I await your groundbreaking refudiation of the law of supply and demand.
There’s a distinction to be made, perhaps: They are all earning the money. On the other hand, once you reach a sort of “investor” level…if I loan a guy $5mil to start a business, and he pays me 10% of his profits in return, I think Der Trihs would argue that I’m not “earning” that money in the same way as the entrepreneur is–in that my contribution doesn’t NECESSARILY require any talent or sweat or genius, just a ready supply of capital.
I don’t necessarily agree that the difference is relevant but I do agree there’s a qualitative difference there. The government acknowledges it, too, which is why there’s a difference between capital gains tax and normal income tax. I would argue that I think they’ve got it backwards and that capital gains should be taxed at a equal or greater rate than income (since “having capital” is not something you can encourage in the same way you can encourage “training to be a doctor/lawyer/engineer”, there’s no particular reason to incentivize it, but there’s no particular reason to penalize it either).
Your mistake (at least in comprehension) is in the two points quoted here. Nobody is arguing (well, most people aren’t, at least) that those providing capital investment should not see returns on that investment. The debate is almost entirely about the magnitude of those returns, and how the fruit of that investment should be shared.
There are some (typically on the left) that believe that while the man that builds the factory should receive a return for that economic activity, the workers in the factory have a right to a meaningful reward for their contribution as well. And more generally, that no person is in any way entitled to the entirety of wealth generated by the economic activity of society as a whole (because no person can generate wealth on their own - it requires workers, consumers, societal protection, nation-state armies, etc…).
As I indicated in my earlier posts, this is not at all an uncommon position, and was in fact endorsed by at least one Founding Father (likely more…).
As far as your comment on whether anyone would take risks in an environment with less of a gap in personal wealth and income, one can rather easily look at the tax situation in America’s past as well as other industrialized nations to get a feel for the possible effects.
Anyways, the question in the OP has been answered. The context of the comment about the “rich having all the money” is generally directly addressing the economic gap (as measured by GINI as well as other factors) when compared to both the US past and other nations (EU in particular).
They have been for over 200 years now. Did you have an alternate system you’d like to propose?
I await your groundbreaking refudiation of the law of supply and demand.
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No need to refudiate it. You just missapplied it. Government budgets are not fixed.
I didn’t say they had “never been compensated”; but the lion’s share of the profits produced by their labor goes to the already wealthy, not to them.
In a fair system there would be no rich individuals. No one contributes so much more than another that they deserve to hog tens of thousands of times the wealth of others.
That’s impractical for political reasons of course; but just because we can’t make a perfectly fair society doesn’t mean we can’t make one that’s fairer than the one we have now. Many other countries have; we are the outlier among industrialized nations when it comes to letting the wealthy hog all the money and power.
Oh, please. The rich investors don’t “take risks”; they get the profits from successful investments, and we pay for their failures. They risk nothing. We are living though an international example of that right now.
Holder’s of capital have choices on where they invest and the greater risk requires a greater return. Providing incentives to for capital holders to take greater risks with their capital is a key driver of growth in any economy.
First of all, it’s a lot more complicate than that, since there is no guarantee there will be any profits at all. In fact, there may be a loss.
Secondly, that is not the only way “the rich” make money.
Squink: I honestly don’t understand what you’re yammering about. If someone posts BS in a thread, I’m going to call him on it. If that bother you, then just ignore me. Unless you agree with what I’m calling BS and want to support the other poster. I can’t tell whether you do or not. Are you in agreement with DT’s statement? If so, let’s debate it. If not, then I don’t understand your objection.
None of those people are even close to being rich. And since when did you need to earn money to have it? You can inherit or take it from others who do the actual work; that’s how the wealthy typically get their money.
Actually no; I do think you are earning something since you are providing a service. The problem is that the people who are moving money like that get a hugely disproportionate award for what is really no more than shuffling numbers around. And the fact that much too often it is individuals who are getting those disproportionate awards, and have so much money in the first place. The economy like the rest of society is the result of the efforts of many people working together, and they should as far as possible share fairly in the results of their efforts.
They certainly are. Lowering government revenues hasn’t had anything to do with lowering expenditures since 1980.
