Why don't we force wealthy people to give us more of their money?

[M.Dancer]

Can you name a single successful modern country where most wealth isnt reclaimed by society? Iv certainly never heard of one...

What?

Can you rephrase that?

[dre]

What?

Can you rephrase that?

No need. That phrase fits just fine.

Take the US for example. Theres a massive spider web of collection points designed to pull money back into the system and almost every transaction is taxed.

A high income earner will pay a graduated income tax of around 30%. Then of the portion he gets to keep another large percentage will be reclaimed though a series of sales taxes, fees and other things. Then they will pay property taxes on all their realestate. A lot of the money also goes back into the system indirectly for example they purchase goods from other companies, and those companies are taxed on the income they get from selling those goods.

This ellaborate system of reclaiming wealth will eat up the majority of a wealthy persons life time earnings alone. And when they die they get heavily hit again. A person with an estate over 3 million dollars will pay a "tentative tax" of $1,290,800 on that first 3 million then 55% on the remainder of the estate.

Society gets the majority of that wealth back when all is said and done. The same is true In Canada and pretty much everywhere else.

[Michael Hardner]

A high income earner will pay a graduated income tax of around 30%. Then of the portion he gets to keep another large percentage will be reclaimed though a series of sales taxes, fees and other things.

So a high income earner pays 20% of their wealth out in fees every year ? You might want to Google 'effective tax rate' to look into that, as it sounds rather high.

[dre]

So a high income earner pays 20% of their wealth out in fees every year ? You might want to Google 'effective tax rate' to look into that, as it sounds rather high.

I never said that. They pay out roughly 30% of their income each year for life. Not 30% of their "wealth".

According to the IRS the top income tax bracket in the US is %35 percent. But even what they get to keep isnt safe, as theres a web of collection points design to reclaim a lot of that as well through things like sales taxes, property taxes, etc.

Then the portion of what they get to keep accumulates throughout their lives, and when they day the government takes around 1/2 of that as well.

The net result is that most of their wealth goes back into the pool.

[Michael Hardner]

I never said that. They pay out roughly 30% of their income each year for life. Not 30% of their "wealth".

According to the IRS the top income tax bracket in the US is %35 percent. But even what they get to keep isnt safe, as theres a web of collection points design to reclaim a lot of that as well through things like sales taxes, property taxes, etc.

Then the portion of what they get to keep accumulates throughout their lives, and when they day the government takes around 1/2 of that as well.

The net result is that most of their wealth goes back into the pool.

Ok... so firstly I concur that I misused 'wealth' and should have said 'income'. But you still have a ways to go to get to 51% or 'most' of their wealth.

[dre]

Ok... so firstly I concur that I misused 'wealth' and should have said 'income'. But you still have a ways to go to get to 51% or 'most' of their wealth.

Iv already done that. Picture the hypothetical life of a wealthy person in the US.

Lets say they live for ten years (just to make it easier to add up).

1. They make 5 million dollars per year for a total income of 50 million dollars.

2. They pay about 18 million in direct income tax (roughly) based on that top 35% tax bracket.

3. They also purchase a 5 million dollar estate and pay property taxes on that over the same ten year period. Im going to ballpark that at 500 000 million based on 1% per year.

4. If they live in California they will pay an 8% sales tax as well. Supposing they buy 25 million dollars worth of stuff in that 10 year life span thats another hit of roughly 2 million dollars. And that money gets double taxed as well because the entity they are purchasing that stuff from is paying taxes as WELL and adding those costs onto the purchase price.

So on the day before they die...

They have generated 50 million dollars in wealth.

And they have paid 20 500000 in taxes.

That leaves them with a 30 million dollar estate.

Then they DIE.

For the first 3 million of that 30 million they pay $1,290,800.

Then they 55% of the remaining 27 000 000.

Thats about another 16 million on taxes.

