# Are the rich hiding $21 trillion? **URL:** \ **Category:** Great Debates\ **Created:** [July 26, 2012, 2:13pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448 "2012-07-26T14:13:27Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Airbeck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/airbeck/32/6574_2.png) [@Airbeck](https://boards.straightdope.com/u/Airbeck)\ **Post date:** [July 29, 2012, 3:03pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/81 "2012-07-29T15:03:34Z")
> [@Aji\_de\_Gallina](#): > > I’ll repeat my example The “Ministry of building roads” cannot build justify its existence by building roads from random point A to random point B, that would be existin to exist. That is the problem with many established bureaucracies is that they end up existing unto themselves. What parts of our government exist only to exist? What are the parts that were created just so that they would exist and not to provide a service? ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 29, 2012, 3:11pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/82 "2012-07-29T15:11:09Z")
It doesn’t exactly work like that, but bureaucracies do make sure to perpetuate themselves. Take the Agriculture Department. Due to the increase in farm prices, price supports are no longer needed very much. So this is great news, right, we can get rid of some employees, don’t have to spend as much on subsidies! Oh wait, they passed a new farm bill changing it from a price support system to an insurance based system. I’m very interested in what they’ll change the War on Poverty into if they ever win it. The War on Slow Internet? ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [July 29, 2012, 3:25pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/83 "2012-07-29T15:25:18Z")
> [@adaher](#): > > It doesn’t exactly work like that, but bureaucracies do make sure to perpetuate themselves. Take the Agriculture Department. Due to the increase in farm prices, price supports are no longer needed very much. So this is great news, right, we can get rid of some employees, don’t have to spend as much on subsidies! > > Oh wait, they passed a new farm bill changing it from a price support system to an insurance based system. I’m very interested in what they’ll change the War on Poverty into if they ever win it. The War on Slow Internet? How about the Rural Electrification Commission? Rural electrification was finished in about 1960-it still exists, though. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 29, 2012, 3:28pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/84 "2012-07-29T15:28:29Z")
I wasn’t aware of that. Maybe it does work exactly that way. Although it looks like we might both be right. Rural Electrification Administration got its mission changed in 1994, so spending kept on happening and the bureaucracy survived. But 34 years performing an obsolete mission, wow. > **[Rural Utilities Service](https://en.wikipedia.org/wiki/Rural_Electrification_Administration#History.2C_structure.2C_and_programs)** > > The United States Rural Utilities Service (RUS) administers programs that provide infrastructure or infrastructure improvements to rural communities. These include water and waste treatment, electric power, and telecommunications services. It is an operating unit of the USDA Rural Development agency of the United States Department of Agriculture (USDA). It was created in 1935 as the Rural Electrification Administration (REA), a New Deal agency promoting rural electrification. > The RUS administers... ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [July 30, 2012, 3:30pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/85 "2012-07-30T15:30:29Z")
> [@Voyager](#): > > Giving squash to my neighbors and having them watch our house isn’t a business. I’d suspect primitive tribes were a lot closer to socialism, with each member giving in return for food and necessities. And in any case, we know what the oldest business was. > > So their presence does not in any way indicate a change in government is required. What did they do to those people who failed every year to produce anything? ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 30, 2012, 6:41pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/86 "2012-07-30T18:41:30Z")
> [@puddleglum](#): > > If we lowered the tax rates then rich people would have less incentive to hide their money which means that they could invest it more productively at home. They would also pay taxes on the money they stopped hiding. This report is exhibit A about why taxes should be lower on the rich. > The shame of this is not that governments of the world lose out on a couple hundred billion dollars but that the worlds economy loses out on the 32 trillion dollars that could go to more productive uses. Or, we could _not_ base our fiscal policy on wishes for ponies. Many, many of the rich intend to keep their money. To make more if possible, but mostly not to lose it. The risk-takers, the Ted Turners, are unusual. So asking for investment from that sort is asking for them to only lend you money at interest so they can get richer. The rest of us should be trying to get that money where it does somebody good, or inflating its value away so it just doesn’t matter so much. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [July 30, 2012, 7:45pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/87 "2012-07-30T19:45:01Z")
What you need to understand about high marginal rates, ‘winfall’ taxes, surcharges on high incomes, and other ways of fleecing the rich is that they have the effect of punishing risk. It’s the risky investments that have high returns when they succeed, but cost a lot when they don’t. Consider these two scenarios: In the first, I can earn a guaranteed $1000 on a $30,000 investment by putting my money in a safe mutual fund or a government bond. My tax rate is 36%, so I’ll clear $740. If the tax rate goes up to $39%, I clear $710. So I’ll keep making that safe investment even if my taxes go up a bit. Now consider an investment such as investing in a new start-up company. I know that 90% of them fail and I’ll lose everything, but if I pick one of the 10% that succeeds, my $30,000 investment will turn into $440,000. I’ll be taxed 36% of that, so the expected value of my investment is $11,600. Great investment. But now, look at the situation where the tax rate is increased to 39%. I lose 9 times, and lose $270,000. Then I win one time out of ten, and earn $440,000. However, the government takes 39% of that Now I only clear $268,400. My expected return is now negative, and I won’t make the investment in the first place. Obviously the situation gets more complicated when I can carry forward losses and all that, but the principle remains the same - high marginal tax rates punish riskier investments. A healthy economy needs some people to ‘play it safe’, but it also needs risk-takers. Elon Musk bet everything on SpaceX, and it was a very risky investment. So did his investors. In an environment of high marginal tax rates, he may not have found those investors, because they would have rationally chosen to just leave their money in safer investments. And here’s a question I’d like to see answered about all these off-shore accounts: How much of that money is being parked in those accounts by corrupt governments? Yassir Arafat alone stashed over a billion dollars in foreign accounts - money expropriated from foreign aid money. Saddam Hussein had billions in offshore accounts. How much money does the Assad regime have parked outside the country as ‘bug-out’ money? How about the Saudi princes? Or the Kuwaiti government? Consider all the dictators and strongmen in Africa, the corrupt regimes in the middle east, Money laundering by North Korea, etc. How about the unstable regimes in Central and South America? There are a lot of rich people in the world, but no one can collect wealth on the scale that a government can, and there are a lot of government actors who have expropriated their country’s money and parked it in offshore accounts. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 30, 2012, 8:21pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/88 "2012-07-30T20:21:33Z")
> [@Kearsen](#): > > What did they do to those people who failed every year to produce anything? Back then? They died. However there was 0 unemployment. But failure to produce anything does not mean you are lazy, especially in farming. Or do you think the Irish were lazy and deserved what the English did to them? ---
**Author:** ![Molesworth\_2](https://avatars.discourse-cdn.com/v4/letter/m/9dc877/32.png) [@Molesworth\_2](https://boards.straightdope.com/u/Molesworth_2)\ **Post date:** [August 5, 2012, 12:31am UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/89 "2012-08-05T00:31:40Z")
> [@adaher](#): > > Liberty is the difference. America is great because of what our government doesn’t do, not for what it does do. What it does do is what all governments do. If that was the reason we had so many rich people, then you’d have just as many rich people in Cuba. Define “Liberty”. Would you rather start a small business in the US or in Somalia? If you answered US then you’re admitting that a stable and well funded government helps business to succeed.. Also, as an Aussie I really don’t get why the US Right has this bizarre obsession with Cuba and Venezuela, so I’m not going to really bother addressing that point. If you think that Fidel and Hugo are out to get you and legitimately threaten your way of life then most probably it’s your own fault. Could it be that you didn’t look hard enough for the monsters under your bed when you were a kid? You knew not to step on the cracks in the sidewalk, right? Because that’s how the commies get you, you know. > [@puddleglum](#): > > What should be gotten rid of are the Department’s of Education Yeah, an uneducated populace is what every nation desperately needs. You Americans really can be fascinating at times. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [August 5, 2012, 1:23am UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/90 "2012-08-05T01:23:51Z")
Somalia doesn’t perform even the most basic functions of government. [http://money.cnn.com/magazines/fsb/fsb\_archive/2007/06/01/100049637/index.htm](http://money.cnn.com/magazines/fsb/fsb_archive/2007/06/01/100049637/index.htm) Our top four - New Zealand, the U.S., Canada, and Australia - place relatively few hurdles in the path of business owners. In each nation it takes between two and five days to start a business and requires five or fewer steps to do so. A case can be made that again, it’s what government DOESN’T do that has as much to do with individual success as what it does do. ---
**Author:** ![Airbeck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/airbeck/32/6574_2.png) [@Airbeck](https://boards.straightdope.com/u/Airbeck)\ **Post date:** [August 5, 2012, 1:41pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/91 "2012-08-05T13:41:54Z")
> [@adaher](#): > > A case can be made that again, it’s what government DOESN’T do that has as much to do with individual success as what it does do. Not a good case though. Who backs up those business contracts and keeps business pirates from attacking your business and taking it over from you? Who helps ensure a healthy and educated populace that can purchase your products from you? Who helps ensure that there is breathable air and drinkable water for your employees so that you have a healthy workforce to make your products? Not to mention transportation to and from the office. To act like all of this happens on its own via magic market forces is just ludicrous. If you hate the U.S. government, then how does that not also mean that you hate the U.S. itself. What would we be without a government? The wild west? This argument taken to its logical extreme would mean that the less a government does, the better, right? And the ideal would be a government that does nothing, or doesn’t even exist? If not, then how does your argument make any sense whatsoever? How do you determine what the perfect amount for it not to do is? Ouija board? Or, maybe you just can’t admit that the U.S. government is something that benefits us all, and creates an environment that has allowed so many business to prosper, where they wouldn’t even get started in many other countries. Maybe that’s just too painful for you to concede or something. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [August 5, 2012, 3:49pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/92 "2012-08-05T15:49:43Z")
The US governmnet does benefit us all. That’s why it was created. And all of the things the government does to facilitate individual and business success is paid for out of a small fraction of the budget. No one is arguing for no government. Few are even arguing for a return to pre-New Deal government. But you can’t credit Big Government with success, because you can turn things around. If more government is better, how come we’re richer as a country than all but a couple of small countries? How come our middle class is richer than nearly everyone else’s middle class? > **[Median income](https://en.wikipedia.org/wiki/Median_household_income)** > > The median income is the income amount that divides a population into two equal groups, half having an income above that amount, and half having an income below that amount. It may differ from the mean (or average) income. Both of these are ways of understanding income distribution. > Median income can be calculated by household income, by personal income, or for specific demographic groups. > The following table represents data from OECD's "median disposable income per person" metric; disposable i... It’s becuase we aren’t weighed down with excessive social costs and regulations compared to most other countries. Our infrastructure sure as heck isn’t better, so you can’t credit that. ---
**Author:** ![Airbeck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/airbeck/32/6574_2.png) [@Airbeck](https://boards.straightdope.com/u/Airbeck)\ **Post date:** [August 5, 2012, 4:18pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/93 "2012-08-05T16:18:28Z")
> [@adaher](#): > > The US governmnet does benefit us all. That’s why it was created. And all of the things the government does to facilitate individual and business success is paid for out of a small fraction of the budget. No one is arguing for no government. Few are even arguing for a return to pre-New Deal government. But you can’t credit Big Government with success, because you can turn things around. If more government is better, how come we’re richer as a country than all but a couple of small countries? How come our middle class is richer than nearly everyone else’s middle class? > > [Median income - Wikipedia](http://en.wikipedia.org/wiki/Median_household_income) > It’s becuase we aren’t weighed down with excessive social costs and regulations compared to most other countries. Our infrastructure sure as heck isn’t better, so you can’t credit that. So you aren’t going to actually defend your comment that what makes business successful is what government doesn’t do? This isn’t a defense of that as far as I can see. You are actually arguing against something that noone is advocating here. Noone is calling for more government. It is your side that doesn’t want to pay for what we already have and in fact wants to eviscerate the current government. So you are arguing for a change, not us. As far as I’m aware, if you are advocating such a huge change in the scope of government, then it is incumbent upon you to prove that such a change would not be detrimental to our current way of life and that it would actually improve things. You need to make that case, not just insist that we need to cut and slash things and that it will just magically all sort out. I remember when you answered my question about specifics regarding what to get rid of. You need to make the case for that and convince the electorate that you are right. I suspect that you know you can’t, so you play these games instead. Instead you keep arguing against some non-existent viewpoint that we need more government. So instead of that, make your case, don’t just argue against a case that noone else is making. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [August 5, 2012, 4:35pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/94 "2012-08-05T16:35:07Z")
> [@Airbeck](#): > > So you aren’t going to actually defend your comment that what makes business successful is what government doesn’t do? This isn’t a defense of that as far as I can see. Our government does less in the very area that has often been cited as a reason for all our success: infrastructure. Yet we’re richer. Why? Could it be… liberty? And you are arguing for more government than we had during the Clinton and Bush years: 23-24% of GDP rather than 18-20%. And Democrats have no plan to pay for that high level of spending either. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [August 5, 2012, 4:40pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/95 "2012-08-05T16:40:50Z")
> [@Airbeck](#): > > As far as I’m aware, if you are advocating such a huge change in the scope of government, then it is incumbent upon you to prove that such a change would not be detrimental to our current way of life and that it would actually improve things. You need to make that case, not just insist that we need to cut and slash things and that it will just magically all sort out. I’m not sure about the poster, but the politicians arguing for this are huge hypocrites. They blast Obama for not lowering the unemployment rate, but then turn around and advocate reducing the size of government. This is hypocritical because the net jobs lost among government workers dwarfs that of the private sector - in other words, we are gaining or at least breaking even with regards to private sector jobs. What anti-government politicians should be saying is “yeah! We still have 8% unemployment, and I LOVE it! It means we’re successfully reducing the size of government, just like I promised!” ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [August 5, 2012, 4:56pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/96 "2012-08-05T16:56:58Z")
The federal workforce shrank under Clinton, was a wondrous thing. The public sector feeds off of the private sector, so it’s not like making public sector jobs will improve prosperity. ---
**Author:** ![rogerbox](https://avatars.discourse-cdn.com/v4/letter/r/76d3ee/32.png) [@rogerbox](https://boards.straightdope.com/u/rogerbox)\ **Post date:** [August 5, 2012, 7:32pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/97 "2012-08-05T19:32:18Z")
LIBERTY! _fap_ ---
**Author:** ![SpectateSwamp](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectateswamp/32/7287_2.png) [@SpectateSwamp](https://boards.straightdope.com/u/SpectateSwamp)\ **Post date:** [August 5, 2012, 10:37pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/98 "2012-08-05T22:37:24Z")
> [@diggerwam](#): > > Define hiding. I assume this money belongs to the rich fair and square. I assume the tax shelters are legal. It’s a good idea if they would put some of this money into the economy but they are under no obligation to do so. Money is theirs. They can do with it what they choose. They bought the politicians that created the loopholes. Remember Slavery was legal before the American Civil War.. Killing Jews was legal in war time Germany. Those tax / business loopholes will be closed and the money clawed back. All of it. ---
**Author:** ![Airbeck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/airbeck/32/6574_2.png) [@Airbeck](https://boards.straightdope.com/u/Airbeck)\ **Post date:** [August 5, 2012, 11:45pm UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/99 "2012-08-05T23:45:27Z")
> [@adaher](#): > > Our government does less in the very area that has often been cited as a reason for all our success: infrastructure. Yet we’re richer. Why? Could it be… liberty? > And you are arguing for more government than we had during the Clinton and Bush years: 23-24% of GDP rather than 18-20%. And Democrats have no plan to pay for that high level of spending either. I am not arguing for more government. You are arguing for drastically less. At least be honest about the discussion here. And please don’t misrepresent what I’m arguing. Defend your own arguments, don’t make them up for me. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [August 6, 2012, 2:00am UTC](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448/100 "2012-08-06T02:00:42Z")
> [@Airbeck](#): > > I am not arguing for more government. You are arguing for drastically less. At least be honest about the discussion here. > > And please don’t misrepresent what I’m arguing. Defend your own arguments, don’t make them up for me. I’m arguing for the level of government we had under Clinton. 18% of GDP. If this is okay with you, then we’re fine. [Previous page](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448.md?page=4) [Next page](https://boards.straightdope.com/t/are-the-rich-hiding-21-trillion/629448.md?page=6)