Ralph Nader's dad's answer to the problem of power and greed.

Great Debates
1

Ralph was on C-Spans’ BookTV promoting his new bookThe Seventeen Traditions his parents instilled in their family.
And at one point he mentioned that his dad was always promoting an idea that it would be wise to let people earn any amount they want, but when they had [if I recall the right number] five million dollars, that was the limit on what they could keep. The excess had to be given to charity or simply collected as taxes, whatever.
This was his perennial answer to the problem of power and greed.
And Ralph and his brothers and sister, and the other people who discussed it would circle around with all sorts of questions and hypotheticals. What if the charity was run by family members? What if the charity wasn’t on the level…

Would there be a way to make it work?

2

Why should there be a way to make it work? It’s theft.

3

[QUOTE=According to Pliny]
Would there be a way to make it work?
[/QUOTE]
Yeah. You could steal — excuse me, tax — whatever amount you thought was excessive. Of course, once I have my five million (or whatever the central planners eventually reduce it to), that’s it for me. The factory closes and I go off to retire somehwere.

4

I think I trust Bill Gates to spend his fortune more intelligently than the government would, had they been taxing it away from him all these years.

5

Trying to tax the very rich is a bit of a waste of time.
They either spend money avoiding it or they shuffle offshore.

The real tax take comes from lower down the food chain.

6

“A waste of time”?

As in, “Oh, you now have a net worth of $110,000,000, so obviously you are far too clever for us to attempt to tax, & we won’t even try?” :dubious: If you refuse to tax them at all, you just turned them into semi-sovereign nobility who don’t answer to the state.

Even if the superrich can pass the costs along, that’s no reason not to tax them heavily. It still takes effort on their part to absorb the hit, & they can take the hit better than anyone in any case.

7

[QUOTE=foolsguinea]
“A waste of time”?

As in, “Oh, you now have a net worth of $110,000,000, so obviously you are far too clever for us to attempt to tax, & we won’t even try?” :dubious: If you refuse to tax them at all, you just turned them into semi-sovereign nobility who don’t answer to the state.

Even if the superrich can pass the costs along, that’s no reason not to tax them heavily. It still takes effort on their part to absorb the hit, & they can take the hit better than anyone in any case.
[/QUOTE]

Super rich people can set up offshore trust funds, they employ expensive accountants, they can simply go offshore. They don’t have to be clever, they just employ clever people to avoid getting taxed.

All one is doing is losing tax take to accountants, lawyers and offshore governments.

8

What does “having $5M” mean anyway? Net worth, I assume. So if I buy a bunch of property cheap, and it appreciates, the government takes a bunch of it away from me?

What would happen, of course, is that I’d start selling off property as I neared the $5M mark, and buy things in other countries that the US government won’t have access to.

It’s not a matter of not taxing the rich. It’s a matter of setting up an “anti-rich” tax scheme. Schemes like this are more like angry responses to someone being richer than you are, than well reasoned tax strategies.

A strategy like this, a person can’t even own an apartment building, or a couple of successful restaurants. You get near your dollar limit, there’s no reason to work, you may as well spend a few years playing with the money you have so you have enough room to make more.

9

[QUOTE=Cheesesteak]
A strategy like this, a person can’t even own an apartment building, or a couple of successful restaurants. You get near your dollar limit, there’s no reason to work, you may as well spend a few years playing with the money you have so you have enough room to make more.
[/QUOTE]
In fairness, five million dollars went a lot farther when Ralph Nader was a kid. Would the idea be any more appealing if the cutoff point were five hundred million instead?

10

What gives anyone the legal right to confiscate my property just because they think I have too much?

11

[QUOTE=FRDE]
Trying to tax the very rich is a bit of a waste of time.
[/QUOTE]

In addition, there are not enough of them. Cranking up taxes on people having 5mil+ is going to bring you to like less than .1% of the population. Far more effective to crank up the taxes on the rank and file by $100/yr, rather than ask a handful that actually have 5mil+ to cough up millions in extra taxes.

