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Bill Gates: Piketty's Attack on Income Inequality Is Right
New submitter rvw sends word that Bill Gates has posted a review of Capital in the Twenty-First Century, an acclaimed book by economist Thomas Piketty about how income equality is a necessary result of unchecked capitalism. Gates, one of the most successful capitalists of our time, agrees with Piketty's most important conclusions. That said, he also finds parts of the book to be flawed and incomplete, but says Piketty has started vital debate on these issues. Gates writes,
Yes, some level of inequality is built in to capitalism. As Piketty argues, it is inherent to the system. The question is, what level of inequality is acceptable? And when does inequality start doing more harm than good? That's something we should have a public discussion about, and it's great that Piketty helped advance that discussion in such a serious way. ... I agree that taxation should shift away from taxing labor. It doesn't make any sense that labor in the United States is taxed so heavily relative to capital. It will make even less sense in the coming years, as robots and other forms of automation come to perform more and more of the skills that human laborers do today. But rather than move to a progressive tax on capital, as Piketty would like, I think we'd be best off with a progressive tax on consumption.
Come and see the violence inherent in the system!
Faster! Faster! Faster would be better!
We charge the people doing the labor (income tax) and then *also* charge them on consumption? The people least able to pay?
This will end well.
Piketty did little to advance the debate on income equality; that debate was already alive and well before he published his book. The only thing it did was to supply some intellectual ammunition to those in favour of greater equality, but there are very few (if any) new arguments brought forth. I read his book and I agree with some of the ideas within, but as a whole this book is vastly overrated.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
I think you mean:
'income inequality is a necessary result of unchecked capitalism'
I do mind when Billionaires report $1 of income like Steve "wormy" Jobs. Then they turn around and borrow money based on unrealized stock options, none of which is taxed.
I feel the same way with pox ridden Warren Buffet who fucking campaigned on the tax difference between him and his secretary. How'd that work out? Where's the so-called "Buffet Rule"?
a progressive tax on consumption
Not sure how that's going to promote demand for goods and services. It looks to me like a recipe for rewarding not-spending. And not-spending is exactly what's sucking the liquidity out of the economy now, locking it up in the vaults of the wealthy, who refuse to spend at all unless it means that they wind up with ever more in their vaults, and construction of the (was this term ever more apt?) vicious cycle is complete.
As always, all IMO. Insert "I think" everywhere grammatically possible.
I concur largely with Gate's perspective (rare). Taxing labor has set up a system that created much of the income inequality. Before the income tax, most taxes were import/export taxes and land taxes. Property taxes (taxes on capital) are very equitable, even when "flat". Taxing consumption, though, is inherently progressive, and can be done well.
Beware, though, that "luxury taxes" have had huge negative economic affects. The yacht industry in the US was destroyed by luxury taxes in 1992. Instead, we should identify what capital is creating quality of life for the population (providing jobs, growing food), v.s. that which is static ("private ranches") and tax those accordingly. This will also provide a huge budgeting advantage, in that real property prices don't change as rapidly as income at the start of a recession, reducing greatly the variance in tax revenues, and allowing state/federal governments to create stability v.s. the current huge economic costs of government funding instability.
"progressive tax on consumption" is a misnomer. The less wealthy you are, the larger fraction of you income is spent on consumption and the harder you will be hit by a tax on consumption. This is exactly the opposite of what "progressive tax" means. Sure you can binge on gold plated caviar sandwiches drowned in champagne while driving the 10th Ferrari you bought this month, but if your net worth is $81 billion you are still taxed at negligible rate compared to a 10$/hour worker paying sales tax on the items he/she buys every month.
Almost forgot... FIRST POST!!!!
Also, for people with low income, taxing consumption is actually worse than taxing income, since the lower your income, the higher the percentage of it you must spend on consumption in order not to starve or freeze.
Brilliant idea. That way, instead of spending their money on things that people have to make, the wealthy will invest in owning a larger share of the world by way of financial instruments which produce more income.
This will, obviously, reduce inequality.
Lacking <sarcasm> tags,
Its called SALES tax and large corporations and rich people get all sorts of tax exemptions and loopholes from it, why dont we start by getting rid of all corporate tax breaks and loopholes then if we want to create a new tax call it a RESOURCE tax and tax companies for their use of renewable and nonrenewable resources.
Hey Gates,
If you are so worried about income inequality, I am sure there are millions of people who will divide your money and even things out..
Right... Like that will never happen.
While I completely agree that the American capitalism model is fundamentally flawed and without a complete overhaul can not be fixed, what is wrong with the Nordic capitalism model? Although the Nordic model is identified as capitalism, It's essentially a hybrid economic model which interweaves several elements of socialism and capitalism in a way that the end result is better than both base models (which is a personal opinion and you will probably disagree with it).
Oh joy, you're already at -1 and I am pretty certain my comment will not fare much better. So much for not using the moderation system to penalize comments one does not agree with -.-'...
I didn't know that Gates was for the FairTax - that's what it seems he is indicating after all.
Please don't start arguing how taxing consumption would "disincentivise" spending - or rather discourage it, our state sales tax doesn't discourage spending now, does it?
Certain taxes get paid because people have no choice.
Most of us don't consume a whole lot, some of consume far more.
Taxing labor is simply a punishment of success. The more you earn, the more you *owe*. That concept is so fundamentally wrong, to me.
Taxes may be necessary, but the circumstance and implementation are just backwards. How many smokers do we have on Slashdot? How many of you remember when a pack of smokes cost less than $2? that's not because Big Tobacco got greedy.
That's just one plain and fair example of embedded tax and I ask - why should one have to pay tax on their income, then tax on their gas, services, consumables?
If a lawyer such as John Morgan can get the state of Florida to seemingly (convincingly so) back legalization of Marijuana (for medicinal use) then certainly a figure such as Bill Gates can get the country behind something like the FairTax. At the end of the day, all of arguments against it (i.e. comparing it to VAT) are simply flawed or lacking in fact - such as the old "Such and such has been LINKED with blah!" - A statement that means nothing, proves nothing but certainly fools enough people into believing it.
We ought not tax the consumption nor the creation of the wealth, but the transfer of the wealth. In this way the transfer of wealth works against middlemen by reducing the value of the transition. The more middlemen there are, the less productive the system. We need producers to sell to consumers and we need consumers to be producers for the system to be appropriately geared toward providing bounty for all.
Corporations in the u.s pay as much as 2% in total federal taxes with all the tax loopholes available and so what would change if taxes on capital went away? Nothing. To a corporation it's the employees that are the burden not taxes and this is why corporations went overseas for cheaper wages so they can feed those shareholder capital whores on wall street. Why make 40 billion a year when you can make an extra 45 billion by moving overseas or to machine automation.
Greed is a human sickness and this causes people to be shortsighted living in the moment not worrying about the future. If there are no jobs anymore and middle class ceases to exist, who is going to buy the products? We will end up in a "Walking Dead" scenario where there is no country anymore and everybody fends(killing, murdering, raping, selling other humans) for themselves.
And it's sad how everybody bitches and whines about federal taxes and such especially when their standard of living is far better than those in Africa, Parts of South Asia, even South America. Without the U.S government those assholes who run corporations and those on wall street wouldn't be making the millions and billions they make today and yet they still have the balls to bitch, fucking greed.
I'm not only saying this...a survey of top economists are saying this.
http://www.igmchicago.org/igm-...
– “Theoretically and empirically the case that r-g is a major determinant of inequality or even top inequality is weak.”
– “Many other factors affect inequality including technological change, globalization, increasing returns to education, and others.”
– “Don’t find r-g a particularly useful summary of anything (doesn’t really capture role of technology, training, tax policy)”
– “A glance at the biographies of the truly rich shows most came from upper middle class families. Good luck and some skill produced the wealth.”
– “Argument has poor theory & negligible empirics.”
– “Is this an inside joke? BEA estimates show little change in rate of return.”
If only money could evaporate (tax or otherwise) when brought together rather than grow, and do so in a way that is not trivially bypassed by creating hundreds of holding accounts, then there would be forcings to spend money rather than hoard it.
Maybe the issue isn't so much how money is taxed and used, but how it is created. If only there were a way to have all money generated by inflation occur on the individual level: producers would have to work harder for money rather than owning shares in financial institutions, more money would be generated in the hands of those more likely to spend it, and the inherent inequalities in the system would be reduced.
As it stands with the way our financial institutions are set up, we're spending what is essentially a global tax of 10-25% (depending on how you add up the global share of the financial and related sectors) for the privilege of living in a money-based society and having more tools to accelerate wealth accumulation for the wealthy.
-Anonymous Coward
Inequality in itself is not harmful. What difference does it make to me that someone in Ohio is driving a Rolls Royce while all I have is a Nissan?
The harm is in politicians stoking the flames of jealousy and trying to convince me that the person in the Rolls got themselves a higher standard of living by pushing me down, which is rubbish.
Steve Jobs didn't get rich by *taking* money from us. He got rich by giving us things we wanted more than the cost of a cellphone contract (and the same thing goes for Bill Gates). No zillionaire has the power to take anything from you - whether it be Warren Buffet or the Koch brothers. Only government has that power, and they most certainly use it.
It isn't the income inequally itself that's the issue, it's more of what you can do with that income. If having more money just means you can buy a bigger house or a faster sports car then it's not an issue. But when having more money allows you to buy legislation, manipulate court proceedings and prevent others from making income, obviously something is wrong.
Let's progressively tax common core till it is out of consumption! We call also do that on the gardasil gate's foundation is pushing on kids in India like lab rats.
"But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption."
I'll just bet you would. Most rich people think that taxing the poor is a good idea. That's what a sales tax is, that's what it does -- it shifts a disproportional percentage of taxation to the poor, the people who can least afford it.
What I'd be in favor of, Mr. Gates, is a restructuring of the income tax rates. Let's phase out deductions for those with yearly incomes over $1M USD, and tax their gross income (that's wages, interest, and dividends, capital gains, etc., IOW all income regardless of origination). We can even cap it at 50% instead of the much higher rates of the 1950 and 60s.
MIght not be completely fair, but it would be a great deal more fair than an overgrown sales / VAT / consumption tax. And it would have the great good effect of lifting the burden of collecting and reporting this tax off the back of small retailers.
You can tax profits (income tax),. It neither discourages nor encourages anything because any tax less than 100% still leaves you ahead when you profit. It is by nature neither progressive nor regressive, and will occasionally tax the working poor, but not the sick, children, or elderly.
Finally, you can tax wealth (property tax). It encourages investment because if the thing you buy is not profitable, then it is costing you money. It is by nature progressive, as poor people don't save anything.
