12 ms·

When the Rich Said No to Getting Richer

156 points by tysone 9y ago

aczerepinski 9y ago
The business leaders who really matter are motivated by their passion and curiosity, shaping their legacy, changing the world, etc. I don't think a personal tax rate of 90% would stop the next Steve Jobs from doing important work. If we're talking about a class of people who don't enjoy their work and won't keep at it without outsized financial incentives, I really don't think we're describing visionaries that we depend on for realizing our potential as a species. I'm 100% ok if hedge fund managers who underperform the market anyway decide to close up shop and sip pina coladas all day.
- TACIXAT 9y ago
  I dislike the myth that business leaders and entrepreneurs who are motivated by money do not matter. There are plenty of income-motivated people who are building meaningful products.
  - TheAdamAndChe 9y ago
    Sure, but income and wealth inequality is affecting our sociopolitical stability. Should we really prioritize their success over the lower and middle classes? How much higher should executive pay be compared to the workers? Why should executives get tens of millions per year while the laborers make $20-40k/yr?
    - TACIXAT 9y ago
      Not totally sure what you're responding to. I was just commenting on this statement from the parent - >The business leaders who really matter are motivated by their passion and curiosity, shaping their legacy, changing the world, etc. I agree though. Most laborers work 10x harder than I do. I'm just rewarded from having some obscure knowledge. I do not necessarily agree that we should be going after individuals though. I think corporations are the correct target.
chollida1 9y ago
I wrote this a few years ago in response to a similar piece: The problem is that the rich have the ability to take their income in alot of different ways. Tax income more, they'll take it as dividends. Tax dividends more, they'll take it as capital gains. Tax capital gains, they won't realize their capital gains until they can offset them with realized losses or they'll just get bank loans again't their stock holdings. Tax assets on death and they'll pass them o n in trusts. Some will move money off shore if they think they can get better returns that way. The problem is that no tax code can close all loop holes because you just can't foresee the creative ways people will out maneuver the tax code. Who would have thought 25 years ago that companies would buy other companies in different countries, not to acquire their products or markets, but to acquire their headquarters address to lower the tax paid in the US. I don't think anything has changed.
- theseatoms 9y ago
  Because the wealthy have more resources to maneuver their assets and income streams, tax policy complexity is a regressive tax.
- tici_88 9y ago
  "The problem is that no tax code can close all loop holes because you just can't foresee the creative ways people will out maneuver the tax code." I disagree. I simple flat tax rate where everything is taxed at a single rate would close every single one of the loopholes above, if only by making it moot. The fact that the rich can maneuver themselves into a much lower tax rate than the average person presents a significant, unfair advantage in my opinion. A flat tax rate would make things much more equitable. Plus it would asimplify the tax code tremendously.
  - jrimbault 9y ago
    And then we'd have to redo/relearn the last millenium of why we do the things the way we do them.
    - inetknght 9y ago
sharemywin 9y ago
I'm not sure why so many people look up to the rich. They fail at kinder-garden. I have to work very hard to help my 4 year old to understand how to share. If your using money to keep score your probably using the wrong system to keep score. I've been using weight watchers lately and keep score with the right system helps a lot.
- neonhomer 9y ago
  > If your using money to keep score your probably using the wrong system to keep score. I think another side of the problem is 99% of people who are not rich are using the same score and since they are "losing" they hate the rich. If we all stop using money as the score we'd all be better off.
  - UK-AL 9y ago
    Remember there a lot of people where more money can actually make a huge difference in their lives. Most people have a tiny amount of savings, and are struggling to get by.
  - Blackthorn 9y ago
    That's very easy to say when you have money, and not really possible to do when you don't have money.
  - sharemywin 9y ago
    You can keep score how ever you like.
  - sordidasset 9y ago
    What quantifiable system of keeping score is as universally applicaple as money? Money is an awful way to keep score on a global scale, but it seems to be the best we have.
    - wu-ikkyu 9y ago
      What does the score of money measure?
