How to reduce wealth inequality?

[swansont]

Capital gains. Somebody's got to invest in new companies. Somebody's got to take a risk. If they make a profit with money that usually already been taxed once, why should they have to share a large part of their profits with those who don't want to take the risks, or do the necessary due diligence, or lack the initiative. Well, you say, they can write off their losses when they fill out their taxes. A whole $3000 worth. Believe me, I know!

 

Why shouldn't they/we contribute to the system that enables and safeguards the money they have made? Also, most stock capital gains does not come from investing in new companies, it comes from investing in stocks bought from other individuals who own stock.

 

 

Look, I'm not saying that there aren't inequities in our system. They should be addressed. But the rich aren't that numerous, nor do they have enough money, to solve all the country's problems. And that last statement IS opinion, I can't back it up with facts. But that's what opinion columns are for.

 

No, it's not a matter of opinion. We have more than 100 million households in the US. By simple math, that means that there are more than 1 million households that comprise the top 1%. Absolutely no opinion involved in that.

 

Nobody is claiming that increased taxation of the wealthy will solve all of the problems, so that's just a straw man. But it will reduce the severity of some of them.

[mothythewso]

Some more thoughts to disparage

Friedrich Hayek is my hero. Feel free to rip on a Noble Laureate.

Most people, mainly middle-class employees, actually own stocks in their IRA's or 401k's, through Mutual Funds.

One of the main income sources for high-net-worth individuals is tax-free Muni bonds. The bond issuers pay a low rate of interest to fund their public service projects, the purchasers get the interest tax-free. They make their money through economies of scale. Anyone can buy tax-free muni's, it just doesn't make economic sense unless you're in a high tax bracket. I'm aware that the system isn't perfect, but do you have problems with the concept?

One of the basic laws of economics is that the reward has to be commensurate with the risk; if it isn't, nobody, even the rich, will invest in the project. There's a point at which excessive taxation of potential profits is counterproductive, it will kill off investment.

There's someone on this thread who continues to lambaste my opinions here and elsewhere as "FOX News talking points" and "Rush Limbaugh canards." This gentleman also railed in his post against "...a single one of Nazi Joe Bush's grandchildren." He's wrong in both cases, and I think the comment about Nazi Joe Bush. is illustrative of his personal biases.

[John Cuthber]

Some more thoughts to disparage

Friedrich Hayek is my hero. Feel free to rip on a Noble Laureate.

Most people, mainly middle-class employees, actually own stocks in their IRA's or 401k's, through Mutual Funds.

One of the main income sources for high-net-worth individuals is tax-free Muni bonds. The bond issuers pay a low rate of interest to fund their public service projects, the purchasers get the interest tax-free. They make their money through economies of scale. Anyone can buy tax-free muni's, it just doesn't make economic sense unless you're in a high tax bracket. I'm aware that the system isn't perfect, but do you have problems with the concept?

One of the basic laws of economics is that the reward has to be commensurate with the risk; if it isn't, nobody, even the rich, will invest in the project. There's a point at which excessive taxation of potential profits is counterproductive, it will kill off investment.

There's someone on this thread who continues to lambaste my opinions here and elsewhere as "FOX News talking points" and "Rush Limbaugh canards." This gentleman also railed in his post against "...a single one of Nazi Joe Bush's grandchildren." He's wrong in both cases, and I think the comment about Nazi Joe Bush. is illustrative of his personal biases.

What Nobel Laureate?

from

http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences

"It is not one of the prizes established by the will of Alfred Nobel in 1895, but instead was established 73 years later by Sweden's central bank"

 

(or was the spelling mistake deliberate?).

 

"Most people, mainly middle-class employees, actually own stocks in their IRA's or 401k's, through Mutual Funds."

I rather doubt that most people are middle class employees.

For what it's worth I probably do count as a middle class employee and my pension isn't based on stocks anyway.

 

"One of the main income sources for high-net-worth individuals is tax-free Muni bonds."

Main?

I'm sure it's one, but how big a component of their income is it?

 

"One of the basic laws of economics is that the reward has to be commensurate with the risk; if it isn't, nobody, even the rich, will invest in the project"

As has been pointed out twice, the very rich don't take any significant risk.

