Car-Guy
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Probably a good idea because if (sorry, when) it's changes, it won't be to your benefit even if they try to spin it that way.
The Super Rich and Taxes
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It's because for tens of thousands of years if not longer, the economy was more or less a zero sum game, and many, if not most, humans are hard wired to believe they have less if someone else has a lot. It's only been since the dawn of capitalism really that economics did not become a zero sum game but the pie actually expands in size, but the years of evolution still have it hardwired into our brains.
I asked a long time great friend of mind (since 6th grade) who is the most socialist guy I know if he could choose between the following two options if he were the King/dictator of the USA:
Scenario 1: Median household income of $10k and household wealth of zero. Top 1% income of $30k and household wealth of $100k
OR
Scenario 2: Median household income of $80k with $125k median household net worth with the bottom 10% at $30k income. Top 1% income of $500k with top 1% household wealth of $10 million.
He said he didn't know he'd have to think about it (scenario two is where we are today), which makes no sense since even the lowest income earnings in scenario two make as much as the middle 50%tile does in scenario 1. But that's how much someone else having a lot of wealth bothered him.
skipro33
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Your friend's issue isn't with income and wealth disparity, it's with the idea that the rich guy got that way by somehow depriving the poor guy. Alot of people feel they are 'stuck' in middle America because the rich somehow rigged the game and that they took a disproportionate amount of fixed wealth and were deprived of what they otherwise would have had if the rich had not manipulated the game.
Trying to explain Scenario 2 would have been clearer to your friend IF you had left out the Top income as a pregnant pause. He would then have seen it was a matter of envy, where once he was satisfied with his own net worth, he no longer is when he is made aware of another's exceptional net worth. I think we here look at those with exceptional wealth and recognize the deeper story; the risk the rich took to get that way and why the rich deserved it.
I've run into this many times when a friend or family member discovers I'm worth more financially than them. Almost instantly they feel this is unfair.
Later they become resentful and rationalize it as I was just lucky, had nothing to do with my management of money and they weren't. This is the reason people are told to not discuss how much they make to anyone. I never understood that, thinking that it would help me to know what others make and how they did it so I could at least try.
No, he flat out said he didn't think there should be that kind of income and wealth disparity no matter what. He fully admits that I make a great income because I worked my butt off 60+ hours a week, went back to finish my undergrad and then MBA and spend an hour a day studying on my own time in my craft (finance) and that he has averaged working 5-10 hours a week for his entire working life. He just hates corporations and seeing super rich people.
He would likely agree with a lot of what you said as well, but that goes to the earlier part of my comments that generally that is the way that humans are hardwired because from 100k years ago to about 1700s, median GDP per person did NOT change materially. It's literally hardwired into our brains that for you to have more, I have to have less. And for most of human history that is actually true.
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The Rich will get that money right back. That's how they get rich. Everybody else has to buy stuff. They own the means of stuff production and charge people for the stuff on an economy of scale that adds up. They don't just dig more ditches than everybody else i.e work. They have dibs on other people's money. Taxing in the context of your friend would be trickle down economics. If there are that many poor, clearly the regular kind of trickle down isn't working.
This is certainly the belief among a huge swath of the country, and perhaps true in Europe, but a strong majority of millionaire+ and billionaire+ in the US are first generation wealth (ie they created their own means of production or equivalent).
The second is how much better off people today are in general. The average poor person today in the US, while obviously far worse off than the wealthy, live far closer to what an upper class person's lifestyle was 100+ years ago. The amount of access to food (both quality and variety), technology, information and mobility today for someone at the bottom 25% income level is significantly higher than a top 1% person in 1900 and a top 5% earner in 1950. It really is extraordinary how rich people are in the US compared to the history of humanity - even recent history. Hard to see living in the moment but start writing down things the average or poor person has today vs in the past and its honestly a bit mind blowing.
Even things you wouldn't think that much - like lodging - the size of the average place today is more than triple what it was a hundred years ago, with far more features (AC, electrical outlets, internet, TVs,multiple bathrooms or bathrooms period, etc), and far more luxurious. In 1950 the average home was ~1000 sq ft - today its ~2,500.
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OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
There are many, many rags to riches examples to say that this model is not true in general. Count a few recent ones: Hewlett & Packard, Buffett, Jobs, Gates, Bezos. None of these guys owned any kind of "means of production" when they started out. They ultimately became rich through a combination of brains, effort, and really good luck. Further, absent a monopoly, just owning some means of production does not give the owner dibs on anyone's money. Ask the American automakers how much "dibs" money they got as the Japanese cars came into our market. Ask General Mills about Post. Ask US Steel about ArcelorMittal. Ask Pepsi about Coca-Cola. Ask Friden about calculators. Ask Digital Equipment about computers.
Winemaker
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It's nobody's business but a law abiding IRS that should know how much i pay in taxes or anyone else.
The statistics/numbers may have have changed, but an article from the TAX Foundation stated that if 100% of the wealth was seized/confiscated from the top 30 richest people in the US, The US Treasury would run out of money in 30 days. Taxes aren't the problem spending is.
