Well, that hardly sonds like voluntary to me. With this formulation, slavery is voluntary. 
Of course. I’m not trying to say that taxes are illegal or that we should ignore the law.
No, but social security and your sister’s salary have a qualitative difference. Social security is a bad example, as Kimstu pointed out because it maintains a sort of fiction that it is really an investment program. Perhaps if you compared your sister’s salary with welfare it would make the contrast more obvious?
All participants in free trade create wealth. The ones who emerge from specific trades with more money have translated their much of that wealth into money. Those who emerge from specific trades with less money had to have earned that money elsewhere. Again, unless you are suggesting that someone has stolen (or perhaps counterfieted) their money. Perhaps I performed some service for you in exchange for the money I used to pay 2sense.
BTW, can we please get another transaction to talk about. It is starting to cause me physical pain avoiding some of the naughty things which are popping* into my head.
*Sorry about that one.
Would it be going too far to thank the both of you for the lovely double team?
Ok, that would be going too far. But I would like to thank you for the lovely conversation. I have not been ganged up on so pleasantly for some time. And with such probing insights into my posts.
Ok, that’s the last one for tonight. I promise. But I’m serious about the thanks.
Don’t wanna make you think about bad stuff, pervert, so I won’t belabor (oh dear :)) this issue. But I have to say that I still don’t feel you’ve answered my question.
One last recap: How does your hypothesized “direct relationship between the amount of money a person has and the amount of wealth he has created” manage to take into account the wealth creation performed in a particular transaction by the participant(s) who did not gain money from it?
Maybe this is just another of the dreaded pervert-Kimstu mutual misunderstanding vortices, in which case, fuggeddaboutit. 
Well, the one’s who do not gain money from the transaction gained value of some other sort. I think I did say earlier that money was not the only way to measure wealth. Or did I dream that. I do that sometimes.
When I said there is a “direct relationship between the amount of money a person has and the amount of wealth he has created” did I imply that someone without money had not created any wealth whatsoever? I did not mean to.
Let me try it this way. If you assume voluntary actors, then the transaction involving an exchange of money can be said to involve the creation of wealth related to the amount of money involved. I’m not sure you can say that it was the only wealth created, and I’m not sure that the relationship between the amount of money and the amount of wealth is proportional exactly. But on balance and for most transactions, you can say that the more money exchanged the more value involved.
So, you cannot say that a person with no money has not ever created value. But you can say that a person with lots of money has created a lot of value. That is, the relationship does not go both ways. I can create value without exchanging money. Gosh forgive me I could have performed a different service rather than give 2sense* cash, for instance.
Possibly, but I think this one is my fault. I keep having so much fun with the examples and hypotheticals that I may not be paying enough attention to the principles. Bad on me.
I hope I did better in this post.
*And I even promised. ;(
From merriam-webster.com :
Main Entry: 1vol·un·tary
Pronunciation: 'vä-l&n-"ter-E
Function: adjective
Etymology: Middle English, from Latin voluntarius, from voluntas will, from velle to will, wish – more at WILL
1 : proceeding from the will or from one’s own choice or consent
By choosing to stay you have consented to the rules. It’s not the best choice to get to make but it is a choice. And unlike a slave you can pack up and go. I believe I said that before.
No, it doesn’t. What is the contrast?
That’s because your uncle didn’t do estate planning well, not because the tax law favors the rich. I started a trust the moment my son was born, even though my wealth under the current regime is about 1/10 of the amount where estate tax kicks in. But it might be over 20 years from now if I die then (hopefully later)
There are no legal means that are available to the rich but not to you or your uncle. You do have the responsibility to research what’s available and plan. That is your responsibility, not the government’s.
Dorfl
First, my uncle had done estate planning at one point, but the rate quietly went from 30% (which he was perfectly willing to pay) to 55% (which he would have considered rape) in the last year of his life. Nonetheless, point taken. It was his mistake which cost him.
My point here is not to complain about my uncle, it’s about the estate tax. We have a 55% marginal rate (clearly punitive) which the vast majority of the “old rich” will never pay. I’d be interested to know how much revenue the tax actually generates, versus its enforcement costs. Add in the waste of time and talent that goes on when we create an army of estate planners, accountants and lawyers to skirt the tax and I submit that we have a serious deadweight loss to the economy. In its current form the tax is an ineffective “gotcha” scheme to punish folks who don’t have good accountants/lawyers.
If you are serious about transferring wealth, and about generating revenue, ditch ALL loopholes (with possible exceptions for small businesses and farms) and drop the rate to say 25 or 30%. I predict that revenues would increase dramatically.
