Author Topic: Inequality: the long view  (Read 13027 times)

sokoloff

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Re: Inequality: the long view
« Reply #100 on: June 28, 2017, 01:04:54 PM »
QATAR, BRUNEI and KUWAIT are in the top 6 in the world in GDP per capita. Your theory holds no water when subjected to 10 seconds of research. 

http://www.businessinsider.com/the-richest-countries-in-the-world-2017-3
I'm glad you were able to refute my argument within your attention span.

Bucksandreds

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Re: Inequality: the long view
« Reply #101 on: June 28, 2017, 01:12:36 PM »
The increase in real income would come from the expansion of the economy. If the GDP of the country increases by 50%, you would expect the pay of the bottom quartile to increase by 50% and the income of the top 1% to increase by 50% as well.
That is an increase in nominal income, which is not (necessarily) an increase in real income. I read your post as clearly referencing real income in the conversation and my comments were confined to real (inflation-adjusted) income.
You are making my point for me. Why is the 1% wage earner making 150 claim checks on the bottom quartile worker today when he was making 50 claim checks every year from 1950 to 1980?
Yes. I agree and acknowledged that point when I said:
It's a fair question to ask why the top 5% saw their real income rise by a CAGR of 1.4% (not 2%)

So we agree it seems. Now I'm asking, by what means can society prevent income inequality from expanding further? I don't dispute a CEO should make 50x what the median worker makes like in 1980. This number has expanded to 400x and is still growing. The CEO now makes in an hour what the median worker (not lowest paid) makes in two months.

The article at the beginning of the thread said it would take a population reduction or event of major wealth destruction; is it impossible to reduce this discrepancy by any other means, or do we continue until music stops?

The conservatives will drive us to a French Revolution style event here and will be kneeling at the guillotine still blaming it all on the Welfare queens.

jmecklenborg

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Re: Inequality: the long view
« Reply #102 on: June 28, 2017, 01:36:25 PM »
Conservatives keep the French Revolution out of American schools because it makes ours look small-time and simplistic. 

index

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Re: Inequality: the long view
« Reply #103 on: June 28, 2017, 01:39:51 PM »
What I get out of your graph is that 62.3% of the families pay only 5.6% of the taxes paid.
 Clearly those families are not over taxed. So we have 37.7% of the families paying 94.4%
of the taxes paid.
 We need to find a way to get 62.3% of the population earning a higher wage.
It is sickening to me that, "Approximately 52.2 million (or 21.3 percent) people in the U.S. participated in major means-tested government assistance programs each month in 2012, according to a U.S. Census Bureau report."
  It should not be that difficult to support yourself in America. I don't know the answer, especially after the study out of Seattle, estimates the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/?utm_term=.f732d5f56094

The bottom 60% make only 21.3% of the income in the country. In addition, they are paying 7.65% FICA taxes on all their income and have to spend nearly everything they make, paying sales tax on the majority of that income.

Here is how you reduce income inequality:

Federal - 1960 Single Tax Brackets (Adjust for inflation and change yearly)
Tax Bracket   Tax Rate
$0.00+   20%
$16,000.00+   22%
$32,000.00+   26%
$48,000.00+   30%
$64,000.00+   34%
$80,000.00+   38%
$88,000.00+   43%
$112,000.00+   47%
$128,000.00+   50%
$144,000.00+   53%
$160,000.00+   56%
$176,000.00+   59%
$208,000.00+   62%
$256,000.00+   65%
$304,000.00+   69%
$352,000.00+   72%
$400,000.00+   75%
$480,000.00+   78%
$560,000.00+   81%
$640,000.00+   84%
$720,000.00+   87%
$800,000.00+   89%
$1,200,000.00+   90%
$1,600,000.00+   91%

Use those tax brackets as total allowed tax- Cut them by however much percent (maybe 10% on the federal level) and let the states decide how they want to add to the above maximum brackets.

Corporate taxes: 0%
Sales Tax: 5% Federal <-- It must all go to maintain infrastructure
FICA taxes: 0%
Dividends + Capital Gains: Up to the Median Income Level (55k) 0%; after that it is taxed as gross income.
Wealth: 0.5%/yr of cash and investments (just like other property)

No deductions other than Charity.

Fractal-

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Re: Inequality: the long view
« Reply #104 on: June 28, 2017, 01:45:54 PM »
I am not sure many folks would strive to earn high incomes if that much was going to be taken away.  Why go through the stress?

Bucksandreds

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Re: Inequality: the long view
« Reply #105 on: June 28, 2017, 02:03:40 PM »
I am not sure many folks would strive to earn high incomes if that much was going to be taken away.  Why go through the stress?

Maybe drop those rates by 20% across the board and cap the max at about 50%. Tax capital gains as ordinary income after a certain amount. Punitively tax estates over a threshold. I think lower corporate taxes would be good for bringing jobs and foreign earned money back to the US. Make those changes and we'd have a lot of healthy economic growth.

Fractal-

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Re: Inequality: the long view
« Reply #106 on: June 28, 2017, 02:10:03 PM »
That sounds a little more feasible, but the other side of the coin is to put a major overhaul into how things work in the government sector to majorly reduce waste.  Though I am no way an expert, and rather more towards the novice side, I always though some kind of tax credit for companies based on hiring employees sounded like a good idea.

bender

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Re: Inequality: the long view
« Reply #107 on: June 28, 2017, 02:23:16 PM »
I disagree that the tax system in setup to favor the rich in this country.


Source http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/

What I get out of your graph is that 62.3% of the families pay only 5.6% of the taxes paid.
 Clearly those families are not over taxed. So we have 37.7% of the families paying 94.4%
of the taxes paid.
 We need to find a way to get 62.3% of the population earning a higher wage.
It is sickening to me that, "Approximately 52.2 million (or 21.3 percent) people in the U.S. participated in major means-tested government assistance programs each month in 2012, according to a U.S. Census Bureau report."
  It should not be that difficult to support yourself in America. I don't know the answer, especially after the study out of Seattle, estimates the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/?utm_term=.f732d5f56094

Me Me Me! Call on me! I know the answer. Since money is finite and part of society is getting rapidly richer and the other isn't, we use taxation to make things more equal in an attempt to improve the overall quality of life and encourage growth (as demonstrated in studies by the IMF and OECD.)

I agree - the solution the post article and others have come up with.  The safety net programs I've mentioned before, like EITC, Medicaid, SNAP, etc, are there to help those who are not valuable enough to society to be paid a decent wage.  I think these programs or something similar are necessary, and expect these programs to continue/expand in the future.  The new studies are showing some proof to the theory that you can't simply raise minimum wage too far past the value of the work being done.

The fundamental issue is that unskilled labor is not as valuable as it once was, and skilled labor has become much more valuable at the same time.  This is what creates the inequality.  McDonalds currently requires 375,000 employees to staff to keep their restaurants staffed.  In response to increased pressure to pay their unskilled labor more, McDonalds has invested in new technology to automate the ordering process. 

https://www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#5d935ee94fbc

A small number of highly skilled people made a lot of money developing this technology, which may effectively eliminate a hundred thousand jobs or more.  Talk about widening the inequality chasm there.  The 'fight for 15' is making things worse instead of better.

To me it's clear that paying more for unskilled labor than it's worth will accelerate adoption of automation.  This will worsen longer term prospects for unskilled workers.  The better solution is actually the current one, with taxpayer funded programs to help those who can't earn a living being paid market rates.  We may need to expand such programs. 




Bucksandreds

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Re: Inequality: the long view
« Reply #108 on: June 28, 2017, 02:37:43 PM »
I disagree that the tax system in setup to favor the rich in this country.


Source http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/

What I get out of your graph is that 62.3% of the families pay only 5.6% of the taxes paid.
 Clearly those families are not over taxed. So we have 37.7% of the families paying 94.4%
of the taxes paid.
 We need to find a way to get 62.3% of the population earning a higher wage.
It is sickening to me that, "Approximately 52.2 million (or 21.3 percent) people in the U.S. participated in major means-tested government assistance programs each month in 2012, according to a U.S. Census Bureau report."
  It should not be that difficult to support yourself in America. I don't know the answer, especially after the study out of Seattle, estimates the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/?utm_term=.f732d5f56094

Me Me Me! Call on me! I know the answer. Since money is finite and part of society is getting rapidly richer and the other isn't, we use taxation to make things more equal in an attempt to improve the overall quality of life and encourage growth (as demonstrated in studies by the IMF and OECD.)