The simplest and best tax is clearly a tax on wealth. It should not be limited to just property, but also include tax on anything worth more than a hundred thousand dollars (luxury cars, jewelry, stocks, annuities, mutual funds, bonds, etc.) A mere 5% tax on said objects would allow us to end the income tax (note, 5% is accurate, because we own so much of this kind of property, far more than the entire yearly income - which would require a flat tax of 20%).
As for the idea that capital should be taxed differently than labor, it is merely propaganda for the wealthy.
excitingthingstodo.blogspot.com
No ... it will be inherited by their heirs ... who will continue to accumulate more wealth and consume more resources.
Contrast that with what Gates wrote:
thanks to the rise of the middle class in countries like China, Mexico, Colombia, Brazil, and Thailand, the world as a whole is actually becoming more egalitarian, and that positive global trend is likely to continue.
Well, ok, so that's the exact opposite of Piketty. He then attacks directly Piketty's point that wealthy people increase their wealth. He suggests that the also spend their money, both on consumption and philanthropy, and that rentier families tend to lose their money. To back up his point, he looks at the Forbes 400:
About half the people on the [Forbes 400] are entrepreneurs whose companies did very well (thanks to hard work as well as a lot of luck). I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since.
Finally he goes on to give his own ideas about taxation. In other words, Gates is using this book as a stimulus for his own ideas, and he found it very stimulating.
And now I've done a review of Gate's review. I feel so meta.
"First they came for the slanderers and i said nothing."
One should point out that Bill Gates lives in a state where we have zero state income tax, zero capital gains tax, and his dividends aren't taxed either when he donates them to his own charities.
The problem is that rich people already have massive assets that produce income - everyone else doesn't.
The median wealth of all African-Americans is about $200. Total.
The median wealth of all Hispanic-Americans is about $500. Total.
The median wealth of all rich corporate lawyer's sons whose mums served on charity boards and went to private schools and live in his house is $60 Billion.
-- Tigger warning: This post may contain tiggers! --
except, a tax on consumption IS a tax on labor, because the poorer you are, the larger a proportion of your income gets spent on buying stuff, as opposed to having your money sit in a fund somewhere. there's a limit on how many yachts someone can buy.
Gates needs to realize he's not an economist, or a teacher, or really anything except a has been, and stop commenting on other people's professional opinion. I'd hate to be his doctor, he must be an awful patient.
It kind of makes sense if there's a way to make it more progressive than a flat sales or value added tax. Taxing people's savings doesn't make sense.
Why not change the income to be on household income and then deduct from that income whatever the poverty rate is for that size family times some percentage, say 25%. That way the poor and those upto 25% above the poverty level aren't taxed at all. Then everything above that is taxed at 20% with no deductions, etc.
If the poverty level for your size household (say parents plus two kids) is $22,000, then the first $27,500 you earn is tax free, everything about that is taxed at 20% If the family in question has family income of $40,000, they would pay $2,500 in taxes (40,000 less 27,500 at 20%). If the family in question had family income of $100,000, then they would pay $14,500 in taxes.
I'm just throwing out those percentages, somebody would need to figure the proper balance between the poverty rate percentage and the tax rate, but basically such a proposal is a flat tax for those above some point. Basically, nobody is taxed on the minimum amount to live but everything else (wages, interest and dividends, capital gains, etc.) is taxed at the same rate.
Why do so many people act like every discussion of income inequality is meant to tear the top down, rather than building the bottom up?
Nobody is saying we shouldn't have ultra-rich people, and reducing the amount of poverty doesn't strike me as controversial.
...except for all the parts where he illustrates that it's wrong.
Finally, you can tax wealth (property tax). It encourages investment because if the thing you buy is not profitable, then it is costing you money. It is by nature progressive, as poor people don't save anything.
Uh no. Property tax penalizes the poor. It drives them out of their homes and from poorness into abject poverty. Tax profits.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
$640k/year should be be enough for anyone
Why do you think the middle and lower classes consume the most? I think observation and evidence suggest that people with more money, tend to consume more. (And it's a lot more, so not-close that I don't understand why there's any disagreement on this point.)
Perhaps I'm missing something. What is it?
They don't have taxes.
They just have 'fees' for everything. So the rich stay rich and the poor are nibbled to death by ducks.
The discussion started long ago: Thomas Piketty and Mises’s ‘The Anti-Capitalistic Mentality’
Not just no. HELL No! Hell no to retirement accounts dropping 5% every year. OK, so you'd exempt that, right? Just tax the jewelry and the Bentleys? Uh-oh... there was a tragic boating accident. My yacht sank with all that stuff on board coughForeignRegistrycough.
The rich will evade such a tax. The rest of us will get agents knocking on our doors to inventory our stuff. I remember hearing about taxes like this from old timers, where you had to inventory stuff. This is like the "use tax", which is also impractical and evaded by just about anybody without even thinking about it. If you ever bought stuff on vacation, there's a good chance you're a use tax evader.
So. These kinds of property taxes aren't particularly enforceable, and aren't particularly fair. Also, they just sort of grate on me in a very peculiar "I thought I owned that, but no you don't" kind of way. The only property tax we'll sit still for is the one on real property; and that's because you can't move it..
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
The problem with your "wealth tax" is that if you had a 5% tax on "wealth", then no one would want to own ANYTHING, because the tax on everything you accumulate would outpace inflation. It would just make everyone want to rent every single thing, always. This would be HORRIBLE for the economy.
- Why should I invest in the stock market if I have to pay 5% tax on everything I accumulate when I would be fairly lucky to have 5% annual gains long term? I am more likely to lose money than make any. Might as well just sit it out and lose only 2% to inflation vs. 5% taxation.
- Why should I buy a home if I have to pay 5% tax on it's value every year? Might as well rent everything.
A shift in taxation towards consumption is blatantly self-serving as the ultra-rich consume a disproportionate small fraction of their income and (especially) wealth.
Strangely, I have the impression that income taxes are comparatively low in the US whereas the corporate taxes are exceptionally high. Anyone who can comment meaningfully on this?
--
virve
"...income equality is a necessary result of unchecked capitalism."
Is this not a significant typo in the summary?
Without a middle class, there is no real economy. If our current system guarantees the destruction of the middle class, then our current system guarantees the destruction of the economy (the economic experiment over the last 30 years seems to support this hypothesis). Thus, we must tweak our system so that it does not destroy the middle class.
In the words of Henry Ford, "I pay my workers well so that they can afford to buy my cars."
Was a video I saw that addressed the degrees of this issue. That is, they started showing a graph of what people polled thought income inequality looked like in terms of relative distribution of wealth. They showed what people thought it should be, people of different ends of the political spectrum. Then they showed what people thought was a healthy or acceptable distribution..... and then the real one.
The thing is, everybody seems to agree that some inequality is ok. Everybody seems to agree that there is more inequality than there should be. Everybody also underestimates how much inequality there is, showing the real numbers were as far removed from what people thought it was as what they thought it was was from what they thought was ideal.
"I opened my eyes, and everything went dark again"
In order to have equality in income, everyone would have to be paid the same amount regardless of job, experience, or any location, education, etc. That was the goal of communism, but failed. And there is always the elites in that system (as in all systems) that benefit more then the regular folks. Why do government employees receive more income on average than private employees for similar jobs?
Since no two people are exactly equal in any regard, there is no such thing as equal abilities and cannot be.
We could eliminate most government regulations that mostly protect certain companies for competition and result in annual costs of $1.8 trillion, or over $6000 for every man, woman and child in the US. Just to cover the cost of compliance requires a huge staff that are basically non-productive and locks out small companies that cannot afford the staff. (This protects the big companies).
We are already paying a consumption tax at a state level. And thus we are being double taxed by the state because not only do they tax our income but the also tax whenever we spend the money. The state I live in does not tax food but there is a state tax on everything else. Now if the Income tax would go away that would mean an extra 600 dollars a month I would have to put towards saving or spending on what I would like. This would increase my wealth which would in turn increase my spending. Now with that I would be able to invest 5000 dollars a year into mutual funds or other funds, get myself out of debt and eventually be in the black and start acquiring assets such as a house, cars, and investments.
Now a progressive consumption tax would work as long as the tax was not exactly flat. Lets take a look at Colorado for an example. They have a state tax that is applied to most goods. Then separately tax Marijuana a flat 15% tax on the consumption of it. This has resulted in a revenue of $34.1 Million as of August of this year. People still choose to pay the tax just to be able to "consume" this plant now that it is legal.
There is a TED talk from the author of the book Bill Gates is commenting about at https://www.youtube.com/watch?... pretty good watch
You forgot a simple head tax. One head tax based on your place of residence (or split among localities if you have more than one residence over the tax period based on time spent at each). There'd be one of these for city, county, state, and federal paid once a year. Pay one each quarter so they aren't all due at once. No other taxes other than severance taxes and perhaps excise taxes. No vehicle license taxes, no boat taxes, no property taxes, no sales taxes. Nothing else. No corporate income taxes. They really don't matter anyway as far as the corporation is concerned. They're charged off in the price of the products sold or the company goes broke. Every company in the food chain marks the taxes of the lower company in the food chain up to achieve a desired profit margin so they're especially bad. Just make sure that the taxes they no longer have to pay are taken out of the pricing structure as the taxed round of goods are sold. Apply the head tax without any age limit and make parents responsible for their kids taxes till they get to voting age.
Adjust each rate once a year to cover the expected budget for next year and how you did the year before and in some cases to try to reduce the existing debt to saner levels over some predetermined time period. Takes care of eliminating a lot of law, a lot of law breakers, and a lot of law enforcers in one fell swoop. No more grey transactions. No more figuring out ways to hide money. No real good way to cheat (although there might have to be a way to track the homeless or people living in motels or hotels or RV or campsites while working - still easier than the shelves of IRS regulations we have now.) Apply it to everyone permanently in the country (legally or illegally). It's foreigner friendly since foreign tourists wouldn't have to pay sales taxes.
Everything else is just hand waving and hoping. Until everyone - and I mean everyone - is paying for the government and its services, so they will have some incentive to actually elect good people to office who won't run the (fill in the blank for the level of government) into the ground by spending more than they are taking in and will reign in their over use of government services, we're doomed.
The more social engineering that people try to do to this basic premise, the worse off we all as a whole get. If you don't believe it, just look at the US real time debt clock. The founding fathers had it right.
Is it tough on big families? Yes it is. Is it tough on the poor? Yes it is. But it is absolutely fair. And for the record - I feel neither poor nor rich, but I do have a big family, and I'd still support it.
A lot of people here are attacking consumption tax in a very misinformed way and clearly did not RTFA or do any kind of background research on it.
Nearly all advocates for consumption tax, or "flat tax" systems, advocate to make it progressive through a rebate system.
In plain english:
- We ditch the income tax.
- We give everything a 17% sales tax (this is the rough number I have seen thrown around as what would be required)
- People who make under 30K / year get an annual rebate of 100% of their consumption taxes. They thus pay NO TAX AT ALL
- People who make 30K to 60K or some other number gets a 50% rebate
- Everyone else gets no rebate.
