent, he should also disagree with you. Somehow I suspect he won't.
Also, your understanding of Keynesian economics is slightly confused; the goal is to cause inflation in order to reduce real wages.
Uh, no. It's entirely logically consistent to agree with him.
Have you not noticed that these goods have experienced a considerable degree of price inflation over the last decade? Did houses get cheaper?
>Note that an increase in the speculative value of real estate is NOT inflation
Bullshit. If I'm spending more on rent or mortgage (which I will if property prices increase), I've experienced inflation just as much as if I'm spending more on milk, eggs and bread.
>By the way, if you believe that money going into the hands of the wealthy is the best way to cause inflation, it therefore follows that the best economic stimulus is tax cuts for the wealthy.
Depends on whose economy you are stimulating. If you just want to stimulate the price of property and stock prices, sure, tax cuts for the wealthy all round. If you want to stimulate employment for the middle classes, not so much.
If you want to stimulate general economic growth, tax cuts for the rich are awful because there is a very minimal multiplier effect. The money goes into real estate and the stock market and largely stays there.
The best way to do that is to offer a job guarantee like FDR did in the 30s or increasing the minimum wage. The spending multiplier on both of those is about 3-5.
>Do you favor such cuts during times of recession?
Clearly not.
Note that property price increases are often associated with increases in rent, but they don't cause the increases -- rent increases is caused by influxes of population, decreases in the population's price sensitivity, etc. Property price increases are caused by the same thing, and speculative property price increases are caused by (among other things) expectations of that sort of thing.
The big difference between houses and milk is that houses are durable goods which don't completely depreciate.
(In fact, its my belief that we've had deflation for a while, since I believe cpi is considerably overstated. The biggest driver of inflation is health care, which is not hedonically adjusted.)
According to you, money in the hands of the poor has a higher multiplier (I.e. causes more inflation) than money in the hands of the rich. How does that not contradict your previous post? In whose hands does money cause the most inflation, the poor or the rich?
Also, your ideas about stimulating different parts of the economy are pretty explicitly not Keynesian.
What work would you like to make up for people when technology has replaced everyone's work? Salespeople? Digging ditches and filling them back in?
It's also true that were I around in 1880 I would not know what roughly half of the US population who were then farmers would be doing after automation.
For those new-age luddites who are generally afraid of technology destroying jobs, why stop at tomorrow's technologies? Why not outlaw washing machines? Surely elimination of washing machines would bring back a lot of jobs. Or let's outlaw productivity tools like spreadsheets. If people were forced to do everything by hand, surely this would create a lot of jobs.
Would you propose we eliminate any of today's technology? Why is it always that today's technologies are OK but not tomorrow's? Those will surely be our downfall.
Ironically, increasing the cost of human capital through a minimum wage will surely hasten the replacement of human capital by machines.
You consider it "fair" because everyone pays the same. Not everyone should pay the same tax. Some people should pay more, some less.