I agree - the solution the post article and others have come up with.  The safety net programs I've mentioned before, like EITC, Medicaid, SNAP, etc, are there to help those who are not valuable enough to society to be paid a decent wage.  I think these programs or something similar are necessary, and expect these programs to continue/expand in the future.  The new studies are showing some proof to the theory that you can't simply raise minimum wage too far past the value of the work being done.

The fundamental issue is that unskilled labor is not as valuable as it once was, and skilled labor has become much more valuable at the same time.  This is what creates the inequality.  McDonalds currently requires 375,000 employees to staff to keep their restaurants staffed.  In response to increased pressure to pay their unskilled labor more, McDonalds has invested in new technology to automate the ordering process. 

https://www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#5d935ee94fbc

A small number of highly skilled people made a lot of money developing this technology, which may effectively eliminate a hundred thousand jobs or more.  Talk about widening the inequality chasm there.  The 'fight for 15' is making things worse instead of better.

To me it's clear that paying more for unskilled labor than it's worth will accelerate adoption of automation.  This will worsen longer term prospects for unskilled workers.  The better solution is actually the current one, with taxpayer funded programs to help those who can't earn a living being paid market rates.  We may need to expand such programs.

No one is arguing causation of inequality. All evidence suggests it's bad for growth and quality of life.  One side is suggesting possible solutions and the other side just wants to let the rich keep taking more and more.  One path may get us back to how America was a booming engine for the world. The other may get us to a peasant uprising like it has throughout history. To argue that economic inequality is not bad for a society is to not have learned from history.

bender

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Re: Inequality: the long view
« Reply #109 on: June 28, 2017, 03:55:13 PM »

To me it's clear that paying more for unskilled labor than it's worth will accelerate adoption of automation.  This will worsen longer term prospects for unskilled workers.  The better solution is actually the current one, with taxpayer funded programs to help those who can't earn a living being paid market rates.  We may need to expand such programs.

No one is arguing causation of inequality. All evidence suggests it's bad for growth and quality of life.  One side is suggesting possible solutions and the other side just wants to let the rich keep taking more and more.  One path may get us back to how America was a booming engine for the world. The other may get us to a peasant uprising like it has throughout history. To argue that economic inequality is not bad for a society is to not have learned from history.

I'm not sure what 'side' I'm on, but I suggested a solution where we expand existing programs.  Your comment seems filled with anger and lacks substance.  It's not clear what solution you're advocating for.

Bucksandreds

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Re: Inequality: the long view
« Reply #110 on: June 28, 2017, 04:07:38 PM »

To me it's clear that paying more for unskilled labor than it's worth will accelerate adoption of automation.  This will worsen longer term prospects for unskilled workers.  The better solution is actually the current one, with taxpayer funded programs to help those who can't earn a living being paid market rates.  We may need to expand such programs.

No one is arguing causation of inequality. All evidence suggests it's bad for growth and quality of life.  One side is suggesting possible solutions and the other side just wants to let the rich keep taking more and more.  One path may get us back to how America was a booming engine for the world. The other may get us to a peasant uprising like it has throughout history. To argue that economic inequality is not bad for a society is to not have learned from history.

I'm not sure what 'side' I'm on, but I suggested a solution where we expand existing programs.  Your comment seems filled with anger and lacks substance.  It's not clear what solution you're advocating for.

Not attacking you. If you believe in expanding safety net programs and you agree that money is finite then you agree that taxes on those not receiving benefits would have to go up. Most conservatives support cutting safety net programs. You appear to not be conservative. My comments were meant to be directed at those who prefer the status quo or would prefer giving less to low income people.

bender

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Re: Inequality: the long view
« Reply #111 on: June 28, 2017, 05:22:49 PM »
Cool.  I consider myself independent and not affiliated with any party.  I think we are very close in thinking, maybe the only difference is in the details. 

How to pay for expanded benefits is the hard part for sure.  Taxes probably have to go up for many.  I hope we could also find a way to make government more efficient as well.  Probably the best bang for the buck is making the military more efficient.

jmecklenborg

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Re: Inequality: the long view
« Reply #112 on: June 28, 2017, 08:32:45 PM »
Probably the best bang for the buck is making the military more efficient.

The military is by far the federal government's largest expense paid out of general revenue (medicare, social security, etc., have their own funding sources).  At the local level, police and fire are the largest budget items for every city in the country.  If national and local security can be improved with technology then staff levels could be slashed. 

sokoloff

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Re: Inequality: the long view
« Reply #113 on: June 28, 2017, 08:48:02 PM »
At the local level, police and fire are the largest budget items for every city in the country.
For my city (Cambridge, MA), education is significantly larger than public safety.

FY18 figures:
Public Safety: $134MM
Education:$183MM

I would imagine that many (possibly most) cities spend more on education than public safety.

sokoloff

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Re: Inequality: the long view
« Reply #114 on: June 28, 2017, 09:09:22 PM »
Spot checking some other local towns, I didn't find any where police+fire exceeded education.

Lexington, MA (legendarily good school district) spends $102MM on education and $13MM on police + fire.

New York City spends $23BB on education and $7BB on fire + police.

jmecklenborg

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Re: Inequality: the long view
« Reply #115 on: June 28, 2017, 11:09:12 PM »
I don't know how it works in Massachusetts but in Ohio the school boards are completely separate entities from municipalities (or counties) and their borders often do not align with their namesake cities.  There is no physical or administrative tie between the City of Cincinnati and Cincinnati Public Schools, for example. Schools are usually funded 100% by property taxes in Ohio, meaning as much as half of a homeowner's property tax payment goes to the local school district, with the remainder split between the city, county, and special funds like zoos, museums, parks, etc. 



MustachianAccountant

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Re: Inequality: the long view
« Reply #116 on: June 29, 2017, 02:56:17 AM »
Quote from: index
It is cheaper for the Koch's of the world to give 1% of their wealth (tax deductible) to political campaigns that make sure they stay in a 20% tax bracket than to see their tax rate go to 25%.   

This quote doesn't make much sense - please provide some reasoning behind it.  Many are passionate about this subject, but I'm finding that some statements are not backed up by facts.

This is just common sense. If I have $10B, which is $400M/yr without touching the principal, it makes more sense for me to donate a tax deductible portion of that to make sure politicians who favor your current situation (i.e. conservative <-- don't want change or only slow change by definition) are elected to office.

The average Senate campaign costs 10M. There are 33 senators being elected in 2018. All winning senators will spend ~300-350M combined in 2018. The combined wealth of the top 0.01% (families with 20M+ in assets) in the US is 9T. 0.008% of their wealth could fund the entire 2018 senate election (winners and losers).   

That is for a national senate race. When you look on the local level at city councils, mayors, state senate etc. it gets even crazier. How much do you think a few real estate guys have to donate to a city council race in Atlanta Georgia to sway an election their way?   

Yeah, except you can't write off political contributions on your taxes. They're not tax deductible.

Freakonomics Radio did a two part interview with one of the Koch brothers recently. Worth a listen.
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MustachianAccountant

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Re: Inequality: the long view
« Reply #117 on: June 29, 2017, 03:03:35 AM »
The fundamental issue is that unskilled labor is not as valuable as it once was, and skilled labor has become much more valuable at the same time.  This is what creates the inequality.  McDonalds currently requires 375,000 employees to staff to keep their restaurants staffed.  In response to increased pressure to pay their unskilled labor more, McDonalds has invested in new technology to automate the ordering process. 

I seriously doubt that McDonald's wouldn't have developed those kiosks without the "fight for 15." Automation is inevitable, especially with something like "ordering fast food." That's just the way things are headed. Technological revolution and whatnot. I don't think the fight for higher minimum wage had anything to do with it. (Except maybe, MAYBE, accelerating the rollout slightly.)
"If we wait for the moment when everything, absolutely everything is ready, we shall never begin." - Ivan Turgenev
"As soon as you believe that something cannot be done, you will find that, sure enough, you cannot do it." -Me, to my children, all the time

MustachianAccountant

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Re: Inequality: the long view
« Reply #118 on: June 29, 2017, 03:06:58 AM »
The bottom 60% make only 21.3% of the income in the country. In addition, they are paying 7.65% FICA taxes on all their income and have to spend nearly everything they make, paying sales tax on the majority of that income.