When all is said and done they have paid about 36 million of that origional 50 back into the pool

Now... I know my example is crude the numbers are relative close based on tax rates published by the IRS. Of course theres a lot of ways that hypothetical person could pay MORE in taxes, and a lot of ways in which he could pay LESS. Some rich people manage to pay hardly any taxes at all.

[Michael Hardner]

Iv already done that. Picture the hypothetical life of a wealthy person in the US.

Lets say they live for ten years (just to make it easier to add up).

1. They make 5 million dollars per year for a total income of 50 million dollars.

2. They pay about 18 million in direct income tax (roughly) based on that top 35% tax bracket.

3. They also purchase a 5 million dollar estate and pay property taxes on that over the same ten year period. Im going to ballpark that at 500 000 million based on 1% per year.

4. If they live in California they will pay an 8% sales tax as well. Supposing they buy 25 million dollars worth of stuff in that 10 year life span thats another hit of roughly 2 million dollars. And that money gets double taxed as well because the entity they are purchasing that stuff from is paying taxes as WELL and adding those costs onto the purchase price.

So on the day before they die...

They have generated 50 million dollars in wealth.

And they have paid 20 500000 in taxes.

That leaves them with a 30 million dollar estate.

Then they DIE.

For the first 3 million of that 30 million they pay $1,290,800.

Then they 55% of the remaining 27 000 000.

Thats about another 16 million on taxes.

When all is said and done they have paid about 36 million of that origional 50 back into the pool

Now... I know my example is crude the numbers are relative close based on tax rates published by the IRS. Of course theres a lot of ways that hypothetical person could pay MORE in taxes, and a lot of ways in which he could pay LESS. Some rich people manage to pay hardly any taxes at all.

They have to buy a lot of stuff to make your example work. They also likely invest that money and pay less taxes on that. And if they make 50, or 500 million then they have to spend even more money.

All of this assumes they don't take advantage of tax loopholes either. But, ok, the example you gave for a $5M earner does compute with the numbers you provided.

[dre]

They have to buy a lot of stuff to make your example work. They also likely invest that money and pay less taxes on that. And if they make 50, or 500 million then they have to spend even more money.

All of this assumes they don't take advantage of tax loopholes either. But, ok, the example you gave for a $5M earner does compute with the numbers you provided.

The numbers are always different of course, and theres no way you could ever come up with any kind of universal formula.

They have to buy a lot of stuff to make your example work. They also likely invest that money and pay less taxes on that. And if they make 50, or 500 million then they have to spend even more money.

All true. My example is a piece of shit, that a guy with only passing knowledge of the tax code came up with in 5 minutes without the use of a calculator. It was meant to paint a broad and dumb picture thats all. And yeah... Investment income is taxed at a lower rate so if the bulk of a persons estate came from that, the numbers would look totally different.

Keep in mind... Im basing that on tax rates today, after decades of the wealthy successfully lobbying to have their own taxes cut. The top tax bracket didnt come down under SEVENTY percent until after 1980, when the US decided it would fund its government through inflation instead of taxes.

Also... The things I mentioned BARELY SCRATCH THE SURFACE. Theres literally thousands of mechanisms in the system to reclaim wealth both directly and indirectly. You could spend a whole career trying to learn the tax code!

Edited August 24, 2010 by dre

[Moonlight Graham]

What is the opposite of taking wealth for your guilt ridden redistribution scheme?

Grabbing shotguns and shooting rich and poor people in the face?

I don't buy cheap t-shirts.

Of course you do. If you want, say, a plain white cotton t-shirt i'd say you're apt to go down to Target or Wal-Mart and pick one up rather than buying one that's a bit more expensive at a fair-trade store.

When i said "cheap" i meant price, not quality.

The world is a better place because of self interest, not the commie plans in your head.