12

[QUOTE=foolsguinea]
Even if the superrich can pass the costs along, that’s no reason not to tax them heavily. It still takes effort on their part to absorb the hit, & they can take the hit better than anyone in any case.
[/QUOTE]

The reason is that it’s not fair. It’s their money. Any progressive tax is simply government sanctioned theft. Well intentioned maybe, but theft just the same. The only two fair ways to tax income is either through a flat amount or a flat percentage. Either everyone owes the government X dollars each year or they have to pay Y percentage of their income.

Also. according to your paradigm it would be less of a crime for you to steal from Bill Gates than me.

13

I support a graduated income tax since the wealthy benefit more from the government than the poor and a larger absolute amount of cash, even a larger percentage of income, is less onerous to the wealthy as they can better absorb it while maintaining their lifestyle.

But a cap on wealth is just stupid. The only time I’d support a truly confiscatory tax (that is, taking away money on the theory that the taxed has too much money) is for inheritance. I think inherited wealth can be very dangerous to a society, and massive (and I mean truly massive) amounts of money shouldn’t be passed along bloodlines. And even then, besides a huge cap before it kicks in, I’d have plenty of loopholes to allow for charitable contributions, dividing among a large family, etc.

14

In a consequentialist sense, it would be less of a sin to steal from Bill Gates an amount equal to your entire net worth, than to steal that amount from you. The sin, or crime, is not in how much it profits the thief, or salvage would be prohibited. The offense is in how much it harms the victim.

But we’re not talking about theft; we’re talking about taxation, which is an acceptable & necessary extortion, governed by law. To talk about theft is prejudicial.

It is a greater sacrifice for you to pay 99.9% of your net worth to your favorite charity than for Bill Gates to pay 99.9% of your net worth to your favorite charity (even if your favorite charity funds something Bill Gates hates, like terrorism). Further, it is, in fact, a greater sacrifice for you to pay 99.9% of your net worth than for Bill Gates to pay 99.9% of his net worth. He will still have something on which to live comfortably for the rest of his life.
[QUOTE=magellan01]
The reason is that it’s not fair. It’s their money. Any progressive tax is simply government sanctioned theft. Well intentioned maybe, but theft just the same. The only two fair ways to tax income is either through a flat amount or a flat percentage. Either everyone owes the government X dollars each year or they have to pay Y percentage of their income.
[/quote]
Oh, that’s cute. Can you justify logically how those are the only two fair ways? I think it makes just as much sense to say that any wealth added beyond an amount sufficient to live comfortably for the rest of one’s life is fair game.

It’s a little more problematic to say that any income in a year an individual receives beyond (Z per person in household) is fair game. Set Z at, say, $50,000 in present dollars. Per person per year, that’s enough to live quite comfortably, but there should be allowances made for non-repeating windfalls & short-duration, high-income careers.

But what’s best, in income tax policy, is probably somewhere between those & your advocated head tax or flat tax. (And really, who believes in head taxes?)

15

As for it being “their money,” well, no, not fundamentally. All real estate & all legal tender, as well as the laws which protect assets & make them recoverable without the use of personal force/private armies, & the courts, & the prisons, exist by the grant of the state. The state is sovereign over the land; the state ensures the existence of the money supply; the state writes, enforces, is the laws.

Taxation, rather than being robbery, is the means by which the state sustains itself; & the state is sine qua non of property. As you live in a democracy, you are free to advocate any tax plan you want. You have a constitutional right to advocate “Bill Gates & Warren Buffet pay for everything,” or “Only tax those with incomes under $40,000 per year,” even though neither of those would go far in paying off the current debt, let alone paying the salaries of those who protect your quality of life–but you’re free to advocate the government going into hock & destroying itself, too.

But as for what’s fair? The government could demand from you everything, & give you an acre & a stipend. It’s not practical, it’s not going to happen, but it’s “fair.”

16

I’m umoved by the thought that it’s stealing. After all, in wartime for the public good we have had no compunction about stealing peoples lives in the form of a military draft. During the present Iraq war we have stolen the lives of people in the National Guard by repeated tours in Iraq. As a result many have suffered financial hardships to their business and might even have lost them in some cases.