Girlang 9y ago
The problem is, with interest rates at 0.1%, you need $20MM in the bank to be able to retire.
qaq 9y ago
I think the thing we keep forgetting is if "everyone" makes more the only thing that is going to change is housing and food prices and you will gain 0.
- nicktelford 9y ago
  The issue here is not the exact value of earnings (which changes with inflation), but the income distribution, which has become massive. To cite the article, in the 50s and 60s, CEOs earned on average 20 times the average workers' salary; this is now 247 times the average workers' salary.
  - djrogers 9y ago
    So what problems does this 247x gap cause for someone earning a median income?
- onion2k 9y ago
  If everyone makes $10,000 a year more then rich people will barely notice. Poor people would be able to afford to heat their homes and buy insurance. I think everyone who's poor would consider that much a gain.
  - conductr 9y ago
    So the energy and insurance tycoons are the big winners? Also - What makes you think poor people will make such practical spending decisions? I hardly believe they will buy insurance. More likely to buy nicer food/dining out/entertainment and nicer cars/clothes/signals of wealth. Again, this materializes mostly as profit in companies owned by the rich.
  - djrogers 9y ago
    If everyone earns an extra $10k, prices in the most basic consumption items will rise, including housing.
- wu-ikkyu 9y ago
  A reduction in housing and food prices would be a net gain for society, and would in turn reduce crime rates and healthcare costs
aaronchall 9y ago
I don't understand the obsession with financially successful people. If you have ambitions for financial success, learn a skill that is in high demand or find another way to create value for society. If you have no ambitions for financial success, you have no right to go around complaining about the success of others. Stop fetishizing successful people who deprecate their success. Some, like Warren Buffet, are disingenuous and fairly transparent panderers. Others, like George Romney here, may well be sincere. But they achieved success by creating value and making careful and studied decisions about the allocation of capital. > Quite often in the pursuit of more wealth, they trample on the little guys, leaving them to struggle more. Show evidence. > Or through fraud, graft, and knowing who to bribe (see "campaign finance"). Show evidence. Not baseless allegations.
- jimbokun 9y ago
  "But they achieved success by creating value and making careful and studied decisions about the allocation of capital." Or through fraud, graft, and knowing who to bribe (see "campaign finance").
- goda90 9y ago
  Quite often in the pursuit of more wealth, they trample on the little guys, leaving them to struggle more.
chimeracoder 9y ago
Like most treatments of this topic, when comparing tax rates from the 1950s and 1960s to today, it fails to note that very few people actually paid this much higher marginal rates. Instead, the high taxation on the upper income brackets encouraged companies to offer perks and benefits that would not be classified as income, and the wealthy would take advantage of these instead. Furthermore, yes, tax rates are lower today if you exclude Social Security and OASDI[0], but tax revenue as a percentage of national income is higher. That's a sign that the higher tax rates did actually suppress economic activity, and that both the government and its citizens are actually better off with tax rates closer to what they are today than what they were 50-70 years ago. [0] SS/OASDI tax rates have increased sevenfold since they were introduced in the late 1930s
- JumpCrisscross 9y ago
  > the high taxation on the upper income brackets encouraged companies to offer perks and benefits that would not be classified as income, and the wealthy would take advantage of these instead An interesting anecdote on this is in the origin of American private health insurance. It came about from war-era wage freezes. Companies wanted to differentiate, were barred from doing so with price, and so shifted to benefits [1]. [1] https://en.wikipedia.org/wiki/Health_insurance_in_the_United_States#History https://en.wikipedia.org/wiki/Health_insurance_in_the_United...
fulminatorz68 9y ago
Hard to make $$ in a country that worships established wealth without getting into the old boys club. You can make great money with a good idea but working two jobs for 170K gets old.
- JustSomeNobody 9y ago
  Probably not as old as working 2 jobs for 17K. Perspective.