[swansont]

 

As has been pointed out twice, the very rich don't take any significant risk.

 

Indeed. I think one of the main complaints here is that the rich are able to rig the system in such a way that reduces risk and/or increases reward.

[Phi for All]

 

Indeed. I think one of the main complaints here is that the rich are able to rig the system in such a way that reduces risk and/or increases reward.

 

In the US, we need to stop electing leaders of the People from the group that has demonstrated they make decisions based mainly on personal gain. Since the Nixon era, we've allowed wealthy politicians and corporate efficiency to leech away our prosperity. Leadership is focused on what corporations want, and it's assumed that's what best for the People as well.

 

What if we focused on the People, and assumed that's what's going to be best for the corporations? We'd certainly have more buying power to purchase goods and services. Surely a more prosperous middle class doesn't increase the risk for the wealthy, in fact it would seem to reduce both risk and reward equally.

[swansont]

 

In the US, we need to stop electing leaders of the People from the group that has demonstrated they make decisions based mainly on personal gain. Since the Nixon era, we've allowed wealthy politicians and corporate efficiency to leech away our prosperity. Leadership is focused on what corporations want, and it's assumed that's what best for the People as well.

 

What if we focused on the People, and assumed that's what's going to be best for the corporations? We'd certainly have more buying power to purchase their goods and services.

 

That all ties in with campaign finance reform and Citizens United, etc., and politicians changing the rules that allow them to more easily stay in power. Undoing that means finding enough politicians who are willing to go against that self-interest.

[iNow]

Most people, mainly middle-class employees, actually own stocks in their IRA's or 401k's, through Mutual Funds.

Most implies a strong majority. That's hardly what we see. Only about half of all Americans contribute to 401Ks, and only 12% of low income people even can.

 

http://www.cbsnews.com/news/why-many-americans-cant-save-for-retirement/

Poor people would save more money if they could. So concludes a new study that found that only 12 percent of low-income older Americans put money in a 401(k) or other retirement plan. <snip> Currently, about half of U.S. private sector workers don't participate in a retirement plan and most of them have lower incomes.

<snip>

There are four major reasons poor people approaching retirement struggle to save, according to the researchers:

• Lack of employment: Only 42 percent of low-income older people are employed at any given time.
• Lack of access: When they are employed, 66 percent work for employers that don't offer a retirement savings plan.
• Lack of eligibility: Many low-income people work several part-time jobs, and many employers offer a retirement plan only to full-time employees.
• Lack of knowledge: Many workers don't know they have to enroll in a retirement plan.

<snip>

The study is just the latest of many to cast doubt on the effectiveness of the system of 401(k), IRA and other accounts for most workers. According to the Federal Reserve roughly half of all U.S. families have no money set aside for retirement. <snip> A report last year by the Economic Policy Institute found that the retirement system largely benefits higher income workers the most because they can actually contribute enough to make 401(k) plans work for retirement.

 

 

 

What Nobel Laureate?

I'm not sure what you're asking here, buy Hayek won the Nobel for Economics in 1974: http://en.wikipedia.org/wiki/Friedrich_Hayek#Nobel_laureate

 

He also had strong feelings that such an award shouldn't even exist in the first place since it would be used by people (as has happened here in this very thread by someone who claims him as hero) to inappropriately give authority to a single person and give too much power to their opinions in matters of policy or similar debates: http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences#Controversies_and_criticisms

[mothythewso]

To answer JohnCuthber, post 78. My bad on misspelling "Nobel". Agreed, it wasn't one of the original Nobel prizes, but it is recognized by the Committee.

Granted, individual stock ownership, whether in one's own account or in mutual funds, or retirement vehicles, is at it's lowest level in in quite a few years, now about 52%, as opposed to a high of 67% in 2007. And it's most likely related to stagnant wages, not lack of interest, as the stock market has done very well post 2008

To answer iNow, post 82, I wasn't aware of Hayek's attitude toward the Nobel; it's been a while since I read him. Also, post 81, the graph is of payroll taxes, like Social Security, NOT income taxes. It may or may not be fair, but since FICA taxes top out, the wealthy will obviously pay a lower percentage of their income. And FICA only applies to ordinary income, not capital gains, bond interest, etc. I'm sure that someday soon, someone will propose the obvious solution: raise the level of income due to FICA, or include other types of income to the base. However, if a guy making $100 M pays full FICA, that's, what, $6-8M That's going to add substantially to his total tax burden.

