Boohoo. That poor Swede is forced to drive a Volvo instead of a Masseratti, while enjoying the most comprehensive welfare support on the planet. I’ll take that.
Then it’s not everyone. It’s everyone except for the bottom. And if you’re worried about poverty, which you claim to be, then that’s a good thing.
That’s fine, but Americans would never put up with a state of affairs where being in the top 10% meant little more than being at the median.
I’m also worried about cost/benefit ratios. If you have to take $50,000 away from one person so that another person can have $5000, then it’s not worth it.
What Sweden demonstrates is that if a person’s skills are going to be taxed at a very high rate, then he will find it more rewarding to take leisure time instead of money for those skills. Since you can’t tax leisure time(yet), then you might as well just take more time off.
Isn’t the solution rather simple:
Tax capital gains (idle wealth) at 35% and income (wealth from labor) at 15%, rather than vice versa which we currently employ?
This insures that the oligarchs can’t just runaway with all the gains of our economy.
The problem with that is that nearly every country taxes capital gains less because of the nature of capital gains. Imagine if you had to pay 35% of the capital gains on your home when you sold it.
I do think we can adjust our tax code to make sure that people living primarily off dividend income and capital gains pay 20% or so. But you don’t want to tax all capital gains at 35%, not even for rich people who primarily make their money from work. Why should anyone invest under those circumstances? Either you lose(your investment tanks), or the government wins. Either way, you lose.
BTW, the one solution that would do more to help poverty than anything else is a negative income tax on working people. Or wage subsidies, whichever you prefer.
Any anti-poverty program should incentivize work. if it does not, it’s not an anti-poverty program, it’s a pro-poverty program.
Nods nods. “That’s why rich people are so poor!”
Well, that would make them less rich pretty quick. Problem is, the government would see no increased tax revenue, at all, because investment would plummet.
So the goal is actually to kneecap the rich, not help the poor, I see.
It would seem that a lot of the handwringing over inequality is motivated by resentment rather than a spirit of charity.
Not sure. I don’t think we can really judge what Americans want given that their perceptions of inequality are way off, and so are their preferences
Would it? Only the profits are taxed. Raising the rate would change the risk/reward calculation a bit, but unless the rate went to 101%, a good investment would still be a good investment. Millionaires would still be looking for ways to put their money to work and places to get a better return than stuffing cash in their mattresses.
It changes the risk/reward calculation a lot, when if you lose, you lose, and if you win, you give up more than a third of your gain.
Imagine of Vegas bookies upped the vig to 35%. Or again, how would you feel about your home’s capital gains being taxed at 35% upon sale? I’m sure that would create a major problem for you.
The thing is, even if you accept that we need some rich people (or “job creators”) at a certain point there’s a decline on return they do for society. So having a decline on return for them, where say going from 2 mill a year to 2.3 mill a year isn’t worth the extra effort, isn’t really a big deal to society at large.
No, but it’s unnecessary. The wealth is just never created in the first place. It doesn’t benefit anyone.
I think the way you phrased that exaggerates the change we’re discussing. Stringbean suggested (in post #144) changing from a 15% rate to 35%. That change is only 20% of the overall profit.
Investing is not like gambling in Vegas. Bookies change the odds and point spreads to get equal action on both sides of a wager. Investors have more options, more research, more predictors of performance, a better track record, and more ways to diversify in search of an overall profit. Hell, invest in treasury bonds; even if the profit was taxed at 35% you’d be doing better than burying your money in a coffee can in the backyard. And the whole premise of this thread is that for a few hundred years investment has tended to outpace economic growth.
I don’t own a home. If I did, and the gain (assuming I sold it at a profit) was taxed at 35%, I’d still be better off than if I’d never bought.
But if we accept that wealth disparity is a problem then discouraging hording/profit after a certain level of wealth is a good unto itself.
Wealth disparity is not a problem, poverty is. Taking money away from rich people does little to help with that problem.
You guys keep saying that the economy is not a fixed pie, and I get that. But when the wealth inequality grows like it has been growing, and the economy remains stagnant, where the HELL do you think the money the wealthy is acquiring comes from? Hint: the middle class and the poor!
What’s actually happening is that rich people don’t need us as much anymore. How many people does Mark Zuckerburg employ? There’s no theft here, he doesn’t even charge us for the service he provides. But he also doesn’t need much help to run his business, only a few thousand people. So naturally, all the wealth Facebook generates goes to just 6000 people.
Facebook is a $140 billion company that employs only 6300 people. That’s the technological revolution for you.
If you have been paying any attention at all in this thread, you will know that historically it often does.
The point of debate in this thread is Piketty’s contention that the wealth generated by Facebook goes predominantly to those who invest in the company, not those who labor to bring it about.