I'm not claiming to be an economist, but I'd imagine there are some big problems with taxing consumption as well. As people will point out, taxing something often has the effect of discouraging it. Depending on how you structure the tax, it could encourage a pack-rat mentality, where people just stuff their money away. That's not all bad, since it serves a purpose of encouraging savings, but when you cut consumption, you have the potential of also cutting economic growth. In addition, a tax on consumption might hit poorer people, since everyone has a minimum amount that they must consume. For example, poor people and rich people both need to spend a minimum of $[X]/year on food just to survive. As the amount of income increases, that $[X] becomes a vanishingly small percentage of income for rich people, while it remains a substantial amount of money for the very poor.
Taxing consumption could also (again, depending on how it's structured) simply drive money out of the US. In its simplest form, it would become much cheaper to make money in the US (since income and capital gains wouldn't be taxed) while making it much more expensive to spend money here. The "smart thing to do" would be to make your fortune here and spend it elsewhere, where the tax is not on consumption.
And that also doesn't begin to confront the source of a lot of the problem: wealth and power represent a self-reinforcing cycle. To oversimplify a bit: Poor people have no power to promote their own interests, while rich people can use their economic power to develop other forms of power, which they can, in turn, use to reinforce their economic power. The obvious example of this is that they can contribute money to politicians, supporting politicians who will support their economic interests. Those politicians can change trade policy to benefit the wealthy person's business, or rewrite the tax code to allow the wealthy person to avoid paying taxes.
If we started taxing based on consumption, how long do you think it would take for an exception to be written into the tax code for private yachts?
And this immediately raises the question in my mind, how to we anticipate tracking "consumption" and deciding what should and should not be counted as "consumption"?
Now, I'm not ruling out the possibility of someone developing a plan that deals with these issues appropriately. But I've heard the suggestion of taxing consumption before, and I've never heard an adequate explanation of how all of these things would be addressed. It seems a bit... I don't know the right word-- silly? creepy? Well, it seems noteworthy to me that Bill Gates starts and finishes his argument by talking about how rich people should be treated differently based on how charitable they are. It suggests that his main motivation is to argue, "I'm one of the good ones. You should leave me alone and let me keep more of my money. Yes, yes, by all means, tax rich people more to deal with this income inequality issue, just so long as you don't tax me."
There is no such thing as pure capitalism anywhere in the world. Fully half of the United States economy is socialized spending. That's far from pure capitalism.
Income inequality will exist in any economic system because the natural tendency is for those who thirst for power and money being the ones who end up with power and money.
Call it crony socialism, but that's basically what we have.
Wow! This is really news!
Here we have a rich guy who while he agrees that income inequality might be bad, proposes that we don't tax (his) capital but instead tax consumption which is the absolute most regressive tax possible. This can only make income inequality worse.
What a clown!
I don't read your sig. Why are you reading mine?
Profits taxes the poor MORE than property tax. Because profits include your salary.
The only reason you think property tax affects the poor is because people that pay income tax AND property tax can't afford both. You foolish object to the property tax instead of objecting to the income tax.
excitingthingstodo.blogspot.com
Speaking as an American, it makes perfect sense to me. Look who owns the policy makers. People like to say the American economy is broken. I say no, it's actually functioning very well according to design. You're just not who it was designed for.
If at first you don't succeed, destroy all evidence that you tried.
There is an age-old answer to the question of income and wealth differences. Income differences in a society are good to the extend that, in the big scheme of things, they lead to a situation where the poorest are better off than they would have been if the differences were lower.
The problem is that it is not easy to evaluate whether this is true in a society.
Gates has a valid point. Taxing corporations takes money away from job creation and innovation. Most people don't realize that countries like Sweden have both solid industry and social services precisely because they have a very low corporate tax rate mixed with a high person income tax rate. (thus encouraging capital investment while simultaneously addressing extreme inequality) On the other hand, corporations currently use their lower tax to do things that amount to consumption rather than capital investment. For example if the CEO wants' a private jet to fly to Hawaii instead buying it with their own taxable salary, they'll put on the tab of the company as a "business expense". Want to hide personal capital gains? Just keep the funds in an executive company investment plan. Ideally corporations should face zero tax and consumption should be the target -- but in practice in most instances because of these loopholes taxing corporations too little hurts the public coffers even further. If we want to change that a review of the tax code to close these loopholes must be the first step. Not sure how Sweden manages it but it would be a good thing to take a close look. https://sweden.se/society/why-... https://en.wikipedia.org/wiki/...
You are assuming that a debt based society is the way it should be. This about it this way: Should taxation encourage savings and investment or consumption. More to the point, will savings and investment increase your standard of living more than consumption _over the long term_?
Gates, being a skinny old guy, who will not be buying lots of steaks or new cars, wants the taxes to be on consumption.
Tax on Capital over $1 Billion is a bad idea to the few people with over a billion.
Someone with several children, does not want to see consumption become a progressive tax.
How about Washington, stop spending MY Money!
As for wealthy avoiding taxes, they do it already. It is fact much HARDER to hide wealth than it is to hide income. Because people can claim that the income never existed merely by spending it, or by hiding the source of it. But it is much harder to evade a tax on wealth because we don't care where it came from, and we can simply insist you show us what happened to the wealth. Oh, you had 2.3 million last year and earned another million this year? That means you now have 3.3 million, show us the receipts to prove that you don't have that much. Oh, it was destroyed? Show us the insurance check. What, you mean you didn't have insurance? Bull. You want us to believe something that stupid, then show us the police report and the MULTIPLE investigations that prove it.
Property taxes are MUCH harder to evade. First of all, most of the wealth in the US is actual real estate. Try claiming that your land vanishes. We just need to put more taxes on things like
As for grating to you, all taxes are grating. The fact that you don't like it is proof it's a good idea.
excitingthingstodo.blogspot.com
I have yet to see someone actually explain why income inequality by itself is a bad thing.
I'm not talking about situations where there is corruption, like certain African-region dictators with gold plated limos while their people die on the streets from starvation, or more common, politicians being bought off by companies and individuals.
Take two people, put them in a room, one guy has a net worth of $100 and the second has a net worth of $5000. What harm is the second person doing? We're talking about a factor of 50x here. Take away the room, let them live their lives, what harm is that second guy perpetuating? Make the difference a factor of 1000 or a 1,000,000, and where do we see him doing harm?
When I hear folks talking about this, what I really hear is, "since one person doesn't need that much money to live, the government should take the difference and use it to make MY life better,"
That doesn't sound like harm to me, but is that what the "harm" is being defined as?
Take our thought experiment above and change the parameters to match Bill's future view; now we live in a world where robots do everything, no one has to work, and all their actual needs (not wants) are taken care of. What harm does it now do to have a pauper and a billionaire?
Someone explain this harm to me, because from where I'm standing in a first world country, it seems to be just so much complaining over sour grapes.
Woah there, fundamentalist much? Instead of having a sane discussion, your first response is to call whoever disagrees with you an idiot? Now if only we could figure out why people don't listen to you and get this urge to tell you to do one instead...
Here's a bit of a history lesson for you:
Social democracy originated in 19th century Germany from the influence of both the internationalist revolutionary socialism and doctrine of communism advanced by Karl Marx and Friedrich Engels; and the reformist socialism of Ferdinand Lassalle. The Marxists and Lassallians were in rivalry over political influence in the movement until 1868–1869 when Marxism became the official basis of Social Democratic Workers' Party of Germany. In the Hague Congress of 1872, Marx modified his stance on revolution by declaring that there were countries with democratic institutions where reformist measures could be advanced, saying that "workers may achieve their aims by peaceful means, But this is not true of all countries." Marx stressed his support for the Paris Commune due to its representative democracy based on universal suffrage.
Fabians and Marxists influenced by Eduard Bernstein advocate an evolutionary approach to the advancement of socialism. Bernstein opposed classical and orthodox Marxism's assumption of the necessity of socialist revolution and class conflict, claiming that socialism could be achieved via representative democracy and cooperation between people regardless of class. Social democracy in the early 20th century began to transition away from association with Marxism towards liberal socialism, particularly through the influence of figures like Carlo Rosselli who sought to disassociate socialism from the legacy of Marxism. By the post-World War II period, most social democrats in Europe had abandoned their ideological connection to Marxism and shifted their emphasis toward social policy reform in place of transition from capitalism to socialism.
One of the primary reasons for this shift was how Lenin's Soviet revolution against the entrenched bourgeoisie (mostly feudal land owners) had played out and the negative connotations it had stained socialism with. With Lenin's Soviet Red Terror, estimates for the total number of people killed range from 50,000 (0.02% of the Russian Empire population in 1917) to 140,000(0.07%) to over a million (obviously depending on the bias of the historian). The people killed in the Red Terror were not just bourgeoisie though, several people from the proletariat who opposed the movement or wanted to be left alone, were killed as well.
Another major factor which played a major role in disassociating socialism from the legacy of Marxism was the aftermath of the Soviet revolution, more specifically the quick decline of Soviet Russia from communism to totalitarianism under Joseph Stalin's leadership and the atrocities perpetrated under that regime. One could possibly argue that things might have turned out differently had Trotsky succeeded Lenin instead of Stalin but that's just conjecture.
You might be under the impression that things in Communist Russia were perfect but that notion could not be further from the truth. Fact of the matter is that the Russian version of communism and its decline into totalitarianism did more harm to socialism than any American propaganda against socialism could ever have done and it was (rightly felt) by several European leaders that the only way they could work towards equality and socialism was through gradual reform instead of sudden violent uprisings. The results speak for themselves, where Soviet Russia is now again an aristocratic state with rampant corruption (granted that this state of affairs is a direct result of the policies pursued by America and her allies, conditions in Russia prior to the dissolution of the USSR weren't all that pretty), the populations of countries with social democracies (most of which have Nordic Capitalism as their economic model) are the most satisfied on the planet according to pretty much every study and every report that's come out in the past ~5 years.
He was wrong on IP back in the 1970s and he's wrong on economics now. Piketty didn't actually contribute much to economic understanding with his book, but he did contribute a verbose defense of the same redistributism that has failed over and over again. Piketty is influenced greatly by Marx and Marxists, leaving out entirely the contributions of classical liberal economists like Bawerk, Menger and Mises who together have provided a deep understanding of the necessary process of capital accumulation, and private property rights. If one is to advance a theory that capital needs to be expropriated and redistributed by state action, one must be able to refute those theories, which Piketty simply fails to acknowledge.