  - fulminatorz68 9y ago
    I'd suggest the same (perspective) to you. I understand fully what you are trying to say but this world is not about pity and never has been. It is about making the best of things and helping who you can as you can while remaining sane.
bko 9y ago
> The theory behind all those high-end tax cuts — a theory that I once found persuasive, I admit — was that it would unleash entrepreneurial energy: The lure of great wealth would inspire business leaders to work harder and smarter, and the economy would flourish. That's one reason I suppose but it's important to note that despite large differences in top marginal tax rates, the percentage of tax revenue as a percentage of GDP has stayed remarkably stable since the 40s. So perhaps something else is going on. [0] https://upload.wikimedia.org/wikipedia/commons/7/75/U.S._Federal_Tax_Receipts_as_a_Percentage_of_GDP_1945%E2%80%932015.jpg https://upload.wikimedia.org/wikipedia/commons/7/75/U.S._Fed...
- sddfd 9y ago
  This is extremely interesting and deserves more attention.
slowmovintarget 9y ago
The damning phrase in the article is "which has left less money for everyone else." The economy is not a zero sum game.
- waisbrot 9y ago
  It's not zero-sum, but it's also not the case that your money and mine are unrelated.
computerwizard 9y ago
Taxation is theft.
- vorotato 9y ago
  Counterpoint, taxation is the money you pay to the corporation called the USA for the ability to work and live in land they own. They then use that money to make the land more appealing attracting more occupants.
  - SoMisanthrope 9y ago
    Your comment is so deeply flawed. But it reflects a generalized misunderstanding of what U.S. federalism is about. The government doesn't own the land, the people do. The government was supposed to support and defend the personal rights to property and personal assets, which are the fundamental resources of commerce. Socialism has failed everywhere that it has been tried.
  - crusso 9y ago
    If that were true then we could sue this USA company for breach of contract (the Constitution) whereby the company was never authorized to own all the land or use its corporate power to attract more occupants.
    - vorotato 9y ago
      Well you can, but the court system is also owned by the same corporation. Monopolies are a pain aren't they....
- sctb 9y ago
  Please don't spam the site with sound-bites; we're after a conversation here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - computerwizard 9y ago
quickConclusion 9y ago
"The theory behind all those high-end tax cuts [...] was that it would unleash entrepreneurial energy [...] The first half of that theory may well have come true. Many of the world’s most successful companies are American — not only Amazon, Apple, Facebook and Google, but also Exxon Mobil, Walmart, Johnson & Johnson and JPMorgan Chase." The article fails to mention that even when the tax code was 90% on the highest earners, most of the successful companies were American, including Exxon Mobil, GM, Ford, DuPont, AT&T... Anecdotally, I don't think I have ever met anyone starting a business thinking "If I don't make more than 2 million a year for myself, I won't have a successful business." So increasing tax rate beyond a couple of millions a year, or even before, seems a no-brainer to me, at least until everybody gets healthcare and free education.
- JSONwebtoken 9y ago
  When the tax code was 90%, the effective tax rate was 10-15%. You clearly aren't informed in your history of American industry. For an individual to make $2 million a year for himself at a 90% tax rate, he would have to own 100% of a company generating $20 million in profit. Assuming the same individual's skills were worth $200k/yr in market salary, you would be suggesting that the individual must have had a greater than 10% chance of growing a $20 million profit business to achieve an expected value of $200k/yr in compensation. You would be wrong. However, if the individual only had to generate $2.5 million a year in profit through their business to take home $2 million a year, that 10% success rate is more realistic.
  - quickConclusion 9y ago
    I am not sure where is the misunderstanding here. The article talks about marginal tax rate at 91% on the take home pay, not effective tax rate. So I am talking about marginal tax rate here too. So NN% (number to be argued) would apply after 500K, 1M, 2M, number(s) would need to be TBD, like the existing tax code. I find progressive tax something really nice, since it helps you get started, and is a fair way for everyone to give back when they're super successful (e.g. healthcare, education). You state this is a cancer, but why?
