Defining Rich in America

[Walt34]

Quote:

Originally Posted by Amethyst Because Person A, being dead, is incapable of being taxed? The taxes apply to Person A's heirs, who are asked to pay their share of their unearned gains?

I wasn't clear and should have said that I was assuming the gains had already been taxed. In fact it was taxed twice, once when earned (income tax) and again when the saver didn't spend it but was paid interest or dividends when he made that money available for use by other people.

That always made me go "grrrrr" too because in effect the saver is penalized for not engaging in consumption that he feels is not necessary or is not wanted.

[nash031]

Quote:

Originally Posted by nun I'd consider dividends and capital gains as just regular income that would be taxed at your marginal income tax rate.

While this would affect a lot of folks on here including me, I agree in principle.

[Blue65]

What is so interesting about this thread is the many paths others take to reach that comfort level and balance between income needs and what it takes to get there. It makes me appreciate the income I have and if I can stay healthy, I can work another 12 years to maximize my SS. Some folks never get that chance because of their health, bad economy, corporate bs, or the creative destruction of the business they work in.

I agree with one of the posters about pensions and wealth. I live in a state that is very very good to their public sector employees, but frankly, the money has to come from somewhere, and it's not the sky.


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[dallas27]

Quote:

Originally Posted by nash031 While this would affect a lot of folks on here including me, I agree in principle.

[ quote is referring to taxing passive income]

The interesting thing is it would presumably lower the overall income tax rates as that burden becomes more shared. Well, maybe that's wishful thinking, probably our leaders would just spend (borrow) more.







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[eta2020]

Quote:

Originally Posted by FlyBoy5 And on that note, I see this reflected in the cars too. Almost all of the McMansions have $60K+ cars in the drives whereas we have lots of older Hondas (especially the 2000-2005 Accords!), Toyotas and a couple of Towncars (that are 10 years old). I feel out of place in my 5 year old Infiniti!

Usually those McMansions with 60k cars are NOT owned by people who have high net worth. They are owned by high earners though.

[Totoro]

Quote:

Originally Posted by Jay_Gatsby That said, the growth of an economy comes down to spending, whether by the Government or someone like Person B blows the money on frivolous purchases. Absent spending (and where there is prodigious saving), money doesn't flow easily and you have an economy like Japan's was until recently.

Probably not the place to voice my stance on this, but the growth of an economy in the long run most certainly does *not* come down to spending.

It comes from the ability to create and do more with less, i.e. efficiency. Specifically, more possible output in goods and services with less energy in human-hours involved.

The increased consumption is an effect of that, not the driver.

Frivolous purchases waste resources and actually reduces potential growth. You need purchases that further increase efficiency and output per unit of energy / human effort. In other words: investments with a good return on capital.

Small counter-example to Japan: Belgium has one of the highest savings rates in the world, they are doing fine. China also saves a bundle.

[dallas27]

Quote:

Originally Posted by Totoro Probably not the place to voice my stance on this, but the growth of an economy in the long run most certainly does *not* come down to spending. It comes from the ability to create and do more with less, i.e. efficiency. Specifically, more possible output in goods and services with less energy in human-hours involved. The increased consumption is an effect of that, not the driver. Frivolous purchases waste resources and actually reduces potential growth. You need purchases that further increase efficiency and output per unit of energy / human effort. In other words: investments with a good return on capital. Small counter-example to Japan: Belgium has one of the highest savings rates in the world, they are doing fine. China also saves a bundle.

+1 to someone who understands "wealth of nations" (adam smith)


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[Gumby]

Quote:

Originally Posted by Totoro Frivolous purchases waste resources and actually reduces potential growth. You need purchases that further increase efficiency and output per unit of energy / human effort. In other words: investments with a good return on capital.

Precisely why enormous military spending, supported by politicians of every stripe for the jobs it supposedly creates in their districts, actually harms rather than helps the economy. There is no economic return on the capital invested in a tank or a submarine (although at least some tanks and submarines admittedly are required for other reasons).

[Hamlet]

The problem with this view is that we've been running below our economic capacity since the economic crisis, and that may continue for quite a while. Our economy is currently facing a shortage of demand.

In our current situation, productivity gains actually work against us, as it just generates lay-offs, which ends up reducing demand further as those laid-off workers cut back spending.