17

[QUOTE=foolsguinea]
In a consequentialist sense, it would be less of a sin to steal from Bill Gates an amount equal to your entire net worth, than to steal that amount from you. The sin, or crime, is not in how much it profits the thief, or salvage would be prohibited. The offense is in how much it harms the victim.
[/QUOTE]

No. Sin and crime are completely different. It is an equal sin to kill a menial laborer as it is to kill Bill Gates. The religious constructs that give us the concept of sin look to the act, and possibly the motivation, not the outcome.

[QUOTE=foolsguinea]
But we’re not talking about theft; we’re talking about taxation, which is an acceptable & necessary extortion, governed by law. To talk about theft is prejudicial.
[/QUOTE]

Sorry. It’s the same thing. We have just become inured to it and accepted at as part of the social contract. Behind you need to pay taxes you’ll find a gun. If you don’t pay them you will be taken, by force, to jail and deprived of your liberty.

[QUOTE=foolsguinea]
It is a greater sacrifice for you to pay 99.9% of your net worth to your favorite charity than for Bill Gates to pay 99.9% of your net worth to your favorite charity (even if your favorite charity funds something Bill Gates hates, like terrorism). Further, it is, in fact, a greater sacrifice for you to pay 99.9% of your net worth than for Bill Gates to pay 99.9% of his net worth. He will still have something on which to live comfortably for the rest of his life.
[/QUOTE]

That is immaterial to the discussion. The practical points you outline are, of course, true. I was talking about what was fair. If people are equal they should be treated equally.

[QUOTE=foolsguinea]
Oh, that’s cute. Can you justify logically how those are the only two fair ways? I think it makes just as much sense to say that any wealth added beyond an amount sufficient to live comfortably for the rest of one’s life is fair game.
[/QUOTE]

I can’t think of another way that would be fair for an income tax. Abolishing it and replacing it with a sales tax would probably qualify. The idea you propose here is almost the opposite of fair. You’re justusing a different equation to decide how much money you want to extract from someone by force. You also penalizing peope for being more successful. And the more successful they are the more you want to penalize them. It’s tempting from a practical standpoint. But laughable as far as being fair. It also would be unwise as it would remove incentives for successful people to be even more successgul, which benefits society. One might argue that with all the jobs Gates has created that he shouldn’t pay any taxes at all, Similar to the tax breaks a corporation will get for moving into a particular area.

[QUOTE=foolsguinea]
It’s a little more problematic to say that any income in a year an individual receives beyond (Z per person in household) is fair game. Set Z at, say, $50,000 in present dollars. Per person per year, that’s enough to live quite comfortably, but there should be allowances made for non-repeating windfalls & short-duration, high-income careers.
[/QUOTE]

I’m not clear on what you’re saying here. Can you restate it?

18

Sorry, I was reediting myself & lost clarity. What I mean to say is:

My personal preferred approach to income tax is that there should be a generous exemption per person per year (say, $40,000 in current dollars, or $120,000 for an earner with two dependents), & that marginal taxes should rise progressively from there.

However, I have to concede that this is unfair (OK, you made me say it) to those who make a lot of money in a non-repeatable fashion in a short time, such as lottery winners. It’s also problematic for those with intrinsically shorter careers, such as ballplayers & supermodels.

And, yeah, I have my own ideas of fairness, so my quasi-totalitarian argument that “fair is whatever the state grants you” is at the least an overstatement. The fact remains that as far as the constitution is concerned, your protection against the seizure through taxation of over 90% of your assets is merely the fact that your countrymen don’t want that law either.

~

As for your contention that, “If people are equal they should be treated equally,” as a radical egalitarian, I agree. The difference is that mathematics, economics, & sociology all tell me that unequal amounts of money are definitely not equal. You seem to think that A’s income should be treated equally to B’s income even if A’s income is unequal to B’s income, but this is not proven by the premise of treating the equal equally.

