The Last Palace

[Panope]

When quoting tax rates for wages, should we not also look at INVESTMENT tax rates as well. Seems the later is more applicable to the very top accumulators. 15% seems a little low to me. Not to mention the 0% percent rate on things that are written off has a business expense yet provide fantastic personal benefit to the top (jets, "offices" in paradise, etc).

Steve

[Panope]

....... Put whatever you want to give your kids in a trust. Now.

Just don't tell them about until they are old, themselves. Like high taxes removing the incentive to earn, would a large inheritance not produce a similar result?

Steve

[BeauV]

Beau, of course you're right--my response was more emotional than analytical.

I long for the "good old days" when our country was viewed as having enough opportunity that people saw a tax on the rich as likely a tax that would apply to them when their ship came in.

I certainly grew up believing that one could "make it". My parents and grandparents personified that to a high degree, and as a result taught me I could "make it" through hard work and determination. I believed them, it worked out.

That said, what was also explained to me was that there was no glory in being ostentatious. The mansions of Newport RI and Beverly Hills, J-Class sloops, and private islands in the Caribbean were referred to as things which only selfish egotists thought were good ideas. I remember a conversation with my maternal grandfather, from when I was 15, who explained to me that building a 20 room house was just a sign of a rich and insecure person who had no imagination and understanding of what they could have accomplished with their money. Years later I would recall that conversation after buying a very nice house in Hillsborough CA and discovering that most of my best friends were intimidated by it. (Hey, it only had 7 garages, a servant's building out back, and six bedrooms!) My x-wife and I sold the place 18 months after we bought it and moved into a three bedroom house in a regular neighborhood in San Mateo. Our friends started behaving rationally again, as had we.

Obviously, sailing MAYAN and belonging to various yacht clubs is somewhat ostentatious; but there is a real difference between that and having a private island like Richard Branson's, three helicopters like one of my VC buddies, and a 757 fitted out with a cargo deck to haul the McLaren and a limo like one of the Google twins has. I think folks have trouble understanding the difference between the top 10% of folks with wealth and the top 1% or 0.1%.

This really boils down to: "How much money is enough?" To me when we get into the top 1% of asset and income folks, they have plenty. Is there really a good reason for someone to collect their 5th Billion? I rather doubt it. What's actually wrong with a 90% tax on income once an asset threshold has been reached?

I fear that when folks say: "Tax the rich" most of them don't actually agree on what being "rich" is. I see nothing wrong with a 90% income tax on folks with a net-worth over a billion dollars. Again: "How much money is enough?" Having established that there is a certain level where a 90% tax rate is completely justified, and a tax rate where no tax is justified (For me that's all income up to about $50,000). Then, aren't we just arguing about the slope of the curve?? It reminds me of the old joke between the philosophy professor and the good looking woman. I'm sure you've heard it. The punch line is "We've established what you are, young lady, we're simply negotiating the price."

But, of course, it's a lot easier to yell "Tax the rich" than it is to actually say: "Tax those with assets over one billion at 90%!" That second one just doesn't have the same caché. It also doesn't fit on a sign well or over a Meme.

As a result, the absurdly rich folks get to defend themselves by making all manner of unproven and unsupportable claims that it's they who are doing the real job creation in our economy (which is false), it is they who are stimulating the innovation and growth in the economy (also false), and that our society wouldn't be as great as it is without them (obviously not true). Sadly, this is where the "anyone can make it" folks actually help defend those who are doing an excellent job of insure that they don't make it.

When it looks like this defense will fail, we get all manner of absurdities. Examples include: Defending the reduction in estate taxes for billionaires on the basis of preserving family farms (no shit, I've actually heard the is from the Koch brothers). Breaking up families through the impoverishment of "Death Taxes". (Now there's a bit of marketing spin.)

I'm really tired of the 0.1% hiding out pretending they are part of the 10% so that the relatively poor folks have to defend them from the villagers with pitch forks. But that's what's happening.

[Panope]

Beau, I agree with everything you said in that last post. Ok, maybe I would have a bit lower threshold (1 billion?) than you.


Steve

[kdh]

There are 540 billionaires in the US that hold a combined $2.4t, and 350m people in the US.

Billionaires are in the top 540/350m = .00015%.

If we took all of the billionaires' money, not just all their income but all they have, and distributed it evenly we'd all get about $7,000. That's a lot of cheese to some people but we're all still going to have to work for a living.

[kdh]

Beau, I think I approach spending money much the same way as you.

For me it's not about having enough, it's about giving the federal government any more than the ungodly sums I give it now rather than to much better causes.

