Are the rich paying their 'fair' share?

[Jon Miller]

Well, I'll let Dad know that someone on the internet thinks that his money just fell from the sky.

He has done just as much to earn his income as someone who makes 1/5th as much. However he gets 5x as much as the person who makes 1/5th as much.

JM

[BlackCat]

The real problem with rich peoples spending is that it rarely benefits the poor. RP's doesn't buy a happy meal at McD, instead they goes to a wealthy cook and buy some fancy food.

The only way to get some of the money out of the closed circle is to tax.

[Jon Miller]

That advantage is part of the price of the house, JM.

But the price of the house is an asset that he can go right around and sell.

Consumption of the sort that poorer people buy (and that everyone has to buy) drops, it doesn't increase at the same time as providing such huge benefits.

Food gets eaten. Cars decrease in value rapidly. And so on.

The rich have access to investments/assets/consumption which the poor do not have access to (due to being poor) which provide a lot 'bang for the buck'.

If the poor could purchase assets which also increased in value at the same time as providing all these benefits with less cost in taxes, some of the 'fairness' issue would be averted.

This is part of the problem. The value/$ of assets which are available to the wealthy are far greater than the value/$ of assets available to the poor. Therefore the wealthy (fair wise) should pay more taxes/$ than the poor.

JM
(As I said, practically wise, consumption + transfer payments is probably the way to go.)

[Hauldren Collider]

Here is an interesting article that states five reasons why the rich have NOT earned their money.

So let's take a look at this massive turd MrFun passes as "interesting"

1. They’ve Taken All the Middle Class Wage Increases

Spoiler:

In 1980 the richest 1% of America took one of every fifteen post-tax income dollars. Now, according to IRS figures, they take THREE of every fifteen post-tax income dollars. They’ve tripled their cut of America’s income pie. That’s a trillion extra dollars a year.

For every dollar the richest 1% earned in 1980, they’ve added three more dollars. The poorest 90% have added ONE CENT.

Yet the average American factory worker, according to Berkeley economist Enrico Moretti, produces $180,000 worth of goods a year, more than three times what he or she produced in 1978, in inflation-adjusted dollars.

So workers have TRIPLED their productivity over 30 years while the richest 1% have TRIPLED their share of income. Worker pay remained flat as the top 10% took almost all the productivity gains since 1980.

Classic liberal "wealth is conserved" stupidity. This alleges that somehow wealth is some sort of conserved quantity and that rich people are accumulating wealth at the expense of other people. BZZZT. Wrong. Flies in the face of obvious observations on economics. Completely detached from reality, etc. Even more bizarrely, it assumes some sort of wealth conservation while simultaneously observing that wealth is not conserved...truly an idiotic writer we're dealing with here, but hey, it's MrFun. The guy is probably a little bit smarter than MrFun is, so we can't blame him for looking at it and seeing brilliance, can we?

2. They’ve Mismanaged Key American Industries

Spoiler:

We have the most expensive health care system in the world. Failing banks have survived because of taxpayer bailouts. Management-approved shortcuts have led to workplace deaths and chemical leak disasters. Companies lobby for cap and trade laws so their profits can pay for their pollution.

Over twenty percent of Americans are unemployed or underemployed as big companies hoard $2 trillion in cash. 93% of post-recession income is going to the 1% “job-creators” with no appreciable increase in jobs.

Private tuition is skyrocketing, with student loans reaching the $1 trillion mark. Bonuses continue for executives at Ford and Bank of America and Sirius and other companies who have underperformed and/or laid off workers.

No, the captains of industry have not earned their money because of their top-notch management skills.

"All rich people are incompetent!"
I do not need to explain this one. It speaks for itself.

3. They’ve Benefited from 50 Years of Public Research

Spoiler:

The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health, the National Science Foundation, and numerous other government agencies.

Consider just a simple communications device. Computer chips and audio/video/voice technologies grew out of decades of funding at the Department of Defense, the Air Force, NASA, and public universities. The pieces of the device were put together by a procession of chemists, physicists, chip designers, programmers, engineers, production-line workers, market analysts, testers, troubleshooters, etc., etc. They, in turn, couldn’t have succeeded without another layer of people providing sustenance and medical support and security and administrative assistance and transportation and office maintenance for the technologists. ALL of them contributed to the final product.

But over the years private businesses have received government contracts to produce and market the results, and “entrepreneurs” have rearranged the pieces into products that seem to appear out of the magical world of a single individual.

Apparently, middle-class and lower-class people haven't benefited from the Internet--only the rich. Also, apparently DARPA is the brainchild of the robber barons and not cold-war strategy. Interesting. And wrong. And thoroughly detached from reality, which is par for the course. Furthermore, entreprenuers making money off of their investments is apparently evil and wrong. I guess in MrFun's fantasy world, we shouldn't ever let people make money off investments--that's tantamount to theft. Good luck getting some capital to start a business that will pay your salary, MrFun. Good luck.

