Quartz and Voyager, perhaps I should have been a little more clear, my apologies. I’m not saying that public works lacks a purpose in the economy. I actually acknowledge the need for taxes (though a necessary evil). What I’m saying is that it is an indirect and inefficient way to grow the economy (Quartz agrees with me). I’m saying that it’s far, far, far more efficient to grow the economy by direct investment rather than by investing in municipal bonds. Yes, we need good roads, a sound infrastructure, and a strong rule of law. If the choice was investing in municipal bonds for where roads and bridges and courts and cops did not exist at all versus direct investment (to help the economy), I might remove one, maybe two of the “fars” above and still be in favor of direct investment.
Taxing the rich, depending on how the taxes operate, will make some of them work less. The other questions we should be asking of such a plan is what will it do to tax revenues? What will it do to economic growth? How will it distort the economy? How fair is it? And, to a lesser extent, how will it effect people on the margins?
Actually, many (maybe most?) municipal bonds are for specific capital items. I’ve had some for the San Diego Sewers. In California, we vote seemingly every two weeks on initiatives to sell bonds for very specific projects, often with some sort of accountability added.
Except for very specific cases that can generate direct revenue (like the Golden Gate Bridge) most of these projects pay for themselves by increased taxes generated through economic growth. I don’t know how private enterprise could get a return on these sorts of projects. That’s not to say we should believe all the projections, but it sometimes makes sense. Sure direct investment is good, but capital moves, and if a city becomes blighted through a lack of investment, the businesses will pick up and invest their money elsewhere, the tax base goes down, and you have a death spiral hurting the people stuck there. Cities compete also, and they partially compete on environment.
We’ve had an excellent case study over the past 12 years or so, where a big decrease in the tax rate for the rich led to deficits, did not grow the economy in any major way, did increase income for the wealthy, led to or did not reduce the gap between rich and poor, and certainly hasn’t seemed to trickle down in any reasonable way.
It’s not enough to claim that the 2001 cuts helped get out of the very mild recession - you have to show that they did better than the alternative, bigger cuts for the middle class and less for the wealthy to grow consumption. That some sort of cut was needed isn’t really in dispute.
I thought that all employee stock grants are lumped in with salary and bonus and therefore taxed at the same rate. Is there some other way of giving stock to employees?
That squares with my observations of low- to mid-level manangers. All that matters is meeting or exceeding whatever metrics upper management cares about. It could be profitablility of a department or days since time lost accident or average customer complaint response time. Their job is about increasing the aggregate performance of their department through smart direction of their subordinates. An email that takes a minute to write could save the company millions and make the manager a golden boy, but the time spent reading 50 pages of reports every morning has essentially no value, beyond not getting fired in the next re-org, regardless of how long it takes.
Well, if that’s what caused the apparent disagreement, then my apologies. Sometimes I assume things are clear in context that aren’t. I should have said “production” or “overall output” or something like that.
I am still not clear on how higher productivity but lower overall output is beneficial.
Assuming your earner is motivated solely by income, how does ambition kick in? If he drops back to mid-income because he is demotivated by taxes at upper-income levels, why would he work hard enough to raise himself back to that level?
If a higher tax rate kicks in at $100K per annum, and I am earning $105K but cut back so that I earn only $99.9K, why would I be motivated to get back to where I didn’t want to be in the first place?
Options only count as income when they’re cashed in. That’s not the best example. ESPP plans give a 15% discount, and make earnings when you sell the stock capital gains if you hold for 2 years, I think. There are also all sorts of perks - free jets, apartments, golden shower curtains, …
When there was a high tax in England, people left the country. Today that would be even easier.
Yeah, you soon learn what things no one cares about and which can be ignored, and which things are really important to your bosses. This usually doesn’t have a lot to do with what your customers want.
How about if your market has dried up. Increasing output of SUVs these days would not be a good thing, increasing productivity in building the few you want to build would be.
Good Lord. Some of you talk about the ‘rich’ like they’re a cow to be milked, rather than free people with their own right to property.
There’s another major reason why taxing the rich hurts productivity - the rich are more productive and generally better stewards of societal wealth than is government or the poor. That’s how they got rich in the first place. One of the features of capitalism is that the money happens to collect with people who have a demonstrated ability to use it for productive purposes (as opposed to the wealth flowing to those with the biggest guns or the crowd with the largest numbers).