- 9y ago
mywacaday 9y ago
I wonder how many more jobs would actually be created if CEOs pay was funneled into R&D or expansion or how many job cuts would have been avoided through the years
- harryh 9y ago
  In 2016 GE (for example) spent 5.5 billion on R&D. Their CEO Jeffrey Immelt made about 20 million. I don't think a 0.363% increase in the R&D budget would make much of a difference.
  - waisbrot 9y ago
    So, if I could hire 20 researchers and spend $1m/year each on their salaries and equipment... your guess is that I would accomplish nothing?
    - topgunsarg 9y ago
      If you couldn't have managed that with $5.5Bn then why does an extra $20M help?
common_ 9y ago
There is only one real tax on the wealthy: a revolution in which all property rights are reset. Everything else is a war between the wealthy themselves to redistribute things in their favor.
- sol_remmy 9y ago
  And there you sit with probably $50k-100k in assets while the average African has less than one thousand dollars. If you truly wanted the "revolution" to be fair, then all the money would go to third world countries and you'd be left with $3000. But nope, you actually want to be allowed to steal from the rich so you can live an American middle class life without having to work.
  - waisbrot 9y ago
    The parent post didn't say "and I'll benefit from this". Why can't they have made an honest post -- a truly fair economy would start with most citizens of first-world countries losing everything we've got.
  - common_ 9y ago
    I'm not American, and I'm not middle class. Thanks.
joedevon 9y ago
I was surprised when I clicked the link that I saw text there. Expected an empty page. :p
SoMisanthrope 9y ago
What the article fails to mention is that, when top marginal rate was 91%, there were an infinite number of deductions that you could take. Any expense that was even-slightly business-related was booked as a personal expense and deducted. I recognize that the majority of people on HN are progressives. So, I encourage you to think beyond your personal prejudices and recognize that our tax code stifles productivity and innovation. It's neither moral nor appropriate to work the 6 months of every year to pay the government, just to have the privilege of working the last 6 months of the year to try to pay your bills. Frankly, it's insane. A flat tax is moral and would eliminate all of the monkey business (read: wasted productivity) that takes place, relative to tax planning.
deleted 9y ago
[deleted]
11thEarlOfMar 9y ago
As CEO of GE, Jeffrey Immelt earned $17,744,236 last year. GE has 330,000 employees. If Immelt decided to take $0 and share his income equally with the remaining GE employees, he'd increase each worker's income by $53.77 per year. That's not going to do much to close either the wealth or income gaps. Part of what we are seeing is simply that corporations are getting so much larger than they've ever been in history. Therefore, the pay granted to the CEO is for he or she to oversee larger and larger groups of people.
- harryh 9y ago
  GE employed 304,000 people in 1955. http://247wallst.com/investing/2010/09/21/americas-biggest-companies-then-and-now-1955-to-2010/2/ http://247wallst.com/investing/2010/09/21/americas-biggest-c...
  - 11thEarlOfMar 9y ago
    Walmart employs 2,200,000 today. McMillon's total pay is $19,800,000. Per employee, that's $9.
    - harryh 9y ago
      I agree with your top level point about CEO pay not being significant compared to corporate budgets. I'm just saying that companies that employ a lot of people aren't exactly a new phenomenon.