Here is how you reduce income inequality:

Federal - 1960 Single Tax Brackets (Adjust for inflation and change yearly)
Tax Bracket   Tax Rate
$0.00+   20%
$16,000.00+   22%
$32,000.00+   26%
$48,000.00+   30%
$64,000.00+   34%
$80,000.00+   38%
$88,000.00+   43%
$112,000.00+   47%
$128,000.00+   50%
$144,000.00+   53%
$160,000.00+   56%
$176,000.00+   59%
$208,000.00+   62%
$256,000.00+   65%
$304,000.00+   69%
$352,000.00+   72%
$400,000.00+   75%
$480,000.00+   78%
$560,000.00+   81%
$640,000.00+   84%
$720,000.00+   87%
$800,000.00+   89%
$1,200,000.00+   90%
$1,600,000.00+   91%

Use those tax brackets as total allowed tax- Cut them by however much percent (maybe 10% on the federal level) and let the states decide how they want to add to the above maximum brackets.

Corporate taxes: 0%
Sales Tax: 5% Federal <-- It must all go to maintain infrastructure
FICA taxes: 0%
Dividends + Capital Gains: Up to the Median Income Level (55k) 0%; after that it is taxed as gross income.
Wealth: 0.5%/yr of cash and investments (just like other property)

No deductions other than Charity.

That could work. Unfortunately, the legislature would be unable to resist monkeying around with the system. That's what happened last time the tax code got overhauled (under Reagan), and over time new exemptions and deductions got added, until you end up with the mess of a tax code we have now. That's not to say it shouldn't be overhauled - it should. Just don't fool yourself into thinking that the "new, streamlined, fairer" system will stay that way for very long.
"If we wait for the moment when everything, absolutely everything is ready, we shall never begin." - Ivan Turgenev
"As soon as you believe that something cannot be done, you will find that, sure enough, you cannot do it." -Me, to my children, all the time

Alim Nassor

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Re: Inequality: the long view
« Reply #119 on: June 29, 2017, 03:57:27 AM »
What I get out of your graph is that 62.3% of the families pay only 5.6% of the taxes paid.
 Clearly those families are not over taxed. So we have 37.7% of the families paying 94.4%
of the taxes paid.
 We need to find a way to get 62.3% of the population earning a higher wage.
It is sickening to me that, "Approximately 52.2 million (or 21.3 percent) people in the U.S. participated in major means-tested government assistance programs each month in 2012, according to a U.S. Census Bureau report."
  It should not be that difficult to support yourself in America. I don't know the answer, especially after the study out of Seattle, estimates the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/?utm_term=.f732d5f56094

The bottom 60% make only 21.3% of the income in the country. In addition, they are paying 7.65% FICA taxes on all their income and have to spend nearly everything they make, paying sales tax on the majority of that income.

Here is how you reduce income inequality:

Federal - 1960 Single Tax Brackets (Adjust for inflation and change yearly)
Tax Bracket   Tax Rate
$0.00+   20%
$16,000.00+   22%
$32,000.00+   26%
$48,000.00+   30%
$64,000.00+   34%
$80,000.00+   38%
$88,000.00+   43%
$112,000.00+   47%
$128,000.00+   50%
$144,000.00+   53%
$160,000.00+   56%
$176,000.00+   59%
$208,000.00+   62%
$256,000.00+   65%
$304,000.00+   69%
$352,000.00+   72%
$400,000.00+   75%
$480,000.00+   78%
$560,000.00+   81%
$640,000.00+   84%
$720,000.00+   87%
$800,000.00+   89%
$1,200,000.00+   90%
$1,600,000.00+   91%

Use those tax brackets as total allowed tax- Cut them by however much percent (maybe 10% on the federal level) and let the states decide how they want to add to the above maximum brackets.

Corporate taxes: 0%
Sales Tax: 5% Federal <-- It must all go to maintain infrastructure
FICA taxes: 0%
Dividends + Capital Gains: Up to the Median Income Level (55k) 0%; after that it is taxed as gross income.
Wealth: 0.5%/yr of cash and investments (just like other property)

No deductions other than Charity.

I'm having a hard time seeing how this helps the bottom 60% at all.  Right now according to the graph they are paying 5.6% + 7.65% for a total of 13.25%.   And the LOWEST bracket you show is 20%, on up to 30% for that same bottom 60% of taxpayers.   With no deductions.  Does that include getting rid of EITC and exemptions and childcare credits and all the other things that allow many of the lower wage earners to actually get more back than they put in?  And on top of that you want a 5% federal sales tax on everything they spend?

Or the middle class, like me, who paid an effective rate last year of 11%, plus the 7.65% FICA.   My new rate would by approximately 33%, plus another several thousand "wealth" tax, plus a new 5% federal sales tax.    Holy shit. 

And at the top end of the scale, 91% tax?  Really?  No killing of incentive there.   Confiscatory tax rates like that are in my opinion, morally wrong.

Bucksandreds

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Re: Inequality: the long view
« Reply #120 on: June 29, 2017, 04:23:25 AM »
What I get out of your graph is that 62.3% of the families pay only 5.6% of the taxes paid.
 Clearly those families are not over taxed. So we have 37.7% of the families paying 94.4%
of the taxes paid.
 We need to find a way to get 62.3% of the population earning a higher wage.
It is sickening to me that, "Approximately 52.2 million (or 21.3 percent) people in the U.S. participated in major means-tested government assistance programs each month in 2012, according to a U.S. Census Bureau report."
  It should not be that difficult to support yourself in America. I don't know the answer, especially after the study out of Seattle, estimates the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/?utm_term=.f732d5f56094

The bottom 60% make only 21.3% of the income in the country. In addition, they are paying 7.65% FICA taxes on all their income and have to spend nearly everything they make, paying sales tax on the majority of that income.

Here is how you reduce income inequality:

Federal - 1960 Single Tax Brackets (Adjust for inflation and change yearly)
Tax Bracket   Tax Rate
$0.00+   20%
$16,000.00+   22%
$32,000.00+   26%
$48,000.00+   30%
$64,000.00+   34%
$80,000.00+   38%
$88,000.00+   43%
$112,000.00+   47%
$128,000.00+   50%
$144,000.00+   53%
$160,000.00+   56%
$176,000.00+   59%
$208,000.00+   62%
$256,000.00+   65%
$304,000.00+   69%
$352,000.00+   72%
$400,000.00+   75%
$480,000.00+   78%
$560,000.00+   81%
$640,000.00+   84%
$720,000.00+   87%
$800,000.00+   89%
$1,200,000.00+   90%
$1,600,000.00+   91%

Use those tax brackets as total allowed tax- Cut them by however much percent (maybe 10% on the federal level) and let the states decide how they want to add to the above maximum brackets.

Corporate taxes: 0%
Sales Tax: 5% Federal <-- It must all go to maintain infrastructure
FICA taxes: 0%
Dividends + Capital Gains: Up to the Median Income Level (55k) 0%; after that it is taxed as gross income.
Wealth: 0.5%/yr of cash and investments (just like other property)

No deductions other than Charity.

I'm having a hard time seeing how this helps the bottom 60% at all.  Right now according to the graph they are paying 5.6% + 7.65% for a total of 13.25%.   And the LOWEST bracket you show is 20%, on up to 30% for that same bottom 60% of taxpayers.   With no deductions.  Does that include getting rid of EITC and exemptions and childcare credits and all the other things that allow many of the lower wage earners to actually get more back than they put in?  And on top of that you want a 5% federal sales tax on everything they spend?

Or the middle class, like me, who paid an effective rate last year of 11%, plus the 7.65% FICA.   My new rate would by approximately 33%, plus another several thousand "wealth" tax, plus a new 5% federal sales tax.    Holy shit. 

And at the top end of the scale, 91% tax?  Really?  No killing of incentive there.   Confiscatory tax rates like that are in my opinion, morally wrong.

Lower each of those income tax rates by 20%, cap the highest at 50% and redo your analysis please.

BTDretire

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Re: Inequality: the long view
« Reply #121 on: June 29, 2017, 07:14:47 AM »

The bottom 60% make only 21.3% of the income in the country. In addition, they are paying 7.65% FICA taxes on all their income and have to spend nearly everything they make, paying sales tax on the majority of that income.

