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I guess I'm still wondering how raising taxes alone will help. Won't the government just see that as an opportunity to spend more? Even if they use it for something good like paying down the deficit, however, that isn't going to help the poor in the short run, and it won't create jobs. So, by raising taxes for the rich, do you want the money automatically redistributed, like the government starts sending checks to the poor from the excess taxes? That doesn't create substantial jobs either. Why work if the government is going to send you money for nothing? I can see that the hope might be if we just give more money to the poor, they will spend more, which will create more demand, which will create the need to make more stuff, which will increase jobs. But that still won't help the underlying mentalitiy consumers seem to have which is not to save and to rack up consumer debt. Or, if after the recession, people have wised up and decided they don't want debts, they will just take the extra money and pay down their debts and save it. (ETA: What happened with the "stimulus" checks? Did they stimulate anything, or did people just save them? Hmmm, maybe if people knew they were going to consistently get checks, they would act differently than if they just got a one time stimulus check, though). I guess that one could argue that it is at least a good thing to redistribute the wealth in the hopes that it creates more demand for consumer items and thus more jobs, but I kind of like what you said earlier and hope that would happen: that is, it would be nice if a business owner redistributed the wealth through giving increased wages. 90% tax seems a bit high, though. I worry if it would decrease a person's drive to continue expanding/growing, if you knew there was going to be no point after a while (or the only point of expanding would be to stay competitive -- not to actually make any money, which would also not be very motivating). The problem is still, why would a business produce something in the US when they could produce it elsewhere for so much cheaper? I guess the answer would be to discourage that practice with excessively huge tariffs on US products that are made outside of the US.

At any rate, you've given me much to think about.

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Originally posted by SignyM:

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What is the huge problem with the top 1% of income earners making inordinately huge amounts of money? Aren't there always going to be people who make huge quantities of money? It would be nice if they shared, but that is their choice. Why should we take their money by force (more laws)?

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Obviously, you haven't been paying attention, to history or to economic theory.

It's like I said, money is like blood, it doesn't do any good unless it's circulating. And if just a few people have most of it, then it's not circulating.

Let me try this example: If 1% of the population has 90% of the money, who do they sell the output of their factories to? Each other? There's only so much a rich person can buy.

I think it was Whozit who said it best: How can companies impoverish their workers when they count on them as customers? And the answer is: They can't. At the time, I congratulated him for discovering the fundamental cause of economic collapse. Progressive taxation was not a socialist cause, it was a rescue plan for capitalism .

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Is the reason for this disparity between the top 1% and the rest of us really due to the Bush tax cuts?

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In a word; YES. The United Stated was doing its best, economically-speaking, when the top tax rate was 90%. Yep, the highest incomes were taxed at 90%. The disparity between the line-worker and the boss was only a factor of ten or so, because it made no sense to earn money that would be taxed away. Because of that, businesses actually paid higher wages AND higher dividends, and put more money into research. People could buy stuff... houses, refrigerators, cars... without going deeply into debt. The savings rate was higher.

Now, CEO salaries are topped out at 38% for "ordinary income" and less for "capital gains" so it make perfect sense to grab as much money as you can. HUGE amounts of money... amounts that materially affect re-investment, dividends and wages... are being sucked off at the top. People can no longer afford to buy anything without going into debt. The economy runs on consumer credit, and when the credit runs out the economy collapses. People are laid off, which reduces demand even further, causing more layoffs.

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Originally posted by SignyM:
Malachite (interesting name BTW)....

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I guess I'm still wondering how raising taxes alone will help. Won't the government just see that as an opportunity to spend more? Even if they use it for something good like paying down the deficit, however, that isn't going to help the poor in the short run, and it won't create jobs. So, by raising taxes for the rich, do you want the money automatically redistributed, like the government starts sending checks to the poor from the excess taxes? That doesn't create substantial jobs either. Why work if the government is going to send you money for nothing? I can see that the hope might be if we just give more money to the poor, they will spend more, which will create more demand, which will create the need to make more stuff, which will increase jobs. But that still won't help the underlying mentalitiy consumers seem to have which is not to save and to rack up consumer debt. Or, if after the recession, people have wised up and decided they don't want debts, they will just take the extra money and pay down their debts and save it. (ETA: What happened with the "stimulus" checks? Did they stimulate anything, or did people just save them? Hmmm, maybe if people knew they were going to consistently get checks, they would act differently than if they just got a one time stimulus check, though). I guess that one could argue that it is at least a good thing to redistribute the wealth in the hopes that it creates more demand for consumer items and thus more jobs, but I kind of like what you said earlier and hope that would happen: that is, it would be nice if a business owner redistributed the wealth through giving increased wages. 90% tax seems a bit high, though. I worry if it would decrease a person's drive to continue expanding/growing, if you knew there was going to be no point after a while (or the only point of expanding would be to stay competitive -- not to actually make any money, which would also not be very motivating). The problem is still, why would a business produce something in the US when they could produce it elsewhere for so much cheaper? I guess the answer would be to discourage that practice with excessively huge tariffs on US products that are made outside of the US.