Of course the “old rich” - in both parties - will never let this happen, they are too happy paying 0%. So why not just repeal the whole stinking tax? It exists, imho, solely as a demagogic nod to “tax equity” and redistribution. I would group it with the famous “luxury tax” on boats that we implemented in the early 90’s. Not only did it drive a lot of small companies out of business, it actually pulled in less revenue than it cost to administer. So it was a deadweight revenue loss with negative economic impact… But it made for great “soak the rich” rhetoric.
Well, a slave can escape or commit suicide. That is a choice as well. I think I understand your point. We’ll agree to disagree.
An exchange for services is different than a grant unrelated to services rendered.
I’m not sure I mentioned anything about decades of time. I’m afraid you lost me with this one.
I’m suggesting that the cause of the welfare programs is their continued political support. The political support (in my opinion) is based more on class warfare than on an abstract desire to provide some sort of infrastructure. I am not accusing you of this necessarily, just making an observation. If it helps, I am not talking about the elderly supporting social security. There are many more who support it.
You said “With our social programs the wealth redistribution is incidental to the program’s goal.” I am arguing that the goal of many who support these social programs are in fact to take money from some and give it to others. I am suggesting that social stability is not the goal. I acknowledge that this is just MHO, and I acknowledge that this may not be your position at all.
I sort of agree if you are saying that we should have an estate tax that give a free base amount (inflation adjusted) plus a flat rate above with an exception for business ownerhsip and farms. On the other hand, some of this money is now taxed at so many levels that you can lose track of it…Overall I think we would better of killing all these taxes and only taxing all annual income and a rate going from 0% to, say, 25%, no deductibles. Done
In any event, I would like to complicate the income tax discussion by throwing in AMT (alternative Minimum Tax), which has not been inflation adjusted and will hit many middle income folks in the next years. No plans to change that. Why? Well, I keep my thinking along the lines of “the current administration lowers taxes on income for wealthy people (dividend, capital gains, inheritence), and finances this with keeping the AMT where it is”. I wonder whether anybody has some numbers to see whether the amounts even out…
I believe the cutoff point for paying Social Security is at $86,000. So it’s almost entirely paid by working class people, for working class people. It’s certainly not very progressive nor does it change the social wealth distribution much beyond keeping old and disabled people from starving to death or having to dig through trash to eat.
1)Yes, the cutoff is $86,000. I’ll go you one better. Unless I’m mistaken, this only applies to regular income. Capital gains and other forms are not subject to withholding. Care to argue that the money taken out is anything like the money that a particular individual put in? Otherwise it is still a program for taking money from those who earn it and giving it to those who have not.
2)The constant apeal to starving seniors, unwed mothers, and children is getting tiresome. Can you provide some figures as to how many people starved in comparison to the amount spent by any of the programs which are supposed to prevent it? I would think that we should have some good figures showing that s spending on Welfare for mothers with dependant children goes down the starvation rate goes up. Or perhaps we have good figures showing that as the spending goes up the starvation rate goes down?
I am confused by this assertion. By that, I mean the mathematics of this distribution which is closer to a Poisson, instead of a normal distribution, is being analyzed incorrectly, it seems to me. When someone in the bottom quintile gains, they sometimes move out of that quintile. When someone in the top quintile gains, they always remain there. This type of distribution MUST increase the standard deviation whenever there is growth. As long as only one end is capped, this must be so. Therefore, the only way to meet the desires of the Left - that income or wealth inequity not increase in a growing economy - is for us to enact an income or wealth cap. Do we really want that?
This comment is not directed at jshore, whom I respect, but people on the left seem to spend an inordinate amount of time trying to figure a way to take people’s money away. Why can’t people in a supposedly free country and free economy be left alone to pursue their life in the way they wish without others trying to take it away from them? If the rationale is that the system is not truly free (or fair), then attack the root cause, not the people living within it.
By the way, we have often talked about how flat or progressive the overall tax system (federal, state, and local) is but without having access to something that ties them all together. Here is a study from CTJ that attempts to do that. They find that the tax system as a whole is already fairly flat especially in the middle and upper regions (with more progressivity near the bottom)…and moreso since the Bush tax cuts. For example, the top 1% pay 32.8% of their income in all combined taxes whereas the bottom 99% pay 29.4% of their income in all combined taxes. Before Bush, these numbers were 37.1% and 31.7%, respectively.
Well, I’ll admit that there may be some tendency for such a distribution that has a boundary at one end and none at the other to grow more skewed over time, but I don’t think it is necessary that it must. And, in fact, in the middle part of the 20th century, inequality actually decreased before strongly increasing again late in the century. Also, I think those of us worried about this would be more comfortable if the increase in inequality weren’t so dramatic that most of the gains are going to only a few, with a lot of people barely seeing their lot improving at all. Note that between 1979 and 2000 the top 1% saw their real incomes increase by a percentage factor that was about 13X as high as those at the median and in dollar terms, the factor was a little more than 100X. These sort of numbers are so dramatic that even if only the money that that top 1% gained had been spread more evenly, it would have made quite a significant difference in the gains received by everyone else.