Here is how you reduce income inequality:

Federal - 1960 Single Tax Brackets (Adjust for inflation and change yearly)
Tax Bracket   Tax Rate
$0.00+   20%
$16,000.00+   22%



If I adjust for inflation people from $0.00 to $133,643  would pay 20%. That puts 90% of the population in the 20% bracket. It also means we are collecting taxes from the bottom 50% of people that at this time do not pay *federal taxes* at the rate of 20%. (that could do a lot for the deficit)
 Your welcome to cry me a river about how they pay 7.42% in payroll taxes, but I don't see why the shouldn't pay into their retirement program.
Oh! I see you want to drop that.
Quote
Use those tax brackets as total allowed tax- Cut them by however much percent (maybe 10% on the federal level) and let the states decide how they want to add to the above maximum brackets.

Corporate taxes: 0%
I'm with on 0% corporate
Quote
Sales Tax: 5% Federal <-- It must all go to maintain infrastructure
I don't want federal income and a sales tax.
Quote
FICA taxes: 0%
Dividends + Capital Gains: Up to the Median Income Level (55k) 0%; after that it is taxed as gross income.
Wealth: 0.5%/yr of cash and investments (just like other property)


It looks like you don't want anyone to acquire wealth.
My wife came from a communist country, they changed the money on a regular basis, you could only exchange a certain amount, any extra money was worthless.
Shall we limit the exchange to $25,000, $50,000. /s/
What's your number?
Quote
No deductions other than Charity.
Edit to fix quotes
« Last Edit: June 30, 2017, 07:12:09 AM by BTDretire »

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Re: Inequality: the long view
« Reply #122 on: June 29, 2017, 07:45:39 AM »

The bottom 60% make only 21.3% of the income in the country. In addition, they are paying 7.65% FICA taxes on all their income and have to spend nearly everything they make, paying sales tax on the majority of that income.

Here is how you reduce income inequality:

Federal - 1960 Single Tax Brackets (Adjust for inflation and change yearly)
Tax Bracket   Tax Rate
$0.00+   20%
$16,000.00+   22%
$32,000.00+   26%
$48,000.00+   30%
$64,000.00+   34%
$80,000.00+   38%
$88,000.00+   43%
$112,000.00+   47%
$128,000.00+   50%
$144,000.00+   53%
$160,000.00+   56%
$176,000.00+   59%
$208,000.00+   62%
$256,000.00+   65%
$304,000.00+   69%
$352,000.00+   72%
$400,000.00+   75%
$480,000.00+   78%
$560,000.00+   81%
$640,000.00+   84%
$720,000.00+   87%
$800,000.00+   89%
$1,200,000.00+   90%
$1,600,000.00+   91%

Use those tax brackets as total allowed tax- Cut them by however much percent (maybe 10% on the federal level) and let the states decide how they want to add to the above maximum brackets.

Corporate taxes: 0%
Sales Tax: 5% Federal <-- It must all go to maintain infrastructure
FICA taxes: 0%
Dividends + Capital Gains: Up to the Median Income Level (55k) 0%; after that it is taxed as gross income.
Wealth: 0.5%/yr of cash and investments (just like other property)

No deductions other than Charity.

I'm having a hard time seeing how this helps the bottom 60% at all.  Right now according to the graph they are paying 5.6% + 7.65% for a total of 13.25%.   And the LOWEST bracket you show is 20%, on up to 30% for that same bottom 60% of taxpayers.   With no deductions.  Does that include getting rid of EITC and exemptions and childcare credits and all the other things that allow many of the lower wage earners to actually get more back than they put in?  And on top of that you want a 5% federal sales tax on everything they spend?

Or the middle class, like me, who paid an effective rate last year of 11%, plus the 7.65% FICA.   My new rate would by approximately 33%, plus another several thousand "wealth" tax, plus a new 5% federal sales tax.    Holy shit. 

And at the top end of the scale, 91% tax?  Really?  No killing of incentive there.   Confiscatory tax rates like that are in my opinion, morally wrong.

Those were the approximate actual tax rates (in today's dollars) between 1949 and 1963. In 1963 to 1966 they dropped the tax rates from 91% to 70% for the top end and 20% to 14% for the bottom end; they stayed here until 1981.

https://taxfoundation.org/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets/

Note the two charts showing wage growth for both the top 5%, median, and bottom 20%; and actual tax rates:

 
http://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

   
 

1950-1980 saw the creation of the national highway system, we put a man on the moon, and improved our waterways. This is what our national debt did:



So those punitive tax codes lead to an infrastructure renaissance, national debt reduction, strong economic growth, and an economy where the rich and poor shared in the economic gain of the country at a roughly equal rate. 

Bucksandreds

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Re: Inequality: the long view
« Reply #123 on: June 29, 2017, 08:27:57 AM »
^^^^^

Conservatives will never allow evidence to get in the way of their agenda. It's one based on how they feel things should be rather than what has been proven to have worked. Lower tax at all cost conservatives are lower IQ or sociopathic, imho. There's no other way to rationally see how someone would think that way.

ooeei

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Re: Inequality: the long view
« Reply #124 on: June 29, 2017, 08:51:06 AM »
I would agree anyone who is conservative leaning doesn't think taxes should be used to reduce inequality. The basic premise of the article that started the thread is, throughout history, the only way inequality has been reduced is through violence or plague. I would like to think the US is forward looking enough to engineer social change in a way that doesn't require a significant reduction in population.

Inequality has been growing since 1980.

 
http://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

This is what tax rates have been doing:

   

Back in the conservative glory days of the 1950s - 1980s, the country accomplished that with high taxes on the top 0.1% and union membership was strong. If you are opposed to raising taxes, what mechanism does society have?

Maybe it is a progressive liberal snowflake idea to think there must be a way to accomplish this and go back to a time when all income brackets enjoyed the gains of the economy at a similar rate. I am not saying people in the 1% didn't work harder, are smarter, got luckier, or were born well and don't deserve their place.

Surely, even far right conservatives, see a problem when the bottom 20% has seen no a change in real income for almost 40 years, is making 20% more money, and the top 5% are making 75% more. To put it yearly; the annual raise for the bottom 20% is 0, the median is 0.5%, and the top 5% are getting a 2% annual raise.

Raising taxes on the top 1% doesn't necessarily mean the government is the one taking the windfall either. If you are a business owner being taxed obscenely, maybe you start giving to a tax deductible charity or pay your employees more to reduce your tax burden.

Yeah that all worked great in the 50's, in a completely different world.  Globalization, tech, and automation have very significantly changed how businesses work since then. You now have companies like Facebook with a market cap of $446Bn that only has 17,000 employees.  That's over $26,000,000 per employee.  If you divide again by the P/E ratio of 38 that's $690,402 in earnings per employee.  It makes sense these employees would be paid more than employees in the 50's, as there was nothing like this back then.  Facebook doesn't even hire people in the bottom 20%, and probably not the bottom 40%, because they have no need for them.

Skills now are even more valuable than they were in the 50's compared to manual labor and putting in time. You can build a machine to do assembly line work cheaper than employing a person.  So far you can't build a machine to design the assembly line. A single mechanic or two now can maintain the machinery to replace 10+ manual labor employees.  It absolutely makes sense that the mechanic's salary would go up compared to 50 years ago, and the manual labor employees would stay the same.  Someone who figures out a new way to optimize the algorithm for Facebook could benefit the company on the scale of millions of dollars.  There was no comparable job to that in the 50's, and to expect that someone who works the checkout counter at Walgreens to see a pay increase similar to skilled labor is absurd.

Your plan to move away from corporate taxes, but toward personal taxes is tricky as well.  What's to stop all of the high earners from simply moving to another country? The ultra high earners you're trying to target are going to avoid the vast majority of these taxes, and you'll end up taxing the lower earners more.  Sure, you'll be able to tax the crap out of the doctor or lawyer making $400k/year living in Chicago, but the CEO who has $50 million in stock options is going to be living in Ireland and have a "summer home" in New York.  Either that or he'll structure it so his salary isn't income, and structure his investments to avoid the wealth tax.  Granted, even with the wealth tax he's looking at paying $250,000 of his $50 million (granted, every year) vs the $45 million he'd pay if it were income.   He'll also have no problem buying all of the high end properties with his extra $45 million he saves and renting them out to people whose jobs require them to live here.

The other issue I have with your plan is the implication that tax rates somehow had a causal effect on our economic growth in the 50's and onward. Just because it didn't hurt in a post-war industrial boom doesn't mean it will work in a global tech based market.  There are a lot of countries out there that are great to live in that don't tax nearly as aggressively as you line out here, and moving to them is easier than ever. It's entirely possible to be in a high level position in a company and communicate almost exclusively digitally, and occasionally with air travel.