4. They’ve Increased Their Incomes By Not Paying Taxes

Spoiler:

The richest 10% own 80% of the stock market, providing billions in “unearned income” that is taxed at less than half the rate of income earned through real work.

Hedge fund managers call their income “carried interest” instead of “income” to keep their tax rate at 15%. Even this small amount may not be paid. Hedge fund managers with incomes in the billions can pay ZERO income tax by deferring their profits through their companies indefinitely.

Real tax rates for the richest Americans have gone way down over the last 30 years, from 34% in 1980 to 23% in 2006. Yet the 1% claim they pay most of the taxes. They don’t, if all taxes are considered. Based on recent data from the Center on Budget and Policy Priorities, the total of all state and local taxes, social security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 22% of the annual incomes of the poorest quintile. For the top 1% of Americans, the same taxes consume less than 10% of their incomes.

In addition, most inherited wealth goes untaxed, with estates valued up to $5 million exempt from federal taxes. The average tax rate on inheritance is less than 3 percent.

It’s no different for corporations. U.S. Office of Management (OMB) figures show a gradual drop over the years in Corporate Income Tax as a Share of GDP, from 4% in the 1960s to 1.3% in 2010. That’s ONE-THIRD of their previous share. From 2008 to 2010, the top 100 U.S. corporations paid only 12.2% of their income in taxes, and thirty of them paid nothing at all.

The lack of SEC regulation has also allowed corporate America to seek tax dodges beyond our borders. Citizens for Tax Justice reports that the 280 most profitable U.S. corporations sheltered half their profits from taxes – up to $337 billion a year – between 2008 and 2010.

Most shocking is the long-term shift in the tax burden from corporations to middle-class workers. For every dollar of workers’ payroll tax paid in the 1950s, corporations paid three dollars. Now it’s 16 cents.

We have a whole other thread on this, so I'm not going to waste my time with it.

5. They’ve Contributed Little to Society

Spoiler:

The richest individuals and corporations have shown little regard for the majority of Americans who depend on sound financial management for their economic security. According to sources such as the New York Times and ProPublica, Wall Street firms including JPMorgan, Citigroup, Bank of America, and Goldman Sachs have been repeatedly charged with fraud only to avoid punishment by paying a fraction of their profits in fines.

Financial insiders have figured out how to cheat other investors by timing the purchase of a stock option to precede good corporate news, timing the sale of a stock option to precede bad corporate news, and changing the purchase date on a stock option to a time when the price was lower.

One hedge fund manager, John Paulson, made $4 billion by working with Goldman Sachs to create a financial product that would allow him to bet on the collapse of the housing market. Other financial masterminds packaged toxic derivatives for sale to unknowing pension funds, as ratings agencies were paid to ensure the worthless packages received AAA ratings.

Meanwhile, the banks were roughing up the homeowners. Bank of America foreclosed on tens of thousands of Americans by using unverified evidence called “robo-signing.”

Disdain for average citizens goes way beyond fraud, and well outside our borders, into the areas of environmental and human rights abuses. Computer and phone makers like Apple save money by obtaining their coltan from the Congo, where children dig it out of the mines. The “blood coltan” goes to China, where teenagers stand for 12 hours a day performing repetitive tasks for a few dollars. Monsanto’s herbicides and pesticides cause biological damage, promote the growth of ‘superbugs’ and ‘superweeds,’ and generally don’t outperform organic methods of farming. Exxon is not only the biggest profitmaker and polluter, but the company has conducted a lengthy campaign to deceive the public about global warming. Corporate Accountability International named Monsanto, Exxon, Koch Industries, Chevron, Blackwater, and Halliburton to its Corporate Hall of Shame.

And finally, how well is society served when valuable resources are spent on a yacht complete with golf course, submarine, beach, and helicopter, and which qualified for a second-home mortgage deduction? Or on a $250,000 playhouse for the kids?

Studies show that increased wealth is correlated with a lesser degree of empathy for others. Despite their dependency on society for everything else, the super-rich have apparently earned the right to live in their own privileged world.

Apparently, all rich people are government-funded layabouts . Also, having money is apparently correlated with being a bad human being.

So what have we learned?
1. Wealth is a conserved quantity, except when it isn't.
2. Rich people have convinced everyone to pay them gobs of money when they suck at doing their jobs. Apparently, everyone but this author is too much of a ****ing moron to realize they're being scammed. Well, there's your problem, I guess.
3. Government programs that fostered innovation really only helped rich people and all the poor employees who got paid for their work but weren't owners weren't treated like owners and this is somehow morally wrong.
4. The corporate tax rate is too low, despite being the highest in the developed world
5. Rich people haven't done anything good! They're all a bunch of lazy, self-centered bastards!

Yes, interesting article. MrFun, you are a ****ing idiot. A complete ****ing idiot.

[Hauldren Collider]

He has done just as much to earn his income as someone who makes 1/5th as much. However he gets 5x as much as the person who makes 1/5th as much.

JM

That's adorable!

Obviously everyone who works hard is entitled to gobs of cash

From each according to his ability...

[Jon Miller]

No.