Another “lefty” here, and one who does not understand your mathematics. Why would this look like a Poisson distribution to you? Why assume that the mean equals the variance? That’s a pretty stringent assumption.
Furthermore, the standard deviation does not have to increase in a model like this if growth is sustainable in all quintiles. You are confusing survival analysis in quintiles over time with an analysis of the distribution of income, aggregated over the course of an entire year. The survival (or even event count) analysis very well might follow a Poisson distribution, but I just do not see how vanilla income distribution would. If you have any support in the literature, now would be a good time to trot it out.
This is specious, since they are one in the same. Rational, self-interested behavior just does not aggregate as well as many right-leaning people believe. This renders it difficult or impossible for many people to be “left alone to pursue their life in the way they wish.”
I’ve seen this concept bandied about several times in this thread, and elsewhere. It is shortsighted and shallow, here’s why:
Value, in general is not intrinsic to a specific item or property. You want to take some portion of the wealth of rich person and give it to someone less well off. I submit that the value of that property diminishes substantially with that transfer. When that happens, we are ALL less well off. The problem is that the wealth of wealthy people, by and large, is NOT cash. If you convert it to cash, much of the value can be lost. A simple example: if Bill Gates has $10B in MSFT stock and you want to tax away half of it. Okay, he sells half of his shares - do you think he will realize $5B in cash? It is an unfortunate fact that much wealth is created by the wealthy people and to try and take it away will destroy it. Involuntary transactions are inherently less efficient than voluntary ones.
And to address an item discussed on the previous page - a transaction between two people does not, in and of itself, create wealth (I’m thinking of that $50 service that will not be named), but can allow wealth to be created. When my company buys electricity from the power company, it uses it, in combination with a myriad of other purchases to create something more valuable than all of the inputs. That is wealth creation.
dorfl replied to TheRight: I sort of agree if you are saying that we should have an estate tax that give a free base amount (inflation adjusted) plus a flat rate above with an exception for business ownerhsip and farms.
But that “free base amount” is exactly what we do have. Where are people getting this crazy idea that the estate tax ever applies at all to any except the most wealthy? In fact, the estate tax affects no more than 2% of American households—and most of it is paid by fewer than 3000 of the wealthiest estates. As this article points out,
The vast, vast majority of people will never have to worry about paying any estate tax whatsoever, even if we don’t end up repealing the thing permanently and entirely (which I think would be a very bad decision). We won’t even come close. But an astonishing number of people still think that somehow this is a tax that might realistically affect them:
dorfl: * I’d be interested to know how much revenue the [estate] tax actually generates, versus its enforcement costs. Add in the waste of time and talent that goes on when we create an army of estate planners, accountants and lawyers to skirt the tax*
Actually, estate tax revenue is a big chunk of change. And estate planning, rather than being a drag on the economy, is a major factor in stimulating big-ticket charitable giving, which is a crucial way of supporting public resources outside the tax system. As this article (coauthored by Bill Gates Sr., father of America’s richest citizen and member of the organization Responsible Wealth) notes, if the estate tax is permanently eliminated,
Whoops, that last quote in my above post attributed to dorfl was really from TheRight, sorry.
Do you? The rules allow you to leave and once you are no longer American you would be free of our laws against suicide. Slavery weren’t so lenient. There were rules to keep the property from doing things to reduce their value. So yes, those are choices as well. Choices that illustrate how your association with society is voluntary and theirs was not.
The government doesn’t operate on any single person’s opinion of which governmental services are worthwhile. You are entitled to your view and I’ll fight to the death ( or more likely natter incessantly ) for your equal say in the matter but just because the rest of us don’t bow to your opinion doesn’t mean the rules are involuntary.
The goals of social safety net were established back in the '30s and I’m unaware of it if they’ve changed.
Before I go off and do hours of research, would proof that social security saves lives have any effect on your opinion of it, or would you still oppose it for ideological reasons?
And does anything short of starving to death not warrant help? What if someone is in a situation where they have to sell their house in order to afford prescription drugs they need?
If someone is paralized from the neck down, and has no family to help them out, how are they going to survive without government aid? This seems like a simple matter of logic to me. You can say charity all you want, but I don’t believe charity can handle every situation. Would you voluntarily donate to a charity to help paralyzed Joe Sixpack with his medical and food expenses? Be honest.