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The disparity between rich and poor
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Post by
207044
This post was from a user who has deleted their account.
Post by
Haxzor
welcome to Capitalism
Post by
Atik
If we could get a group of people that would actually allowit to function properly: Communism is one of the greatest forms of government.
The native americans had it pretty good before the old world showed up. And guess what government structure they had...
Post by
324987
This post was from a user who has deleted their account.
Post by
Heckler
There needs to be a system to wealth redistribution.
Some unsourced (in a bit of a hurry) thoughts off the top of my head...
There already is a system of "wealth redistribution," in a manner of speaking --
progressive taxation
-- in fact, Republicans love to call it wealth redistribution in order to rail against it. Reading about it, and why its important as a stabilizing factor, is pretty interesting. The basic idea is that the richer you are, the more taxes you should pay
as a proportion
of your wealth (Adam Smith's justification of this in
The Wealth of Nations
, shown in the link above, is pretty interesting).
In the U.S. we do have a progressive
income
tax (low income people usually pay no or very few income taxes, and the percentage goes up as your income goes up to a maximum of something like 28% at the top tier -- but this maximum was
91%
in the 1960's and above 50% until the 1980s -- more on this later), but when you consider these two other taxes -- the payroll tax and the capital gains tax -- the ACTUAL "percentage paid as a function of wealth" chart looks very... wrong (including sales tax makes it even worse).
Payroll taxes are only charged on the first ~$100,000 of income (FICA, Social Security, Medicare). That means that most "normal" people pay this tax on 100% of their income. That's a
regressive
tax in its truest form (lower income means a higher proportion paid). If I make $101,000 in a year, I pay the same
dollar
amount in payroll taxes as someone who pulls in 200 million.
The capital gains tax (which is the taxes you pay on income from things like the stock market, investments, dividends, etc -- where people who make their living by moving money around get paid) is 15%, flat. Worse yet, it's not progressive at all (save a small exempt amount before it 'kicks in'). This means that if I make 150 million on the stock market, I pay 15% -- and if my grandmother sells her house she's owned for 50 years for $750,000 -- she pays 15% too. A flat tax is not as bad as a regressive tax, but the basic stabilizing notion of progressiveness is entirely absent in both. People like Warren Buffet make a huge majority of their income through capital gains, so the net result is that the percentage they pay is near 15%. Consider that the average McDonalds worker pays more than that in FICA alone.
Finaly, a quick note on sales tax and income tax. If sales tax is 9%, and you spen all of your income on stuff (like most low income people do) then it represents a 9% tax on you. With the same tax, if you spend 10% of your income on stuff (like rich people do), then it's a 0.9% tax on you -- another regressive example. Now, income taxes are only charged on non-capital-gains-income, and you pay a percentage on each "tier" as you make more and more money. So as a quick example, you might be asked to pay 0% on the first 50k, 5% on the next 50k, 10% on the next, and on and on to a "TOP MARGINAL TAX RATE" (popular phrase) of 30% on everything above $300,000. So if you made 350k in a year, you could rightly claim that you were in a 30% tax bracket, but in reality (in this system) you actually
paid
15% in taxes on your 350k.
So when you hear that the 'top marginal tax rate' was 91% under Eisenhower in the 50-60's, that's not actually as horrible as it sounds. What it served to do was to impel people who take in a lot of non-capital-income (people like business owners who write themselves paychecks out of their company coffers) to cap their own income. Instead of taking $100 million out of the company, they would take $3 million, to avoid hitting the 'top-tier rate' and they would leave the rest invested in their business. The net effect of an extremely progressive income tax is not just more revenue (in fact, it could be argued that the government actually brings in
less
revenue with such a drastic progressive slope) -- it's a stabilizing agent to all things economy, and an incentive to grow business (
growth
being the fuel that capitalism requires to survive, after all). (A further discussion here about the corporate tax structure -- and the incredible number of loopholes and exemptions that usually allow the largest companies in America to pay no U.S. taxes at all -- would be proper).
