6 ms·

"earn an absolutely massive portion of all income in the state" - it's not as if the money is just sitting there and 1% are taking most of it. Wealth is _create

"earn an absolutely massive portion of all income in the state" - it's not as if the money is just sitting there and 1% are taking most of it. Wealth is _created_. The top 1% _create_ most of the wealth in California. How is it just that they are required to pay so much in taxes? Before I left California, my marginal tax rate (including Federal) was over 52%. Super-high earners in California have marginal rates over 60%. How is that just?

jsprogrammer 11y ago
Money is created from bank loans. Wealth may be slightly different, but at any given time there is a fixed amount of money in existence and the only way to increase it is to originate more bank loans.
- Randgalt 11y ago
  Money changes hands in exchange for something of value. I give Apple $300 and I get an iPhone. Apple takes that $300 and gives it to someone else in exchange for something they value. Money is merely a medium of exchange. The wealth is the products we produce and trade for.
  - jsprogrammer 11y ago
    Yes, but where does $300 come from in the first place?
    - Randgalt 11y ago
      I got it by trading with someone else. You seem fixated on the money supply, which is (mostly) irrelevant in a discussion of wealth and income.
      - jsprogrammer 11y ago
        Wealth and income are denominated in dollars, or other bank currency generally, so they are bound by their availability. For example, you cannot have $2,000,000,000,000,000 in annual income, simply because $2,000,000,000,000,000 do not exist. >I got it by trading with someone else. If you examine the transaction in its historical context, there will be a chain of trades going back to a bank loan (or multiple). You seem fixated on the trade of dollars, while seeming unconcerned about how dollars come to exist.
        Randgalt 11y ago
        The money could have come from a gold deposit 150 years ago. Who knows. It doesn't have to come from debt. The number of units of currency I have is also irrelevant. The only relevant thing is how valuable those units are to someone else. The value of the units is directly correlated to the amount of work required to get the units.
        jsprogrammer 11y ago
        The amount of non-debt money in circulation is <20% and always shrinking. >The value of the units is directly correlated to the amount of work required to get the units. Do you have a proof of this? I doubt there is much correlation between "amount of work required" and the value of the units. The FRB has instantiated ~$4,000,000,000 with almost no work required and its dependents have gotten those units, also with very little work required.
    - btilly 11y ago
      I strongly suggest that you read http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html. To save time, skip to the section "Money is not Wealth" and then read from there. Note, Paul Graham was the public face of founding ycombinator.
      - jsprogrammer 11y ago
        I am familiar with the argument, but note that Randgalt said: > it's not as if the money is just sitting there and 1% are taking most of it Well, the money is just sitting there. Additionally, of all the money that exists, banks effectively take ~10% off-the-top annually through interest privilege, giving them (and their shareholders) a headstart. Everyone else gets to fight from what's left before it gets destroyed in a principal payment.
        btilly 11y ago
        You do not appear to be acquainted with how wealth works. Suppose I buy $15 of Xynodyne stock and $1 per share. Suppose later it is trading at $2 per share. I have just made $15 without any money being added to the system. I sell my shares. Do I keep money? No! I buy shares in a money market. Leave it there for 3 months, then sell that for shares in Apple. At each step I am wealthier and wealthier. And it is wealth that wasn't sitting there, it was created out of the fact that people price assets differently. And they price them differently because the company is producing something valued more highly by our whole society. Money doesn't actually enter into the picture. I write a check from my bank account to my broker. My broker settles transactions electronically. I eventually get a transfer from them to my bank, from which I pay my taxes. All of the "money" in this system is a brief record created in one place, destroyed in another. This is all basic economics of fractional reserve banking. The size of our economy is no more limited by the amount of money that exists than it is by how much gold is in the ground. Money is a medium of exchange, not a measure of value. And the rich got that way in one of three ways, owning something that became valuable, creating value where none existed, and theft. In general the ones who got really rich through theft did so through political connections (Carlos Slim comes to mind). Successful entrepreneurs like Paul Graham fall in the second bucket. And the first bucket happened historically, for example the Astor family of New York, but isn't so common now.
csours 11y ago
User tag: Rand Galt. Parody Level: Poe.
sp332 11y ago
"Most earnings for the top 1 percent come from investment proceeds; the stock market has risen steadily since mid-2011." There's no particular reason that middle-class people couldn't make the exact same investments in the stock market. The only difference is a lower amount of capital to invest. "Created" is not the word I'd use to describe investing your wealth and sitting around waiting for a return.
- Randgalt 11y ago
  When I buy a stock or invest in some company, I'm taking a risk. That risk is a type of production - it requires me to think and make decisions. Obviously, I can lose in an investment. So, yes, it is a productive activity.
  - sp332 11y ago
    And yet, it's much less risky that what everyone else has been doing, since mean and median incomes have declined.
    - ArkyBeagle 11y ago
      They have not declined. They just have not kept up.
      - sp332 11y ago
