That’s because there aren’t very many people laboring to bring it about.
And you have research like Piketty’s to back up that claim?
Sure it’s not ideal, but let’s not pretend that the wealthy will suddenly hoard all their money if capital gains were raised. They can still do the basic calculation that a return on investment, even if 1/3 is taxed out, is better than no return on no investment.
Here’s a graph from Piketty’s book. Notice how the top %1 share of wealth begins its climb in the 80’s. I wonder what could’ve caused that?
This figure regarding the trajectory of income inequality in the United States is just frightening.
- Honesty
finance.yahoo.com: Facebook has 6337 employees.
It doesn’t take a doctorate and years of research to see what’s in front of your face: the richest companies are tech companies and they employ very few people.
Apple is the biggest. They employ 80,000. By contrast, GM in their heyday employed 2 million.
Qualcomm employs 31,000.
Microsoft also about 80,000.
Google less than 50,000.
That’s about a trillion dollars in wealth that only 200,000 people are involved in creating. It would make sense that those 200,000 would be doing very well for themselves.
If the above were true, it’d make for a compelling argument. But, apparently, the evidence is weak.
Len Berman found “no apparent relationship” between “top tax rates on long-term capital gains and economic growth (measured as the percentage change in real GDP) from 1950 to 2011.”
Correlation does not prove causation.
Tech companies are less labor intensive than manufacturing companies. Tech is growing, manufacturing is shrinking.
That means less jobs, and higher paying ones, which will increase inequality.
Obviously, the only solution is go back to being an agrarian nation.
Wait until the 3D printing revolution gets underway. That’ll really increase inequality.
And let’s not forget self-driving vehicles. All that money that used to go to truck drivers, bus drivers, taxi drivers, etc.? That will belong to Google.
Correlation still does not prove causation.
The cause is fewer employees means the owner gets to keep more money.
Mark Zuckerburg didn’t steal a dime from the poor or middle class. He just didn’t hire any of them.
Some of you seem to be laboring under the opinion that capital is just the trinkets of the rich, to be expropriated without consequence. It’s ‘excess’ money that needs to be redistributed.
But what you’re missing is that the whole thesis of the Piketty book is that capital has a higher return than labor. That means it’s actually growing the economy. Capital is what allows private spaceships to fly and FaceBooks and Googles to be funded. Silicon Valley is built on venture capital. Some of the most dynamic areas of the economy are directly funded by billionaires. Tesla Motors, SpaceX, Google, Apple, Facebook, Amazon… Billionaires running all of them. And every one of those billionaires is investing the majority of their capital in other startup ventures.
Those people are massively rich because they have created massive amounts of value for society. Elon Musk took the billions he made from PayPal and put it insto SpaceX and Tesla Motors. Had he been taxed at 90% of his income, there would be no SpaceX or Tesla. There probably wouldn’t have been a Paypal, eiither, because that needed startup capital he earned from his first venture.
When you take that money away, you are directly defunding the most productive areas of the economy. And you believe that handing that money over to the government will somehow replace all that lost productive capacity.
Stop thinking in terms of money games. There is a real economy out there, made up of millions of people actually building things and solving problems. Capital is what makes it run. You aren’t skimming off idle cash - you’re downsizing the private economy, and replacing it with government management. Given the current state of the U.S. government, that’s like giving a pyromaniac a shiny new lighter.
I’ll never understand how a country can have only a 10% favorable view of their own government and yet a large percentage of the people still advocate for that same government to take over running significant additional parts of the economy. The mind boggles.
I did a lot of work with Nintendo in the early 2000’s and they were a small, very successful, company also. Having an inside view of the company, I would estimate that the ratio of contractors (whether internal or outside vendors like me) to employees was at least 50:1. I wonder how many sub contractors the companies you listed employ; any idea?
I don’t think many here would actually make that argument. I think there are a lot of people who believe that capital gains should be taxed like income and not at half the rate. I don’t see what the problem with this is.
Yeah, Sam, well when you can’t find a job, can’t get medical care when you get sick and are spending all your waking hours working two part time jobs to get by, all those toys and goodies just don’t mean a hell of a lot, you know? A society that can’t handle its people’s basic needs doesn’t DESERVE Teslas or SpaceX. First things first. Get the bottom level of Maslow’s hierarchy of needs taken care of before you start heading for the peak.
I chose to highlight those things because they are high profile. But the same story is true of all business financing - including businesses that provide products to the poor. Access to capital is a prime factor in GDP growth, environmental improvement, etc.
For example, modern energy-efficient autos are now built on platforms that took massive amounts of capital to create. A new transmission design can cost hundreds of millions of dollars. Some of these platforms are so expensive that large companies have to pool their resources to afford to build them.
You want to talk jobs? 70% of all job creation happens from small businesses, and they are the ones that would suffer most from an increase in taxes on capital. I can’t think of a faster way to kill jobs than to tax the assets of the people creating those jobs.
Capital is used by companies to buy and hold inventory. It’s used for investment in process improvement that makes the economy more efficient. It’s used by startups to finance operations and purchases until they are profitable. It’s used for R&D. When a new drug is developed, it takes billions of dollars of capital investment to get it to market. Everything we buy, all the services we consume, required capital to create them and require capital to maintain the day-to-day production and operations that provide goods and services.
When you tax capital out of the free economy, you make all of these things harder. The first things to go will be projects with high risk, which are also the ones that generate the highest returns for society. Carrying costs of inventory will increase, driving up the cost of goods. Less ability to grow capital will mean more startup failures and less corporate investment in the future.
Just look around the world at the historical results of policies that stripped capital through taxation and ‘distributed’ it through government programs. Have a look at what’s happening in France with their socialist policies. Have a look at the results of Venezuela’s sharp turn to the left. See what happened to Spain and Greece.
Then look at the strongest economies today, and what they’ve been doing to get there. Canada has cut its federal corporate tax rate to 12.5%, and has cut capital gains and dividend taxes dramatically. New Zealand has no capital gains tax, has recently lowered corporate taxes, and makes a large part of its revenue from sales taxes - the exact opposite of what the left here would propose. New Zealand is considered to be one of the most business-friendly economies in the world now. As a result, its economy is booming. In the 1970’s, under more socialist policies, New Zealand went bankrupt and its heavily taxed and subsidized economy was not competitive on world markets.
If you want to reduce wealth inequality, you may achieve that - but only by making everyone poorer. If that’s where your values lie, so be it. Just don’t pretend that your plan carries no cost for society.
What? No. The Waltons getting favorable tax treatment on their inheritances (or dodging tax treatment completely) and being taxed at the capital gains rate instead of the income rate when their pile of money increases doesn’t grow the economy. It simply puts more money in the hands of the aristocratic dynasty they’re attempting to create.
Growth in the economy now is the result of productive workers with stagnant wage growth. The money that should be going to them gets skimmed off by the rentier class and pocketed.
Right. They just hide their money under a mattress.
Because all those countries that have stripped money and power from the ‘rentier’ class have done so well economically.
You’re white knighting rentiers. How unsurprising.
No, they hide it in offshore accounts and dummy foreign corporations to dodge taxes, which has EXACTLY the same effect as hiding it under a mattress.