To forestall Overtone, read Hayek's essay, "Why I'm not a Conservative".

To return to post 78, your pension has to be based on some type of self-replenishing asset, probably bonds.

Some thoughts on Social Security, Pensions, IRA"S and 401k's.

I had a friend, he was a Black male, we used to get into pretty intense arguments about SS. My contention, since Black males have lower life expectancies than most any other group, they on average got screwed. He just couldn't accept that. He died, hadn't reached 65, he got nothing; his wife, who had divorced and predeceased him, got nothing; his sons, both adults, got nothing.

 

On Pensions, now they're mostly confined to government workers. Why? Because only governments can back up their promises with tax revenues. When a private company, like Bethlehem Steel or GM, goes bankrupt, the workers get screwed. Full disclosure, I get a State Government pension, and I thank my lucky stars.

I think IRA's and/or 401k's are the only way to go, with support from SS. I'm aware the better off you are, the more you can contribute, the more likely you're to be to take advantage of Roth IRA's. But you're not forced to participate. If you don't care to take personal responsibility, it's on you. Yes, yes, some workers aren't eligible, some workers aren't able to contribute very much, some people just can't conquer the odds against them. Still, I think they're the best way, and definitely the way of the future.

One minor dig at Overtone (I can't resist). Another Gullup poll I saw earlier indicated that the number of self-described liberals over the age of 30 has been decreasing.

[overtone]

There's someone on this thread who continues to lambaste my opinions here and elsewhere as "FOX News talking points" and "Rush Limbaugh canards." This gentleman also railed in his post against "...a single one of Nazi Joe Bush's grandchildren." He's wrong in both cases,

That's me. My reference to your continued posting of Fox News talking points and Rush Limbaugh canards was specific to the posting quoted, not general to posts you had not made yet, and it was completely accurate. You had indeed posted Fox News talking points and Rush Limbaugh canards and the other terms I accurately employed in description.

 

So was my reference to Joseph Bush's (a famous supporter of the Third Reich during WWII, from which dealings he gained much of the fortune his heirs continue to profit by) grandchildren's lack of risk taking in the garnering of rewards - the same point is easily made regarding Sam Walton's heirs, etc. Your contention that the wealthy in the US have undertaken great risk in their ongoing accumulation of the entire productivity gains of the US economy since Reagan's taxation reforms is without support in physical reality. It is a shibboleth of the extreme right in the US, a Teaparty level fantasy, an empty assertion apparently derived from the first couple of chapters of an introductory economics textbook, equivalent to the analyses in the introductory physics textbooks that begin by saying "neglecting friction".

 

 

 

 

I had a friend, he was a Black male, we used to get into pretty intense arguments about SS. My contention, since Black males have lower life expectancies than most any other group, they on average got screwed.

Your contention is based on describing SS as an insurance program, rather than a transfer or welfare payment. That's a Fox News talking point, Rush Limbaugh canard, and Teaparty jibberjabber.

 

Everyone who pays into SS gets the same benefit - the old people in their community have some money coming in.

 

The way SS has been screwing people is in the tax breaks given to the wealthy who profited by Reagan's SS Trust Fund - a setup wherein the baby-boom wage-earner paid a lot of extra SS in, a Fund accumulated, and that fund was then loaned to the Federal government and used to cover tax reduction for the rich. The way to repair the situation would be to return to the original scheme, and replenish the Fund by taxing the wealthy as was originally set up.

 

 

 

 

I think IRA's and/or 401k's are the only way to go, with support from SS.

Wall Street broker comment, heard from multiple sources in the investment brokerage community: "What starts with an 'F', ends with a 'K', and means you've been screwed? 401K". In order to benefit from an IRA or a 401K, you have to be competent at investing in financial instruments or lucky in your choice of representative, and you have to have an income high enough that income taxes are a significant expense. For most working poor, neither of those hold. You also have to be fortunate in the timing of your retirement, a factor that will not obtain for some fraction of everybody, poor or not.