Can anyone remember an instance of changing tax rates without changing them for everyone? Changed to varying degrees but everyone felt they were part of the increase or decrease. The tax increase associated with the Bush cuts expiring only hit the top bracket. Now we don't talk about cuts or increases for all but just about increasing taxes for the wealthy, as you point out Beau, whatever that means. To Senator Warren it's $50m or more.

[Anomaly]

Hey! Hold it there with all this talk about billionaires. Don’t you people listen to the coffee bean guy— it’s “people of means.” Please.

(Disclaimer: I don’t know how to do the purple font)

[kimbottles]

And then there is this article........

https://www.nytimes.com/2019/02/04/opin ... hultz.html

That was the partial inspiration for my post at 1620 EST.

Krugman is too far left for me, but he does make some good points.

I agree that Krugman is too radical for me, but he does post interesting information sometimes, this being a good example.

[Panope]

There are 540 billionaires in the US that hold a combined $2.4t, and 350m people in the US.

Billionaires are in the top 540/350m = .00015%.

If we took all of the billionaires' money, not just all their income but all they have, and distributed it evenly we'd all get about $7,000. That's a lot of cheese to some people but we're all still going to have to work for a living.

I agree, Keith. The super rich do not yet hold a significant % of our wealth. I'm concerned about what percentage they will hold in 50 years if the current trend continues.

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

[kimbottles]

There are 540 billionaires in the US that hold a combined $2.4t, and 350m people in the US.

Billionaires are in the top 540/350m = .00015%.

If we took all of the billionaires' money, not just all their income but all they have, and distributed it evenly we'd all get about $7,000. That's a lot of cheese to some people but we're all still going to have to work for a living.

I agree, Keith. The super rich do not yet hold a significant % of our wealth. I'm concerned about what percentage they will hold in 50 years if the current trend continues.

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

I think study of this link might surprise some. Sobering information and clearly not healthy (IMHO.)

https://en.m.wikipedia.org/wiki/Wealth_ ... ted_States

Passages like:

The "richest 1 percent in the United States now own more additional income than the bottom 90 percent.”

(And, yes a number of us here are part of that 1%, but I still believe this imbalance is not sustainable no matter that I am part of that 1%.)

And:

“More recently, in 2017, an Oxfam study found that eight rich people, six of them Americans, own as much combined wealth as half the human race”

A major problem as pointed out by Keith is we 1% are not very happy with how the Fed spends the dollars we have each been taxed. (I personally choose to believe ALL my tax dollars go to support the new Webb Space Telescope so I feel better about what I have paid into the federal kitty.)

We better address this before it explodes into something really ugly.

[Panope]

My favorite rich person statistic: In 1913, Rockefeller's net worth was equal to about 2% of GDP

[Benno von Humpback]

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

I don’t like the sound of guaranteed income either, but providing meaningful and remunerative work for the underclass we are creating in the various ways discussed above seems more difficult.

[Olaf Hart]

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

I don’t like the sound of guaranteed income either, but providing meaningful and remunerative work for the underclass we are creating in the various ways discussed above seems more difficult.

Safe bicycle pathways?

[kdh]

My own view is that the wealth disparity, to put it plainly but obviously oversimplify somewhat is a result of:

1) Too many humans on the planet--with larger economies/increased specialization/automation there isn't enough work for everyone.

2) To earn wealth, having marketable skills and/or being willing to take risks with new enterprises has become essential.

Any sort of playing Robin Hood is not a direct solution.

[Benno von Humpback]

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

I don’t like the sound of guaranteed income either, but providing meaningful and remunerative work for the underclass we are creating in the various ways discussed above seems more difficult.

Safe bicycle pathways?

Good proposal. I'd even give up the pleasure of impeding traffic to use them. How about subsidized in-home care for the non-indigent elderly?

[kdh]

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

I don’t like the sound of guaranteed income either, but providing meaningful and remunerative work for the underclass we are creating in the various ways discussed above seems more difficult.

Safe bicycle pathways?

Good proposal. I'd even give up the pleasure of impeding traffic to use them. How about subsidized in-home care for the non-indigent elderly?

Sounds like work for welfare. I thought guaranteed income was for just showing up. A reward for merely existing.

[kdh]

My favorite rich person statistic: In 1913, Rockefeller's net worth was equal to about 2% of GDP

And the foundation built on that wealth is still making grants of $200m per year.

https://www.rockefellerfoundation.org/2015-summary-financial-statements/

[Olaf Hart]

Yes, we all need to work. I shudder whenever I hear talk of a garanteed income for all.