Supply and demand informs us that a decrease in the value of dollars can be caused in two ways:
An increase in the supply of dollars or
A decrease in the demand for dollars
As the population grows, the number of people who want dollars will increase not decrease, so inflation wouldn't generally be due to falling demand. It must therefore be due to an increase in supply. It must be caused by an increase in supply - somebody's printing money. Who has the capability to print new money? The federal government and their assigns. The government can pay it's bills by just writing itself an IOU, creating new money. That allows the government to pay for products and services without openly voting for an tax.
So it pays for government services, at the cost of devaluing savings. Thus, it's effectively a tax on saving.
Property tax can be bad for some individual poor people; but doesn't create poverty in general. Let's be clear here--I'm talking about taxes on real estate only. The classic argument in support of tax on land and housing is that without it, the wealthy might horde the land and fail to put it to productive use. With a tax in place, you must produce some income with the property to justify ownership. That income-producing activity is generally good for the poor, because it employs them.
Property tax only tends to harm the poor when they can't afford the rent (because property tax is passed through) or can't pay the tax directly. You tend to think of retired people as getting "taxed off their land". This problem could be solved by better integration of income and property taxes.
As it stands, property taxation lives in a world of its own. It tends to be unaware of the income tax. If the two tax regimes were integrated, progressive income tax would include progressive property tax.
Imagine this: [X] Is your AGI less than $10,000? If so, you owe no property tax. If you made property tax payments in 2014, you may file for a property tax refund.
An integration like this would have solved some of California's problems with out of control property taxes in the 1970s. Instead, they went the prop 13 route and opened up a whole can of worms. We're still dealing with it.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
That won't work. Hollywood math that shit and you can make your "profits" anything you want.
We don't have a state-run media we have a media-run state.
Because they happen at very different moments in time, and have very different meanings. And, of course, because their impact in society are very different.
I live in Mexico. The poorest ~half of the country have to pay very little taxes, if anything. Income tax for workers on low wages is very low. And we have VAT exemption on many prime-need items (i.e. unprocessed food, medicines, books). Income tax raises slowly, then steeply; VAT is flat 16% for everything else.
I am far from rich, but pay a fair share of taxes. And of course, the more you earn, the more you complain about how much you have to pay.
Have you run the numbers on this?
US government spending, per capita, is $12,101, so the canonical family of four would start off owing $48,400. Roughly half of the population would pay more in taxes than they earn.
Which, aside from value judgments, is going to make it necessary to increase the tax rate since those "takers" won't be paying much. Of course, increasing the tax rate will put more of them in the street, etc.
Lacking <sarcasm> tags,
Gates is an idiot. There is nothing wrong with capitalism. Income inequality is the direct result of globalization with an absence of building economies of poor nations. The result is a shift of wealth. Not a hard subject. Gates, and others who attempt to analyze economics, always seem to leave globalization out of the equation.
It is NOT fair in any way shape or way. It simply refuses to admit the many many benefits that the wealthy get from the government, that the poor don't.
The poor don't care if the government is overthrown and someone confiscates half the wealth. The wealthy do.
The poor don't care if their house burns down (and no one dies), the wealthy do. (at least not to the same extent - they are left as poor as they started).
The poor don't benefit from police as much as the wealthy do. (Think about what happens when they are both arrested for a similar crime, or how much you lose if someone steals from you.)
The poor don't benefit from transportation infrastructure, the wealthy do, they don't travel or ship as much.
The wealthy can call up government officials and get stuff done, the poor can't.
Your idea is ultimate regressive, and you fail to see the problem with it. Worse, arguing with someone like you is irrelevant because you don't care about right and wrong, and your sense of fairness is so radically warped that you have no idea that the far majority of people in the world disagree with it. It's like you said you don't see anything wrong with slavery.
The basic problem is you do NOT understand the very concept of 'fair'. Fair means an equal chance. That means when you get more, you pay more, and the wealthy get SO much more, they have to PAY so much more. It means that children are not penalized for mistakes or stupidity of their parents. No that child gets nothing because his parents had a big family, or just couldn't afford college.
Until you learn the real meaning behind the world 'fair', the rest of the world will laugh at what you think is fair.
excitingthingstodo.blogspot.com
I think the paperwork labor intensive method of taxation is flawed. Why can't we be taxed via inflation using the mint to print the money required to operate the government? Kill income tax, labor tax, sales tax... just print money and get rid of the IRS (a little change to help with the national debt and overall citizen satisfaction)....
Why are Americans so fucking stupid? Every day you redefine another word, twisting it to mean something else, because you were simply too STUPID to remember the actual word you were looking for.
Secondly, "a necessary result of unchecked capitalism" - it's an inevitable result of unchecked JUDAISM. Who owns the 'Federal Reserve'? Do you even know where money comes from, and who controls its creation?
The JEW has stolen your country from under your noses, and made you into their wage slaves, yet you'd rather mod people down and silence dissent than question your Jewish 'masters'. Idiots.
The truly rich do not have income. They own assets and become richer based on the increased value of their assets. Warren Buffet makes a income that is dwarfed by the increasing value of his company. I have read that his effective tax rate is less than one percent. You are not taxed until you sell and the value is translated into cash. The truly rich never have to sell. If they want a yacht or new home they borrow against the value of their assets. Therefore they pay almost no taxes, since they have no income.
Yes, I have. The numbers are large, but only under the assumption that nothing changes - that life in government goes on as usual. Since my family is bigger than 4, it would be particularly bad for me. My point is that the only way to change usual is to actually go to something like this.
Everything being bandied about where the politicians can carve out exceptions for the favored or pick consumptive rates based on how it would affect them will fail. I firmly believe that at every level of government, the spending would be reduced and reduced quickly and dramatically. That may mean that park and museum entrance fees would go up. It might mean that we give less money away to allies. It might really mean that we stop being the world's policemen (at least on our dime). None of these things would be particularly bad in my opinion. There would definitely be costs for service where there weren't before, but I happen to approve of people who use services being the ones paying for them.
Reducing prices (via eliminating corporate and sales taxes) would also mean that you'd have more money to work with.
I do agree that the transition would be huge. But ultimately, it would work. If government didn't change, there'd be a revolution much the same as when we broke off from England. Whether that is coming anyway is anybody's guess.
I don't care that this story is about Bill Gates. It has NOTHING to do with science/tech. Most of the stories on the homepage right now are political.
WTF Slashdot?
The Tax code is public information, please go read it instead of presenting an absolute fairy tale and claiming that people disbelieving that fantasy are under a misconception as an appeal to emotion.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
OK, here's your answer, as simplified as I can make it based on your premise:
Because the guy with the net worth of $100 is unable to contribute to the economy. He is too poor to pay taxes, he's too poor to buy food for his family and therefore has to rely on government help to feed his children.
Meanwhile, the rich guy with the net worth of $5000 has used his immense wealth to manipulate politics and has a sneaky accountant, so he also pays practically no taxes, compared to the middle class.
So it's up to you and me, the guys with a net worth of let's say $250, to help out the poor guy with the net worth of $100. But that $5000 guy is cutting our jobs and shipping them to india, so we have an ever shrinking population of $250 net worth people, and a growing segment of $100 net worth people, since the only jobs available are minimum wage.
Following me so far? With less and less people buying socks and shoes and food, and paying taxes, the economy shrinks. Meanwhile the very rich do not go to walmart and buy 10,000 pairs of jeans, so their contributions to the overall economy are minor compared to their immense wealth.
Please see the documentary "Inequality for all", you can find it on netflix streaming, and it will describe it a way that everyone can understand, even Fox News watchers.
If telephones are outlawed, then only outlaws will have telephones.
"Come and see the violence inherent in the system! Come and see the violence inherent in the system! Help-Help I'm being repressed, I'm being repressed!!!"
"Bloody Peasant!"
Sorry....couldn't help myself...immediately pops to mind when I read any statement that something is 'inherent in the system".
If estate size > $N millions then tax = 75%.
I have no problem with intelligent, insanely hard working entrepreneurs amassing a fortune and enjoying the fruits of their labor.
When that person passes away, take a swipe at that Scrooge McDuck sized pile of gold coins and redistribute it to primary schools and skills training programs for unemployed / underemployed adults.
The decedents survivors still get millions - and keep real property - and society gets massive cash infusions into education and skills programs designed to keep society employed, productive, fulfilled and vibrant.
Leave the whales alone, stop hassling them with nickel and dime taxes every time they turn around, let them enjoy their 200 foot yachts, Ibiza birthday bashes with P Diddy and Ukrainian supermodel girlfriends, annnnd when they pass away, a whole lot of single moms working 3 jobs waiting tables get converted into dental hygienists and LPNs with professional livable incomes and personal fulfillment & satisfaction.
You know nearly every wealthy person says they don't want their children to be burdened with extreme wealth or have everything given to them? Well, buddy, have I got a solution for you...
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From http://en.wikipedia.org/wiki/E...
"Effects of inequality researchers have found include higher rates of health and social problems, and lower rates of social goods,[81] a lower level of economic utility in society from resources devoted on high-end consumption,[82] and even a lower level of economic growth when human capital is neglected for high-end consumption.[83] For the top 21 industrialised countries, counting each person equally, life expectancy is lower in more unequal countries..."
Everytime I read about some rich guy, or some smart guy, talking about taxes and proposing some new system I wonder the same thing... What is wrong with a flat tax?
If there was a flat tax (10-25%, whatever makes sense) on everything we buy, land, goods, stock, etc. I think it would fix a lot of our problems. It would bring an end to high frequency trading, it would tax the rich more than the poor (because they buy moe expensive stuff), but would make the tax % burdern equal on all of us so hopefully nobody can complain. A flat tax would level the playing field in so many ways...
I suspect that if you exempted someone's primary residence up to say half a million dollars, that would avoid much of the difficulty with penalizing the poor.
This puts the highest burden on the middle class yet again. Everywhere from $30k to $150k, those people are paying the highest proportion of taxes.
Let me give you an example:
The lower middle class guy can only afford the $1 shoes. They are cheap enough, but only last one year and then need to be replaced.
The rich guy can afford the $10 shoes. Yes, they cost 10 times more than the cheap ones, but they have been made to last 20 years. Over time, you see, the rich guy will ultimately pay less for the better quality items, and as such, pay less in consumption taxes as well while the poor shmuck who can only afford the $1 shoes actually pays more for the product and more in taxes over time.
And not every rich person is Imedla Marcos.
If telephones are outlawed, then only outlaws will have telephones.
The problem which I see with comments on both sides of this thread is the assumption that one can hoard money, or that money can be put somewhere where it "just sits." The problem is that, unless Mr. Gates, et al. are taking CASH (paper) and making stacks of it in their basement/attic/wherever the money isn't just sitting anywhere.
Even if they just put it in a bank account (which is about the closest to making a pile out of it) it is then circulated through the economy via increased ability for the banks to loan, etc. (Ok, I am oversimplifying, but the point is still accurate.) More likely is that thier money has been invested somewhere. The reason that the rich can make more money in investments than the comparitively less-well-off is that you have to have a certain amount of money to be legally allowed to invest in the riskier investments, which are the ones which pay off big (or fail big). That risk of big failure is restricted to the rich exactly because they are less likely to be "hurt" by a failure, so if they get conned, they can afford it.