As far as bringing back unions, that sounds like a great way to push even more manufacturing jobs out of the US.  Unionizing the auto plants and increasing wages through collective bargaining?  Time to move to the plant to Mexico.  The US worker in 2017 isn't only competing with other US workers.  They're competing with workers worldwide.  Companies are willing to pay a premium for many jobs, but once the cost gets too high they can and will move elsewhere.
« Last Edit: June 29, 2017, 08:54:10 AM by ooeei »

2Cent

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Re: Inequality: the long view
« Reply #125 on: June 29, 2017, 08:56:31 AM »
^^^^^

Conservatives will never allow evidence to get in the way of their agenda. It's one based on how they feel things should be rather than what has been proven to have worked. Lower tax at all cost conservatives are lower IQ or sociopathic, imho. There's no other way to rationally see how someone would think that way.
So if president Trump announces he has a plan that increases taxes to build more infrastructure and pay off debt would support it? Or would you assume it's going to his friends in construction and the rich would just find a loophole.

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Re: Inequality: the long view
« Reply #126 on: June 29, 2017, 09:40:36 AM »
Yeah that all worked great in the 50's, in a completely different world.  Globalization, tech, and automation have very significantly changed how businesses work since then. You now have companies like Facebook with a market cap of $446Bn that only has 17,000 employees.  That's over $26,000,000 per employee.  If you divide again by the P/E ratio of 38 that's $690,402 in earnings per employee.  It makes sense these employees would be paid more than employees in the 50's, as there was nothing like this back then.  Facebook doesn't even hire people in the bottom 20%, and probably not the bottom 40%, because they have no need for them.

Skills now are even more valuable than they were in the 50's compared to manual labor and putting in time. You can build a machine to do assembly line work cheaper than employing a person.  So far you can't build a machine to design the assembly line. A single mechanic or two now can maintain the machinery to replace 10+ manual labor employees.  It absolutely makes sense that the mechanic's salary would go up compared to 50 years ago, and the manual labor employees would stay the same.  Someone who figures out a new way to optimize the algorithm for Facebook could benefit the company on the scale of millions of dollars.  There was no comparable job to that in the 50's, and to expect that someone who works the checkout counter at Walgreens to see a pay increase similar to skilled labor is absurd.

Your plan to move away from corporate taxes, but toward personal taxes is tricky as well.  What's to stop all of the high earners from simply moving to another country? The ultra high earners you're trying to target are going to avoid the vast majority of these taxes, and you'll end up taxing the lower earners more.  Sure, you'll be able to tax the crap out of the doctor or lawyer making $400k/year living in Chicago, but the CEO who has $50 million in stock options is going to be living in Ireland and have a "summer home" in New York.  Either that or he'll structure it so his salary isn't income, and structure his investments to avoid the wealth tax.  Granted, even with the wealth tax he's looking at paying $250,000 of his $50 million (granted, every year) vs the $45 million he'd pay if it were income.   He'll also have no problem buying all of the high end properties with his extra $45 million he saves and renting them out to people whose jobs require them to live here.

The other issue I have with your plan is the implication that tax rates somehow had a causal effect on our economic growth in the 50's and onward. Just because it didn't hurt in a post-war industrial boom doesn't mean it will work in a global tech based market.  There are a lot of countries out there that are great to live in that don't tax nearly as aggressively as you line out here, and moving to them is easier than ever. It's entirely possible to be in a high level position in a company and communicate almost exclusively digitally, and occasionally with air travel.

As far as bringing back unions, that sounds like a great way to push even more manufacturing jobs out of the US.  Unionizing the auto plants and increasing wages through collective bargaining?  Time to move to the plant to Mexico.  The US worker in 2017 isn't only competing with other US workers.  They're competing with workers worldwide.  Companies are willing to pay a premium for many jobs, but once the cost gets too high they can and will move elsewhere.

I agree with a lot of what you are saying about automation and I completely agree that unskilled labor is not going to be as highly compensated as skilled labor. We can't just say here is the 1960 tax bracket and leave it; any tax reform would have to close loopholes of course. Maybe tax everything at the corporate level; weight the revenue of the company versus the employees pay and tax at the revenue level for goods and services sold in the country. That would solve the whole moving headquarters, and foreign workers (or execs living in a tax haven) would be taxed for goods sold in the US.

I am not a tax expert by any means, but was presenting the 1960 tax bracket as an example of how high taxes did not stifle growth between 1950 and 1980. We have a huge debt burden, and growing inequality in the country. Saying there is no way to fix it is dooming us to relive a very dark history. The last 37 years of trickle down economics is not working for the bottom 90%. They are making about the same to less pay in real terms as they were in 1980.  That is 9 out of 10 people have not participated in the economic boom associated with the computer age. Meanwhile the top 10% are only doing 36% better, the top 1% are doing 2.3x better, the 0.1% are doing ~4x better, and the top 0.01 are doing 5.3x better. If trickle down was working, you would expect at least some trickle down to the bottom 80-90% of Americans.

The break into the top 20% is 111k and top 10% is 153k for household income. There are a bunch of people on this board who are between these two numbers and aren't participating in the country's economic growth! That is what is so astounding about the argument that everything is ok; they really have no clue it is affecting them as well. It is easy to see the fast food worker or janitor and say yeah automation is hitting those guys hard, that's where the gap comes from. The gap in economic growth is hitting lawyers, engineers, tradesmen, and nurses too.     

RetiredAt63

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Re: Inequality: the long view
« Reply #127 on: June 29, 2017, 09:49:49 AM »
People aren't going to have equal outcomes. They also aren't going to have equal opportunities. Trying to change this a fool's errand.

Society can make spending choices that encourage equal opportunities. 

Low/no tuition fees for post-secondary education mean more students can continue their educations. 
Universal health care means people are not tied to their jobs because they fear losing work-related health insurance.
Good parental leaves mean women and men have more options for work/family life.

And so on.  These are all social choices.
None of those create equal opportunity. Just to go with the third, since it's extremely obvious, some families have 2 parents, and some families do not. You cannot adjust for that, unless you decided to off my Dad somehow. Perhaps through a war or a bubonic plague, which is what the original article suggests is the ONLY way to create equality.

I don't care if the average person goes to college, they still aren't going to have the opportunities of wealthy kids unless you prevent their parents from helping them in other ways (connections, job advice, additional rent money, whatever).

EDIT: If you want to spend money on it, fine, but I'm not interested wasting money on an equality dream. Expanding coverage to the remaining 20 million uninsured is probably going to cost another $200 billion per year. Trying to correct for the fact that everyone has crappy plans with high deductibles is going to cost several hundred billion more. Bernie Sanders free college is $75 billion. If you want to increase all the education spending in the US to $18,000 per pupil, that's another $300+ billion.

Now you're talking another $1.2 trillion in spending, which is a 36% increase in taxes, and we're still not going to be equal, so someone is going to come back in 10 years and want even more. I haven't even touched retirement, or pre-K programs, for instance.

Ah, but you see you are thinking like an American, and I was thinking like a Canadian.  Canada and most western European countries do all those things, and tend to have higher minimum wages as well.  The end result is a smaller differential between high and low income earners.

https://en.wikipedia.org/wiki/List_of_countries_by_income_equality#OECD_countries
The measure of civilization is how people treat one another.

http://forum.mrmoneymustache.com/meetups-and-social-events/ontario's-own-camp-mustache-2017/ - MEET US THERE!

MrMoogle

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Re: Inequality: the long view
« Reply #128 on: June 29, 2017, 10:43:02 AM »
^^^^^

Conservatives will never allow evidence to get in the way of their agenda. It's one based on how they feel things should be rather than what has been proven to have worked. Lower tax at all cost conservatives are lower IQ or sociopathic, imho. There's no other way to rationally see how someone would think that way.
What were the actual rates paid at that time?  If all income became exempt during that time, it doesn't matter what the rate is if it isn't actually used. 

Table 1.2 in :
https://obamawhitehouse.archives.gov/omb/budget/Historicals
shows that relative to the GDP, the federal receipts (taxes) haven't changed much since the 40's.  Yes it fluctuates a bunch, but even at those higher taxes, people didn't pay (much?) more taxes.  It seems with those higher taxes, people in those brackets were just sheltering their money one way or another.  Which means higher taxes now probably won't help with inequality.

Your last paragraph seems very emotional.