I don’t like the sound of guaranteed income either, but providing meaningful and remunerative work for the underclass we are creating in the various ways discussed above seems more difficult.

Safe bicycle pathways?

Good proposal. I'd even give up the pleasure of impeding traffic to use them. How about subsidized in-home care for the non-indigent elderly?

Sounds like work for welfare. I thought guaranteed income was for just showing up. A reward for merely existing.

That’s the whole problem with welfare, it pays people money to go away.

The real challenge is using welfare money to provide the two missing ingredients for true happiness, meaningful relationships and meaningful work.

[Olaf Hart]

I have been on about safe bike paths for years, even instrumental in the feds putting up a $65 million fund to help local governments to build them.

Not only a good “ welfare” project to teach folks work skills, but lots of flow on public health benefits for safety, diabetes, obesity, depression, the list goes on...

[kimbottles]

I, of course, have no problem being solidly behind safe bike paths.
Back when I was employed, I often used bike paths for my commute to work and much enjoyed them.

There is a rails to bike path movement here in the USA that is trying to finish a sea to shining sea path across the continent. I would like to ride it if they can get it finished while I am still cycling fit.

[Benno von Humpback]

I have been on about safe bike paths for years, even instrumental in the feds putting up a $65 million fund to help local governments to build them.

Not only a good “ welfare” project to teach folks work skills, but lots of flow on public health benefits for safety, diabetes, obesity, depression, the list goes on...

I think Dr. Paul Dudley White, one of the fathers of modern cardiology was one of the first American proponents of bike paths and the one on the Boston side of the Charles is named after him. I have mixed feelings about some of them in my personal life, but I’m all for the idea.

[BeauV]

Keith,

Thanks for correcting me on the $$$$ amount which we’d need to qualify as “rich” to be able to do my “Networth Determines Income Tax Bracket” scheme. Just to be clear, I’m not suggesting we take people’s assets away only that their income taxes be indexed by their net worth. We can pick a number like $200m if you like. I think that’s probably enough to live on. The key is to stop folks living on renting out the money their Dad or Grand Dad or Great Great Grand Dad made. Instead, we do the opposite.

We have the completely unsupported belief that gains off of capital investment should be taxed at a lower rate because that will encourage more investment vs outright spending. Folks making up these policies don’t answer the simple question: “Just how much can one person spend in a year.” Remember that hysterical movie in which a guy has to lose all this money in ordered to get an even larger amount. He has real trouble losing it all. I always found that amusing.

——-

Eric,

When it comes to dealing with the work vs self-worth issue, I know of no better read than “Player Piano” the first book by Kurt Vonnigut (sp?). He addresses this issue head on in a very interesting way.

——-

Finally, in a country with crumbling infrastructure and a need for massive upgrades to its IT backbone and any number of other things, I simply can’t believe that we can’t put people to work! It might not be the work they want, but there is certainly a lot of it that needs doing.

[Benno von Humpback]

Beau, we agree about work, but it’s complicated. I actually think most of those who are capable of working already have jobs. Not good ones, but they’re working. Many of the rest have social, psychological, and physical issues which will prevent their participation in any work program.

[kdh]

The key is to stop folks living on renting out the money their Dad or Grand Dad or Great Great Grand Dad made.

On inheritances. My parents grew up poor. My dad studied engineering, was first in his family to go to college, and made a living sufficient to help us with college, but he insisted we learn electrical engineering (I studied math in grad school). By providing my daughter with an inheritance she can be productive in whatever way she wants--playing cello in the BSO comes to mind. Along with paying for my niece's and nephews' educations providing that flexibility is to me the greatest joy of having wealth.

On the disincentive to work. Adele rolls her eyes when she sees the expensive clothes and country club lifestyles of kids in her school whose families likely don't have 1/100 of the wealth we have. Values. Essentially all her clothes come from a used clothing store or the sale rack. I shop with her. She's ridiculously cheap. Her inheritance is "family money," not to be spent on anything not sensible. I'm not worried.

In principle I don't have a problem with progressive taxes based on either income or assets.

Finally, in a country with crumbling infrastructure and a need for massive upgrades to its IT backbone and any number of other things, I simply can’t believe that we can’t put people to work! It might not be the work they want, but there is certainly a lot of it that needs doing.

If I had any sense that our country's government and its people could do this effectively I'd write Uncle Sam a check whether he asked or not. Does anyone think we could effectively pull off a public works program like we had in the 30s? Obama's stimulus money around here seemed to have been spent on useless highway exits and waste.