 

Without those two factors holding, such investment accounts are just a somewhat riskier way of saving money for your old age than a bank account - a good thing to do, but SS was invented in the first place because it doesn't work for so many people. Back when personal savings and investments like that were the financiers of retirement for everyone, old people in the US were dying of malnutrition in significant numbers and the elderly were the poorest demographic group in the country.

Edited January 30, 2015 by overtone

[mothythewso]

Put "Joseph Bush and Nazi's" in any web browser, nada. In fact, the grandfather of W. and Jeb, to whom I presume the previous poster of #84 was referring, was Prescott Bush. Now try "Joe Kennedy (the grandfather of JFK, RFK, and Teddy Kennedy) and Nazi's", there's a veritable plethora of hits, none complimentary. So, the previous poster is dead wrong in his accusation. Nothing new.

My describing Social Security as an insurance program, and not a "...transfer or(sic) wealth program..." is understandable. FICA stands for the Federal Income Contributions Act; included in FICA is old age, survivors and disabilities insurance (OASDI). The supreme Court, in Flemming vs. Nestor (1960), has ruled that no citizen has an accrued property right to Social Security benefits. AS a matter of fact, the ex-Social Security employee who briefed us on retirement benefits, became incensed when we characterized FICA as a tax. And the poster was dead wrong when he stated that "Everyone who contributes into SS gets the same benefit-...", your benefit is based on your earnings; you earn more, you get.

For what it's worth, when Social Security was set up, the average worker didn't get to retire, the average life-span wasn't anywhere the eligibility age of 65. That's why it was solvent for so long.

"In order to benefit from an IRA or 401K you have to be competent at investing in financial instruments or lucky in your choice of representative..."; why does the poster have such a negative opinion of the intelligence of the poor, or their desire to get ahead in life. And you also need to have a high income; two words, Compound Interest.

By the way, this poster is still waiting for an apology for the "joannova graph" comment on another thread; are you still claiming, since you admit you can't find the graph in question, that it was deleted?

Edited January 31, 2015 by mothythewso

[imatfaal]

Put "Joseph Bush and Nazi's" in any web browser, nada.

 

http://bit.ly/1EWqaqG

 

Nothing reputable perhaps. Most of it is scurrilous and I am not sure where Joseph sprang from - but it is definitely not "nada"

[Phi for All]

For what it's worth, when Social Security was set up, the average worker didn't get to retire, the average life-span wasn't anywhere the eligibility age of 65. That's why it was solvent for so long.

 

This differs from any risk pool in what way? Actuarials predict the average age at death (which was ~59 in 1930), so of course the eligibility was set higher. The pool can't grow if the benefits age is the same as retirement age (and lots of other retirement risk pools at the time put eligibility at 70).

 

Why do you use this standard, accepted practice as a way to make Social Security sound bad? Because this is EXACTLY the kind of punditripe that confuses so many of the American public, and keeps them from using their brains to figure out how intellectually dishonest these arguments are.

[Ten oz]

On Pensions, now they're mostly confined to government workers. Why? Because only governments can back up their promises with tax revenues. When a private company, like Bethlehem Steel or GM, goes bankrupt, the workers get screwed. Full disclosure, I get a State Government pension, and I thank my lucky stars.

I think IRA's and/or 401k's are the only way to go, with support from SS. I'm aware the better off you are, the more you can contribute, the more likely you're to be to take advantage of Roth IRA's. But you're not forced to participate. If you don't care to take personal responsibility, it's on you. Yes, yes, some workers aren't eligible, some workers aren't able to contribute very much, some people just can't conquer the odds against them. Still, I think they're the best way, and definitely the way of the future.

One minor dig at Overtone (I can't resist). Another Gullup poll I saw earlier indicated that the number of self-described liberals over the age of 30 has been decreasing.

The top 10% owns 80% of the stock market. The choices the top 10% make move the market. They are in he drivers seat. If the bottom 90% put their retirement accounts in the market they are handing it to the top 10% to control.

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

 

It creates a situation where the bottom 90% fortunes rely on keeping the top 10% increasingly successful. Not just that but when markets fall during recessions it forces everyone who was planning on retiring to shift those plan to the right until the market recovers.