In any case, their accumulation of cash is still working in the economy, providing start-up loans to new businesses so that people can be hired, etc.
As to the non- or anti- productive examples given by the parent post: Just because sometimes a business has to downsize to better match the current economy, doesn't mean anything nefarious is happening. If you are making more product than you can sell, then you are making too much product. A stock buyback does affect the stock price, but it is essentially just the company becomming owned by fewer people, the people who sell the stock back have been compensated for their prior ownership, and are free to buy something else with their money. There may be a point to questioning the bubble speculation, but to fix that would be to further disallow smaller investors and only allow the richer investors to risk the bubble. Even in that case, every new industry may just be a bubble, and is a gamble, until it proves that it isn't. If you outlaw risk (overstated), then you will never have anything new (also overstated, but you get the point. I hope.).
McFly777
- - -
"What do people mean when they say the computer went down on them?" -Marilyn Pittman
In the summary I saw the phrase "move to". What do you think that means?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
The founding CEO of a biotech company is probably a scientist. The founding CEO of a software company is probably a software engineer.
Anyone who thinks that income inequality is not a bad thing has obviously never heard of Ethan Couch. When you're born into so much money that you think you can do whatever you want, you basically do... even kill people.
http://en.wikipedia.org/wiki/E...
If telephones are outlawed, then only outlaws will have telephones.
How much did a helicopter cost in 1914? Or a microwave oven, or a colour teeeveeee-eeee?
[triddle um triddle um triddle um dumdumdum]
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Of all your bullet points, the only one that has any hint of truth is "The wealthy can call up government officials and get stuff done, the poor can't."
Everything else is - well - I just don't know what to call it. The poor don't benefit from transportation? Where do you think the things they buy come from? Very few poor have enough space to grow or raise their own food, just to state an obvious problem with that. The poor don't care if their house burns down? Wow. I just don't know what to say to that. The poor don't benefit from police? The rich hire their own private security. It is the non-rich that receive almost all the benefit from the police.
I care very much about right and wrong, thank you. Fair means that everyone has the same chance to do well. I do agree with you there. My proposal doesn't affect that at all either. All it does is guarantee that if you do the work and do well, you get to keep the fruits of your labor. Everybody does. Those just starting, and those who are well established. Believe me - those just starting will see far more benefit to that than somebody who has inherited billions. I don't expect to inherit much, if anything, from my parents. When I invest money that I have earned, and been taxed on, it would be really nice to not have another chunk of it confiscated. If I worked hard, went to college, didn't spend tons of money on wine, women, and song, then why should I have to continue to pay more taxes when money I have earned is put to work and makes more? Things like that are just as unfair as the entitlement social system you espouse.
I haven't talked about the government outlays much at all. I'm not saying that we should not help the poor. I'm not saying we should shred their safety nets and send them to poor houses. I am saying that governments at all levels are spending more than they are taking in and that needs to be balanced and at a much lower level. Whether social or military or other spending is reduced to make that possible is a completely separate discussion and doesn't impact how the government collects its revenue at all.
I also care very much about the future of the country, and firmly fear that the future is dire for my children with the rampant spending and entitlements that are being doled out. It is rapidly reaching the point where the percentage of people who vote and are beholden to the government will cross 50% (if not there already) and they'll be able to vote in people who will promise them more and more till we all go up in flames. The spending has to be reduced some way. This may not be the best way, but unless you can show me a better way to put the brakes to it with some of your favored tax plans, I'll stick with mine.
There isn't enough money scattered among all the rich of the world to cover the cost of the federal government for much of a year's operation - even if you take it all. There is no fairness to saying it is ok to confiscate one person's money over another person. That is simply wrong. The concept that the rich benefit more than the poor from government is wrong on its face. There may not be 100% equality, but it is far from being skewed to the extent you think it is.
I see people claim income inequality is an inherent quality of capitalism. Perhaps this is true, perhaps not. But why isn't such a criticism leveled in terms of communism, socialism, and social democracies? And extend the analysis to power as well as income. You'd see quickly that capitalism and free markets do quite well in comparison.
Further, look at the overall absolute quality of life. If I'm better off in a free market economy than an egalitarian social democracy, even though I'm relatively poorer than another guy who's WAY better off, I'm still better off overall. Zero-sum-game thinking from socialists can't begin to crack that nut.
step 1: Become wealthy either by inheritance, or by starting a business (generally in an area the government is not regulating heavily). Don't let any ethical concerns get in your way - ethics are for losers or the super-rich who can afford them and you're not that rich yet.
step 2: Once rich enough to have a small army of accountants, get even richer by exploiting any and every loophole in tax laws those accountants can find (and which are not known and/or available to the middle class). This includes things like creating companies in lower-tax states (like Nevada) and routing transactions through those to avoid paying the higher taxes where your company is really located (like Washington), and having some business units re-headquarter in countries like Ireland or regions like the Bahamas to do this even more effectively. Above all, park as much money overseas as possible to avoid paying the standard tax rates in your home country (presumably the US, unless he really does now think of himself as a "global citizen" and his company as a "global company"). At this point, you can talk about being a "good corporate citizen" in your home state as you support politicians and policies that provide the masses with good taxpayer-funded stuff - as long as you can prevent the public from noticing that you are dodging taxes. Journalists probably won't "out" you to the unwashed masses because they each dream of a job as a PR person for a billionaire or one of the politicians you have cozied-up-to if their current gig flames-out.
step 3: Once rich enough and big enough, start supporting "reasonable regulations" in your industry; You and your now large business can afford the overhead, but this will become a filter to block many upstart competitors entering your market
step 4: Once rich enough to have a small army of lawyers, get even richer by ignoring things like other peoples' copyrights (google: stack and data compression) and anti-monopoly laws. Exploit your corporate power to force other companies to buy your products to use with ALL their products even though they might only need your stuff for some of them, thereby effectively asserting a private tax on a whole category of goods
step 5: Win favorable attitudes among the public by pretending to not be scrooge McDuck, or that guy from the Monopoly game box art; Do interviews and speak at various public policy forums talking about "income inequality" and the need for big government to provide everybody with "universal healthcare", "universal education", etc. Make sure to never point out that all those big government solutions you are advocating are funded by the taxes you are working overtime to avoid paying - The public might not like you as much if they thought this through completely. It's sort of the modern "let them eat cake!" but with the twist that FIRST those "little people" from "flyover country" should be taxed to get the money to make the cake and then they should be force-fed the cake.
step 6: Team-up with other filthy-rich left-leaners to create schemes (often in the form of "foundations" and "initiatives") to make sure you keep as much money away from government as possible while backing politicians who keep calling for "higher taxes on the rich" to fund government growth; These politicians themselves are rich and therefore have no intention of actually taxing the rich, so you can count on them - they'll campaign against anybody opponents who try to simplify the tax code (thereby eliminating the loopholes that allow the super rich to escape taxation) by labelling such people as "the rich" or servants of "the rich".
Gates, Buffet, Soros, the Rockefellers, the Kennedy family, etc are all cut from the same cloth. They will pretent to care for the poor and middle class, but in reality they propose government solutions funded by the very taxes they dodge. Every dollar in tax increases comes out of the pockets of the middle class and upper-middle class, NOT the super rich. The tax these guys will NEVER support is any tax on the GLOBAL ASSETS of a person. THAT is the sort of tax a Gates or a Buffet or a Soros would actually FEEL
Never mind this being the stupidest idea on earth, we already have a wealth tax, and it has a name: inflation.
(Hint: enacting a wealth tax will result in those that have money and mobility immediately moving to another nation that does not have a wealth tax.)
Pray, tell, what country will the wealthy go to? For the wealthy, the US has a pretty low effective tax rate. That's probably one of the reasons that the wealthy from other countries try and come to the US. If you are wealthy, you can't beat the low effective tax rate, the health care system and the other perks that come your way in the US.
So again, what country do you think the wealthy will flee to and why aren't they doing so now, if things are so bad?
Piketty's solution is crazy but to my surprise I find myself nodding at Bill Gates' comments. Consumption taxes, not labor or capital taxes.
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
To blame "income inequality" and all the rest of the world's ills on "unchecked capitalism" that hasn't existed in most people's lifetimes just plain fails on every front, given the ever increasing interference, meddling and "regulation" of industry and economy by the government, especially as "income inequality" has largely only worsened ever since the government started meddling more and more with the economy, introducing more and more regulation, giving unions patently anti-liberty powers they should never have to fulfill a purpose that shouldn't even be necessary, and in return, businesses use the regulation and legal process to bring about ever more and more laws that are patently anti-capitalist in order to protect them from competition and to game the economy.
The failure of this analysis becomes only more evident when you consider the fact that when you compare America - arguably the closest thing to "unrestricted capitalism" you'll find among First World nations today, regardless of how far it is from being completely true - to the rest of the world, our "income inequality" gap is as narrow - or narrower - here than almost anywhere else on the planet, and certainly among nations with a population exceeding 20 million.
What, does Piketty think that there was no "income inequality" anywhere else in the world, prior to the existence of Capitalism as we know it today? That it is somehow worse today than it was in the 18th century? That there's no "income inequality" in nations with heavily "managed" (i.e., meddled-with) economies? That all government will always work towards the betterment of "the people" by default, more so than private industry will?
Sorry, but Piketty's analysis is just plain flawed on too many levels to be worth taking seriously, as it is premised entirely on the falsehood that "unrestricted capitalism" has ever even existed recently enough in this country - or anywhere else in the world - recently enough to be a cause of income inequality, when it is readily shown that the ever-increasing regulations imposed by government have led to ever increasing meddling by that government in the operation of business, paving the way for other businesses to then abuse the political process to create ever more anti-capitalist laws and regulations, and that a great deal of that very same regulation, taxation, and interference is very often itself a factor in income inequality.
In a truly "unrestricted, free-market capitalist" economy, under a strong, just and ethical system of reasonable laws based on liberty and freedom that are equally enforced regardless of wealth, influence or social station, the only restriction on wealth and income (aside, perhaps, from physical/mental health) is one's own industry and willingness to work, learn, and create industry where none exists.
"Inveniemus Viam Aut Faciemus" 'We will find a way... Or we will make one!' --Hannibal of Carthage
That won't work. Hollywood math that shit and you can make your "profits" anything you want.
They show up somewhere, whether it's in income or in corporate profit. You can shuffle it around but you can't hide it completely. Unless, of course, you are gifted with an unusually baroque tax code
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
How much to tax from whom by what means: these are matters of opinion, as Gates says. Tax labor less, consumption more, and eliminate subsidy granted by silly tax breaks (such as 'carried interest') for the earnings of capital, especially finance capital.