[Benno von Humpback]

If I had any sense that our country's government and its people could do this effectively I'd write Uncle Sam a check whether he asked or not. Does anyone think we could effectively pull off a public works program like we had in the 30s? Obama's stimulus money around here seemed to have been spent on useless highway exits and waste.

This histories of the New Deal work programs I've read suggest that it they were less efficient and effective than has sometimes been portrayed. In addition, the problem was really one of lack of jobs. There were no multi-generational epidemics of drug addiction, obesity/diabetes/vascular disease, chronic pain, sociopathy, and other social and biological responses to despair and displacement, at that time. Work is obviously critical, but we need a multi-pronged approach to restore communities and families and many people of working age today may simply be beyond the point of employability. I believe nothing we can do is going to look very effective while it's happening, but we have to do it anyway.

[kdh]

There were no multi-generational epidemics of drug addiction, obesity/diabetes/vascular disease, chronic pain, sociopathy, and other social and biological responses to despair and displacement, at that time. Work is obviously critical, but we need a multi-pronged approach to restore communities and families and many people of working age today may simply be beyond the point of employability. I believe nothing we can do is going to look very effective while it's happening, but we have to do it anyway.

Good point. I'll add that drug addiction and obesity are associated with unemployment, and there is a plausible argument that lack of work is causing addiction/obesity, not the other way around. So going forward at least providing jobs might help.

For now we have homeless people eating out of dumpsters. In our area Ann and I have been active with the Pine Street Inn and Boston Healthcare for the Homeless. They are phenomenally efficient and effective and would serve as a great model for expansion. I'd be ecstatic to see more of my tax dollars going to programs like these.

[Benno von Humpback]

There were no multi-generational epidemics of drug addiction, obesity/diabetes/vascular disease, chronic pain, sociopathy, and other social and biological responses to despair and displacement, at that time. Work is obviously critical, but we need a multi-pronged approach to restore communities and families and many people of working age today may simply be beyond the point of employability. I believe nothing we can do is going to look very effective while it's happening, but we have to do it anyway.

Good point. I'll add that drug addiction and obesity are associated with unemployment, and there is a plausible argument that lack of work is causing addiction/obesity, not the other way around. So going forward at least providing jobs might help.

For now we have homeless people eating out of dumpsters. In our area Ann and I have been active with the Pine Street Inn and Boston Healthcare for the Homeless. They are phenomenally efficient and effective and would serve as a great model for expansion. I'd be ecstatic to see more of my tax dollars going to programs like these.

I agree that loss of meaningful work and economic loss are at least close to the root cause of the social and personal decay we're discussing and must be addressed, but a steak dinner is not what someone in the advanced stages of starvation needs.

Also, I don't think the post-Soviet health crash and explosion in substance abuse were associated with big changes in employment rates, but had more to do with the loss of a sense of social security.

[SemiSalt]

If I had any sense that our country's government and its people could do this effectively I'd write Uncle Sam a check whether he asked or not. Does anyone think we could effectively pull off a public works program like we had in the 30s? Obama's stimulus money around here seemed to have been spent on useless highway exits and waste.

This histories of the New Deal work programs I've read suggest that it they were less efficient and effective than has sometimes been portrayed. In addition, the problem was really one of lack of jobs. There were no multi-generational epidemics of drug addiction, obesity/diabetes/vascular disease, chronic pain, sociopathy, and other social and biological responses to despair and displacement, at that time. Work is obviously critical, but we need a multi-pronged approach to restore communities and families and many people of working age today may simply be beyond the point of employability. I believe nothing we can do is going to look very effective while it's happening, but we have to do it anyway.

The New Deal work programs didnt last very long, probably not more than a year, and, on the plus side, created art and research that's been a useful legacy.

[kdh]

Also, I don't think the post-Soviet health crash and explosion in substance abuse were associated with big changes in employment rates, but had more to do with the loss of a sense of social security.

Will you elaborate on "the loss of a sense of social security?"

[Benno von Humpback]

Also, I don't think the post-Soviet health crash and explosion in substance abuse were associated with big changes in employment rates, but had more to do with the loss of a sense of social security.

Will you elaborate on "the loss of a sense of social security?"

The Soviet system provided a clear and fixed set of expectations, the assurance that no one would ever be forced to compete on their merits, and a rigid class structure. That is, a tiny nomenklatura and everyone else. Once that was thrown over in favor of a quasi-meritocracy, free speech, capitalism, and an eroded safety net, people lost their sense of security and didn't like what they got in return. That lasted for a decade or so and now the whole corrupt authoritarian system, minus the formal ban on capitalism, has been reassembled under Putin with the clear support of the working class. Masha Gessen and others have written brilliantly on the rise and return of "homo sovieticus."