[mothythewso]

Imatfaal: Why don't you let the poster explain his error, unless you also want to serve as an apologist for Joe Kennedy. Prescott Sheldon Bush (no mention of Joseph) was a Director of Union Banking Corporation. He held 1 share of stock. The bank was accused of conspiring with Nazi industrialist Fritz Thyssen to clear Nazi gold during WWII, and it was divested by the US Government. According to one of the articles you referenced, Bush had a commercial relationship only with UBC; he was never considered to be a Nazi sympathizer, including, amongst others, the Anti Defamation League. I'll let the poster defend Joe Kennedy's positions on Jews in general and Nazism in particular.

Phi for All: Why has the age for full eligibility gone up, depending upon your birth year?

[Phi for All]

Phi for All: Why has the age for full eligibility gone up, depending upon your birth year?

 

Bleh. Answering a question with a question (especially a big fat Red Herring question)? Q&A helps people learn, not Q&Q. Discussion, please.

 

I can listen to Beck or Limbaugh if I want unproductive obfuscation.

 

Why do you specifically call out blame on Social Security for a practice used by many successful insurance companies? Here's what you wrote:

 

For what it's worth, when Social Security was set up, the average worker didn't get to retire, the average life-span wasn't anywhere the eligibility age of 65. That's why it was solvent for so long.

 

This is the only productive way to set it up. This type of insurance works because those who need it longest are offset by those who need it for the shortest. The rest of us fall somewhere in the middle and that also averages out. So in order to grow the fund, you need to offset the average somehow. Adjusting the age when one is eligible is one of those ways.

 

So again, why do you specifically call out blame on Social Security for a practice used by many successful insurance companies?

[iNow]

Keynote from economist Brad DeLong for an event scheduled tomorrow/tonight. Good points summarizing this issue.

 

http://equitablegrowth.org/2015/02/02/rise-inequality-honest-broker/

 

We are here today because of a problem in the American economy, a problem that emerged back at the end of the 1970s. Since 1980 our rate of productivity growth in the American economy has been little more than half what it was before. Americans used to expect living standards in the country to double every generation. Not since 1980. in fact, standards of living at the medianwith half the workers above and half the workers belowpretty much stopped growing around 1980 and are still stuck.

 

2/5 of the measured productivity growth we reasonably expected back in the late 1970s that we would have seen by now in the American economy is simply not there.

 

Effectively all of the growth and measured living standards at the median of the population that we reasonably expected we would have seen by now is simply not there.

 

Why has the median done so much worse than the average since the late 1970s? Arithmetically, it is not because the bottom has caught up via some leveling process but because the top has leaped ahead. Americas best educated, best positioned, and most fortunate tenth looks no better educated or entrepreneurial relatively speaking now then its predecessor did in 1980. Yet it receives half of all income now while it only received one-third of all income then.

 

What has happened has not been a tilting of the income distribution as globalization or the race between education and technology shifts the skill and education premium. What has happened, instead, has been a great hollowing out.

Read the whole thing here. There are several hypotheses for how it's become this way.

[overtone]

Put "Joseph Bush and Nazi's" in any web browser, nada. In fact, the grandfather of W. and Jeb, to whom I presume the previous poster of #84 was referring, was Prescott Bush

Yep. I did swap the Kennedy Nazi grandfather with the Bush one. Mental confusion.

 

So, the previous poster is dead wrong in his accusation.

No, the "accusation" is accurate (it's not an accusation, but an observation of historical event). Only the first name was wrong. Here: http://en.wikipedia.org/wiki/Prescott_Bush

 

 

 

By the way, this poster is still waiting for an apology for the "joannova graph" comment on another thread; are you still claiming, since you admit you can't find the graph in question, that it was deleted?

Nope. I have no idea where I saw that graph or why I confused the poster with you. I did verify the graph exists, on the website, but I hadn't been there in years, so - - mystery to me, sorry about that. I do get the wingnuts mixed up, a bad habit for sure.

 

 

For what it's worth, when Social Security was set up, the average worker didn't get to retire, the average life-span wasn't anywhere the eligibility age of 65. That's why it was solvent for so long.