The local school districts provides breakfast and lunch to all students, as well as providing paper and pencils. While I'm all in favor of good nutrition for developing children, most of what is served, is thrown away. Students go through thousands of pencils a year because they're taught that one would always be provided to them. School buses used to pick students up at a bus stop. Now the buses drive around and pick the kids up at their door. Students don't learn to dress for the weather as they run out the door to the bus, go into school, then get left off at their front door.
The statistics/numbers may have have changed, but an article from the TAX Foundation stated that if 100% of the wealth was seized/confiscated from the top 30 richest people in the US, The US Treasury would run out of money in 30 days. Taxes aren't the problem spending is.
The local school districts provides breakfast and lunch to all students, as well as providing paper and pencils. While I'm all in favor of good nutrition for developing children, most of what is served, is thrown away. Students go through thousands of pencils a year because they're taught that one would always be provided to them. School buses used to pick students up at a bus stop. Now the buses drive around and pick the kids up at their door. Students don't learn to dress for the weather as they run out the door to the bus, go into school, then get left off at their front door.
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
That’s an odd basis for a conclusion? I wouldn’t expect confiscating the wealth of 30 people to solve our deficit issues. Just feeds the willfully ignorant notion that deficits could be wiped out if only rich people and corporations paid more.
Most taxpayers will have to pay more in taxes or accept less in government services - which never seems to pan out when you ask people specifically what they’d be willing to give up. Most of the spending categories people offer up to reduce are trivial in the overall scheme of things. About 80% of federal spending is Soc Sec, Medicare/Medicaid, Defense and Debt Repayment…
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But they didn't get rich that way. They got rich collecting other people's money on an economy of scale for more than the value of producing their wares and paying those working for them less than the value they produce. I know this sounds "Kommie" but it's pretty academic economics.
Yes, it's called progress. Nothing to brag about really. Read what Smith said about relative poverty. We ought to be better off now than 1900 or 1950. But I'll admit even that might even be at least a pink herring of less importance that it might seem.
The number that matters. Those to whom we are referring to as "The Rich" have been collecting a bigger and bigger share of productivity gains for, I hear the the number 50 years thrown around. And even that is being maldistributed into a smaller tier among The Wealthy. That is not how any economy is supposed to work. (Unless you ask the beneficiary thereof) That is how looting works. More and more wealth is being taken OUT of the economy. That's what being Rich means. It's there. In a pile. Swiss bank accounts & other assets, etc. Out of circulation. Where'd it come from? Certainly not working. It comes from rules set up to allow it to happen.
Winemaker
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That’s an odd basis for a conclusion? I wouldn’t expect confiscating the wealth of 30 people to solve our deficit issues. Just feeds the willfully ignorant notion that deficits could be wiped out if only rich people and corporations paid more.
I guess my point is more taxes paid by the rich isn't going to change to the federal budget. Paying/seizing 2 Trillion in wealth doesn't put a dent in a 30 Trillion deficit. But it will make some jealous people happy.
I'm a 3rd generation American. My great grandfather came to the US in 1908 and was a coal miner/gravedigger. My father had a blue collar job and my mom stayed at home raising 4 kids. First in both sides of family to send all kids to college. I studied investing and businesses; and invested for for them. Mom died a millionaire, and all 4 of her kids will, too. I don't understand how someone can be so jealous of what others have earned/gained/collected/were paid.
Yes - or they won't be producing anything and no one would ever take risk or create anything. Workers can both benefit immediately by wages, can invest their own wages and can start their own business. It's how I went from poverty in my childhood and $7/hr in 2002 as a college dropout as a cashier at a grocery store to $500k+/yr in income 20 years later with zero assistance from anyone - not one penny from my parents for college (they didn't have anything) or anything else since. And I'm not a rare story by any stretch of the imagination.
Nothing to brag about? For the entirety of human existence, we had virtually zero economic progression until capitalism. Years where the average person is better than the decade before in human history is less than 0.01% of the time we've been on this rock - so to do it for 300 straight years in the US is quite literally amazing, especially at the pace it has occured. I'm not going to bother responding to the rest.
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OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Not commie.
For every sale I ever made, my goal was to get a price that was higher than my cost of producing the product. Isn't this obvious? If the product cost me exactly the sale price or worse, more, what would be the point in making the product?
For every hire I ever made I expected the new employee to produce more value than my cost of having him on the payroll. Isn't this obvious too? If he cost me exactly the value of his production or worse, more, what would be the point in making the hire?
People who run around insisting that they be paid 100% of the value they create are simply ignorant. The world couldn't possibly work that way. Same-o anyone who thinks products should be sold at cost.
Two things are among primary causes of mankind's progress. First, markets and specialization. If I am a damned good blacksmith but a marginal shoemaker, the existence of markets allows me to buy my shoes from a specialist and sell my specialty wares to those who value them. Specialization improves labor productivity and, hence, standard of living . The second cause of progress is a huge drop in the cost of capital, which is then employed to improve mankind's productivity. The economic benefits of this improved productivity end up being shared by the owners of the capital and the workers who employ it. Henry Ford's invention of the production line and his idea that his workers ought to make enough money to buy the products they produce illustrates.