Of course, I expect sneering and derision at this comment, because many of you seem to think the rich are layabouts who got lucky and trample the poor while they sip mint juleps and blow dollar signs in smoke with their giant cigars or something.
I used my example to keep things simple (which I realize is one of the things I derided). But the model holds. If people try to avoid income tax by accepting stocks or some other form of recompense, then the government can tax those as well. If people can figure out ways to avoid taxes under current laws then the government can pass new laws to go after that lost tax revenue (assuming the will is there).
I’m not suggesting that we actually pass confiscatory taxes like I said. But I’m saying the argument that many people use that lowering taxes on the wealthy will make them more productive and raising their taxes will make them less productive doesn’t make sense. As you said, most people don’t even consider the relationship between their work and their compensation in that kind of detail. And some people are in a fixed situation where they are already working as hard as they can. For these people, a change in tax policy would have no effect.
But some people do consider that relationship between the amount of work they preform and the amount of recompense they recieve and make a voluntary choice to set it at a certain level. These are the people whose behavior would be affected by a change in tax policy but it wouldn’t follow the claimed inverse pattern. If they’re working at a certain level and making a certain amount of money and you lower their taxes, they’ll realize they can get the amount of money they want with less work and consequently put in less effort. And if they’ve settled into a situation where they can receive the amount of money they desire by a certain level of effort and you raise their taxes, they will realize they now have to put in more effort to make the amount of money they want.
But there’s no logic in the argument that by making something easier to do, you’ll get people to work harder while doing it.
Sooner or later, we got to have a national conversation about what “work” is, what we value, and why. For instance, the greedy goons who totally fucked the mortgage industry? I’m betting they made more money than, say, a fireman, or a nurse, or a paramedic. On the Elucidator Comprehensive Matrix of Essential Suckitude, that’s about a 9.7.
First you said she did it for the philanthropic benefit of the city and then you said you doubt she has a significant impact. Which of your opinions of St Teresa do I address? Or should I just pray to her for tax advise?
And what would be the purpose of this ‘conversation’? Because I can answer all three of your questions:
Work is what you are doing when you are producing things other people value, so that you can trade with them for the things you value.
Value is the relative importance I place on the ownership of something as compared to the other things I could work to own. Or the bid price established by the people collectively voting with their dollars to assign values to things they all want but which not all can have.
None of your damned business.
Let’s see - you want what they have. So you want to use government to turn its guns on them and take some of their things away. And they’re the greedy goons. Got it.
So, if I donate $1,000 to charity, I’m not being philanthropic because it doesn’t have significant impact? And does it mean I’m not benefiting the charity? No, one person is not going to move interest rates a heck of a lot. But it does help, is a good example, and helps far more than investing in shudder Haliburton.
A lot of wealthy people are not productive. Their ancestors were productive and created the family wealth. All this generation did was get born into the right family. Heck, if my dad left me a billion dollars you’d never see a lick of productive labor out of me.
But let’s put these people aside. Let’s focus on the self-made wealthy. What do you base your premise on that taxing them makes them less productive. I know it gets repeated endlessly but do you have any actual evidence that it’s true? As I said in my previous post, it goes against any normal sense of economic logic. For people like you or me, if our expenses go up and we want to maintain the same standard of living, we respond by working harder. Why are the rules different for wealthy people?
It does not go against logic. Wealth magnifies power and influence. Burt Rutan was a genius when he was 35 and broke, and his genius and drive employed about 5 people. Now he’s wealthy and still a genius, and he employs hundreds.
A poor Burt Rutan could barely scrape together enough money to build foam and fiberglass kit airplanes. A rich Burt Rutan is rocketing people into space.
Take away Rutan’s ability to become wealthy, and you will minimize the effect his abilities can have for the rest of society. Oh, he may keep working plenty hard, but he’ll never be able to build up the resources needed to expand his influence.
The sad thing is, it’s very hard to measure the cost to society of the diversion of wealth away from the Burt Rutans and Sam Waltons and Jeff Bezos and Paul Allens of the country - that information is lost. You can never know what you might have been had you not suppressed your best and brightest.