Productivity gains are good when the economy can find something useful for those freed up workers to do, but in the current situation they actually makes the economy worse.

Its slowly getting back to "normal", but until we are at full employment, those productivity gains aren't really gaining us anything.

Quote:

Originally Posted by Totoro Probably not the place to voice my stance on this, but the growth of an economy in the long run most certainly does *not* come down to spending. It comes from the ability to create and do more with less, i.e. efficiency. Specifically, more possible output in goods and services with less energy in human-hours involved. The increased consumption is an effect of that, not the driver. Frivolous purchases waste resources and actually reduces potential growth. You need purchases that further increase efficiency and output per unit of energy / human effort. In other words: investments with a good return on capital. Small counter-example to Japan: Belgium has one of the highest savings rates in the world, they are doing fine. China also saves a bundle.

[travelover]

Quote:

Originally Posted by Gumby ........ There is no economic return on the capital invested in a tank ...........

Sure there is . They can be handed down to local police departments to save them from having to buy them from their own budgets. This can be a big deal in a town of a hundred people.

[imoldernu]

Rich in America... Didn't make the cut.

[Milton]

Quote:

That’s why it’s better to think about the question of who’s rich in terms of accumulated wealth instead of annual income (which in turn is a good argument for a wealth tax).

Thanks candrew for the excerpts, which saved me from wasting time reading the linked article. I can stop reading right there … no such thing as "a good argument for a wealth tax".

[Turboslacker]

Quote:

Originally Posted by eta2020 Usually those McMansions with 60k cars are NOT owned by people who have high net worth. They are owned by high earners though.

And to build on your point...those folks are simply temporary "users" of that stuff. Financial entities actually "own" it.
Well over 50% of high end vehicles are leased rather than purchased.


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[Walt34]

Quote:

Originally Posted by Gumby There is no economic return on the capital invested in a tank or a submarine (although at least some tanks and submarines admittedly are required for other reasons).

I think that is straight out of The Art Of War. Force the enemy to spend outlandish sums on his military and thereby bankrupt him or at least reduce his resources.

[unno2002]

Personal Opinion:

If you do not have personal assets & income along the lines of the British royalty, you are not rich.

[haha]

Quote:

Originally Posted by FIREd We tend to worship the millionaire next door on this forum. But there are people out there for whom a 3,000 sqft colonial and a BMW are still well below what they could afford. Sometimes people look rich because... they are rich, richer than most us millionaires next door ever will be!

LOL. that is the secret envy of this board. My Dad used to give me this line, but mostly he was wrong, just like mostly one would be wrong to assume that most of the people who park their Ferraris, Aston Martins and 911s in the Microsoft or Google garages are actually broke. Most of them are actually filthy rich!

Ha

[LARS]

Quote:

Originally Posted by Gumby Precisely why enormous military spending, supported by politicians of every stripe for the jobs it supposedly creates in their districts, actually harms rather than helps the economy. There is no economic return on the capital invested in a tank or a submarine (although at least some tanks and submarines admittedly are required for other reasons).

Actually in the case of the US, it is in no small part all the money spent on tanks, submarines and missiles, etc. that has made the US the dominant military force of the 20th (and so far 21st) century, which in turn as allowed the US to have the tremendous economic benefit of having its currency (the $) as the world's reserve currency.

[Gumby]

Quote:

Originally Posted by LARS Actually in the case of the US, it is in no small part all the money spent on tanks, submarines and missiles, etc. that has made the US the dominant military force of the 20th (and so far 21st) century, which in turn as allowed the US to have the tremendous economic benefit of having its currency (the $) as the world's reserve currency.

Is it military might that makes the USD the world reserve currency? It is an interesting theory and there are substantial benefits that arise from that status. I honestly don't know the answer.

[LARS]

Quote:

Originally Posted by Gumby Is it military might that makes the USD the world reserve currency? It is an interesting theory and there are substantial benefits that arise from that status. I honestly don't know the answer.

Yes, generally thru history the privilege of reserve currency status has fallen to the world's military 'enforcer'. Prior to the US, Great Britain (of Britannia rules the waves era) played the role similar to modern US.

[Spanky]

Quote:

most of the people who park their Ferraris, Aston Martins and 911s in the Microsoft or Google garages are actually broke. Most of them are actually filthy rich!

In reality, the original Google garage does not have any cars in it!