What to do is the core of these kinds of discussions, just as it is with pollution impacts on climate. Exactly what is going on is not relevant.
Piketty is clueless about capital, except as to the point Mr. Gates restates: inequality is a NECESSARY part of capital and of progress by any means, inescapably so. But social cohesion is also, and at some point, inequality can undermine social cohesion, just as boneheaded support for cohesion can suppress progress.
Money=Power.
Political power. Economic Power. Personal Power.
Transnational, trans-generational money is the biggest power on the planet right now. Within that, there are factions, rivalries and competitions, but like a bacteria colony, collective decisions happen which benefit the colony and completely disregard everyone else.
If you want a real, effective, democratic capitalist society, that benefits the largest amount of people, you put limits on power at the top, which means limits on the amount of money any one person, or organization is allowed to possess, or control.
The founding fathers assumed that government was corruptible, and put in checks and balances. This didn't go far enough. Everybody is corruptible. Everybody. That includes businesses and individuals. The damage they can do can be limited by checks and balances. In the case of individuals and organization, it can be limited by putting an upper bound on the wealth of individuals via taxation and the size and scope of commercial organizations. Antitrust laws were an excellent first step - if only they were enforced, which they would be, had the legislature and individuals responsible for regulation not been purchased by the wealthy.
Please do not read this sig. Thank you.
That way only the rich can afford to buy anything...except that this time it's a quantity scaled sales tax rather than quantity scaled income tax. What's the difference? It's still taking large chunks of peoples' money. I have a better idea. Limit population growth, stop encouraging broke people and nations to procreate. I'm not suggesting china style forced abortion, but just removing the incentives to reproduce from welfare programs, and stop sending money and resource to nations that have grown beyond self sufficiency. So what does this mean? bill gates still gets to eat a steak while the rest of us are stuck with insects? I'll pass.
The summary makes the book sound like it's some marxist pretending to be a capitalist. I haven't read the book, though.
The problem with this is that Bill Gates started out very rich and became extremely rich. It is a lot easier to get richer when you start out already very rich since little of your income is consumed by necessities and your time is freed up from survival thinking to thinking about how to get further ahead. Bill Gates is a bad example of success. All he had to do was jump of the cliff of his Daddy's money.
There's a math problem here. These numbers cannot be correct. 320 million people, 6.7 trillion total government spending, 3.7 trillion just for the federal government:
http://www.usgovernmentspending.com/total_2014USrt_15rs5n
That's $20,937 total spending per capita, and 11,562 federal spending per capita. I dont' trust that site - the numbers do not match. What's the disconnect between my numbers and yours from the same site?
Excellent post.
I also recommend that ForAFreeInternet read up on the so-called "social market economy" constructed in West Germany after WWII; 70 later it is still the economic powerhouse of Europe, still capitalist, and still provides for many social needs.
De-fanged capitalism can work.
"But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption"
Bill Gates must be getting senile.
If we're going to be pedantic about words, we also need to distinguish a "free market" from "capitalism". Too often self-identified proponents of "capitalism" are really just proponents of free markets, and use "capitalism" as if all it means is "free market".
A free market an economic arrangement where all exchanges are made voluntarily, without coercion.
Capitalism is an economic arrangement where those who own capital can extract surplus value from the labor of those who don't own such capital.
Both contemporary opponents and proponents of either assume that each entails the other:that without some kind or coerced redistribution, those with more capital will exploit those with less, and the only choice is between those two evils. But in principle the two concepts can come apart. The hard question is how.
My proposed answer is that what allows a free market (good) to become capitalism (bad) is the legal enforcement of any contract where someone allows the temporary use of their capital in exchange for a permanent transfer of some other capital. In other words, rent, including the rent on money that we call "interest", or in general, to use a more archaic but etymologically illustrative term, "usury": the charging of a fee for usage. Such contracts allow those who have more capital than they need for their personal use, who can thus afford to lend it out, to extract value from those who need to use more capital than they have, who thus have to borrow it. This creates an "uphill" flow of wealth from those who already have less of it to those who already have more of it.
In the absence of such contracts of usury, the only way someone with more wealth than is personally useful to them to get some value for it would be to sell it off. And, as is already the case, the only thing that those without enough wealth can trade for anything of value is their labor. The natural effect you would expect, in a free market without usury, would be that those with more capital would benefit from it by trading it for labor from others, gaining luxury (not needing to labor themselves) at the cost of their capital; and the laborers, in turn, would gradually accrue capital in exchange for their labor, and this free trade of capital for labor would gradually equalize the capitalists and the laborers, until each had enough capital for their own use, and had to labor upon it themselves. Some natural variation in wealth would still exist due to the natural differences in productivity of different people, but there would be no run-away concentration of wealth independent of productive activity that we have now.
Introduce usury into that system though, as we have now, and suddenly those with more wealth can lend their excess to those with less wealth, for a fee, which fee they can then use to pay for the labor of those who have less, who in turn are having to trade their labor to pay the fees for the use of the wealth of those who have more. In this way, usury creates an "upward" flow of wealth canceling the natural "downward" flow that a free market would be expected to have, and allowing those with more wealth to live perpetually off the labor of those with less wealth, without ever having to actually lose any wealth in exchange. It's not an insurmountable effect, it is still possible for the poor to accrue wealth or the rich to lose it all, but you have to be exceptionally competent or exceptionally incompetent to do each, respectively. For an average person, having wealth makes it easy to keep and gain wealth, and lacking it makes that exceedingly difficult. And I think we have usury — rent and interest — to blame for that. Without it, free markets would be inherently "socialist", as in for the public good, as one would naturally expect.
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."
Come and see the violence inherent in the system!
I have read the comments and most of them are the typical of "capitalism is to be blamed" kind of argument
The one inherent inequality that truly exists in the system is INITIATIVE --- in which, persons who are more prone to take proactive actions are more prone to become successful and/or to have higher possibilities in surviving any given crisis
Those who argue that capitalism is the one thing that has caused the discrepancies of wealth distribution never care about the reality - that is, if one is lazy and never takes any initiative, how can that person become wealthy in the first place?
Muchas Gracias, Señor Edward Snowden !
It looks like I plugged in the Federal rather than "all sources" that I claimed. Thanks for catching it.
Lacking <sarcasm> tags,
Repeal the corporate income tax and personal income tax in favor of a consumption tax. Now, before you can say "that will hurt the poor" check out
http://fairtax.org/
Under this system, you get a tax "prebate" so that a poor person would still pay zero net tax over the course of the year. The consumption tax that they would pay on spending their meager income gets refunded before they pay it.
Think about it. Whether you're producing electronics or growing potatoes, work is the most productive activity in the economy. Consumption is the least productive. Furthermore, the ridiculously complicated tax code is where politicians love to include handouts to favored constituents. With the fair tax, the complexity disappears.
See Dan Pink's presentation: http://www.youtube.com/watch?v...
So, much of the premise of differential rewards to spur innovation is flawed (even though it does apply to some extent for hard manual labor not involving much creativity). What Dan Pink says motivates people most to work in creative innovative directions is a sense of purpose, a sense of autonomy, and an increasing sense of mastery.
Also on that theme by Alfie Kohn:
http://www.alfiekohn.org/books...
http://www.amazon.com/No-Conte...
See also: http://en.wikipedia.org/wiki/T...
"The book argues that there are "pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness, (and) encouraging excessive consumption".[5] It claims that for each of eleven different health and social problems: physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child well-being, outcomes are significantly worse in more unequal rich countries.[1] The book contains graphs that are available online.[6]"
And see also, on how the logic of diminishing returns in economics got replaced by the concept of "Pareto efficient":
"Economics for the Rest of Us: Debunking the Science That Makes Life Dismal"
http://www.amazon.com/Economic...
Also on the social dynamics and mythology related to all this: http://conceptualguerilla.com/...
You made a good presentation of the roots of the better ideas behind capitalism. But somehow along the way, as power accumulated and corrupted our main social institutions in the USA and elsewhere, those ideas got stretched into neoliberalism... Here is a conceptual video on what happens as those neoliberal ideas expand:
http://www.youtube.com/watch?v...
For some comic relief (and a bit more insight), the first novel in a futuristic sci-fi series featuring cybertanks fighting against neoliberalism (especially in the third novel in the series started by the Chronicles of Old Guy by Timothy Gawne):
http://www.amazon.com/The-Chro...
As long as we have an economy based mostly on exchange and capitalism, and as automation takes more and more jobs, it seems like we would need a basic income to make the system more humane and also keep it going by creating demand. So, to do that, we can just reduce the age of the first Social Security payment from age 65 to age 0, and fund that via taxes and fees royalties on use of government assets (like the Alaska Permanent Fund) and so on. However, long term, as I say on my website, we will likely see a mix of advanced subsistence production (3D printers, solar cells, Mr. Fusion), an expanded gift economy (FOSS, Freecycle), better democratic planning (like via the internet), and an exchange economy softened by a basic income.
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
...because you can't have both equality of opportunity and equal outcomes. Genetic variation guarantees that not all people are equally capable of creating value. So if everyone has a fair and equal chance to use their genetic gifts, then you will by definition reach unequal outcomes. Very unequal.
On the other hand, if you want equal outcomes, then by definition you must not allow equal opportunity. You must tax the most productive at a rate that makes them equal to the least productive. Which tends to make the productive folks go on strike, partially or fully.
Or you can have a mish mash in between, which is what the U.S. does. But in the end, there is always inequality. it's the nature of life. The question is simply whether you prefer an equal chance or an equal outcome. You cannot have both. Life is not equal.
Gates and his ilk want consumption taxes instead of capital taxes because they don't spend anywhere near as much as they have consuming things.
As per usual, it's the rich trying to protect their ill-gotten gains.
I do not fail; I succeed at finding out what does not work.
Idle wealth benefits no-one. It slows the economy. The effect is more pronounced on the poor - the wealthy can afford to sit on idle money. Progressive taxation should tax wealth, not consumption. If Bill is as valuable as his wealth implies, he should have no trouble replenishing his account.
Bill Gates is a college dropout. While less wealthy by many orders of magnitude I did finish college, and I took an economics course only because it seemed a less unpleasant or less boring of a limited list of choices in requirements for my (non economics) degree. Mr. Gates obviously hasn't checked Picketty's numbers, which are full of errors, many of which are documented by Financial Times here and further discussed by other financial websites such as Real Clear Markets and others. Actually, outside of picking good employees, marketing and business bullying, Gates wasn't really very brilliant at anything. Not even software development. It's no surprise he got sucked into Picketty's fictional account of economics.
The modding is wrong. If I had not already commented in the thread I would correct the censorship.