At any rate, you've given me much to think about.

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And you have given ME much to think about!

You're right about one thing: raising taxes, in and of itself, isn't going to do anything. It very much depends on what the government does with that money that makes a difference. And some of the problem will not be solved unless we undergo a fundamental re-ordering of our economic priorities... not likely to happen in the near-term!

So, what can the gubmint do? Options:

Pay down the deficit. Won't create jobs, WILL prop up the value of the dollar. Good for peeps who've invested in gubmint paper, not much else.

Give money to folks. Which will rapidly be spent in Walmart. Good for Chinese workers, not so good for us. (However, as you said, if combined with stiff tariffs against cheap-labor nations, may do more good. That would need a break with our free-trade mezmerization, tho.)

Spend money on infrastructural improvements like green energy, healthcare and teaching. Now THAT will definitely create jobs at home!

Raise the minimum wage. Not strictly a tax-transfer program, but definitely transfers money at home. Studies have shown that rather than "costing" jobs economies actually EXPAND when minimum wages are raised.

In the end, though, as long as currencies and goods are freely traded cross-boundary economies will be subject to the competition on the basis of productivity. But since there is no functionally sound reason to constantly improve productivity (Good for maximum profits, but people ARE out of work, are they not?) nations need to break with the concept of free trade or they will wind up competing at the bottom of the barrel and unable to determine their own internal policies.

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Originally posted by Niki2:

So what happened to Mala? I gave him what he asked for, specifics about how inequality causes collapse, and he never came back. I would have liked to hear what he had to say about that...

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Byte: Maybe no good options, but certainly many better options. It does sound like justification if you try to juxtapose the deliberate slaughter of thousands and the war casualties that were occuring as a fixed fact - slaughter or not - as two alternate options.

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Originally posted by Bytemite:
Attempting to exile the nobility would likely result in retaliation and forcible repression. Bad option.

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Originally posted by Niki2:


1. When inflation is taken into account, wages have pretty much stagnated for quite some time now, which the rich continue to make vastly more and more money.

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2. the discrepancy between rich and poor has become enormous, and that’s not good for the country, in my opinion.

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Most of them didn’t gain that huge amount by work ethic, but by conniving with their board of directors, fraud, lying, cheating, etc. Because a person can ATTAIN great wealth doesn’t necessarily mean they deserve it, just as if a dictator attains power, it doesn’t make it right.

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If you want to talk perspective, the valid perspective I see is the growing inequality, the HUGELY growing inequality. Our cost of living is a lot higher than countries with low wages, for one point. Comparing the poor in other countries to those here, and the huge disparity, isn’t valid in my opinion. . That isn’t healthy for the country, it’s huge gaps between rich and poor which begin the collapse of a system;

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I don’t want to see ours collapse...any sooner than it has to, anyway.

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3. I don’t believe I said the disparity was because of the Bush tax cuts. They increased it; they contributed to it, but of course there are many causes...the gap was pretty big before he came into office, for one thing. S you said about other things contributing to it, so did the tax cuts, as they favored the rich.

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4. Yes, they pay the bulk of taxes, I never disagreed. But the percentage perspective is still off. Between tax shelters, capital gains and so many other things, they pay proportionally LESS than regular workers do of their earnings; That’s fair? I posted the facts on that a while ago.

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I can' find that article I read which pointed out that the wealthy earn money from investments in various funds, while the middle class and poor don’t have the money TO invest.

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You really think it’s reasonable for someone to make BILLLIONS while the rest of us have to save and borrow to send our kids to college, pay for childcare, etc., and even then many lose their HOMES? If so, we have no even begin discussing the issue.

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And if you want to come back with “the rich invest, that helps businesses”, no, it doesn’t. Because banks aren’t LOANING, they are paying bigger salaries and investing for their own profits. They took our bail-out money (another point) and are hogging it and engaging in virtually the same practices which caused them to be bailed out!

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Ahh, there it comes, exactly the argument I anticipated. It’s false, pure and simple. The rich invest in money, and make money because of it. The institutions they invest in aren’t circulating that money, as I said above. Ergo the money is only circulating amongst themselves, and as proven before, does NOT “trickle down”.

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I’ll look around for articles such as you suggested. One thing I found right off the bat was

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inequality in the United States has increased to the extent that the gap between the rich and poor is larger now than at time since 1928--greater than that of any industrialized nation (see Edward N. Wolff's 1995 Top Heavy: A Study of Increasing Inequality of Wealth in America, Twentieth). A 2007 study of the Congressional Office Bureau found the wealth of the richest 1 percent of Americans totaled $16.8 trillion, $2 trillion more than the combined wealth of the lower 90 percent of the population. The Center for American Progress reported how between 1979 and 2007 the average income of the bottom 50 percent of American households grew by 6%; the top 1% saw their income increase by 229 percent.

