How *exactly* you and your income are being affected by inequality.

by cognisonance 25 Replies latest social current

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  cognisonance

  The thesis of Robert Reich's idea isn't that the US become socialistic like the scandinavian countries. Rather that our economic polices return to what they were in the 1950s.

  As regards taxing the top earners much higher... I don't think this was mentioned in Reich's documentary directly as I don't think it was one of the economic polices he was talking about (I'd have to watch it again). But nonetheless, and as an aside, taxing people more who make an enormous amount of money (like 1000x as much), where is the problem with that? It's not like it is causing any hardship. Consider two situations:

  Person A Makes $40,000. He's in what, the 15% tax bracket (after factoring in deductions).

  Person B Makes $30,000,000. He's in the 39.6% Tax bracket (assuming this is income, if it isn't it's mostly capital gains at 15% (I believe this was 25% in the 1950s)

  After standard deduction and person exemption Person A's AGI would be around $30,000. His effective tax rate around 13.5%

  He is left with a tax burden of $4050. So he has $35,950 (well not really after state, local, payrolltaxes, but let's ignore those).

  Person B Subtract the standard deduction and personal exemption (which is a gross simplifation because he will likely be able to write off a lot more in tax deductions by itemizing...) His tax burden is ($30,000,000 - 10,000) * 39.6% (just took the top rate as the effective rate will skew close to this): $11.9 Million. After taxes he still has $18.1 Million.

  So what happens if person A actually made $30 Million in income (or let's say capital gains too if it was taxed just as high) and had to pay 80% in taxes? He'd have a tax burden of 24 Million true, but he still would have $2,000,000.

  Now yes he paid most of what he earned in taxes, but please explain to me how he is not living very very very very well off on a "paltry" $2 million?

  Person A, most of his income will go to expenses. Person B, a fraction of his income goes to expenses and stimulating the economy. Most of it he will end up locking away in savings. You can only buy so much house, car, clothes, food before you have enough.

  I don't see why that would impose any hardship on the super wealthy.
• 

  jgnat

  How about simply raising the minimum wage?

  Looking at that world map, I can see why South Africa continues to go through so much social disruption.

  I'm going to make a prediction. In about thirty years, we will see a global equalization of minimum wage. Current growth economies will be turned on their head, and we will somehow have to switch to conservation economies. The "rich" countries will no longer be able to take advantage of slave-labour prices. Any profit will be realized through increased automation and efficiency.
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  designs

  Most local labor jobs pay 9.00-12.00 per hour, 2014; 1990 most local labor jobs paid 8.00-12.00 per hour.
• 

  GoUnion

  we need better wages for the middle class?

  we need unions to have a stronger say in the workforce.
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  cognisonance

  Typo: Meant $6,000,000 not $2 million rather...

  we need better wages for the middle class?

  we need unions to have a stronger say in the workforce.

  Yes he was suggesting this.

  Some of the suggestions (including taxes, so sorry about that, he did mention that, at least on the website) can be found here:

  http://inequality.is/fixable
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  scary21

  If you tax the top earners too much, who is going to open the new businesses to employ people? Read Atlas Shrugged.

  When you take away people's insentive, things don't get better. Get rid of corporate welfare for one. Goverment get out of the way so people can produce without punishment.

  If capital gains were raised I would invest less of my money. Less money going into investments ( new resturants, drugs, hospitals, stores) not good. Why are people mad when other people work really really hard and are sucessful ? Alot of those people give people jobs.

  IMHO Sherry
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  cognisonance

  If you tax the top earners too much, who is going to open the new businesses to employ people? Read Atlas Shrugged.

  I don't think concepts like rational self-interests that objectivism and libertarianism tout works (we humans are often irrational).

  But instead of exhanging opinions I'll ask you this:

  • You are implying that few (none?) will be willing to open businesses and employ people if top earners were taxed "too much" (if by too much we mean 1950s levels). Well who then opened businesses and employed people in the 1950s?

  It isn't business owners that "create jobs." It's the middle class and poor that are the job creators as they create the demand. When they have healthy income levels they fuel the economy. Supress the poor and middle class, then there is less people able to purchase the products and services that businesses provide. A healthy middle class and poor is a healthy economy.
• 

  cognisonance

  Why are people mad when other people work really really hard and are sucessful ?

  No one is mad that people work hard and reap the benefits of their hard work. People are upset about the inequality that exists becuase of factors beyond their control (e.g. luck, rigged policies that benefit the wealthy and corporations at the expense of the poor and middle class, lack of actual equal oppurtunity, corruption, etc).

  The weathy aren't were they are just beacuse they worked "really really hard." Many a poor person also works "really really hard" and doesn't obtain the same success. Again this is due to factors beyond their control, not their work eithic or abilities. True some people don't work hard and these types are not limited to just the poor. Likewise, some wealthy individuals inherited their money, not earn it.
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  talesin

  cog, it's true, so true. Trickle-down economics (aka Reganomics) doesn't work - the crash of the late 80s, and subsequent 'recession' proved that. Since then, the numbers get fiddled every 4 months or so in order to reflect recession as opposed to depression, which is the true state of the economy, imho.

  Afterthought: Our Prime Minister is an economist, and I am always reminded that he has a Bachelor of Arts, NOT Science. Economics is an art - NOT a science - think of the term 'playing' the stock market. It's all a big game of chance, and the odds are with the "House". *wink, wink*

  tal
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  scary21

  Yes, I agree the poor and middle class have created jobs. For sure we don't want to surpress the poor.

  In the fifties the US was the biggest industrial producer in the world. The rest of the Industrial world was hit hard by WW 2. Today different story.

  In the fifties the top rate was 90% but that applied to almost no one.

  In the fifties poor people paid 20%, Today half the filers pay 0.

  In the fifties you got way more in SS benifits than you paid in taxes. Today most will pay more and recieve less.

  The fifties were pretty good but when Kennedy cut taxes things got better.

  What matters most is the average marginal rate ( fifties ) 25% ( including federal state and SS) Today 37%

  So I don't think taxes are lower today.

  Tax policies that diminish incentives for the innovator, business owners and investers ( poor, middle class , Rich ) will not spur the economy.

  A healhy middle class and and poor is a healhy economy.....amen IMO Sherry