Lastly, the Estate Tax (which has just been re-instituted in a weak form) accomplishes exactly what you think should exist in terms of an inheritance tax. Once you break a certain "worth" that you're passing on, the government starts taxing it at a high rate. I believe it used to be every dollar above $3 million was charged 50% tax -- the current code is 35% on dollars above $5 million ($10 million for married couples) I believe. This tax has historically been applied to the top of the top 1% of the richest households in America (on the order of hundreds of estates) but the Republican Party successfully turned public opinion against this tax in ~2000 by re-branding it the "Death Tax" and convincing people who will die with 20 cents in their pocket that they should be against the idea. As part of the "Bush Tax Cuts," the estate tax was temporarily removed (a further discussion here about the political strategy of 'temporarily' removing taxes would be fitting. Additionally, a thorough look into how the policies of G.W. Bush affected the economy of the U.S. on the whole would be fitting -- two unfunded wars, a squandered surplus, loss of incredible amounts of revenue in estate taxes, privatization that ended up being
more
expensive, and tax cuts across the board both income and corporate... it's no wonder our economy fell apart).
The idea was that you could pass on a large amount of cash untaxed (as you said), but
drastically
large amounts were charged a crazy-high tax rate, because the government is asserting the principles you talked about -- no one gets rich in this country on their own, they do it by taking advantage of things like the
security
offered by our borders, police, fire protection and military; the
mobility
provided by the roads constructed on public funds, and regulated air traffic; a
standard currency
supported by the 'full faith and credit' of the government; and a
legal system
which allows them to redress harm done to them by other agencies (trademark law, copyright law, patent law), and
keeps the playing field level
.
Our version of capitalism is "regulated capitalism" -- a stark contrast to free-for-all capitalism, or pirate capitalism. A good analogy is a football game. The game doesn't work without rules and referees. The structure of the government (of, by, and for the People) is supposed to fulfill the purpose of the referees, and the game only works when they're there to enforce the rules.
This might sound like a leftist, communist rant, and if it did, you were reading it with that bias pre-set. The fact is, I support capitalism, but it has to have rules, and it has to be designed to benefit the society and the people as a whole -- otherwise, what is the point? The idea is that when every person is working in his own best interest, society naturally improves in turn -- but there
must
be rules and regulators in place to ensure that people aren't working in their own best interest at the expense and ruin of others. There is no such thing as a "Free Market" in this country, if you want to see a Free Market, look at Somalia. The structure, rules, and regulations that pervade our economy are absolutely necessary to support it -- and if the economic crisis of the last five years has shown anything, its that these rules need to be reformed and strengthened, with a mindset of doing what's best for the Country, not your campaign contributors (Dems and Repubs both).
I'm just going to post this without proofreading it, think of it as free-written verse: my mind over the last 15 minutes, in text form.
Post by
gnomerdon
The poor remains poor because they choose to remain poor. Their only trap is their mind. Everyone grinded at one point. The point that determines your choices will determine where you will be. Leave that up to the people to decide when to do something else, not the government.
Post by
OverZealous
To be honest, facesmasher, that's not quite a fair thing to say. Some people are born into situations where it is incredibly hard to earn wealth. Take a look at Africa, for example. I definetly agree that to some extent it is the mind that blocks your capacity, but that is absolutely not the only underlying reason. Poverty is not a choice in the way you see it. Do you think Asia and Africa chose to be poor?
Post by
gnomerdon
This only applies in America. :(
Post by
OverZealous
Well, in that case I apologize - your statement appeared to address poverty in general though. My bad.
Post by
Patty
This only applies in America. :(
Although it doesn't really apply in America. Whilst that may be true in some cases - in others it's a matter of being born into poverty, living in a run-down area with sub-par education and being unable to better yourself because of a lack of, well, aspiration I suppose. Any capitalist country has disparities, and America still has millions living in poverty.
