The wealth gap started widening in the 1980s, which was thirty years ago. If the average life expectancy is around 75 and continually increasing, using inheritance tax as the mechanism to stem growing inequality is both imprecise and lethargic.
Proposal : stop the accumulation of all wealth into fewer and fewer hands through inheritance taxes.
Ditka thought what I wrote was confusing also, so I guess it’s just my fault. Sorry.
I think you’re maybe glossing over something, though.
Let’s say that I happen to be one of those captains of industry you were just talking up: an innovator who develops a new product and builds a business that benefits people. And, after I sell the shares of my company to one of those traders who only buys shares of existing businesses, you badmouth that guy by comparing him to me: you announce that I’m the guy who sure added something to the economy and did everyone a service, and you sneer that he’s just some dick.
Hang on, I say; I want to mention something: the reason that I built that business from the ground up, was in hopes of someday selling it to that guy.
So doesn’t that guy deserve a speech like the one you’re giving me?
[QUOTE=wolfpup]
Not to get too overtly partisan here, but it seems hard to avoid the conclusion that if someone wants an object lesson in how to maximize wealth inequality and keep widening the gap, they have only to read the Republican policy platform. And if they want to reverse the trend and create a slightly more equitable wealth distribution, they need to start doing pretty much the exact opposite.
[/QUOTE]
Well, the conclusions are partisan though. If you think that wealth inequality doesn’t have a real-world tangible effect, or you think the flexibility of your economy is enhanced to the point where the tradeoffs are in your favor by having a system that has, as a side effect more wealth inequality verse one that doesn’t, then you are going to think this is good, or at least that the pros outweigh the cons. If you don’t, then you are going to ‘want to reverse the trend and create a slightly more equitable wealth distribution, they need to start doing pretty much the exact opposite’. I think there is a valid viewpoint for both of those…it comes down to whether you want social stability over a dynamic economy. Europe verse the US (or I suppose China since they are the other vibrant economy with a huge amount of wealth inequality) I guess, and where you want to set the bar. MMV depending on your political outlook and worldview.
Not just for buying the company, no. You’ll probably like the guy, but he could send your company down the drain and destroy everything you’ve created.
But, again, if not for a guy like him to sell it to, there maybe wouldn’t be anything that I’d created in the first place. I mean, yeah, I’m out now, since I’ve gotten the money from that guy; but, back when, I did it to someday get that money: I knew there’d be a market of traders-who-buy-shares-of-existing-businesses – and figure that loomed biggest in my mind when I chose to start building that company.
Remove him from the story and – what?
I more or less agree with your analysis, to which my response is that social stability (and general contentment in society) is incredibly important and hard to overestimate. It’s certainly far more important than ensuring the ability of very small numbers of people to become very, very rich, simply because of the great disparity in numbers of people in each case, and because a stressed, unstable, inequitable society ultimately affects everyone. My second response is that, taking everything in moderation, it’s possible to have both social stability and a dynamic economy – case in point is much of the western world which is quite far to the left of the US, and with a few exceptions here and there generally lacks Republican-style extremism. Every one of the places has, for instance, universal health care, a stronger social safety net, generally higher minimum wages and stronger unions all of which is augmented by social guarantees like UHC.
The ability to start a business and become a successful entrepreneur is unparalleled in the US, but it’s only one dimension of life and the social cost of having that as an overriding priority to the virtual exclusion of all else is very very high. The other thing to note here is that this “virtual exclusion of all else” extremism is a relatively recent development in Republican ideology. In 1965, for instance, the Medicare vote solidly and for the first time put the government squarely in control of health care funding for the elderly, and was thus landmark legislation of the kind that wouldn’t have a hope in hell of passing today. Yet in 1965 it had broad bipartisan support, with a little more than half of House Repulicans voting in favor and a little less than half of Senate Republicans doing likewise, and the Democrats voting against it were looking for something more ambitious. It’s astounding how far to the right things have lurched since those days. Those who celebrate the greatness that the US has achieved need to remember its history, and reflect on where Republicans are taking it today. Look at the income inequality trends, and look at the current occupants of the White House.
I’m not terribly concerned about wealth accumulation/inequality. Maybe I should be; OP certainly does not make a compelling argument. But I accept a compelling argument could be made.