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Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Bolded by me - Well isn't that the point that gets passed over. All the senior managers in my last company all worked crazy hours and put up with BS at some point in our careers before we got there. This is certainly not the only criteria in being successful.
My former best friend would always state I wish I could make your money (he had a general idea), but I would never state back that you truly work 20 hours a week when all is said and done, so........
Music Lover
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You can also call it a failure of the education system that people who graduate after 12 years of schooling were not taught that if person A has more than person B it doesn't necessarily come at the expense of person B. In fact, what people seem to be taught is that if someone does better than them they should be jealous instead of using it as an example.
VanWinkle
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I agree with rianne that I wouldn't mind the tax burden if they actually spent the funds on improvements to schools, roads, and infrastructure.
Thanks for clearing up the property tax issue, although the type of pension in trouble really doesn't matter as the municipal and first responder pensions may be a little short at the time also.
My answer to the problem is to plan to move to another state in the next year after living here for 65 years. If you live in Chicago, you know it isn't going to change during our lifetimes.
Best to you,
VW
jkern
Full time employment: Posting here.
I believe our current culture is one of jealousy, complaining, and dissatisfaction no matter how well or poorly you are doing.
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Except for the four years I was away at school, I've lived here all my life. DW and I attended Chicago Public Schools (and lived to tell about it!). My dad, two uncles and a cousin all worked for the City of Chicago. DW taught in the Chicago Public School system briefly. We lived in a neighborhood where at least half the bread-winners were City of Chicago employees of some sort or another. So, I'm pretty familiar with all the Chicago shenanigans. It's changing, but not necessarily for the better.
We've looked hard at moving to another state too. But it's tough with the kids, grand kids and several cousins still here. At 74, we may have waited too long to make it worth the hassle.
It's unfortunate that government, taxes and all that can cause such a disagreeable situation.
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Mulligan
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Your close, but not quite sufficient. That is a bit too self serving. How about adding me in with you…
From 1973 or attributed to then….
“Most people have the same philosophy about taxes,” says Senator Russell B. Long, who has heard all the variations during seven years as chairman of the Senate Finance Committee, which handles tax legislation. Long puts that universal theme to verse:
Don’t tax you,
Don’t tax me,
Tax that fellow behind the tree.
Sunset
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In Canada there is no step-up in basis for a house, and that has not stopped the housing market to skyrocket.
Removing step-up in basis here in the USA on inherited houses would probably really hurt the low and middle class. It may be the only asset the family has that can be passed to the next generation that has substantial value.
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Easy solution:
1. Abolish deductions for charity.
2. Abolish non-taxable status for charities and religious institutions. Pay your own way for your pet projects/beliefs.
3. Tax capitals gains — including homes, and any taxable accounts. All capital gains should be taxed right?
4. Refundable tax credits adjusted for inflation for any future losses. Need to compensate for future losses.
5. Index any thresholds to inflation to prevent tax creep.
6. Abolish step up basis on death.
… ya I didn’t think so. I love how people get upset over the billionaires, yet have 0 clue over why the system was setup like this in the first place (we want the money working in our economy). The calls to tax capital gains are foolish. You’ll never see the predicted revenue stream… they will sell, pay capitals gains once, renounce citizenship and move the money to the Caymans faster than you can say “tax the rich”.
Alternatively they will wait for a severe crash, and TLH, lowering their cost basis, move the money to the Caymans and renounce.
Silly policy ideas by people who don’t understand investing or money.
1. Abolish deductions for charity.
2. Abolish non-taxable status for charities and religious institutions. Pay your own way for your pet projects/beliefs.
3. Tax capitals gains — including homes, and any taxable accounts. All capital gains should be taxed right?
4. Refundable tax credits adjusted for inflation for any future losses. Need to compensate for future losses.
5. Index any thresholds to inflation to prevent tax creep.
6. Abolish step up basis on death.
… ya I didn’t think so. I love how people get upset over the billionaires, yet have 0 clue over why the system was setup like this in the first place (we want the money working in our economy). The calls to tax capital gains are foolish. You’ll never see the predicted revenue stream… they will sell, pay capitals gains once, renounce citizenship and move the money to the Caymans faster than you can say “tax the rich”.
Alternatively they will wait for a severe crash, and TLH, lowering their cost basis, move the money to the Caymans and renounce.
Silly policy ideas by people who don’t understand investing or money.
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Coupled with a public who largely doesn’t understand economics at all (back to education). Oddly many of my well to do friends don’t seem to understand basic economics either, they just worked hard and spent (much) less than they made. Look at who our culture elevates, movie stars, rock stars, athletes and billionaires.
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misanman
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+1
Written in 1894 not so true in 2022. Sleeping under bridges and begging in the streets seems to be fine now, and if you steal a loaf of bread, there is little chance of punishment. (with some understanding if your a feeding your child)
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