But when the workers productivity increases enormously, yet the workers pay stays the same, why is the worker not entitled to the profits of his labor?

The only way you get paid for how much you work is if you own the company. And generally in that case you get paid for the effort that other people do.

JM

[Hauldren Collider]

Look, Jon, my dad gets paid what he does because he a) works hard and b) is awesome at what he does and c) what he does is really valuable. Those are the only 3 reasons. And as an equity partner and an owner, which he wouldn't be if he didn't already qualify for a) b) and c), he also assumes the risk of the company, something ordinary partners are unwilling to do. In return he gets big payouts.

[Jon Miller]

3. They’ve Benefited from 50 Years of Public Research

Spoiler:

The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health, the National Science Foundation, and numerous other government agencies.

Consider just a simple communications device. Computer chips and audio/video/voice technologies grew out of decades of funding at the Department of Defense, the Air Force, NASA, and public universities. The pieces of the device were put together by a procession of chemists, physicists, chip designers, programmers, engineers, production-line workers, market analysts, testers, troubleshooters, etc., etc. They, in turn, couldn’t have succeeded without another layer of people providing sustenance and medical support and security and administrative assistance and transportation and office maintenance for the technologists. ALL of them contributed to the final product.

But over the years private businesses have received government contracts to produce and market the results, and “entrepreneurs” have rearranged the pieces into products that seem to appear out of the magical world of a single individual.

Apparently, middle-class and lower-class people haven't benefited from the Internet--only the rich. Also, apparently DARPA is the brainchild of the robber barons and not cold-war strategy. Interesting. And wrong. And thoroughly detached from reality, which is par for the course. Furthermore, entreprenuers making money off of their investments is apparently evil and wrong. I guess in MrFun's fantasy world, we shouldn't ever let people make money off investments--that's tantamount to theft. Good luck getting some capital to start a business that will pay your salary, MrFun. Good luck.
.

Wrong.

They make money off the labor of people like me. I do my labor for cheaper so that the human race can benefit, not so that a few people can get rich.

JM

[Al B. Sure!]

Albie/HC, you should stop discussing property taxes and discuss actual home prices more. Most of the homes on Trulia in McLean are seven figures. You have to pay for those with money, just like everything else. It's not some sort of magical benefit of being rich that doesn't involve exchanging money for land and housing.

Oh I know this but I wasn't going to give my opponents an argument to use against me until I had a response.

But since you took the cat out the bag, even if Fairfax residents did pay significantly higher local taxes than Philly residents and that money was used to better fund local police, education, etc. (as was apparently HC's and gribbler's original argument), I doubt it would explain the huge disparity in crime rates.

There are 6600 Philly police officers serving 1.5 million people with an annual budget of $536M.
Fairfax has 1400 officers serving 1 million people with an annual budget of $117M.

And yet, we have 6 times the crime rate. This is because the number of police officers and the PD's budget alone does not explain differences in crime rates. Median household income is a good predictor of crime rates, however.

[Jon Miller]

Look, Jon, my dad gets paid what he does because he a) works hard and b) is awesome at what he does and c) what he does is really valuable. Those are the only 3 reasons. And as an equity partner and an owner, which he wouldn't be if he didn't already qualify for a) b) and c), he also assumes the risk of the company, something ordinary partners are unwilling to do. In return he gets big payouts.

And other people work hard, are awesome at what they do, and what they do are really valuable.

But they get paid far less as compared to what they produce.

JM

[Hauldren Collider]

Obviously what they do isn't as valuable as what my dad does or they'd be making as much as he does.

You act like being an owner isn't a valuable thing in and of itself. It is. There's tremendous risk involved with being an owner, and assuming that risk is why they make the big bucks.

[Hauldren Collider]

Wrong.

They make money off the labor of people like me. I do my labor for cheaper so that the human race can benefit, not so that a few people can get rich.

JM

When did you turn into a marxist? The value of your labor is what you get paid for it. Just because the product goes and sells a billion units instead of a million doesn't mean you were worth more than what you were paid. Labor value is determined by supply and demand just like everything else.

[Jon Miller]

But those with wealth have an advantage.

And if labor decides to act and defend itself, to even things up a bit, by increasing taxes/etc, somehow it is 'wrong' or 'not fair'.

I have to work to be able to eat. I have to work to have a place to sleep.

The wealth do not have to.

This is unfair.

JM
(And the middle class do not have to for a small period of time.)

[Al B. Sure!]

But the price of the house is an asset that he can go right around and sell.

I'm curious about housing value appreciation between Fairfax and Philly.

Looks like housing in Philly did appreciate in the 2000's after declining in the early 90's, but at a lower rate than other cities'. From 1998 to the peak, housing appreciated 172% in a 10-city composite, but only 143% in Philly.

http://www.econsult.com/articles/07252011_Price_Indices.pdf

[Al B. Sure!]

We have a whole other thread on this, so I'm not going to waste my time with it.

Umm... I thought THIS is the thread where we discussed this. Remember what this thread was originally about.