        From the article: "Average adjusted gross income for filers in the second-highest fifth dropped by about 1 percent.... Adjusted gross income in the second-lowest fifth declined the most, 9 percent".
        ArkyBeagle 11y ago
        On an adjusted basis, sure. I was speaking in absolute terms. What's happening is that people are leaving the second quintile. About 1/3 move down, 2/3 move up. The sort of thing people in the second quintile used to do has evaporated.
blackguardx 11y ago
It used to be 90%. Also, a broader discussion could be had around the services the government provides that allow people to generate wealth. I'm not going to voice an opinion on what is "just," but the money has to come from somewhere.
awinder 11y ago
* create most of the wealth from employees educated under taxpayer funded education, utilizing tax-payer funded infrastructure, on business verticals where the bedrock technology was funded through federal tax funded research & grants Fixed it for you. It's fair because it works. America didn't become an economic powerhouse through poor income stratification and letting the rich hoard all the money. It grew through investment in the conditions that are conducive to the rich having the tools to build wealth. Those investments didn't happen when the system didn't force it, see the early half of the 20th century. What we are doing now, all of this lunatic libertarianism that goes on in the valley, this has all been tested before with disastrous results.
jiiam 11y ago
In Europe is far worse. In Italy I believe that 60% is the minimum, with two caveats: - there is a huge problem of tax evasion, in the sense that a big portion of the middle-high income professionals declare only a small fraction of their earning - the health system is public We could argue for hours about whether it's right or not to increase taxes on the richer, but truth is that there is a natural balance that occurs when the tax rate is so high that people prefer to ask Putin for a citizenship. I believe that with these numbers, California might have a problem.
- zajd 11y ago
  > there is a natural balance that occurs when the tax rate is so high that people prefer to ask Putin for a citizenship [citation needed]
  - asf3205984 11y ago
    here you go: http://www.theguardian.com/world/2013/jan/03/putin-grants-gerard-depardieu-citizenship http://www.theguardian.com/world/2013/jan/03/putin-grants-ge... But you might say, well that's only one guy, who cares. So here's a couple more, but if you just google "the rich flee EU" or similar all will be revealed. http://www.france24.com/en/20150808-france-wealthy-flee-high-taxes-les-echos-figures http://www.france24.com/en/20150808-france-wealthy-flee-high... http://www.thelocal.fr/20141229/france-75-percent-super-tax-rich-scrapped-damage http://www.thelocal.fr/20141229/france-75-percent-super-tax-... In a lot of EU countries taxes get rally high really quickly (>50%), but there's not much you're getting back in any kind of service so, no one in the right state of mind is going to pay that, not even the ones setting those taxes. Need a life saving heart surgery? Sure, in 6-12 months, just wait in line like everybody else irrespective of how much in taxes you paid. Want you're kid to go to a good school? Well, there's the shit public schools they can go to paid for with your taxes. Want your kid to go to a good college in another country? Well, the government already took away most of what you earned so bad luck, you don't have enough left to make choices like that, just use the shitty public ones you paid for... etc.
mtanski 11y ago
A big chunk of income tax that comes from states with high earners gets redistributed via the federal government to other states. States with wacky politicians, that want to legalize bigotry via laws. On top of that, many of those states actively try to make their resides worse off (not taking free federal money for healthcare). People living in those states keep re-electing the same representatives who vote to make them worse of. As a result of this I've become pretty apathetic politically (yay political tag lines) and in all honestly I stopped carrying what happens in other states. I can't be bother to want things to change there more then people who live there. Everybody gripes about paying taxes, but I would much happier if a big chunk of that federal tax money (non-mutual goal like defense, treaties etc) that gets redistributed instead ended up in local communities (say 50 mile range). Since a lot of people in the area (NYC) could use a leg up, and it's on our own selfish interest to make them successful. Data: https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/ https://wallethub.com/edu/states-most-least-dependent-on-the... Just look at highest X per $ spend on federal taxes. http://www.huffingtonpost.com/2014/03/26/republican-states-most-dependent-government_n_5035877.html http://www.huffingtonpost.com/2014/03/26/republican-states-m...
- entee 11y ago
  This is true. However it's important to add that state income taxes are deductible on your federal return. While this doesn't entirely offset the imbalance, it does mean that the federal government indirectly subsidizes states with high tax rates (often wealthy+coastal+more to the left politically) in a proportional way. I'm actually glad that in the US this isn't a charged political issue. My family comes from a place where half the country (by region) hates the other half in part because of this kind of tax redistribution. It's not a pretty way to run a country.
  - Randgalt 11y ago
    If you work in Silicon Valley you almost certainly are subject to the AMT and, therefore, cannot deduct state income taxes.
    - 11y ago
ginko 11y ago
> Super-high earners in California have marginal rates over 60%. How is that just? And yet after tax one of those super-high earners will still take (way) more money home than people who earn less.

jsprogrammer 11y ago

Money is created from bank loans. Wealth may be slightly different, but at any given time there is a fixed amount of money in existence and the only way to increase it is to originate more bank loans.