Are there any solutions out there that don't increase taxes? 

mm1970

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Re: Inequality: the long view
« Reply #129 on: June 29, 2017, 01:18:27 PM »
^^^^^

Conservatives will never allow evidence to get in the way of their agenda. It's one based on how they feel things should be rather than what has been proven to have worked. Lower tax at all cost conservatives are lower IQ or sociopathic, imho. There's no other way to rationally see how someone would think that way.
So if president Trump announces he has a plan that increases taxes to build more infrastructure and pay off debt would support it? Or would you assume it's going to his friends in construction and the rich would just find a loophole.
Depends on the infrastructure.  If we are talking fixing roads and bridges, fixing the water problem in Flint, rebuilding communities, helping to install solar, spending money to install high-speed internet (much like the phone system of long ago), OH and KEEP the ACA (or goodness, maybe even go to single payer), I'd totally support it.

Virtus

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Re: Inequality: the long view
« Reply #130 on: June 29, 2017, 02:15:42 PM »
Yeah that all worked great in the 50's, in a completely different world.  Globalization, tech, and automation have very significantly changed how businesses work since then. You now have companies like Facebook with a market cap of $446Bn that only has 17,000 employees.  That's over $26,000,000 per employee.  If you divide again by the P/E ratio of 38 that's $690,402 in earnings per employee.  It makes sense these employees would be paid more than employees in the 50's, as there was nothing like this back then.  Facebook doesn't even hire people in the bottom 20%, and probably not the bottom 40%, because they have no need for them.

Skills now are even more valuable than they were in the 50's compared to manual labor and putting in time. You can build a machine to do assembly line work cheaper than employing a person.  So far you can't build a machine to design the assembly line. A single mechanic or two now can maintain the machinery to replace 10+ manual labor employees.  It absolutely makes sense that the mechanic's salary would go up compared to 50 years ago, and the manual labor employees would stay the same.  Someone who figures out a new way to optimize the algorithm for Facebook could benefit the company on the scale of millions of dollars.  There was no comparable job to that in the 50's, and to expect that someone who works the checkout counter at Walgreens to see a pay increase similar to skilled labor is absurd.

Your plan to move away from corporate taxes, but toward personal taxes is tricky as well.  What's to stop all of the high earners from simply moving to another country? The ultra high earners you're trying to target are going to avoid the vast majority of these taxes, and you'll end up taxing the lower earners more.  Sure, you'll be able to tax the crap out of the doctor or lawyer making $400k/year living in Chicago, but the CEO who has $50 million in stock options is going to be living in Ireland and have a "summer home" in New York.  Either that or he'll structure it so his salary isn't income, and structure his investments to avoid the wealth tax.  Granted, even with the wealth tax he's looking at paying $250,000 of his $50 million (granted, every year) vs the $45 million he'd pay if it were income.   He'll also have no problem buying all of the high end properties with his extra $45 million he saves and renting them out to people whose jobs require them to live here.

The other issue I have with your plan is the implication that tax rates somehow had a causal effect on our economic growth in the 50's and onward. Just because it didn't hurt in a post-war industrial boom doesn't mean it will work in a global tech based market.  There are a lot of countries out there that are great to live in that don't tax nearly as aggressively as you line out here, and moving to them is easier than ever. It's entirely possible to be in a high level position in a company and communicate almost exclusively digitally, and occasionally with air travel.

As far as bringing back unions, that sounds like a great way to push even more manufacturing jobs out of the US.  Unionizing the auto plants and increasing wages through collective bargaining?  Time to move to the plant to Mexico.  The US worker in 2017 isn't only competing with other US workers.  They're competing with workers worldwide.  Companies are willing to pay a premium for many jobs, but once the cost gets too high they can and will move elsewhere.
I am not a tax expert by any means, but was presenting the 1960 tax bracket as an example of how high taxes did not stifle growth between 1950 and 1980. We have a huge debt burden, and growing inequality in the country. Saying there is no way to fix it is dooming us to relive a very dark history. The last 37 years of trickle down economics is not working for the bottom 90%. They are making about the same to less pay in real terms as they were in 1980.  That is 9 out of 10 people have not participated in the economic boom associated with the computer age. Meanwhile the top 10% are only doing 36% better, the top 1% are doing 2.3x better, the 0.1% are doing ~4x better, and the top 0.01 are doing 5.3x better. If trickle down was working, you would expect at least some trickle down to the bottom 80-90% of Americans.

I few things:
 
1. Trickle down economics has worked just fine. The bottom 90% drive better cars then 37 years ago, have cellphones, have computers, live longer, have better TVs, have access to more entertainment, live in bigger house, and have had many other improvements I have not listed.

2. You are looking at income percentiles incorrectly. It is incorrect to say 9 out of 10 people have not participated in the income boom caused by the computer age. This statement assumes that when you are born you have a number imprinted on your forehead (Bottom 20%) and will always be in that income cohort. This is COMPLETELY FALSE. Seven out of ten Americans will be in the 90th percentile of income earners at some point in their career. There is a high degree of mobility between income cohorts. 

3. Have you thought that maybe a cashier at Walmart should not participate in the growth in income caused by the computer age? Remember, income comes from helping people so the more (this encompass quality and quantity) people you help the more money you make.

A cashier today and 37 years ago noth helped about the same number of people every day. A lawyer on the other hand has seen a modest increase in their income because they are able to use technology to increase the number of people they help. Some individuals that have taken advantage of the scalability of digital products have helped so many people that their incomes are hard to comprehend. Bill Gates or Mark Zuckerburg made a ton of money because they helped a lot of people, more than Mother Teresa!

With this mindset maybe growing income in-equality is a good thing because it is being caused by technology, which has increased the number of people a single person can help. 
« Last Edit: June 29, 2017, 03:56:45 PM by Virtus »

jmecklenborg

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Re: Inequality: the long view
« Reply #131 on: June 29, 2017, 02:44:07 PM »

1. Trickle down economics has worked just fine. The bottom 90% drive better cars then 37 years ago, have cellphones, have computers, live longer, have better TVs, have access to more entertainment, live in bigger house, and have had many other improvements I have not listed.

The labor era was trickle down economics.  What Reagan espoused was a trick.  The power vacuum created by the decline of labor was filled with fascists like the Koch Brothers. 

MrMoogle

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Re: Inequality: the long view
« Reply #132 on: June 29, 2017, 03:19:30 PM »

1. Trickle down economics has worked just fine. The bottom 90% drive better cars then 37 years ago, have cellphones, have computers, live longer, have better TVs, have access to more entertainment, live in bigger house, and have had many other improvements I have not listed.

The labor era was trickle down economics.  What Reagan espoused was a trick.  The power vacuum created by the decline of labor was filled with fascists like the Koch Brothers. 
I understand that you disagree with them, but I believe calling them fascists hurts your argument more than it helps.

 https://www.merriam-webster.com/dictionary/fascism
fascism:
  a political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition



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Re: Inequality: the long view
« Reply #133 on: June 29, 2017, 03:21:03 PM »
Yeah that all worked great in the 50's, in a completely different world.  Globalization, tech, and automation have very significantly changed how businesses work since then. You now have companies like Facebook with a market cap of $446Bn that only has 17,000 employees.  That's over $26,000,000 per employee.  If you divide again by the P/E ratio of 38 that's $690,402 in earnings per employee.  It makes sense these employees would be paid more than employees in the 50's, as there was nothing like this back then.  Facebook doesn't even hire people in the bottom 20%, and probably not the bottom 40%, because they have no need for them.

Skills now are even more valuable than they were in the 50's compared to manual labor and putting in time. You can build a machine to do assembly line work cheaper than employing a person.  So far you can't build a machine to design the assembly line. A single mechanic or two now can maintain the machinery to replace 10+ manual labor employees.  It absolutely makes sense that the mechanic's salary would go up compared to 50 years ago, and the manual labor employees would stay the same.  Someone who figures out a new way to optimize the algorithm for Facebook could benefit the company on the scale of millions of dollars.  There was no comparable job to that in the 50's, and to expect that someone who works the checkout counter at Walgreens to see a pay increase similar to skilled labor is absurd.