Why is the post correct? Because the problem isn't with Capitalism, it's with what we have today which is anything but what Adam Smith envisioned when describing Capitalism (read the damn books). What we have today is a gross bastardization that we are calling Capitalism, but in reality it's working closer to Mercantilism. The failures harming everyone except for the wealthy are the same failures we had under Mercantilism as well.
Milton Friedman wrote numerous books telling us where things were headed after the continual reduction in regulations, and nobody wanted to listen. Dr. Friedman was a pro Capitalist, about as pro capitalist and libertarian as you will find in a Nobel prize winning Economist.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
With robotics becoming more capable all the time even more skilled labor jobs will go away. A prediction is that one in three jobs will be gone by 2025 http://www.computerworld.com/article/2691607/one-in-three-jobs-will-be-taken-by-software-or-robots-by-2025.html and that trend is still ramping up.
What labor-intense industry will technology create? The current arc of innovation is not like that which enabled the move from rural farming to factory farming and sent workers to urban factories and then to work at Starbucks and Wal-Mart.
We'd better get used to a whole lot more socialism, or a whole lot fewer hours worked per week, or some other way to define value for compensation. The current winner-takes-almost-all system will collapse with no employment for the vast majority of humanity.
It is quite well known that purchases do not go up in proportion to income. A sales (consumption) tax is, therefore, a regressive tax...it hits the lower classes especially hard as they MUST spend most or all of their income on necessities to stay alive.
I don't want to flame Bill Gates too hastily, however. Can we get a better explanation of what he is proposing?
That said, if he is proposing that what everyone buys should be forced through digital currency and MONITORED, so that the percentage one pays goes up with the amount or percent of what one earns, then he is proposing totalitarianism of a viciousness the world has never known. (And Google / Facebook / Bing are well on the way to getting us there ... hand in hand with the NSA and its equivalent in other countries).
And why does Gates jump so quickly to the idea of taxing either capital or consumption (higher sales tax)? What would be wrong with taxing ALL capital gains, starting with stock sales, at a rate as high or higher than ordinary income? That would be both fair AND practical without any additional techno-logic intrusion.
But not for reasons of economics, but because of social dynamics.
The rich don't care about the poor -- their superiority over the poor is obvious, axiomatic and unquestioned.
What the rich care about is their superiority over the middle class. Historically there was no middle class so this really wasn't a problem. As the middle class arose, the rich needed to use material goods as symbols of their superiority, since the traditional symbols such as education and social habits made the rich's superiority over the middle class less certain.
This worked when material goods were relatively expensive. However, material goods have become increasingly common and high quality and available at lower prices. This serves to dilute the social superiority of the rich, forcing them to seek ever more elaborate and expensive material goods to retain their social position.
This leads to the huge increases in income inequality -- you now need to amass large amounts of money in order to obtain the material goods of sufficient importance that your social superiority remains secure. Undermining the middle class via wage stagnation and unemployment is an ideal way to pay for this increased financial need. It doesn't require large amounts of growth and it serves as a double-edged sword, since an undermined middle class is less able to obtain the material goods which serve to challenge the rich's social standing and superiority.
Bill Gates is an evil moron. I've dealt with Microsoft and been punished by it over and over again. This man professes "Income Inequality" while BANKING on not only his evil crap in the early 80's to get his IBM contract and then using his father's lawsuit skills to virtually destroy any company that made anything better than his. He's NEVER innovated anything other than a lawsuit, and crushing companies that make better products. If he can't crush them under lawsuits, he settles out of court or buys them. Bill Gates is the epitomy of UNCHECKED CAPITALISM (ALBEIT WITHOUT HONORABLE INTENTIONS). There is not any problem with "UNCHECKED CAPITALISM" with the caveat that people do business honorably, but this man, Bill Gates, is everything wrong with our current economy, and politics. He should have no say on anything technological, nor anything future seeking because he is incompetent, but well paid. Bill Gates invented little but sued a lot! This man earned nothing but creating the patent-trolls we have today. He created a version of BASIC, and then sued everyone he could until his father got him the licensing deal for MS-DOS with IBM. Let's start at the beginning. By having his buddies/father at IBM license a shitty version of a disk filing system he called MS-DOS ... he got his foot in the door and dominated the PC market, crushing superior products like the Amiga, the Macintosh, and the Atari. All had 32-bit operating systems, while MS-DOS was still stuck on keeping Intel alive. It's sad!
An inferior product takes the win. Here it is over 30 years later and this asshole after having succumbed to BILLIONS of dollars in settlements with AT&T, American Express, Bank of America, still deems that he's the right person to lecture us on capitalism? Microsoft STILL TODAY LIVES AND BREATHES LAWYERS! AND MOST OF THOSE LAWSUITS THEY'VE LOST!
Think stacker and msdos 6.0. If they can't reproduce the product they steal it, if they succeed in stealing they sue into oblivion. If they can't steal it, they buy it and destroy it, like they did with hotmail. Does anyone have a hotmail account anymore... and are you still happy with it? (1998).
When you can't produce something worthwhile, you create a Fear, Uncertainty, and Doubt campaign, like they did with Windows NT... "with UNIX reliability". And when that didn't work they entered into a contract with AT&T to share source code..., stole AT&T's latest version of UNIX and never reciprocated with 4.0 of WIN NT, thus settling "out of court for an undisclosed sum"... I know that sum. $35 BILLION to be accounted over 20 years!
That was just AT&T... but American Express got a similar settlement when Microsoft couldn't reproduce the back end of Speedy Low Fare Search, a product that completely surpassed travelocity and expedia. So let's not mince words, Microsoft and Bill Gates have always been predatory capitalists. I don't mind predatory capitalists per se, if your predatory methods are innovation and marketing. My problem is that Microsoft and Bill Gates, used the legal system, outright stole proprietary code, sued when found guilty, and then settled out of court after the companies were destroyed or assimilated, thereby destroying or delaying innovation and the true human spirit of creation.
Microsoft is so frigging evil, it's difficult to express... their patent-trolls are stealing money from every android samsung phone sold. Am I invested with them... sadly yes... you can hardly avoid doing so, given all the mutual funds today.
Here's a note to Bill Gates if he's listening: Shut the fuck up and go sit on your billions and don't lecture us about what is inequality or honorable. You've never been honorable in your life, as you've stolen more than you've given, and destroyed more than you created. You're a cur, Worry about the middle classes and taxes when you give back all the funds you acquired by bribery, theft, and graft.
Just my opinion!
REMEMBER STACKER!
That was well paragraphed and formatted. But was my first comment on slashdot... maybe I need to read up on formatting.
Are 8 hours of work per day more valuable than 4? If so, shouldn't the person who works 8 hours a day have a higher income than the person who works 4, for the same type of work?
What about management? Which is harder for a landscaping business to find: a worker who can mow lawns, or someone who can successfully supervise them? Why wouldn't we reward the more difficult skill with more pay?
What about skill? Which is harder for a hospital to find: a doctor who can perform brain surgery, or a nurse's aide who can bandage wounds? Why wouldn't we pay the doctor more?
The idea that income inequality is bad, is often rooted in envy. There are reasons some people earn more than others, and that is the way it should be.
You are talking real estate property, not all property (or assets). If you are talking all assets, then you are opening a huge can of works because national registries will have to be created for all items sold so that people will register that diamond necklace, or 1000 gold coins they purchased, etc. Otherwise they will get out of real estate (or keep one token item) and then minimize their tax burden. Then they can claim the sold it and now you have IRS agents traveling all over trying to find these items that people are hiding.
The problems are simple but complex. We, as a country need to figure out what we want to do and what we need to tax. The issue becomes we have the hydra of tax code now which you find the least evil head and pay taxes there. People by nature hate to pay more than they have to (in taxes, for items, etc). We need to figure a strategy which answers these questions:
* Do we want to have a progressive/regressive tax?
* Do we want to tax wealth or income?
* Do we want to tax when people participate in the economy (i.e. sales tax)?
* Do we want to have a simplified or complex tax code?
* Do we care about effective tax schemes? (i.e. tax on prepared food "effectively" taxes the poor more as they eat at McDonald's more)
* Do we want to limit wealth accumulation (on the rich, on everyone) by taxing it?
Give me a break. Consumption taxes would be MORE regressive than taxes on labor.
AND they would depress consumer activity and deepen the current depression
...typo in the first sentence of the Slashdot abstract implies to me that nobody posting on this page has even RTFA.
Humans can be taxed but if a robot is doing the same work at the same cost how would government tax it? Can anyone declare themselves as robots, loose all voting rights but pay not taxes?
https://archive.org/details/WipeOutHumans-BillGates-VaccinesArebestWayToDepopulatePlanet
The equilibrium distribution of disposable income should follow a Boltzmann curve,
Germany's economic model is called Christian Capitalism these days btw and arguing against the positive effect it has had on the German economy will be difficult for anyone.
The post by AthanasiusKircher is the first I've seen that hints at the fundamental problem. Yes, income inequality is a fatal condition as history will attest. I suggest that it is a natural outcome of human nature: humans are naturally acquisitive and many are greedy. I.e., a typical individual wants all the marbles and to hell with anyone else. What we see today is a result of that fact of human nature.
...) per unit of time worked can be no more than 500:1. Today it is at least 8000:1 and probably growing.
That's one reason why so-called civilized societies have rules. For example, you can't just grab your neighbor's stuff and claim it's yours. Without rules by which humans can actually live in proximity and cooperate and share, there would be no "civilization" at all. That issue is believed to be one factor in why Neanderthals died out and Cro-magnins thrived.
What we don't have yet is adequate rules about distributing the rewards of our labors. It's winner take all. Sure you need someone to scrub the floor, put together iPads, design buildings, but you pay them as little as possible so you can keep as much as possible. Etc. etc.
My ideal solution does not assume anything about how one chooses to use the rewards of his/her labors. It merely requires that those rewards are fairly (by some definition) distributed. That is the fundamental missing piece. Few, if any, countries have truly rule-free economies. The US certainly has many rules in play but we need to address this hugely important missing piece. Here's my modest proposal:
1) The ration of highest to lowest compensation (salary + benefits + bonuses +
2) At the end of the fiscal year, if profits are higher than projected, the excess is shared among all workers in proportion to their regular compensation. If profits are lower than projected, i.e., the enterprise suffers a loss, then those with the highest compensation take the hit and those within the range of less than 50:1 of the lowest unit compensation are not affected. (This is based on poor management taking the blame.)
Note that none of the above mentions taxes. Taxation is necessary for development and maintenance of common infrastructure, defense, safety, etc. and "how" taxes are defined or distributed is important but is not the basic issue. The basic issue is fairness in the rewards of labor (by which I include not only manual labor but scholarly work, innovation, art, management, etc. etc.).
I believe that my model above would create well distributed wealth that would allow for simpler, more uniform taxation. What that would look like will be for future generations to decide.