Post by
Squishalot
Heckler - it's important to note the difference between income taxes and other taxes. While I agree that payroll tax in America under that system is regressive (note - payroll tax in Australia isn't linked to an individual's salary, but is a flat rate charged on all salaries to an organisation), if you consider that the aim of payroll tax (as opposed to income tax) is to recover the cost of processing a worker's rights and responsibilities as an employee. There's only so much it can cost a government (how much does it cost to process a tax return?) and therefore, it does sortof make sense that there's a cap, seeing as it's originally intended to be more of a levy than a wealth-distribution tax. (Traditionally.)
The big problem with the disparity between rich and poor is the fact that societies, as a collection of people, can't determine what the best way of spending a country's money is. Because millions of voters can't conclusively say that welfare is good, or that hospitals need more money, and at the same time, reach into their pockets to pay for it, we're always going to have this divide where the welfare reliant suffer and the rich prosper.
Post by
207044
This post was from a user who has deleted their account.
Post by
pezz
The poor remains poor because they choose to remain poor. Their only trap is their mind. Everyone grinded at one point. The point that determines your choices will determine where you will be. Leave that up to the people to decide when to do something else, not the government.
If that were true, you'd see roughly the same percentage of people from poor and rich backgrounds going into executive positions in large corporations. If the only deciding factor in how far a person goes is literally whether they decide to 'follow the American dream' (and you divorce a person's upbringing from how it might affect that decision), then, say, 10% of poor people and 10% of rich people would be in executive positions in large corporations. The funny thing is, then you'd have
more
poor people at the top than rich people.
Post by
Squishalot
The poor remains poor because they choose to remain poor. Their only trap is their mind. Everyone grinded at one point. The point that determines your choices will determine where you will be. Leave that up to the people to decide when to do something else, not the government.
If that were true, you'd see roughly the same percentage of people from poor and rich backgrounds going into executive positions in large corporations. If the only deciding factor in how far a person goes is literally whether they decide to 'follow the American dream' (and you divorce a person's upbringing from how it might affect that decision), then, say, 10% of poor people and 10% of rich people would be in executive positions in large corporations. The funny thing is, then you'd have
more
poor people at the top than rich people.
Not really. The grind will get you Y far from X starting point. Yes, people who have a rich upbringing will get further if they work as hard as someone who have a poor upbringing, but that doesn't change the fact that the person in the poor upbringing can pull themselves out of their poor situation with the grind.
Post by
255458
This post was from a user who has deleted their account.
Post by
Atik
/shrug
Before he got all big on the idea of mass genocide and world domination, Hitler was an awesome leader.
Pulled his country, and later the world, out of the great depression and all.
Worst millitary tactician ever though.
Post by
Adamsm
The native americans had it pretty good before the old world showed up. And guess what government structure they had...
A tribal one, led by a chief who ruled over all? And they warred with the other tribes quite often, taking slaves and servants from their rivals.
Post by
Patty
/shrug
Before he got all big on the idea of mass genocide and world domination, Hitler was an awesome leader.
Pulled his country, and later the world, out of the great depression and all.
Worst millitary tactician ever though.
No he didn't. Germany was recovering before he gained power, and the Weimar Republic only really got out of the Depression as the rest of the world did. Furthermore, the jobs he then created during large public work schemes such as on the autobahns realistically could not be sustained.
Post by
Atik
The native americans had it pretty good before the old world showed up. And guess what government structure they had...
A tribal one, led by a chief who ruled over all? And they warred with the other tribes quite often, taking slaves and servants from their rivals.
The chief was no more than his subjects. He went out with the other men and hunted and put his own life in just as much danger. Other than the symbols of his position, he owned no more than anyone else.
And I am talking about the entire species under one communist rule.
Post by
Adamsm
The chief was no more than his subjects. He went out with the other men and hunted and put his own life in just as much danger. Other than the symbols of his position, he owned no more than anyone else.
And I am talking about the entire species under one communist rule.
Heh, you are kidding right? The Chief would have all the best things; best blankets, clothes, tepee, women, first choice at the food that was brought in. Yeah, that's real communism at work; and communism itself is a failed system on a global scale.
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