Your plan to move away from corporate taxes, but toward personal taxes is tricky as well.  What's to stop all of the high earners from simply moving to another country? The ultra high earners you're trying to target are going to avoid the vast majority of these taxes, and you'll end up taxing the lower earners more.  Sure, you'll be able to tax the crap out of the doctor or lawyer making $400k/year living in Chicago, but the CEO who has $50 million in stock options is going to be living in Ireland and have a "summer home" in New York.  Either that or he'll structure it so his salary isn't income, and structure his investments to avoid the wealth tax.  Granted, even with the wealth tax he's looking at paying $250,000 of his $50 million (granted, every year) vs the $45 million he'd pay if it were income.   He'll also have no problem buying all of the high end properties with his extra $45 million he saves and renting them out to people whose jobs require them to live here.

The other issue I have with your plan is the implication that tax rates somehow had a causal effect on our economic growth in the 50's and onward. Just because it didn't hurt in a post-war industrial boom doesn't mean it will work in a global tech based market.  There are a lot of countries out there that are great to live in that don't tax nearly as aggressively as you line out here, and moving to them is easier than ever. It's entirely possible to be in a high level position in a company and communicate almost exclusively digitally, and occasionally with air travel.

As far as bringing back unions, that sounds like a great way to push even more manufacturing jobs out of the US.  Unionizing the auto plants and increasing wages through collective bargaining?  Time to move to the plant to Mexico.  The US worker in 2017 isn't only competing with other US workers.  They're competing with workers worldwide.  Companies are willing to pay a premium for many jobs, but once the cost gets too high they can and will move elsewhere.
I am not a tax expert by any means, but was presenting the 1960 tax bracket as an example of how high taxes did not stifle growth between 1950 and 1980. We have a huge debt burden, and growing inequality in the country. Saying there is no way to fix it is dooming us to relive a very dark history. The last 37 years of trickle down economics is not working for the bottom 90%. They are making about the same to less pay in real terms as they were in 1980.  That is 9 out of 10 people have not participated in the economic boom associated with the computer age. Meanwhile the top 10% are only doing 36% better, the top 1% are doing 2.3x better, the 0.1% are doing ~4x better, and the top 0.01 are doing 5.3x better. If trickle down was working, you would expect at least some trickle down to the bottom 80-90% of Americans.

I few things:
 
1. Trickle down economics has worked just fine. The bottom 90% drive better cars then 37 years ago, have cellphones, have computers, live longer, have better TVs, have access to more entertainment, live in bigger house, and have had many other improvements I have not listed.

2. You are looking at income percentiles incorrectly. It is incorrect to say 9 out of 10 people have not participated in the income boom caused by the computer age. This statement assumes that when you are born you have a number imprinted on your forehead (Bottom 20%) and will always be in that income cohort. This is COMPLETELY FALSE. Seven out of ten Americans will be in the 90th percentile of income earners at some point in their career. There is a high degree of mobility between income cohorts. 

3. Have you thought that maybe a cashier at Walmart should not participate in the growth in income caused by the computer age? Remember, income comes from helping people so the more (this encompass quality and quantity) people you help the more money you make.

A cashier today and 37 years ago noth helped about the same number of people every day. A lawyer on the other hand has seen a modest increase in their income because they are able to use technology to increase the number of people they help. Some individuals that have taken advantage of the scalability of digital products have helped so many people that their incomes are hard to comprehend. Bill Gates or Mark Zuckerburg made a ton of money because they helped a lot of people, more than Mother Teresa!

With this mindset maybe growing income in-equality is a good thing because it is being caused because technology has increased the number of people a single person can help.

You need to get your head away from the cashier, the janitor, the barista; the bottom 90% is capped at 153k. That means engineers, accountants, actuaries, and lawyers.

Here is an example for you. Lets just look at the starting salary's of professionals in the 1980 vs 2017.

http://www.naceweb.org/job-market/compensation/salary-trends-through-salary-survey-a-historical-perspective-on-starting-salaries-for-new-college-graduates/

What you will discover is starting salaries have not changed on an inflation adjusted basis. Well that is just starting salaries you say? Ok, lets take a chemical engineer as an example. They start on average at about 65k (this has improved about 7% from 1980); what will that starting chemical engineer make late in their career? 2-3x the starting salary?

http://www.payscale.com/research/US/Job=Chemical_Engineer/Salary

Shows they make about 130k on average in their late career. So a chemical engineer is doing about 5-10% better today on an inflation adjusted basis than they were 37 years ago. The economy has expanded by 240% on an inflation adjusted basis. Zuckerburg, Gates (the 0.01%) have grown their income 540% on an inflation adjusted basis.

This is for a white collar, relatively highly trained chemical engineer. How much more work do you think computers have allowed this person to do in 2017 than in 1980? 2x, 5x, 10x? His pay for the amount of work product he is producing has increased 7%! By the way, I didn't just cherry pick a chemical engineer; the engineering profession as a whole is down 1% in pay vs. 1980. STEM degrees as a whole? Down 1.5%, Bachelors degrees as a whole? Down 1%.

Quote
3. Have you thought that maybe a cashier at Walmart should not participate in the growth in income caused by the computer age? Remember, income comes from helping people so the more (this encompass quality and quantity) people you help the more money you make.

Yeah, your point makes sense, but the people making the computers are not participating either!   

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Re: Inequality: the long view
« Reply #134 on: June 29, 2017, 04:09:54 PM »
I saw comments about FICA being a regressive payroll tax.
I disagree.

FICA is composed of social security and medicare components.  The largest portion, by far, is social security (unless someone makes a whole lot more than the social security cap on taxable income).

At first glance both Medicare and Social Security appear to be regressive, in that both rich and poor pay the same rate into the system.   

However, the benefits that low income workers receive are HEAVILY subsidized by high income earners.  So, although the percentage paid into Social Security is the same, the value received back is GREATLY skewed to provide advantages to low income workers.

Some of you might say, "But there is an income cap on Social Security taxation!  High income earners don't have to pay taxes on the money they earn above that cap!"

You would be right.  Your point would also be irrelevant because BENEFITS are also capped based on that income cap.   If one of the CEOs who make obscene amounts of money per year became disabled in their 30s, would you want to pay social security benefits for another 60 years based on their full income?   Thankfully we don't have to do that.

Medicare is a regressive tax, I agree.


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Re: Inequality: the long view
« Reply #135 on: June 30, 2017, 06:36:17 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

I always find it a bit difficult to understand the mindset that the heirs are entitled to anything at all. 

2Cent

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Re: Inequality: the long view
« Reply #136 on: June 30, 2017, 07:06:14 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

I always find it a bit difficult to understand the mindset that the heirs are entitled to anything at all.
It's not the heirs who are entitled to something. It's the parent who is entitled to give his money to his children rather than spending it all.

ChrisLansing

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Re: Inequality: the long view
« Reply #137 on: June 30, 2017, 07:20:28 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

I always find it a bit difficult to understand the mindset that the heirs are entitled to anything at all.
It's not the heirs who are entitled to something. It's the parent who is entitled to give his money to his children rather than spending it all.

Good point.     The parent might also decide to leave it to someone other than the child.   

BTDretire

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Re: Inequality: the long view
« Reply #138 on: June 30, 2017, 07:24:26 AM »
I've never understood the mindset that thinks the government is more entitled to an estate than the heirs are.  SMH.

I always find it a bit difficult to understand the mindset that the heirs are entitled to anything at all.

I find it difficult to understand why anyone would think the government should get the money
someone worked and already paid taxes on. The owner of the money should have the right to say where it goes.

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Re: Inequality: the long view
« Reply #139 on: June 30, 2017, 07:45:52 AM »
It's not the heirs who are entitled to something. It's the parent who is entitled to give his money to his children rather than spending it all.
+100

jmecklenborg

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Re: Inequality: the long view
« Reply #140 on: June 30, 2017, 09:51:10 AM »
I always find it a bit difficult to understand the mindset that the heirs are entitled to anything at all.
It's not the heirs who are entitled to something. It's the parent who is entitled to give his money to his children rather than spending it all.
[/quote]


If it is a parent's intention to create a multi-generational dynasty of layabouts we workers are helpless to stop them. 

A Definite Beta Guy

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Re: Inequality: the long view
« Reply #141 on: June 30, 2017, 10:02:57 AM »
^^^^^

Conservatives will never allow evidence to get in the way of their agenda. It's one based on how they feel things should be rather than what has been proven to have worked. Lower tax at all cost conservatives are lower IQ or sociopathic, imho. There's no other way to rationally see how someone would think that way.
What were the actual rates paid at that time?  If all income became exempt during that time, it doesn't matter what the rate is if it isn't actually used. 

