IMF-tax the rich

[GostHacked]

Or this - why not make all government funding online only, so that it can be monitored through open source....

I like the idea, but that won't happen. There are some items that are off the budgets, like top military programs. If we start getting itemized billing then we can scrutinize where our tax dollars are going.

[Michael Hardner]

I like the idea, but that won't happen.

Honestly, I'm surprised you like it given the privacy implications but then again it's our money.

There are some items that are off the budgets, like top military programs. If we start getting itemized billing then we can scrutinize where our tax dollars are going.

They're not "off the budgets" you just don't get details, and that level of secrecy will likely continue.

[GostHacked]

Honestly, I'm surprised you like it given the privacy implications but then again it's our money.

What you and I do individually with our own money is a private matter.

Government is a public entity that is accountable to it's taxpaying citizens. What they do with our tax money is a collective public matter. Because they see fit to take money from both of us in the form of tax and yet feel that they really don't need to tell us what it is really being spent on. It's called accountability. And that is a nasty word in the government.

Maybe the surprise comes from your confusion of what you perceive my view, on what privacy really means.

They're not "off the budgets" you just don't get details, and that level of secrecy will likely continue.

In some cases you are not even allowed to know what the budget is. Ripe for abuse.

[Moonlight Graham]

I am not advocating anything. I am just pointing out the cold hard math that there are not enough "rich" to make much of a difference even if you taxed them more.

The IMF research study disagrees with you:

A new paper by researchers at the International Monetary Fund appears to debunk a tenet of conservative economic ideology — that taxing the rich to give to the poor is bad for the economy.

The paper by IMF researchers Jonathan Ostry, Andrew Berg and Charalambos Tsangarides will be applauded by politicians and economists who regard high levels of income inequality as not only a moral stain on society but also economically unsound.

Labelled as the first study to incorporate recently compiled figures comparing pre- and post-tax data from a large number of countries, the authors say there is convincing evidence that lower net inequality is good economics, boosting growth and leading to longer-lasting periods of expansion.

In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme.

In fact, because redistributing wealth through taxation has the positive impact of reducing inequality, the overall affect on the economy is to boost growth, the researchers conclude. "We find that higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect," the paper states.

...

The data they looked at showed almost no negative impact from redistribution policies and that economies where incomes are more equally distributed tend to grow faster and have growth cycles that last longer.

[dre]

I am not advocating anything. I am just pointing out the cold hard math that there are not enough "rich" to make much of a difference even if you taxed them more.

It WOULD make a difference though. More money would be cycled back into the economy, and the tax burden would slightly shifted away from the broader consumer base, which would create jobs. Wealthy people and companys dont create jobs... Demand for products and services creates jobs. Thats why we saw such fast growth when the top marginal tax rate was up around 70%, and why demand-side economics has always been a lot more effective that supply-side economics.

[TimG]

The IMF research study disagrees with you:

The report does not address my point at all. In equality is not addressed by taking from the rich and giving to the poor. It is solved by funding social infrastructure that enhances social mobility. When it comes to funding this infrastructure the lion's share has to come from the middle class because they are the ones with all of the money. Having a culture that places a value equality is also important - a culture that does not exist in the US today. It is a little better in Canada but not by much. Edited February 28, 2014 by TimG

[TimG]

Thats why we saw such fast growth when the top marginal tax rate was up around 70%

Holy cherry picking to support your pet policy batman! There are a thousand better explanations for post war boom starting with a population spurt. The boom was likely in spite of the absurdly high taxes - not because of them. Marginal tax rates should never exceed 50% as a matter of principle. Edited February 28, 2014 by TimG

[Shady]

Bill Gates could cure world hunger RIGHT NOW. With all his money. Bill Gates could almost pay off the US national debt just on his own.

That's the most ludicrous thing said in this forum in a long time. It's complete and utter nonsense. What a ridiculous lie to spread around.

[Shady]

Holy cherry picking to support your pet policy batman! There are a thousand better explanations for post war boom starting with a population spurt. The boom was likely in spite of the absurdly high taxes - not because of them. Marginal tax rates should never exceed 50% as a matter of principle.

Exactly. If such economic policy was effective, France would be an economic powerhouse. Regardless, you get diminishing returns as tax rates get that high, and it's essentially a wet blanket for strong economic growth.

[dre]

Holy cherry picking to support your pet policy batman! There are a thousand better explanations for post war boom starting with a population spurt. The boom was likely in spite of the absurdly high taxes - not because of them. Marginal tax rates should never exceed 50% as a matter of principle.

No the economy grew fast because wealth was deconcentrating and a large middle class emerged resulting in massive consumption.

[Topaz]

If you make under 20,000, one pays no taxes and so as business reduces the middle-class, through jobs loss or through increase service cost, the middle is reduce or disappears, where are the governments going to get their revenue....the top half of incomers.

[TimG]

No the economy grew fast because wealth was deconcentrating and a large middle class emerged resulting in massive consumption.

You are mixing cause and effect. The middle class grew and consumed because of a combination of the baby boom, post war reconstruction and a lack on any global competition for UUS enterprises.

[dre]

You are mixing cause and effect. The middle class grew and consumed because of a combination of the baby boom, post war reconstruction and a lack on any global competition for UUS enterprises.

The middle class emerged because the tax structure pevented a small group of people from hording all the wealth. As soon as the tax rates for the rich were slashed wealth began to quickly concentrate and the middle class started to disappear.

[GostHacked]

That's the most ludicrous thing said in this forum in a long time. It's complete and utter nonsense. What a ridiculous lie to spread around.

Do you even read your own posts? But I'll take it as a compliment.