... to see Mr. Gates fall into the "Fair Tax" nonsense. I suppose this is why business and economics are such distinct fields. If only more business people understood that.
Does Mr Gates understand that Piketty is calling for the taxation of capital assets and income (both progressively, of course)? For the likes of Gates and and other billionaires, this represents way more taxes on them than the paltry capital gains tax. Not that they couldn't afford a 2% one time tax and then a greater income tax going forward. BTW a great book, took me weeks to slog through it on Aubible.
I think that all taxes based on income level should be wiped out, but have higher taxation on resource usage and a new tax on income disparity. Under this scheme, there would be no exemptions or credits. It would also be absolutely necessary to repeal NAFTA and prevent the upcoming TPP. The TPP will be especially damaging to economies all over the globe, especially our own. We also need to stop subsidizing gasoline and corn and stupid stuff like that. This falsly encourages a reliance on oil and provides cheap corn meal and corn syrup for the major companies to shove down our throat while making enormous profits ... why should we pay our taxes to make their products cheaper to make?
Sales taxes should be completely removed as well. Sales taxes and other flat taxes have been shown to disproportionately tax the lower incomes more than anyone else. Instead, we need resource taxes which goes to whichever state owns the resource you are using (or polluting!). This makes online trade pretty sane because you don't need to worry about sales taxes, and the manufacturer (or rather supplier) is now responsible for paying the tax, and they can't move their place of business to change taxes, its set by where the resource is coming from (although obviously you can change where you get the resource to a different state - each state would set their own).
Since income disparity is not normally in the discussion, here is how it works. You take your income and divide it by the income of the lowest paid employee. This is used (likely with a logorithm function) to determine the amount of taxation. For example, something like this: log ( yourIncome / lowestIncome) * 35 = percentage you pay.
If you are the the lowest paid worker at your company, you pay nothing. If you make 80K/yr and some guy makes 20K/yr, then you pay 21%. If you make 800K/yr and some guy makes 20K, then you owe 56%. Of course, this is still 350K/yr, and that percentage is actually close to what many people making much less are paying. If you make 5M/yr and some guy is making 20K/yr you might want to raise his salary so that you can make more money (but isn't 800K/yr enough?), or consider having that job fulfilled by another company. An equal partnership or sole proprietorship pays no taxes - you earned that with your own sweat, you keep it all. As soon as you have employees that make less than you, you are standing on the fruits of their labor and need to support the community with what you gain. They are making money for you.
This also encourages companies to raise salaries to reduce their taxes and to employ things like cleaning services which can use their power of numbers to negotiate better treatment for employees than what the major corporations are doing. Right now, you either take a crap job or they'll find someone more desperate. Obviously, tariffs must be used to prevent companies from moving off-shore to evade taxes and pull money out of our economy.
No exceptions, no loopholes, no end-of-year returns, no writeoffs, no discounts.
This may seem harsh. But writeoffs encourages behaviors. Do we really want to discount having more children? Isn't that opposite of what we should encourage? How about writing off the interest on your mortage? Not only does that encourage debt, but who does it benefit? The poor don't own a house, the middle class votes for it because they are already over-taxed, but the real benefit is the rich who have 12 houses - its a giant tax evasion and just serves to employ your accountants and tax preparers.
Comments welcome.
Actually, it's worse than you think.
Gate's assertion contains an obvious flaw: A tax on consumption is infinitely regressive.
Look at it this way: A poor person who lives from paycheck to paycheck spends all of his income just to keep a roof above his head. ALL his income goes into consumption which means every cent of his income is taxed and a tax on consumption beats him like a drum.
Meanwhile, back at the ranch, a person with vast discretionary income not only has a bigger buffer before a tax on consumption hurts him or her ("The food, clothes, entertainment and whatnot that I can easily afford costs a little more, yawn") but the wealthier person can shield income from taxes just by banking it. Before anyone suggests that taxing consumption would serve as a spur to investment, let him consider the increase in investment fueled by the cycles of tax-cuts that started with Reagan's presidency..
All things considered, it is easy to imagine a consumption tax suppressing consumption by all but the wealthiest which has *got* to do bad things to any economy where it appeared.
This is so obvious it makes you wonder about what Gates is smoking.
This is absolutely wrong.
If the rich weren't evading taxes, forcing down your salaries with anti-competitive practices and using the power of their lobbists, they wouldn't have that rolls-royce. There is a reason why companies spend millions if not billions of dollars on a candidate. They are buying the laws and policies that keep them richer than the rest of us. A democracy seeks to be a democracy when our representatives can be BOUGHT. Its not 1 person = 1 vote, its 1 dollar = 1 vote. Look at what the actual costs of living and actual adjusted wages are in this country and how they have changed over time. A single wage-earner family can no longer survive without government help, and we blame socialist government practices for giving out that help. If the capitalist machine hadn't run over them in the first place, they wouldn't need any help. We've given up our powers and our voices by believing the hype of the marketing machine and the politicians that blatanty lie to us while corporations fill their pockets. The disparity of income in this country keeps growing and the average incomes compared to the cost of living are going DOWN. Don't think this is just luck or circumstance. Study economics and you'll find this is planned. In fact, our founding fathers warned us of things like federal debt and a national bank (the federal reserve is not federal and there is no reserve, it is a banking cartel designed to make money for wall street while the tax payers bail them out ... and we keep on doing it in spite of the fact that we had to modify the constitution to make it happen). No one ever mentions the papers written by George Washington and Thomas Jefferson and others that make our whole economic system totally against their vision.
Don't be a SHEEP. READ. EDUCATE. Then stand up and say NO.
I'll believe corporations are people when Texas executes one of them!
Inequality in itself is not harmful. What difference does it make to me that someone in Ohio is driving a Rolls Royce while all I have is a Nissan?
The harm is in politicians stoking the flames of jealousy and trying to convince me that the person in the Rolls got themselves a higher standard of living by pushing me down, which is rubbish.
Steve Jobs didn't get rich by *taking* money from us. He got rich by giving us things we wanted more than the cost of a cellphone contract (and the same thing goes for Bill Gates). No zillionaire has the power to take anything from you - whether it be Warren Buffet or the Koch brothers. Only government has that power, and they most certainly use it.
I was going to write a reply to your post but it's already taken care of. Please read the world-class economist, Stiglitz's, "The Price of Inequality."
It disagrees with every word you just said with examples and extensive footnotes. Basically, when the pharmaceutical industry uses its campaign contributions to have lawmakers create a policy where the government forbids itself, by law, from using its status as a massive consumer to bargain for a wholesale discount in prescription drugs purchased by federal programs, we all pay more than we have toÃ"in fact, their a people in Europe who pay FAR LESS for drugs made in the United States than Americans do.
The wealthy have an effect on the economy that does bad things to people who aren't wealthy. Look it up.
hello good morning jam tangan wanita Jam Tangan original jam tangan pria
Capitalism = Promoting race to the top.
Socialism = Preventing race to the bottom.
You regime must BALANCE both https://en.m.wikipedia.org/wik... and https://en.m.wikipedia.org/wik...
Casteism
I believe that the inequality we experience is directly related to the size of the corporations and economy in whole. If the planet was bigger, and could support ten times as many people than the inequality would be even greater. The richest in that world may have wealth that exceeds even the richest today -- likely by a factor of five to ten.
Automation/Robots will displace human labor; then taxes based on public labor/consumption a/o private enterprise will fail US, EU, RU, CN ..., IMO.
Unaccountable leaders are masters, and unrepresented people are slaves. How do US and EU fare?
The wealthy are already heavily taxed,
HAHAHAHAHAHAHAHAHHAHAHAHAHHAHAHHAHAHAHHAAAA.......Now get back on the troll bus, you tea party suck-up. The top 1% are paying perhaps 33% in taxes if they are stupid, and 10% if they are tax dodgers like Mitt Romney. Moreover, 33% of say, a million dollars a year still leaves enough to buy a whole fleet of Ferraris each year. If you are part of the dissolving middle class and making 40k, you are left with 32 thousand after the 20% taxes you pay, which isn't much to get by on. Thirty percent isn't heavily taxed by any yardstick.
and much of that tax money goes to the poor to remove the poor's incentive to work.
Drinking the much cool-aid, Tea bagger? I am just waiting for the requisite racist comment about lazy immigrant minorities are coming here to steal all our free benefits.
This is a typically leftist and obviously wrong viewpoint,
Lets play a game, which logical fallacies did you just commit? I am deliberately replying using an incendiary tone, because actual logic and reason doesn't seem to get through to 'your kind'.
production is made by human effort, and to the extent that you take a man's production or the money that results from his production, you are treating him as a slave.
Ah yes, the tired old taxes == slavery bullshit that is parroted by every self centered asshole who feels that their life would be so much better if they could just keep every one of their precious hard earned dollars, because they owe nothing to the society as a whole. Wake up and smell the bullshit, humans aren't very good at being solitary creatures, and we work really well together. As we build a society, the group as a whole benefits from building shared resources and infrastructure, and taxes is how it is accomplished. Tea baggers are a model of self reliant individualism, who only need a few thousand years of the collective work of society to prop up their selfish fantasies.
I really wish there was a small corner of the country we could put you idiots in so you could have your little tax free state and see what a horrible economic disaster that would turn out to be. Your brand of stupid deserves to see how 'free' you are in really are in a non-regulated, non-taxed Utopian pipe dream.
HA! I just wasted some of your bandwidth with a frivolous sig!
Wow! Why do we keep having this discussion? We begin with the premise that Income Inequality is something that is bad! Then Bill F*ing Gates posits his incompetent opinion on a FALSE PREMISE. He's incompetent by design, not by predatory and collusive governmental crony capitalism. We don't need to disparage capitalism in its purest form. We need to despise people like Bill Gates, who, while raping and stealing his way to the top of the pyramid, disparage everyone and raises the straw man of "income inequality!" The only reason there is such a thing is because he invented it! Steal and sue everyone you can and yea there's a huge income inequality. That is not the problem. The problem is unethical assholes like him who steal products, troll patents, and then sue anyone and everyone they can. Then to avoid prosecution or further lawsuits, they form a flimsy charity and pretend to be egalitarian by whining about the same inequality of income they pursued. Let's stop painting Bill Gates as egalitarian or the technological genius he isn't. Let's paint him as the egomaniacal asshole he is. He always will be. Even if he gives back every ill-gotten stolen technology he profited from. We're still waiting for the mea culpa Bill Gates. And we'll be waiting until you die.
I agree. But Bill Gates STOLE it. Remember stacker! He STOLE technology he didn't invent or purchase or license. Microsoft has done this over and over again. It's not competition it's theft. I witnessed this. I was there. I haven't any desire for rich people to be pilloried. Most people that are rich earned it, or their parents did and I've no problem with that. I have a problem with outright theft and using the legal system as a weapon, which Microsoft has done since its inception. That's my point.