I recommend reading Piketty, Mayer, etc., and tying to make that argument. And maybe consider how much the inequality is a symptom of problems vs a problem in and of itself. There may be more important issues. I’m going to start owing msmith royalties:
So rich guy earns XX dollars, pays his owed taxes on XX dollars, lets pretend he straight paid them, used no tax shelters even.
Rich guy dies, you want to retax the money that has already been taxed? :eek:
Excuse me, i’ll be over here dumping tea in the water.
Piketty makes the case that wealth inequality is growing and problematic; Mayer (I assume you mean Jane Mayer) makes the related case about the hugely disproportionate control that the wealthy have over politics and society in America, and their ability to shape the political landscape in their own interests at the expense of everyone else. Unless I’m misunderstanding you, it’s perplexing that you can know these things and still be “not terribly concerned about wealth accumulation/inequality”. The questions that you quote are good ones, but they inform arguments about how to balance the best interests of society with a robust economy. What they do NOT do is justify unfettered rampant capitalism and the unrestrained growth of the wealth gap at the expense of all social values.
You think you’re a captain of industry yet you can’t profit without selling the whole shebang to someone else? You have to be a good businessman and profit from your endeavors when you control them. People pay taxes and die in wars to protect your right to engage in business. They aren’t doing that just to satisfy your greed. The system is meant to work for the benefit of everyone, not just you. And all that I propose is that the guys who buy your company have to provide that benefit or pay an appropriate tax on their profits.
So, just to be clear, you intend to obliterate all forms of private investment, non-active forms of business ownership, and the capital accumulation necessary to sustain large enterprises. I will deliberately leave off any commentary, because either I didn’t understand your idea at all, or you didn’t think it through at all. I’m leaning rather heavily towards the latter.
I have no idea what you are talking about or how you got that from what I wrote. I encourage exactly the investments you are talking about. I discourage investments used to destroy competitive markets and investments which don’t result in economic growth no matter how much they may profit an individual. I pay for your right to profit and I don’t give a rat’s ass if you make any money if it’s solely for your own benefit.
Also Stiglitz: The Price of Inequality - Wikipedia
No.
Tax capital gains at a rate at least as high as the highest income tax bracket, but with a lifetime exception limit, i.e. the first $2 million or so that a person earns in a lifetime through capital gains is tax-free.
I’m assuming you’d do the same with qualified dividends? Otherwise I’d expect to see a shift toward dividends.
I’ve wondered about lifetime trackers for various tax schemes. Anyone aware of a country trying something like that? I guess we have it for gift tax exemptions. I wonder what the breakdown of lifetime CG looks like.
I’ll note that CG&D are about 7% of personal income reported to the IRS. And only about a quarter of stocks are held in taxable accounts.
You are missing you extremely basic, but important issues.
There are two ways stock can be sold twice (or more). Either the company has to re-acquire it and then re-issue it, or one owner sells it to another. Your proposal would eliminate the latter and probably the former. By definition, people saving for retirement and, well, everyone else, are in the exact same bucket as the “evil greedy investors” [paraphrasing, not a direct quote]. Also, there’s no way to know if something doesn’t result in whatever you personally define as “economic growth” except if it results in… actual profits. So this amounts to arbitrarily blocking whatever you (or the vaguely-defined regulator) happen to be angry about at any given time, which is one reason that illiberal economic regimes tend to fall apart over time.
Also, buying stock to wreck the competition or whatever tends to cause anti-trust litigation. Some people further dislike corporate raiders, but that was more of an 80’s thing anyway and, in the long run, most likely did not economic damage. That is to say, it was disrupting and painful while the sharks took their bites, but it also probably did force companies to develop and improve so they couldn’t be bitten.
Maybe I’m not getting the point:
Why wait until death and use estate tax as the mechanism?
Why not reroute the money well before then? Why not require better pay for workers? Why not recognize that when someone at a car factory replaces 14 workers with 14 machines, the wealth created by the machines doesn’t benefit the machines, and should perhaps be shared with the people who lost their jobs?
I see someone has suggested taxing capital gains at a higher rate already. That is an example of a more timely intervention. But I still don’t quite see why the government should be involved (taxation) rather than a more direct mechanism of paying workers better.
Is that because the initial focus was on reducing the deficit?