First, i'm not in favour of communism. Class systems and capitalism are fine, and i'm not in favour of dictatorships. What i am in favour of is a market-based economy where wealth is redistributed from the very wealthy to the very poor, which is more aptly described as capitalism mixed with socialism. This is the system that the U.S. and Canada employs, as well as other western states. The only debate is how much wealth is to be redistributed.

As for self-interest, it serves both good and bad for humanity. There needs to be balance between self-interest and concern for others. IMO, the world is tilted too far towards self-interest. There is a line where self-interest turns into greed, and greed causes harm.

I am the voice of reality...if that be arrogant...then reality is arrogant.

Everyone thinks they are "the voice of reality". Shady is the "truth detector" after all. This isn't why you're arrogant. I like debating with someone like Bonam because he does just that: debate. Speaks rationally and rarely gets personal or puts up the a-hole defense mechanisms, even when he disagrees with me.

You, on the other hand, are a fairly intelligent and knowledgeable guy, yet will be rude or insulting to me or whomever chaps your bottom on a particular post. You are stubborn and arrogant in that you will never ever admit you are wrong, even then you know you are, and rarely if ever acknowledge when someone brings up a good point (unless of course it helps your own argument). Your a-hole defense mechanisms are always in full-effect. It's a shame, really, because as i said you are otherwise an intelligent and knowledgeable guy whom i enjoy debating with when the other rubbish is on the hush-hush.

Edited August 24, 2010 by Moonlight Graham

[Bonam]

What?

Virtually every successfull country cycles MOST wealth back into the pool through things like progressive graduated income taxes, and inheritance taxes. Countries that dont do this eventually face revolution because wealth and political power consolidate into the hands of the few.

Can you name a single successful modern country where most wealth isnt reclaimed by society? Iv certainly never heard of one...

What I said was that people need to be able to keep a substantial chunk of the fruits of their labour. A substantial chunk can be defined in various ways, but I'd say a half, even a third, or a quarter, is still "substantial". Of course I personally would prefer to see that chunk to be a higher %, but as long as it is something significant, I believe you can have a functional and free society (in technical terms: a necessary but not a sufficient condition). This is true in every "successful modern country", by which I assume you refer primarily to places like North America, Europe, Korea, Japan, etc.

When Moonlight Graham proposes that we essentially confiscate the vast majority of the wealth from the rich, that is, eradicate the incentive or freedom to be able to benefit significantly from one's industriousness, I believe that path can lead only to totalitarianism.

To summarize my viewpoint: I moderately dislike the "mixed socialism" type societies that Canada, the US, and most of Europe are based on but recognize that they can and do work reasonably well. But what was proposed in the OP reeks of something far beyond that, and that I cannot support, and think it can lead nowhere but the Gulag.

[Moonlight Graham]

When Moonlight Graham proposes that we essentially confiscate the vast majority of the wealth from the rich, that is, eradicate the incentive or freedom to be able to benefit significantly from one's industriousness, I believe that path can lead only to totalitarianism.

The point of this topic seems lost on pretty much everyone (mostly my fault), and nobody seems to have really answered my key question.

I don't really support my "proposal", what i am really asking is WHY has it not been done? More specifically, given human nature is ultimately selfish, why haven't the middle and lowers classes aka "the majority" in western countries demanded the wealthy give them more of their money? It's a simple question. It kind of seems odd that to me that "the majority" is content on letting the rich keep their riches when they could easily have a good chunk of it for themselves through legal tax increases on the wealthy. Let me be clear again that I AM NOT SAYING I SUPPORT THIS, I AM JUST ASKING WHY IT HAS NOT OCCURRED.

Is it because of the historical fears/taboos of "communism"? Do most people think the rich have legitimately earned said wealth, and therefore should be free to have it in a liberal/capitalist society? Do the middle-class feel content enough with their lives & standard of living that they feel no urgent need to enact such rather radical tax increases? Is it because people would fear such taxation would drive business and investment away from their country?

Is it a combo of these? I am just curious.