Randgalt 11y ago
Money changes hands in exchange for something of value. I give Apple $300 and I get an iPhone. Apple takes that $300 and gives it to someone else in exchange for something they value. Money is merely a medium of exchange. The wealth is the products we produce and trade for.
- jsprogrammer 11y ago
  Yes, but where does $300 come from in the first place?
  - Randgalt 11y ago
    I got it by trading with someone else. You seem fixated on the money supply, which is (mostly) irrelevant in a discussion of wealth and income.
    - jsprogrammer 11y ago
      Wealth and income are denominated in dollars, or other bank currency generally, so they are bound by their availability. For example, you cannot have $2,000,000,000,000,000 in annual income, simply because $2,000,000,000,000,000 do not exist. >I got it by trading with someone else. If you examine the transaction in its historical context, there will be a chain of trades going back to a bank loan (or multiple). You seem fixated on the trade of dollars, while seeming unconcerned about how dollars come to exist.
      - Randgalt 11y ago
        The money could have come from a gold deposit 150 years ago. Who knows. It doesn't have to come from debt. The number of units of currency I have is also irrelevant. The only relevant thing is how valuable those units are to someone else. The value of the units is directly correlated to the amount of work required to get the units.
        jsprogrammer 11y ago
        The amount of non-debt money in circulation is <20% and always shrinking. >The value of the units is directly correlated to the amount of work required to get the units. Do you have a proof of this? I doubt there is much correlation between "amount of work required" and the value of the units. The FRB has instantiated ~$4,000,000,000 with almost no work required and its dependents have gotten those units, also with very little work required.
  - btilly 11y ago
    I strongly suggest that you read http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html. To save time, skip to the section "Money is not Wealth" and then read from there. Note, Paul Graham was the public face of founding ycombinator.
    - jsprogrammer 11y ago
      I am familiar with the argument, but note that Randgalt said: > it's not as if the money is just sitting there and 1% are taking most of it Well, the money is just sitting there. Additionally, of all the money that exists, banks effectively take ~10% off-the-top annually through interest privilege, giving them (and their shareholders) a headstart. Everyone else gets to fight from what's left before it gets destroyed in a principal payment.
      - btilly 11y ago
        You do not appear to be acquainted with how wealth works. Suppose I buy $15 of Xynodyne stock and $1 per share. Suppose later it is trading at $2 per share. I have just made $15 without any money being added to the system. I sell my shares. Do I keep money? No! I buy shares in a money market. Leave it there for 3 months, then sell that for shares in Apple. At each step I am wealthier and wealthier. And it is wealth that wasn't sitting there, it was created out of the fact that people price assets differently. And they price them differently because the company is producing something valued more highly by our whole society. Money doesn't actually enter into the picture. I write a check from my bank account to my broker. My broker settles transactions electronically. I eventually get a transfer from them to my bank, from which I pay my taxes. All of the "money" in this system is a brief record created in one place, destroyed in another. This is all basic economics of fractional reserve banking. The size of our economy is no more limited by the amount of money that exists than it is by how much gold is in the ground. Money is a medium of exchange, not a measure of value. And the rich got that way in one of three ways, owning something that became valuable, creating value where none existed, and theft. In general the ones who got really rich through theft did so through political connections (Carlos Slim comes to mind). Successful entrepreneurs like Paul Graham fall in the second bucket. And the first bucket happened historically, for example the Astor family of New York, but isn't so common now.

csours 11y ago

User tag: Rand Galt. Parody Level: Poe.

sp332 11y ago

"Most earnings for the top 1 percent come from investment proceeds; the stock market has risen steadily since mid-2011." There's no particular reason that middle-class people couldn't make the exact same investments in the stock market. The only difference is a lower amount of capital to invest. "Created" is not the word I'd use to describe investing your wealth and sitting around waiting for a return.