[Moonlight Graham]

The report does not address my point at all. In equality is not addressed by taking from the rich and giving to the poor. It is solved by funding social infrastructure that enhances social mobility.

You say this as if it's true, but how did you come this conclusion? Is this based on real evidence or is it just a theoretical guess?

When it comes to funding this infrastructure the lion's share has to come from the middle class because they are the ones with all of the money.

The middle-class provides the bulk of tax money, yes. But how does this prevent middle and lower-class wages from stagnating while the rich keep getting richer and creating more inequality, as has been the case over the past 30-35 years with the advent of neoliberal "trickle-down" policies?

[carepov]

The middle class emerged because the tax structure pevented a small group of people from hording all the wealth. As soon as the tax rates for the rich were slashed wealth began to quickly concentrate and the middle class started to disappear.

What/where/when is this disappearing middle class? To me it is clear that incomes for the middle class (middle 60 percentile) has been steadily growing in Canada.

http://www4.hrsdc.gc.ca/[email protected]?iid=22

Edited March 2, 2014 by carepov

[Topaz]

What/where/when is this disappearing middle class? To me it is clear that incomes for the middle class (middle 60 percentile) has been steadily growing in Canada.

http://www4.hrsdc.gc.ca/[email protected]?iid=22

The graph goes only to 2011, I like to see 2014. I know more workers that were making about $25 hourly wage, who now lost their job, can only find part time or making 10.25 hourly which put them under 20,000 yearly. I like to see if the 1.3 million out of work were middle-class or upper class, and I think they were middle-class.

[TimG]

The graph goes only to 2011, I like to see 2014.

Even if it did - it would not be a large drop because the data does not change fast and it would not change

I know more workers that were making about $25 hourly wage, who now lost their job, can only find part time or making 10.25 hourly which put them under 20,000 yearly.

And you have other workers graduating from school with the right skills seeing their wages rise from nothing to well over 25/hour. The average does not mean that individuals are not losing ground. It means that on average the middle class is NOT getting poorer. It is just not getting richer as fast as the wealthiest and this makes many people jealous. Edited March 2, 2014 by TimG

[GostHacked]

Carepov, the cost of everything else has risen faster than wages. That needs to be taken into account to determine who is middle class. The numbers can be hidden.

[TimG]

You say this as if it's true, but how did you come this conclusion? Is this based on real evidence or is it just a theoretical guess?

I did not explain what I was thinking very well. I reject the notion that 'inequality' is a problem in itself because our entire capitalist economy depends on inequality existing. If 'inequality' it is a problem it is only because it is symptom of some other problem like lack of social mobility. Hence my statement that simply moving money around is not enough - the money has to be directed at solving the real problem.

The middle-class provides the bulk of tax money, yes. But how does this prevent middle and lower-class wages from stagnating while the rich keep getting richer and creating more inequality

There are a couple trends which need to be considered:

1) Globalization means the middle class faces a lot of competition for the skills they offer. This will put a downward pressure on wages and no wealth transfer can change that. An investment in a top notch education system would help in the long term but the global over supply of labour is not going away any time soon.

2) Globalization means the upper class has the entire globe to invest their capital. So their wealth is connected to the well being of the global economy more than the Canadian economy. So it makes sense that the incomes of the wealthy are no longer connected to incomes of the middle class. You can increase taxes on this group only so much before they take their money and run.

So my estimate is you could increase the tax take on the wealthiest by at most 10% before the negative consequences would start to really kick in. The real number could be lower but it is not likely to be much higher. Based on this estimate you can calculate the maximum possible additional revenue ($10 billion/per year) and that sum is a drop in the bucket. It is not going to make up for the slow wage growth brought on by globalization.

[carepov]

Carepov, the cost of everything else has risen faster than wages. That needs to be taken into account to determine who is middle class. The numbers can be hidden.

The data is adjusted for inflation, that is what 2011 constant dollars means.

[carepov]

The graph goes only to 2011, I like to see 2014.

That would be nice. I would not expect a big change, given that the middle class survived the Great Recession and other economic downturns.

I know more workers that were making about $25 hourly wage, who now lost their job, can only find part time or making 10.25 hourly which put them under 20,000 yearly. I like to see if the 1.3 million out of work were middle-class or upper class, and I think they were middle-class.

Sure, that's too bad for them. There are people that move from middle class to lower class but there an equal ammount of people that move from the lower class to the middle class. On average, the real incomes of the middle class are steadily increasing.

[dre]

That would be nice. I would not expect a big change, given that the middle class survived the Great Recession and other economic downturns.

Sure, that's too bad for them. There are people that move from middle class to lower class but there an equal ammount of people that move from the lower class to the middle class. On average, the real incomes of the middle class are steadily increasing.

No they arent. Real income for the middle class has fallen from 58k, to 53k in the last 14 years.

And they are recieving a small piece of pie than ever before, and its steadily getting worse.

Edited March 4, 2014 by dre

[carepov]

No they arent. Real income for the middle class has fallen from 58k, to 53k in the last 14 years.

And they are recieving a small piece of pie than ever before, and its steadily getting worse.

I was talking about Canada. You may be right about the US, I will look into it. If (big if) the top graph is real $ (adjusted for inflation) then the last 30 years have been good for the middle class.

By the way I agree with Buffett, increase taxes on the rich. I agree that the rich have unfairly avoided taxation. I am also convinced however that the Canadian middle class and poor are better off today than ever in history.

[bush_cheney2004]

I was talking about Canada..... I am also convinced however that the Canadian middle class and poor are better off today than ever in history.

Yes, this was quite clear above, but the U.S. invariably becomes part of the mix, even when it does not apply. In the U.S., real (inflation adjusted) income for all quintiles has increased since 1967: