Suppose I invest a million dollars into starting a business, providing the entirety of its capital. But I don’t otherwise lift a finger. The business isn’t my idea and I don’t perform the labor or any management role. What should be my return? What proportion should go to labor? What proportion to whoever had the idea for the business? Those are the actually relevant questions in this thread, since the proportion of return to investment capital is almost the entire ballgame on wealth and the politics of wealth.
I see three principled positions in American political life:
(1) Lefty: we should answer those questions in terms of moral desert, and capitalists don’t deserve a significant return on investment.
(2) Liberal: we should answer those questions empirically by asking how much return each of the players needs to get in order to maximize the size of the economic pie without creating a level of inequality that damages society more than the cost of a smaller economic pie.
(3) Conservative/libertarian: we don’t need to answer those questions collectively. because people decide it voluntarily.
I am a liberal because I don’t think there’s any especially persuasive way to get at what each of the people involved morally deserves and because conservatives/libertarians miss the fact that the voluntary arrangements are highly influenced by the choices we collectively make about our laws and our society. So we do eventually have to take a position on the question, one way or another. They just tend to take the position, by default or otherwise, that the people with the most wealth should set the rules and then let those rules play out in predictable ways.
I think we’re talking about two different things- what I’m trying to say is that while a person making 100k in taxable income and a person making 20k in taxable income are taxed identically on their first 20k, in overall tax percentage, that person making 100k is taxed roughly 18% of their income overall, while the person making 20k is taxed roughly 11% of their income.
The 100k person is in the 24% tax bracket, meaning that the part of his income above and beyond $84,200 is taxed at 24%. Meanwhile the 20k person is in the 12% tax bracket, meaning that the part of his income above $9700 is taxed at 12%.
What you’re trying to say is that if you compare Daddy Warbucks and a person making $10/hr, they’re going to be taxed identically on the same amount of taxable income- i.e. their tax brackets are the same. Which is true. But that doesn’t mean they pay the same overall percentage in taxes… not by a long chalk.
That’s just as true of me today (not rich in any way), as it is for someone who’s fantastically rich. All that stuff benefits me- I need streets, broadband and law enforcement just as much as a rich guy. And just as much as a poor person as well- are you trying to say that we (the not-super-rich) don’t need roads as much as say… Mark Cuban? Or that broadband is more integral to T. Boone Pickens’ life than mine?
What I was saying is that the money my parents paid in school tax when I was in high school did NOT go to pay for my education. I didn’t derive any direct benefit from it.
But everyone derives the SAME benefit from it when you get to these nebulous indirect benefits- unless your stuff catches fire, everyone derives the same benefit from the fire department being funded. Same for police- the dividends of law and order are mostly equal- my neighbors don’t somehow benefit more or less proportionately from it based on whatever difference there are in our incomes. It’s like saying that bigger plants benefit more or less than smaller plants from rainfall, which is untrue. What you can say is that when rainfall is adequate for both, there’s no difference, and when it’s inadequate, there’s no difference. Even when it’s adequate for one and not the other, it’s not like somehow the plant that needs more water is deriving less benefit from the same amount of water. It just needs more water. And the plant with adequate water isn’t deriving more benefit- it just needs less.
Okay, so why is “overall percentage of income paid as tax” the meaningful figure of comparison here? Why is that a better number to focus on than what Moriarty is focusing on (total percentage by tax bracket) or what certain dishonest hacks would prefer we focus on (total amount in dollars) or what I would prefer we focus on (total percentage by marginal utility of each dollar)? Beyond the obvious fact that my preferred solution is completely unworkable in practice, anyways.
2% compounding interest would do that. You can even open a money market account at American Express or Discover bank that will pay you slightly more than 2%. So yes.
The math works for turning $1,000 into $1,100, or even $10,000 into $11,000.
I’m just pointing out that his statement “Each person pays the same percentage of their income in taxes, but not the same amount.” is flat out wrong.
Someone making 100k doesn’t pay the same overall percentage- if they did, it would be a flat tax. But the brackets apply equally- I pay the same tax (10%) on my first 9700 dollars of taxable income that Lebron James does, as well as the guy making sandwiches at the Subway across the street. But none of us pay the SAME percentage overall in taxes- Lebron probably pays somewhere fairly close to 37%, I pay somewhere in the 15-18% overall amount, and the guy at Subway probably pays somewhere between 10% and 12% overall.
Does it make a difference if instead of inheriting $10 million that the individual earned and saved his $10 million through work, acting, playing basketball, singing in a band, and then they stuck it an low risk investment vehicle and earned approx. $200k + per year on the interest?
If you buy theater tickets and then decide not to go, do you blame the theater?
And childless people pay the same school tax without even the possibility of direct benefit. So your parents had it good.
The person with the million dollar house the fire department saved is seeing twice the benefit as the person with the $500 K house.
As Budget Player Cadet mentioned, brackets should be based on marginal utility, or pain. Do you object to all people feeling more or less the same pain from their tax burden? If not, taxes on the upper brackets should be a lot higher.
Republicans seem to think the Liberal position on wealth is that businesses and wealthy people are inherently parasitic and thus deserve to have their wealth redistributed to people who “need” it more. But for some reason, wealthy Hollywood types seem to get a pass. I don’t see anything in your OP that contradicts that.
Personally, I don’t think there is anything about being able to knock a baseball out of Fenway Park or compellingly tell a story about some plucky girl trying to decide which douchebag is “the one” is inherently more worthy of wealth than running a multi-billion dollar company that employs thousands.
of course, the point is not for Conservatives to convince Liberals or Liberals to convince Conservatives of their positions. It’s to convince moderate independents and undecideds that the other side is full of corrupt idiots.
Not for this particular point of contention, which was whether it was possible for people born lucky to stay rich without doing anything particularly intelligent or productive.
The problem with scenario number 2 is that the economy isn’t a system that can be solved to determine what is actually optimal. Furthermore, politicians who run on and advocate positions that resonate with so-called liberalism as you describe it don’t necessarily mean what they say.
But, it’s only a difference in percentages in the aggregate; we are all subject to the same tax brackets, just some of us don’t have anything but a zero in the top ones. That’s equal treatment, in my opinion, not “punishment” directed towards the richest wage earners.
I wanted to return to this. What I am saying is that people like Mark Cuban and T. Boone Pickens have more to lose if the infrastructure like roads or broadband fell apart. If America couldn’t ensure the integrity of its markets, these people stand to lose BILLIONS of dollars. So, yes, they should be more obligated to ensure that the system is funded than somebody with significantly less wealth.
He didn’t say that. He said (paraphrasing) that, at some point, you’re house is big enough. That implies buying a really big house. I think you could fairly fault Obama if he was constantly buying a bigger and bigger home, or if he wasn’t involved in philanthropy.
But he definitely didn’t say that people shouldn’t buy a big house.
That’s pretty funny and thanks for the help. However, the question is actually quite serious. It’s the difference between the philosophy that leads to central planning and the philosophy that leads to the free market.
Ironically, the only way a free market can exist (which I agree is a good thing) is if you have some central planning.
Because businessmen like Bill Gates, John Rockefeller, Sam Walton, and Al Capone all agree: competition is bad for business. Capitalists do not welcome a free market. Their ideal is a monopoly where they are the only seller.
So if a free market is going to exist, it’s not going to happen due to the actions of capitalists. It’s going to happen because there is a strong authority that exists outside of the market itself which maintains the existence of a free market and prevents capitalists from achieving their ideal state of monopoly.