Randgalt 11y ago
When I buy a stock or invest in some company, I'm taking a risk. That risk is a type of production - it requires me to think and make decisions. Obviously, I can lose in an investment. So, yes, it is a productive activity.
- sp332 11y ago
  And yet, it's much less risky that what everyone else has been doing, since mean and median incomes have declined.
  - ArkyBeagle 11y ago
    They have not declined. They just have not kept up.
    - sp332 11y ago
      From the article: "Average adjusted gross income for filers in the second-highest fifth dropped by about 1 percent.... Adjusted gross income in the second-lowest fifth declined the most, 9 percent".
      - ArkyBeagle 11y ago
        On an adjusted basis, sure. I was speaking in absolute terms. What's happening is that people are leaving the second quintile. About 1/3 move down, 2/3 move up. The sort of thing people in the second quintile used to do has evaporated.

blackguardx 11y ago

It used to be 90%. Also, a broader discussion could be had around the services the government provides that allow people to generate wealth. I'm not going to voice an opinion on what is "just," but the money has to come from somewhere.

awinder 11y ago

* create most of the wealth from employees educated under taxpayer funded education, utilizing tax-payer funded infrastructure, on business verticals where the bedrock technology was funded through federal tax funded research & grants Fixed it for you. It's fair because it works. America didn't become an economic powerhouse through poor income stratification and letting the rich hoard all the money. It grew through investment in the conditions that are conducive to the rich having the tools to build wealth. Those investments didn't happen when the system didn't force it, see the early half of the 20th century. What we are doing now, all of this lunatic libertarianism that goes on in the valley, this has all been tested before with disastrous results.

jiiam 11y ago

In Europe is far worse. In Italy I believe that 60% is the minimum, with two caveats: - there is a huge problem of tax evasion, in the sense that a big portion of the middle-high income professionals declare only a small fraction of their earning - the health system is public We could argue for hours about whether it's right or not to increase taxes on the richer, but truth is that there is a natural balance that occurs when the tax rate is so high that people prefer to ask Putin for a citizenship. I believe that with these numbers, California might have a problem.

zajd 11y ago
> there is a natural balance that occurs when the tax rate is so high that people prefer to ask Putin for a citizenship [citation needed]
- asf3205984 11y ago
  here you go: http://www.theguardian.com/world/2013/jan/03/putin-grants-gerard-depardieu-citizenship http://www.theguardian.com/world/2013/jan/03/putin-grants-ge... But you might say, well that's only one guy, who cares. So here's a couple more, but if you just google "the rich flee EU" or similar all will be revealed. http://www.france24.com/en/20150808-france-wealthy-flee-high-taxes-les-echos-figures http://www.france24.com/en/20150808-france-wealthy-flee-high... http://www.thelocal.fr/20141229/france-75-percent-super-tax-rich-scrapped-damage http://www.thelocal.fr/20141229/france-75-percent-super-tax-... In a lot of EU countries taxes get rally high really quickly (>50%), but there's not much you're getting back in any kind of service so, no one in the right state of mind is going to pay that, not even the ones setting those taxes. Need a life saving heart surgery? Sure, in 6-12 months, just wait in line like everybody else irrespective of how much in taxes you paid. Want you're kid to go to a good school? Well, there's the shit public schools they can go to paid for with your taxes. Want your kid to go to a good college in another country? Well, the government already took away most of what you earned so bad luck, you don't have enough left to make choices like that, just use the shitty public ones you paid for... etc.

mtanski 11y ago

A big chunk of income tax that comes from states with high earners gets redistributed via the federal government to other states. States with wacky politicians, that want to legalize bigotry via laws. On top of that, many of those states actively try to make their resides worse off (not taking free federal money for healthcare). People living in those states keep re-electing the same representatives who vote to make them worse of. As a result of this I've become pretty apathetic politically (yay political tag lines) and in all honestly I stopped carrying what happens in other states. I can't be bother to want things to change there more then people who live there. Everybody gripes about paying taxes, but I would much happier if a big chunk of that federal tax money (non-mutual goal like defense, treaties etc) that gets redistributed instead ended up in local communities (say 50 mile range). Since a lot of people in the area (NYC) could use a leg up, and it's on our own selfish interest to make them successful. Data: https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/ https://wallethub.com/edu/states-most-least-dependent-on-the... Just look at highest X per $ spend on federal taxes. http://www.huffingtonpost.com/2014/03/26/republican-states-most-dependent-government_n_5035877.html http://www.huffingtonpost.com/2014/03/26/republican-states-m...

entee 11y ago
This is true. However it's important to add that state income taxes are deductible on your federal return. While this doesn't entirely offset the imbalance, it does mean that the federal government indirectly subsidizes states with high tax rates (often wealthy+coastal+more to the left politically) in a proportional way. I'm actually glad that in the US this isn't a charged political issue. My family comes from a place where half the country (by region) hates the other half in part because of this kind of tax redistribution. It's not a pretty way to run a country.
- Randgalt 11y ago
  If you work in Silicon Valley you almost certainly are subject to the AMT and, therefore, cannot deduct state income taxes.
  - 11y ago

ginko 11y ago

> Super-high earners in California have marginal rates over 60%. How is that just? And yet after tax one of those super-high earners will still take (way) more money home than people who earn less.