In the first case, you are letting them keep X. In the second, you are giving them X.
These kinds of discussions are interesting, if for no other reaons than to see the basic assumptions. Who owns what I earn? Conservatives say I do. Liberals say that the government does, and that I should be grateful if I am allowed to keep any of it.
And if.
I am not aware of many on the right who think that we should bring back slavery.
The workers in the factory have already been compensated for their part. This compensation is in the form of salaries and benefits. If the workers wish to share in the profits, they need also to share in the risks, by buying stock (in publicly traded companies).
If they don’t want to, they don’t have to.
They are, however, entitled to keep the bulk of it. Because the various opportunities you mention (enforcement of the rule of contracts, protection by the military, roads and bridges, public education, etc.) are all available to every member of the public. But that is not sufficient to allow every member of the public to be a successful entrepreneur. You need someone who is smart enough, hard-working enough, lucky enough, to make a success of a business and thereby create wealth where there was none.
This is not an argument against the need to collect or pay taxes. It is an argument against the notion that everything that has been created really belongs to the government, because we have a military to protect us from Canada and a building code.
I have offered this challenge in the past. I am intimately familiar with a gentleman who is a self-made millionaire. He inherited nothing - his father was a furniture salesman. He founded and built up a business that still exists, that employed a dozen or more people, at salaries well above minimum wage.
I read this kind of stupid and ill-informed shit a lot on the SDMB -
I would like one of the Usual Suspects to explain clearly in what way the gentleman I describe is parasitic on his employees.
Failing that, I wish they’d shut their pie holes about things they clearly don’t understand.
Regards,
Shodan
The point I’m making is this (and this answers John Mace too): If a doctor makes $300,000/yr, it is overwhelmingly likely that they are highly successful at doing exactly what they do, that they have spent a long time working towards that income with blood and sweat and education and practice. Very few if any doctors go from 0 to $300,000/yr with no hard effort applied.
Whereas with investment income, an (so far as I know) unknown but non-zero percentage of investors didn’t earn their own seed capital, or make a poor risk-vs-reward decision and got lucky. To put it another way, we have no ready information on whether J. Random Investor is merely lucky or has rich relatives, or if they are in fact a skilled and talented manipulator of capital and money who worked their ass off for it.
Given that, I think it’s certainly plausible to shift a higher tax burden on returns from pure investment activity, or at least make that tax burden equal to the doctor’s.
Can we agree on a definition of “the rich”, by the way? I’m working from a definition of “derives more income from investment/capital activity than from regular salary” combined with “has enough money that, even if all income were cut off, would not have to worry about food and shelter for the rest of their natural lifespan”. I recognize this is nebulous, but I see the first criterion as the essential dividing line between “upper middle class” and “rich”.
And going back to the OP, the quoted phrase pretty much seems to me to refer to the alleged propensity of Republican governments to make political decisions regarding regulations such that the rich either find it easier (fewer restrictions on X) or more legal (relaxed rules on, say, media monopolies) to get richer, ostensibly at the expense of the poor. Whether this is even possible depends on whether you believe the economy is essentially zero-sum or not.
Man it’s getting deep in here!
Just after you repeal the law of supply and demand, please cite how often shriking revenue has been accompanied by or resulted in lower government expenditures in the past 30 years.
ETA: because when they are not, LIKE IN THE PAST 30 YEARS, the effect of lowering taxes on the rich while not simultaneously lowering government expenditure is equivalent to raising taxes on the poor, due to the law of supply and demand.
Yeah let’s go back to the OP. Many posters in defense of the quote in the OP, like to throw that last little phrase in there…like is a person get’s rich, it must be at the expense of someone else, right…so if the rich are the ones getting rich, then it must be at the expense of the poor.
For simplicity let’s use Shodan’s example above of the entrepeneur, that started a business and reinvested his profits (his capital) back into the business to grow it. Apparenty the people that bought his furniture thought they were getting a fair deal, or they wouldn’t have bought it. Apparently, his employees, thought they were getting a fair wage, or they wouldn’t have worked there. Apparently his suppliers thought they were getting a fair price for the raw materials they sold him, or they would have taken their business elsewhere. How has this man gotten rich at the expense of the poor?