In 1935 the life expectancy of a US white male at age 20 - the "average worker" has not died in childhood - was about 68. It increased from then on, never approaching the current early eligibility age of 62.

 

 

 

 

"In order to benefit from an IRA or 401K you have to be competent at investing in financial instruments or lucky in your choice of representative..."; why does the poster have such a negative opinion of the intelligence of the poor, or their desire to get ahead in life.

I don't rate people's intelligence and ambition on their competence with modern financial instruments and familiarity with Wall Street's various shenanigans. Kind of the opposite, actually.

 

A lot of very smart and ambitious people lost their 401Ks and IRAs and house equity and other investments in the fraud-caused crash of '08, for example. And in every downturn before and to come, a certain fraction of retirees loses their savings to various predations and frauds and scams and unlucky coincidences - as has happened throughout the economic history of the United States. This is a fact of life. That's one reason the elderly were the poorest demographic group in the US before Social Security (despite their shorter life spans then) - not because the longest lived people were stupid and lacked ambition, but because life and investment came with risks. They still do.

 

 

 

 

And you also need to have a high income; two words, Compound Interest.

The stock market doesn't pay compound interest. The bank rates available to lower income savers do not cover the inflation rate of their major expenses. And they have little or no money left over to save, from those major expenses. Compound interest concentrates money in rich people's hands, as an overall effect. Bankers profit from it, ordinary people in general don't. That's why wherever and whenever there is a prosperous middle class in a country, their principal store of wealth will be in their physical possessions - especially, in the US, their house. Not their stock market holdings.

 

If the return to capital is not heavily taxed in a capitalistic society that permits compound interest, the rich will end up owning most of the community wealth.

Edited February 4, 2015 by overtone

[swansont]

Some thoughts on Social Security, Pensions, IRA"S and 401k's.

I had a friend, he was a Black male, we used to get into pretty intense arguments about SS. My contention, since Black males have lower life expectancies than most any other group, they on average got screwed. He just couldn't accept that. He died, hadn't reached 65, he got nothing; his wife, who had divorced and predeceased him, got nothing; his sons, both adults, got nothing.

 

 

That's basically the same problem as people who don't get into a car accident "get screwed" by having insurance. But a cherry-picked example doesn't actually establish that any group is being systematically shortchanged.

[overtone]

 

 

He died, hadn't reached 65, he got nothing; his wife, who had divorced and predeceased him, got nothing; his sons, both adults, got nothing.

He didn't get nothing. He got a lifetime of security for his old age rather than scrimping in fear of penury, his parents and his wife's parents not living in his house, his kids having freedom to leave home for work or school, and the same true of his friends and relatives and neighbors.

 

iBlack people got screwed by Social Security same as everyone since Reagan let the rich off the hook, but not because they didn't collect benefits themselves.

[Phi for All]

He died, hadn't reached 65, he got nothing; his wife, who had divorced and predeceased him, got nothing; his sons, both adults, got nothing.

 

This seems like another argument not fully thought through. Why on Earth would you expect a fund like this to pay a worker benefits for a woman who isn't his wife anymore, and also happens to be dead? I think you've been using this argument with people who never question you, or don't really listen to you so they don't catch it when you say something irrational like this.

[iNow]

An article recently popped into one of my feeds that seems aimed squarely at this thread topic:

 

Eight Ways to Reduce Income Inequality

 

http://billmoyers.com/2015/03/03/eight-ways-reduce-income-inequality/

Extreme economic inequality is corrosive to our societies. It makes poverty reduction harder, hurts our economies and drives conflict and violence. Reversing this trend presents a significant challenge, but one where we’ve seen some progress. Below we offer eight ways to move the world forward in reducing global inequality.

I can't get onboard with #3, and am struggling to determine whether I'd pick #2 or #4 if forced to choose. What about you?

[imatfaal]

An article recently popped into one of my feeds that seems aimed squarely at this thread topic:

 

Eight Ways to Reduce Income Inequality

 

http://billmoyers.com/2015/03/03/eight-ways-reduce-income-inequality/

 

I can't get onboard with #3, and am struggling to determine whether I'd pick #2 or #4 if forced to choose. What about you?