Table 1.2 in :
https://obamawhitehouse.archives.gov/omb/budget/Historicals
shows that relative to the GDP, the federal receipts (taxes) haven't changed much since the 40's.  Yes it fluctuates a bunch, but even at those higher taxes, people didn't pay (much?) more taxes.  It seems with those higher taxes, people in those brackets were just sheltering their money one way or another.  Which means higher taxes now probably won't help with inequality.

Your last paragraph seems very emotional.

Are there any solutions out there that don't increase taxes?

Re: bold
I'm a relatively conservative guy. I live in IL and am a Millennial, so maybe I'm underestimating my conservative-ness, but I come from a libertarian-ish background.

Just throwing out the tribal affiliation before getting to the point.

There's no way to navigate the next few decades without substantial tax increases. The aging population alone is going to add an additional 3% of GDP to government spending. There's probably going to be an additional 1.5-2% because of healthcare cost growth in the major programs.

Non-defense discretionary spending (IE, stuff that gets spent on roads and dams and all that) has been pushed as a % of GDP pretty dramatically over the last few decades. There's not much room to cut it.

If you're household income is in the six figures, there's probably a minimum 30% tax increase baked in over the next 15-20 years. Given the resurgent....ahhh... "democratic socialism" in the air, I'd bank on more like 50%, all-in.

dude

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Re: Inequality: the long view
« Reply #142 on: June 30, 2017, 10:13:20 AM »

Thinking like this bothers me.
I suppose you would think it is OK if you inherited $100K from a rich uncle, but somehow it's not OK that Sam Waltons (or similar) kids inherit a few million.  They are going to spend their millions and trickle it down into the economy same as you are going to spend your $100K.   And why do you think they contribute nothing to society, just because they inherited a big windfall?   

This whole wealth inequality debate is silly.   Take everything away from everyone and those same wealthy people will rise to wealth, while those at the bottom will stay at the bottom.  Wealthy people and families get wealthy because of their behavior and you can't get the poor ahead by "giving" them money.

Wow, a defense of the long discredited trickle down economics theory and an utterly baseless claim that the rich are rich because they deserve to be rich and vice versa for the poor.  Sam Walton or Bill Gates or Sergei Brin or any of the other wildly successful people in history are total outliers, who benefited largely from luck and circumstances, and to suggest that their offspring would rise to wealth from nothing as they did is beyond ridiculous.  Sure, reset everyone to zero and eventually they would stratify and some would of course rise to the top, but there is no basis to conclude that it would be the same people who did previously, and for sure absolutely ZERO basis to conclude that their offspring would.

thesvenster

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Re: Inequality: the long view
« Reply #143 on: June 30, 2017, 10:31:27 AM »
You all need to back of the high inheritance tax ideas. I'm building wealth solely for the benefit of my family for my lifetime and afterwards. I want to leave a legacy to them so that my family can get ahead in future generations. Many people think like this even if they don't say it.

Get rid of inheritances (to be given the benevolent state who will surely administer the monies well) and most people won't want to leave an inheritance at all. Also, just curious if someone builds a company that's worth $35million, is that company administered by the government once the founder dies? Or will there be a work around for that?

dude

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Re: Inequality: the long view
« Reply #144 on: June 30, 2017, 10:40:08 AM »
You all need to back of the high inheritance tax ideas. I'm building wealth solely for the benefit of my family for my lifetime and afterwards. I want to leave a legacy to them so that my family can get ahead in future generations. Many people think like this even if they don't say it.

Get rid of inheritances (to be given the benevolent state who will surely administer the monies well) and most people won't want to leave an inheritance at all. Also, just curious if someone builds a company that's worth $35million, is that company administered by the government once the founder dies? Or will there be a work around for that?

That's a fine idea if you favor oligarchies.  If you happen to think that progressive democracy has led to the greatest innovation and wealth creation in history, then you may want to re-think that position. Teddy Roosevelt was a stinging critic of dynastic wealth, and I happen to think he was spot-on.

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Re: Inequality: the long view
« Reply #145 on: June 30, 2017, 10:42:58 AM »
Most inheritance is left via a will, meaning the person who earned the money through whatever means AND paid taxes on the earnings gets to decide what to do with it.  The government has no business with their money.

For those of you who are in favor of it, just go ahead and will your money to the government when you die. and leave everyone else alone.

EnjoyIt

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Re: Inequality: the long view
« Reply #146 on: June 30, 2017, 10:49:17 AM »
You all need to back of the high inheritance tax ideas. I'm building wealth solely for the benefit of my family for my lifetime and afterwards. I want to leave a legacy to them so that my family can get ahead in future generations. Many people think like this even if they don't say it.

Get rid of inheritances (to be given the benevolent state who will surely administer the monies well) and most people won't want to leave an inheritance at all. Also, just curious if someone builds a company that's worth $35million, is that company administered by the government once the founder dies? Or will there be a work around for that?

That's a fine idea if you favor oligarchies.  If you happen to think that progressive democracy has led to the greatest innovation and wealth creation in history, then you may want to re-think that position. Teddy Roosevelt was a stinging critic of dynastic wealth, and I happen to think he was spot-on.

Basically:
If you have a bunch of wealth you tend to believe that your family should inherit it.
If you have little wealth then you are more likely to believe they should give it away to those who have little wealth.

Go figure.  It is always so easy to give away someone else's money.

BTW, you can't tax inheritance because those with enough money will always set up trusts to protect it.  All the tax does is make lawyers, trust managers, and accountants richer due to fees.

bender

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Re: Inequality: the long view
« Reply #147 on: June 30, 2017, 10:50:12 AM »
What will happen to the family farm?  For example a farm valued at $10M that has been passed down from generation to generation.

I guess it would have to be liquidated to pay the taxes, then a large corporation will buy it up?

MrMoogle

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Re: Inequality: the long view
« Reply #148 on: June 30, 2017, 11:08:43 AM »
^^^^^

Conservatives will never allow evidence to get in the way of their agenda. It's one based on how they feel things should be rather than what has been proven to have worked. Lower tax at all cost conservatives are lower IQ or sociopathic, imho. There's no other way to rationally see how someone would think that way.
What were the actual rates paid at that time?  If all income became exempt during that time, it doesn't matter what the rate is if it isn't actually used. 

Table 1.2 in :
https://obamawhitehouse.archives.gov/omb/budget/Historicals
shows that relative to the GDP, the federal receipts (taxes) haven't changed much since the 40's.  Yes it fluctuates a bunch, but even at those higher taxes, people didn't pay (much?) more taxes.  It seems with those higher taxes, people in those brackets were just sheltering their money one way or another.  Which means higher taxes now probably won't help with inequality.

Your last paragraph seems very emotional.

Are there any solutions out there that don't increase taxes?

Re: bold
I'm a relatively conservative guy. I live in IL and am a Millennial, so maybe I'm underestimating my conservative-ness, but I come from a libertarian-ish background.

Just throwing out the tribal affiliation before getting to the point.

There's no way to navigate the next few decades without substantial tax increases. The aging population alone is going to add an additional 3% of GDP to government spending. There's probably going to be an additional 1.5-2% because of healthcare cost growth in the major programs.

Non-defense discretionary spending (IE, stuff that gets spent on roads and dams and all that) has been pushed as a % of GDP pretty dramatically over the last few decades. There's not much room to cut it.

If you're household income is in the six figures, there's probably a minimum 30% tax increase baked in over the next 15-20 years. Given the resurgent....ahhh... "democratic socialism" in the air, I'd bank on more like 50%, all-in.
Those increases would be to solve deficits we've already committed to, which is another topic.  I mean specifically for Inequality: Is there any solution to inequality that isn't designed around increasing taxes?  I can understand increasing taxes to fund the solution, but the two solutions put forth so far have been increasing income taxes and increasing estate taxes, where the tax is the solution, not the means to a solution.

thesvenster

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Re: Inequality: the long view
« Reply #149 on: June 30, 2017, 11:12:55 AM »
What will happen to the family farm?  For example a farm valued at $10M that has been passed down from generation to generation.

I guess it would have to be liquidated to pay the taxes, then a large corporation will buy it up?

That's the question I'm trying to get answered here by the proponents of the inheritance tax. The proponents think it will end dynasties of wealthy people. What it will really do is screw over the family who owns the $10million farm while the Waltons hire an army of lawyers to keep doing what they've always done.

Also, the proponents of inheritance taxes are operating under the assumption that the government will manage wealth well.