Edited August 24, 2010 by Moonlight Graham

[Jack Weber]

Well,seeing as the Middle Class has seen their wages stagnate over the last 30 years,one has to wonder if there is much of a middle class left?

I notice all the free market types always talk about Socialism/Communism being a wealth redistribution system.That's a fair assessment,but,so is the Friedman/Von Hayek theory as well.Socialism/Communism tends to turn the wealth triangle upside down,the other tends to turn it right side up.But too much of the Freidmanite plan basically lets wealth flow upward into the hands of the few.The other way does the exact opposite.Basically,society needs to find an equitable balance.We had that during the post war Golden age that I would say ended with the election of both Reagan and Thatcher.Since then,we've had different versions of neoliberal economics given to us,and the middle clas has gotten squeezed more and more...

For every Marxist nightmare anyone can think off,and there's alot,I can see an equally horrible unfettered free market version of that same nightmare.A nightmare where the standard of living falls because every single entity is competing to get the lowest possible price on every single thing,reducing us to basic animals gathering around a constantly shrinking standard of living watering hole...

Whenever these disparities in wealth happen,usually very bad and bloody things happen.And very bad ideas come out of that type of naked greed.

[Bonam]

I don't really support my "proposal", what i am really asking is WHY has it not been done? More specifically, given human nature is ultimately selfish, why haven't the middle and lowers classes aka "the majority" in western countries demanded the wealthy give them more of their money? It's a simple question. It kind of seems odd that to me that "the majority" is content on letting the rich keep their riches when they could easily have a good chunk of it for themselves through legal tax increases on the wealthy. Let me be clear again that I AM NOT SAYING I SUPPORT THIS, I AM JUST ASKING WHY IT HAS NOT OCCURRED.

Is it because of the historical fears/taboos of "communism"? Do most people think the rich have legitimately earned said wealth, and therefore should be free to have it in a liberal/capitalist society? Do the middle-class feel content enough with their lives & standard of living that they feel no urgent need to enact such rather radical tax increases? Is it because people would fear such taxation would drive business and investment away from their country?

Is it a combo of these?

Yep, probably a "combo" of these and possibly other factors. Some people have a rational dislike for communism, some are definitely concerned about businesses and investment, others realize that legitimately gotten wealth should not be forcefully confiscated, some want the opportunity open to become rich themselves someday, many are apathetic to the whole issue.

Again, your original question was flawed: it HAS been done. Just not here. We have the lessons learned from the places that did try to do it to show that it's a bad idea. Unless you've backpedaled from the original proposal to just "legal tax increases", in which case you can certainly see that happening all the time, new taxes and fees are instituted periodically.

[dre]

I AM JUST ASKING WHY IT HAS NOT OCCURRED

Because the wealthy in the west are smart, and they learned from things like the guilded age and the aristocracy. In the west theres a social safety net and the underclass is kept just comfortable enough so that they dont turn politically activist. Poor people in the west vote in very low numbers because of this, leaving the middle and upper class in control, and they of course vote for governments that will strengthen their private property rights.

Thats why I laugh when some people rant about the "welfare state" etc. They dont understand that social programs ultimately help the rich by keep the poor from getting desperate enough to vote.

A good example is Venezuela. The underclass in Venezuela was allowed to grow very large, and impoverished. To the point where people lived in massive tent cities. This is a very dangerous thing in a democracy. THE POOR STARTED VOTING... and they voted for the first guy that campaigned on REAL wealth redistribution. Chavez... who immediately began naturalizing resources, siezing companies, banks, wealth, etc.

Anyhow... THAT is the answer to your question. Pure socialist movements cant get off the ground in the west because the poor people dont vote. They dont vote because "limited socialism" keeps them pacified and disinterested in politics.

If we brought down the social safety net in Canada you would have pure socialism complete with wealth redistribution and naturalization within a decade.

[bush_cheney2004]

Of course you do. If you want, say, a plain white cotton t-shirt i'd say you're apt to go down to Target or Wal-Mart and pick one up rather than buying one that's a bit more expensive at a fair-trade store.