 

Wealth taxes are - in my mind - part of the makeup of banana republics and tinpot dictatorships; but when I examine my feeling coldly and forensically I cannot see quite why I am opposed to them so vehemently. They do not make up part of the Anglo-American concept of fair taxation . But is it fairer to tax at (admittedly a very low rate) the income of a one-parent family struggling to support children -- which we do; or to trim the excess from funds of wealth that are already at the stage that no normal family could even make a sizeable dent in the interest? It is pretty clear that impact of taxation might be better served by the wealth tax. The argument of motivation, of the crushing of entrepreneurial spirit, of punishing success that is normally trotted out when a tax targets the wealthy rather than the poor is pretty easily deflected - who are we really targeting; an income tax by it's nature must target those who have an income ie those that are striving to improve themselves and their polity - whereas a wealth tax will target those (to an extent) who are no longer/have never been working for either themselves nor increasing state productivity.

 

Your money in the bank acquires an aura of property whilst your income is in a transaction state; our societies are so wedded to the idea of the sanctity of personal property that wealth taxes become anathema. You can go back to the great debates in 14th century Europe revolving around the ideas of property, poverty and inheritance and brought to a head by the vow of Poverty by the Order of St Francis. BTW one of Science's all time biggest hitters was involved for those who get turned off by the idea of religion - William of Ockham and Bonnagratia of Brescia were two of the main Franciscan contenders that the vow of poverty was properly apostolic, should be universal, and could not be reconciled with the vast wealth of the church.

 

#2 and #4 - I already agree with.

 

At present I pay 50% income tax on some of my income and there might even be national insurance taken from that portion as well (I am on Pay as you earn - a UK scheme that allows employees to trust employers calculations on their salary - so I am not quite sure of the details). The fact that any reasonably successful professional will pay the top rate of taxation is something I think should change - when senior doctors, accountants, lawyers (I think the new term for my profession is now weasel with luggage) etc. are no longer taxed at a different rate than the captains of industry, footballers, bankers etc. I think we have arrived at a situation where the progressive nature of income tax has prematurely stopped.

 

On a proper living wage - it should be done without hesitation. the only companies that will suffer are those who rely on exploitation to balance the bottom line - I will try and dig out a survey of companies I once read (way before UK had minimum wage) that looked at those corporations who paid significantly lower than average salaries. The average wage bill was every so slightly higher per "unit of productivity" than those who took a fairer flatter approach - ie the exploitative companies tended to merely skew their wage profile towards the top earners rather than trim the total bill

[swansont]

I thin 4 & 5 are part of the same issue. Workers should have the right to organize and collectively bargain, but for those who can't develop any leverage this way, the government can step in and bargain for them in the form of a minimum wage and benefits, and ensure that it's sufficient. 6 is tied in as well — workers have rights, and need the government to be there so that workers can't be intimidated into silence when those rights are infringed upon.

[overtone]

Wealth taxes are - in my mind - part of the makeup of banana republics and tinpot dictatorships; but when I examine my feeling coldly and forensically

Examining physical reality, one discovers that wealth taxes directed against the wealthy are not features of banana republics or tinpot dictatorships - the exact opposite is, instead, the usual case, often demarcated by specific violence and overt employment of physical force.

 

Example: The attempt by the newly and democratically elected head of State in Honduras, back in the 1950s, to force either 1) tax revenues from banana plantations commensurate with their actual value as property or 2) sale of large swaths of that property to the State at their current ridiculously low tax evaluation,

was the trigger for the US backers of those property owners to support a military coup and the reduction of a nascent democracy and free people to banana republic status.

 

It's the inability or unwillingness to impose sufficient taxation on compounding capital that ends up reducing States to banana republics (Honduras), tin pot dictatorships (Zaire) , de facto feudalism (West Virginia coal towns), de jure feudalism (Saudi Arabia), and so forth.

 

 

 

 

They do not make up part of the Anglo-American concept of fair taxation

Sure they do: property taxes go back forever, fair and unfair both. The US cannot be that different from the UK, or any Western industrial State, in that regard. Edited March 4, 2015 by overtone

[swansont]

Virginia, USA has property taxes not only on real estate but on certain personal property, i.e. cars (and boats and airplanes)