Of interest here are the ways in which inequality is institutionalized, in other words, the ways by which socially-defined categories of persons are unevenly rewarded for their social contributions. These are the criteria by which the social worthiness of individuals are judged and discriminations made. These vary, in part, on the basis of a society's stratification order and its cultural. The "rewards" come in a number of forms: power, wealth, social power, prestige in the eyes of others, self-esteem and sense of personal efficacy, the number and welfare of one's progeny,

In The Middle Class as a Precondition of a Sustainable Society, Nikolai Tilkidjiew observes "...the best political community is formed by citizens of the middle class, and that those states are likely to be well-administered, in which the middle class is large, and stronger if possible than both the other classes, or at any rate than either singly; for the addition of the middle class turns the scale, and prevents either of the extremes from becoming dominant." For a number of social scientists, its shrinkage in recent decades in the United States is a cause for concern.

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http://www.trinity.edu/mkearl/strat.html

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Warren Buffet again:

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[We] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter.” Mr. Buffett said that he made $46 million in 2006 and was taxed at 17.7 percent, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 percent.

If the majority of your income is derived from tax-advantaged sources, then your tax burden can be minimized...drastically. For example, it is estimated that Ross Perot took in $230 million in 1995 but only paid 8.5 percent of that income in taxes. Compare this to the person with an earned income over $259,700, who would pay 31.1 percent in taxes. The Atlanta Journal-Constitution reported that this is because Perot "minimizes his tax bill by investing heavily in tax free municipals, tax-sheltered real estate, and stocks with unrealized gains."

A more recent example is Frank McCourt, the owner of the L.A. Dodgers. He received a reported $108 million and paid no federal and state taxes because of loss-carry forwards.
The truth is that one of the reasons the super-affluent get into that position is by being masters at minimizing their realized income

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http://www.roshawnwatson.com/2010/05/do-rich-pay-their-fair-share-of-t
axes.html

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Ah-hah! I found one that traces the timeline of a society where inequality leads to 1. All civil societies/cultures develop Elites; this is the nature of social animals. Elites are selforganizing groups which share the same self-interests, that is, a higher-order clique; they are not conspiracies or formal organizations...

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I don’t think the answer is taxes either, Mala...I see it as a BEGINNING, part of the solution, to free up more spendable money.

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But obviously there need to be numerous solutions to the problem, just as there were numerous causes. Outsourcing is DEFINITELY one of them; if we found ways to make it more profitable to keep jobs in-country, that would help. I’m sure there are numerous things that could contribute, but I’m not well versed enough on the issue to think of them.

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Originally posted by AnthonyT:
"Pay down the deficit. Won't create jobs, WILL prop up the value of the dollar. Good for peeps who've invested in gubmint paper, not much else.

Spend money on infrastructural improvements like green energy, healthcare and teaching. Now THAT will definitely create jobs at home!"

Hello,

Decreasing the deficit would liberate more money for use by the government on things like infrastructural improvements like green energy, healthcare, etc.

Paying down one's credit cards achieves positive savings eventually.

--Anthony

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It's this I disagree with. How would exiled nobles forcibly repress the revolution? How would they retaliate in ways that weren't already going on, anyway?

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I do not think increasing taxes during a financial bind is wise.

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They killed aristocrats and non-aristocrats alike, they nearly committed genocide in the region Vendee, they massacred many citizens of Lyon in brutal ways.

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The French revolution and the civil war-like turbulance that followed was never, ever in any way a question of choosing between "bad options" where bad was defined as loss of civilian lives or the defense of the actual revolutionary ideals - like rights. It was about power and fanaticism.

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They were at war with Austria well before they killed the king, well before the terror - because France declared war! A defense-through-attack strategy that wasn't even all that unsuccessful. Having a French aristocrats in exile would not have changed much about that.

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Originally posted by Niki2:
Anthony, maybe surprisingly to you, but I agree that it doesn't feel good to me either. But given I'm aware that an awful lot of those riches are ill-gotten gains (as I have said), that countes my "guilt pangs" completely. The discrepancy is SO huge, putting their taxes back to where they were before Bush isn't actually a "tax increase" to me, and the fact that, as Sig said, it's not going to stop them buying stuff, makes me in favor of it.

Remember, if the tax cuts for the rich expire, they're essentially just taking back a freebie gift Dumby gave them. They did pretty well before that gift, somehow I think they'd survive going back to those "lean times", as it were.

If the inequality weren't so huge and the uber-rich didn't have all the dodges they do to avoid taxes, I'd actually be in favor of everyone being taxed equally. Don't fall over.


Hippie Operative Nikovich Nikita Nicovna Talibani,
Contracted Agent of Veritas Oilspillus, code name “Nike”,
signing off

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