And you would be wrong....I am an old school Jockey kinda guy....not available at WalMart or Target in my neck of the woods. Much more expensive than Hanes or Fruit of the Loom.

First, i'm not in favour of communism. Class systems and capitalism are fine, and i'm not in favour of dictatorships. What i am in favour of is a market-based economy where wealth is redistributed from the very wealthy to the very poor, which is more aptly described as capitalism mixed with socialism. This is the system that the U.S. and Canada employs, as well as other western states. The only debate is how much wealth is to be redistributed.

Actually, the "poor" are taxed at higher rates as a percentage of income, and the remaining "redistribution" goes back to the providers of goods and services (capitalists).

As for self-interest, it serves both good and bad for humanity. There needs to be balance between self-interest and concern for others. IMO, the world is tilted too far towards self-interest. There is a line where self-interest turns into greed, and greed causes harm.

"Greed is good."

Everyone thinks they are "the voice of reality". Shady is the "truth detector" after all. This isn't why you're arrogant. I like debating with someone like Bonam because he does just that: debate. Speaks rationally and rarely gets personal or puts up the a-hole defense mechanisms, even when he disagrees with me.

Don't get too high and mighty, as you have your own brand of dipstick antagonism.

You, on the other hand, are a fairly intelligent and knowledgeable guy, yet will be rude or insulting to me or whomever chaps your bottom on a particular post. You are stubborn and arrogant in that you will never ever admit you are wrong, even then you know you are, and rarely if ever acknowledge when someone brings up a good point (unless of course it helps your own argument). Your a-hole defense mechanisms are always in full-effect. It's a shame, really, because as i said you are otherwise an intelligent and knowledgeable guy whom i enjoy debating with when the other rubbish is on the hush-hush.

I yam what I am....and I really dislike patronizing prattle like this. Play the game for yourself....I have carefully defined my role here and it does not include kissing your ass for "debate" points. Somebody has to represent the "cruel hard world".

Edited August 24, 2010 by bush_cheney2004

[bush_cheney2004]

Let me be clear again that I AM NOT SAYING I SUPPORT THIS, I AM JUST ASKING WHY IT HAS NOT OCCURRED.

Pretty simple...they never got a job from a poor man / woman.

[Moonlight Graham]

And you would be wrong....I am an old school Jockey kinda guy....not available at WalMart or Target in my neck of the woods. Much more expensive than Hanes or Fruit of the Loom

"There is no beauty in the finest cloth if it makes hunger and unhappiness" - Mohandas Ghandi

Don't get too high and mighty, as you have your own brand of dipstick antagonism.

I am always a perfect gentleman, even when i'm not.

Somebody has to represent the "cruel hard world".

I highly doubt you have the credentials to hold such a responsibility. Had your village bombed lately? Sleep in your own diarrhea last night? Or on the street corner?

[bush_cheney2004]

"There is no beauty in the finest cloth if it makes hunger and unhappiness" - Mohandas Ghandi

"Always wear clean underwear without any holes or skid marks just in case you get hit by a car and go to hospital"

- A mother's wish

I am always a perfect gentleman, even when i'm not.

No matter...you will be treated to the utmost in sarcasm and arrogance whenever warranted.

I highly doubt you have the credentials to hold such a responsibility. Had your village bombed lately? Sleep in your own diarrhea last night? Or on the street corner?

Yes!

[Michael Hardner]

I don't really support my "proposal", what i am really asking is WHY has it not been done? More specifically, given human nature is ultimately selfish, why haven't the middle and lowers classes aka "the majority" in western countries demanded the wealthy give them more of their money? It's a simple question. It kind of seems odd that to me that "the majority" is content on letting the rich keep their riches when they could easily have a good chunk of it for themselves through legal tax increases on the wealthy. Let me be clear again that I AM NOT SAYING I SUPPORT THIS, I AM JUST ASKING WHY IT HAS NOT OCCURRED.