I’m a former Republican, & as far as what we used to call the country-clubbers are concerned, that comment seems close enough.
To whom does the country belong? Whom does the government serve? The people, or the “beautiful people”? The extremely wealthy in this country benefit from disparity in ownership of property, & are able to grow wealthy on the labor of others. So is their money properly their money, is it the nation’s, or something else? A conservative will say that obviously it is theirs. As a child of the Christian tradition, I’m not sure it is. Jesus said that if he came into his kingdom, he would have them dispossessed & distribute their wealth to the poor. If I let wealth remain inviolate, what’s my excuse?
Let me add also that fat cat industrialists have been using the power of the state–you know, the people’s government–for their special-interest advantage for a long time. I support welfare because I know that “corporate welfare” is older & never really going away, & the commoners may as well get a cut.
It depends. For simplicity’s sake, and to avoid casting aspersions, let’s presume an Evil Shodan’s Friend who has a similar business. He pays his employees minimum wage, and the economic conditions are such that those employees will have a hard time finding another job right away. If, given those two facts, the government reduces unemployment benefits or if the government reduces the minimum wage, or the government reduces factory safety standards so that ESF could reduce his expenditures on safety equipment and keep the profit for himself, we could say that the governmental choices are explicitly enabling Evil Shodan’s Friend to get rich at the expense of the poor. If government doesn’t make sure minimum wage keeps pace with inflation, meanwhile, they could be argued to be implicitly enriching ESF at the expense of the poor. The key is this:
If the choices are “work there and eat”, or “don’t work there and starve in the streets”, it’s no choice at all. Rarely is it this stark in the real world, but let’s not pretend that everyone can afford to refuse a job if they think the pay is criminally low.
Let’s say, too, that the capital gains tax is 15%, the corporate income tax is 15%, and the average income tax of a worker at ESF’s factory is in the 25% bracket for income tax. If ESF reinvests most of his profits and draws only a minimum of salary for himself (taking most of his salary in stock options), governmental policies are working to make sure ESF gets richer faster than his workers (since ESF’s income, mostly taxed at 15%, accumulates faster than the worker’s income taxed at 25%). Arguably any situation in which the capital gains tax is lower than the income tax says one of two things: either the government is therefore rewarding capital ownership more than income (and thus rewarding “being rich” more than “working hard”, or the government thinks that investment requires a tax-based incentive to cause investors to accept higher risk rates. Arguably both could be true.
These are merely examples of what could be meant by that phrase. I don’t particularly think it’s a helpful phrase, myself, because it leads to this kind of discussion that’s not nearly as productive as a reasoned look at the fiscal realities.
Thanks, Shodan.
But since the end result is exactly the same, what’s the practical difference? I suppose there might be some penumbra or emanation of a difference, but the end result is the same.
Imagine the mafia comes to your neighborhood. They want everyone to pay $1000 in “protection” money. So what’s the difference between collecting $1000 from everyone except Fat Tony because he’s a friend of ours, and collecting $1000 from everyone including Fat Tony, but then giving Fat Tony goods and services worth $1000?
And this is why tax cuts and tax credits are such a popular way of distributing government money. Of course it’s not confined to giving away money to the super-rich, we have things like the Earned Income credit. We can’t give people of category Y a check for $X, that would be communism, but giving them a tax credit for $X is fine.
And this is why we have the sorry mess of our tax code, with hundreds of schedules and deductions for this, that and the other. Rather than treating the tax code as a way to generate money to pay for the necessities of government, we treat it as a tool of social policy.
It seems to me that it is blatantly obvious that if you cut taxes for the highest incomes, it means the rest of us will have to pay more. Even if you cut spending to match the tax cuts the rest of us are paying the same amount, but getting fewer services in return for the same tax bill. Maybe you’d be happy to pay the same amount but get less in return, but I wouldn’t be.
No. It depends on which cuts are made. Not all government spending is on services to the non-rich. There are some pretty simple ways to balance a budget, things that all of us do all the time, things that businesses do all the time, that governments refuse to do. If I were tasked with cutting spending, I’d probably start with the military.