Rich Getting Richer, ever wonder why?

But, my response is - avoid debt. Your response is...?

 

All that needs to be done is to allow these things to take their natural course - the frugal, wise and well-paid should profit from their attributes.

But wealth is being manipulated by policies and dirty tricks which have and are giving the wealthy uber-advantages - well over and above what might be naturally occurring.

Rolling back the Bush tax cuts (for everyone) could be the first order of business. We all need to pay our fair share and should be honored to do so rather than rely solely on spending cuts - which put an undue burden on those who can afford the burden least. I don't look at this roll-back as progressive taxing but a mechanism to right a erroneous attempt to please and appease at the expense of the country's economic health.
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This is where I think it gets interesting. I think Steve Jobs is a person who has, through innovation, created real wealth in our society making everyone better off - and he happened to get rich along the way, but I doubt his motivation was simply to get rich and then get richer and richer at the expense of others.

On the other-hand, Warren Buffett has gotten rich, through his form of innovation, by exploiting financial anomalies primarily in secondary financial markets. I argue most of his wealth has come at the expense of others and it appears the purpose of his business ventures is to get rich and then get richer and richer for the sake of getting richer.

I think there is a difference. Whatever the course of the tax debate takes, I think it important to protect, nurture and encourage (basically get out of their way and let them do what they do best) innovators like Steve Jobs. I neither begrudge or hold Buffett in high regard in that respect - I just don't want government trying to be the arbiter on how people decide to make their money as long as it is legal.
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10% of $10,000 is $1,000
10% of $100,000 is $10,000
10% of $1,000,000 is $100,000.

A flat tax - the high income would pay more.

A tax based on consumption would tax people with high wealth accordingly, and there is no way to hide from it. A consumption tax can exclude basic necessities like food and health care, etc.

The intent of progressive taxation is wealth redistribution.

 

You made this statement:

A flat tax rate system or a consumption tax system would accomplish the same goal.​

A progressive tax system is designed so that those with more pay more so that those with less can pay less. This is a system of wealth re-distribution.​

 

There is no perfect system. The choice depends on the flaws one is willing to live with. I can live and have been living with a progressive income tax system - I simply think we can at the very least improve the current system - my ideal would be a consumption tax system, but I don't expect to see that in my lifetime - and I have stated that before.

 

Interesting anecdotes, but they have nothing to do with the data. Of course people who focus on making money make more money than those who don't. That isn't the point. However, if it helps you to dismiss statistics....

Separately, regarding flat tax rates - yes, they could be fair.

However, that will only be the case when we have flat rate salary increases, too. Give everyone the same $500 a month increase. Fair, yes? Or should that be a percentage of salary? If so, the same applies for tax. Flat tax rates affect the poorer more then the richer, just as flat rate salary increase would benefit the lower earners more then the highly paid. To understand this, you need to consider outgoings vs discretionary spend.

 

If the income tax was flat, overall taxes would be regressive. But I guess that is the point, right?

 

Bingo! Sounds "fair", but favours the richer members of society.

 

Has everything to do with the data. We have to see the individual behaviors adding up to sum total. If we can not, we have to question the data. The data has to make some empirical sense or we have to question the data.

It is clearly the point. This simple point gives us the answer to the question. I don't understand ignoring the big simple things in favor of some overly complex theoretical answers.

This is clear - Given 100 people, if 10 have a primary focus above all else to accumulate wealth, and 1 of those 10 is exceptionally good at it - over time the 10 will accumulate more and more wealth relative to the 90. And the 1 will accumulate more and more wealth than the 99. This is obvious. The question is what do we do about it, if anything? I argue that the things we have been doing have been making it more difficult for the 90.
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No. If you are suggesting my motivation is punitive you are wrong.

But I challenge you to think about a regressive tax system in the context of incentives to get rich. If your first $1 is taxed at 100%, and your second at 99%, etc. What is your motivation to earn $1 compared to earning $101? What is your motivation to earn $1 if you can not earn $2 or more?

Next I tell you that there are many areas in our current tax code that is regressive. So we have areas in the tax code where people are motivated not to earn that theoretical $1 and we have areas where people are highly motivated to go from $1 to $100 as fast as possible. This is what many do not see in our current system - these incentives have an impact on economic behaviors.

 

I see "the point" as something different.

If that 90/10 split example has always held true, why are the 10% proportionally a lot better off than they have been in the past.. why is the divide growing (not individual wealth).

If, at one time, I could expect to be twice as well off by exhibiting those behaviours, why might I now expect to be (for example, and not based on real numbers) - 5 times better off? What changed?

 

I support a tax system that is fair and shows no favoritism to anyone.
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I argue that since the 60's it has been the failed war on poverty in this country. i doubt you would argue that the top 10 are more greedy now than in the past, so what has changed? Within the black community since the 60's the disparity between wealthy blacks and poor black has grown, why - poor blacks have grown more and more dependent on the "nanny state" and certain policies have had a devastating impact. For example minimum wage legislation - unskilled inner city youth, can not get entry level jobs partly because they are priced out of the market - without entry level jobs, higher level jobs do not become available - perpetuating a cycle of desperation. Letting young people get their foot in the door would make a big difference on urban area poverty.

 

OK - leaving aside the question that 7 bucks an hour can price someone out of the market, how does that work for the divide between the median earners and the highest earners? Or the people already above that? You know - the middle classes. Why are they falling behind faster (or why are those ahead doing so much better if you prefer)?

 

Just note that $7 is not what the cost is.

There is normally a system for the unskilled to gain marketable skills - sort of like apprenticeships. If this is cut off, you cut off that path to wealth. My first real job was with McDonalds making less than $3 an hour. As I gained market skills, my wage went up accordingly. But most important, I learned what employers valued.

People put an incorrect value on a college education. Very few people leave college after four years with highly valued marketable skills. It is a filtering mechanism. The emphasis on college degrees has devalued other forms of education which traditionally served lower income people pretty well. In this condition people with college degrees materially out earn those who do not attend college. This system adds to the wealth gap. Government in its attempt to give everyone a college education has done so at the expense of those who are not college material and would be better served by other forms of education or job preparation. Trade schools are often ripe with fraud, harming those who take that path. The system is not in proper balance, thanks to the "one size fits all" government mentality.

 

Ace,
I am not arguing some "opinions may differ" point. I am stating an incontrovertible fact that the only thing that keeps taxes overall a bit progressive is that income tax is progressive. If income tax was flat, overall taxes would be regressive. No two ways about it.

As for the insanity of the "incentives" talking point, we'd have to believe that the reason people get rich is not to be rich, but to pay less taxes.