If, in fact, we seek to treat people equally, we have cause to try to mitigate the social inequality that wealth inequality is used to support. This is why, for example, we have publically funded schools, instead of relying on individuals to procure all their own schooling.

No need for the subjunctive; one may argue that, we have freedom of the press. It does not mean it makes any sense at all.:wink:

19

[QUOTE=foolsguinea]
My personal preferred approach to income tax is that there should be a generous exemption per person per year (say, $40,000 in current dollars, or $120,000 for an earner with two dependents), & that marginal taxes should rise progressively from there.
[/QUOTE]

The progressivity is the part that is unfair. There’ s no getting around it. As you have acknowledged. (I think.)

[QUOTE=foolsguinea]
However, I have to concede that this is unfair (OK, you made me say it) to those who make a lot of money in a non-repeatable fashion in a short time, such as lottery winners. It’s also problematic for those with intrinsically shorter careers, such as ballplayers & supermodels.
[/QUOTE]

Do you think it is unfair to those people only. How about the businness owner who pulls down a million a year? How about a Hollywood star like Jack Nicholson or Gene Hackman, who have had, and continue to have, long financially rewarding careers? How about Oprah? Or Letterman? How about Stephen King?

[QUOTE=foolsguinea]
And, yeah, I have my own ideas of fairness, so my quasi-totalitarian argument that “fair is whatever the state grants you” is at the least an overstatement. The fact remains that as far as the constitution is concerned, your protection against the seizure through taxation of over 90% of your assets is merely the fact that your countrymen don’t want that law either.
[/QUOTE]

This is the socail contract I referred to earlier. But I think you’re conflating legality with fairness. The two are not the same. The former seeks to approach the latter, but rarely reaches it due to the fact that it can’t take into account each and every particular case.

[QUOTE=foolsguinea]
As for your contention that, “If people are equal they should be treated equally,” as a radical egalitarian, I agree. The difference is that mathematics, economics, & sociology all tell me that unequal amounts of money are definitely not equal. You seem to think that A’s income should be treated equally to B’s income even if A’s income is unequal to B’s income, but this is not proven by the premise of treating the equal equally.
[/QUOTE]

I must say, foolsguinea, this is utterly ridiculous. Your refutation amounts to not being able to treat people equally, as regards to their earnings, because 2 does not equal 3. Huh? You and I both try out for a basketball team. We both make it. You are much, much better and are paid $5,000,000 year. I get offered $500,000 per year. A third guy who tried out and didn’t make the team takes a job as an assistant coach at a college for $100,000 per year. Unequal amounts, obviously, yet there’s no reason for the government to treat us differently. Doing so is penalizing one more then another. How is that fair? How isw putting a limit on what your talents are able to bring you the morally correct thing?

[QUOTE=foolsguinea]
If, in fact, we seek to treat people equally, we have cause to try to mitigate the social inequality that wealth inequality is used to support. This is why, for example, we have publically funded schools, instead of relying on individuals to procure all their own schooling.
[/QUOTE]

I basically agree, but given that this is inherently unfair, we should, and do, seek to minimize our social engineering. I’m all for having public assistance available, for instance, but the amount someone will receive when they are in need is a minimum amount to help them get by until they get back on their own two feet.

Aside: since you are such a fan of an egalitarian society, shall I assume that you are in favor of a voucher program for schools. I mean, right now the rich can choose to send their kids to a variety of schools. Shouldn’t the poor have that same option? I guess you could take the other side of the coin and mandate that ALL children must attend public schools and enforce that by force, similar to the tax idea. Thoughts?

[QUOTE=foolsguinea]
No need for the subjunctive; one may argue that, we have freedom of the press. It does not mean it makes any sense at all.:wink:
[/QUOTE]

Nice. Would you mind commentiing on the content, as well?

20

[QUOTE=Musicat]
What gives anyone the legal right to confiscate my property just because they think I have too much?
[/QUOTE]
That’s how ALL taxes work. There’s a toll on the toll bridge because they think you have a couple of dollars to spare. And stamps are 39c because they think you have that much extra.