Tax rates have been much higher, even in conservative America. As has been pointed out, the top rate was 70% even in the relatively recent Nixon era.

Higher taxes discourage investment and lower spending, both of which are good for the economy. But economic policies are always intertwined with politics and a key reason that taxes for highest earners (in the US) have been declining for decades is the elimination of multiple brackets for the highest earners. I believe that happened under Reagan.

So now, the top tax rate kicks in at a middle class salary - which makes it politically difficult to raise the top rate.

[Argus]

Our society is built on a social contract where people who play by the rules are entitled to the wealth they earn.

What if they twist the rules to their benefit, and against ours, so that they get rich at our expense?

What if they engage in legal but morally questionable behaviour, taking advantage of people, especially less educated people, using them, abusing them, getting rich at their expense?

A lot of the behaviour the financial systems, particularly banks, have engaged in over the past few decades is highly immoral, even if technically legal.

You also should to remember that the majority of the super rich in North America are people who built successful companies that delievered something that benefited everyone (Gates, Jobs, Waltons (Walmart), the Google guys etc.)

Gates? He took a really, really crappy operating system and made it the standard over much better, more efficient systems. Waltons? He certainly helped China by flooding America and the world with cheap goods. Running masses of manufacturing companies and retail outlets out of business, however, is not necessarily a "help" to the rest of us. Don't make the mistake of thinking the majority of the super rich deserve to be super rich because of their drive, intelligence and determination. Lots of them just pulled a fast one, or inherited from someone who did.

Would America be a better place if Sam Walton was strangled at birth? I think so.

[bush_cheney2004]

.... Don't make the mistake of thinking the majority of the super rich deserve to be super rich because of their drive, intelligence and determination. Lots of them just pulled a fast one, or inherited from someone who did.

...and don't make the mistake of confusing what people legally do and don't deserve if that's so important.

Would America be a better place if Sam Walton was strangled at birth? I think so.

Sure...and I think Canadian Tire sucks too. So what?

[M.Dancer]

Sure...and I think Canadian Tire sucks too. So what?

So what? You think just like most Canadians about crappy tire...

[Argus]

Tax rates have been much higher, even in conservative America. As has been pointed out, the top rate was 70% even in the relatively recent Nixon era.

Higher taxes discourage investment and lower spending, both of which are good for the economy. But economic policies are always intertwined with politics and a key reason that taxes for highest earners (in the US) have been declining for decades is the elimination of multiple brackets for the highest earners. I believe that happened under Reagan.

So now, the top tax rate kicks in at a middle class salary - which makes it politically difficult to raise the top rate.

In a situation where 1% of the populace controls 95% of the wealth, which I understand is the case, I think we have to say that the changes benefited only that small percentage at the top to the detriment of everyone else. I think it's time to consider changing the tax laws back and closing some of those loopholes.

[Michael Hardner]

In a situation where 1% of the populace controls 95% of the wealth, which I understand is the case, I think we have to say that the changes benefited only that small percentage at the top to the detriment of everyone else. I think it's time to consider changing the tax laws back and closing some of those loopholes.

Do you have somewhere where we can look at that metric ?

That might be key to deciding when tax rates have fallen enough, or at least when they can be raised temporarily to fund a recovery, or some project or other.

[dre]

In a situation where 1% of the populace controls 95% of the wealth, which I understand is the case, I think we have to say that the changes benefited only that small percentage at the top to the detriment of everyone else. I think it's time to consider changing the tax laws back and closing some of those loopholes.

The easiest way to do this without rewriting the tax code is to just make sure theres a large inheritance tax, and remove the loopholes there.

The problem of course is that the upper middle class, and the wealthy are the ones that reliably go to the polls!!! Politicians are nervous as hell about doing anything that could be seen as weakening private property rights for a collective benefit.