      - 11thEarlOfMar 9y ago
        What is material to me is the notion that somehow the wealthy are responsible for the plight of the middle and lower class. In the US, the wealth that some enjoy is a side-effect of the economy's behavior. The economy behaves in the way it was designed* (not saying the designs are sound in all respects, but it is intentionally designed and its behavior reflects that design). I'm not convinced that the income/wealth gap itself is 'the problem'. Therefore, taxing the wealthy at a greater level will not be 'the fix'. What we want is for lower and middle income families to have more disposable income, less financial stress, and overall better quality of life. I believe that the most potent knob to affect that is the number of jobs available. Increasing the number of jobs increases the demand for workers. Increasing demand for workers increases the average pay. We can talk about the quality of the jobs as well, but I believe the primary influence from a macro-economic view is the number of jobs. US unemployment is at a 10 year low[0]. So we should see pay (and inflation) creeping up over the next few years, barring some unforeseen economic disaster, and the lower and middle class will benefit. [0] https://data.bls.gov/timeseries/LNS14000000 https://data.bls.gov/timeseries/LNS14000000 * One illustration that keeps coming to mind: Two investors invest in the same instrument. That instrument returns 10% per year. They hold the investment for 5 years. Investor A invests $10,000 Investor B invests $100,000. At time 0 the 'wealth gap' is $90,000. At 5 years, A's investment is worth $16,100 and B's is worth $161,000. The wealth gap has grown to $145,000. It seems to me that people are making the observation that this gap is increasing, and it is, but in reality, it's a natural manifestation of capitalist economies. We've been in a bull market for 7 years, it's borderline unprecedented, and one observable effect is that the gap in absolute $ between rich and poor is increasing.
program_whiz 9y ago
Guess I'm the only one that thinks you should just keep your money if you earn it? The article begins by talking about Romney's character and how he didn't try to take every possible dollar, then tries to attribute this to progressive tax codes. Maybe the "problems" we have are due to the erosion of basic virtues, and trying to make an airtight "system" where no one trusts anyone and we assume total greed and power hunger by every citizen is doomed to failure. Also there's little evidence that charging higher taxes is helping anyone (note highest spending by government in history, wages and income stagnant) -- guess its a given in this forum that higher taxes are assumed to be good...
- acuozzo 9y ago
  > keep your money if you earn it Earned? My ass. A fortune amassed from profits skimmed off of HFT isn't earned and produces nothing of value.
sealthedeal 9y ago
Tax avoidance is your civi duty, tax evasion is illegal.
makecheck 9y ago
When people talk about complex tax codes and the “end of the quarter”, they don’t really consider how these things have evolved into farms of nearly-enslaved workers (accountants). Such horrendous workplaces do exist inside big companies: the job is to figure out how to pay the least tax, and time is of the essence. I knew someone who worked as such a finance person, at a contracting company for the oil industry, 7 days a week from 6 AM to midnight. Oh, he had a day “off” every few months but that was only because the quarter had just ended and literally the next day they started a new march of insanity, all for the numbers. Dozens of workers, hundreds; they all swore at each other, it was a disaster of over-stress and anger, and it was actually more common to find divorced people there than not.

156 points by tysone 9y ago

The business leaders who really matter are motivated by their passion and curiosity, shaping their legacy, changing the world, etc. I don't think a personal tax rate of 90% would stop the next Steve Jobs from doing important work. If we're talking about a class of people who don't enjoy their work and won't keep at it without outsized financial incentives, I really don't think we're describing visionaries that we depend on for realizing our potential as a species. I'm 100% ok if hedge fund managers who underperform the market anyway decide to close up shop and sip pina coladas all day.

TACIXAT 9y ago
I dislike the myth that business leaders and entrepreneurs who are motivated by money do not matter. There are plenty of income-motivated people who are building meaningful products.
- TheAdamAndChe 9y ago
  Sure, but income and wealth inequality is affecting our sociopolitical stability. Should we really prioritize their success over the lower and middle classes? How much higher should executive pay be compared to the workers? Why should executives get tens of millions per year while the laborers make $20-40k/yr?
  - TACIXAT 9y ago
    Not totally sure what you're responding to. I was just commenting on this statement from the parent - >The business leaders who really matter are motivated by their passion and curiosity, shaping their legacy, changing the world, etc. I agree though. Most laborers work 10x harder than I do. I'm just rewarded from having some obscure knowledge. I do not necessarily agree that we should be going after individuals though. I think corporations are the correct target.

chollida1 9y ago

I wrote this a few years ago in response to a similar piece: The problem is that the rich have the ability to take their income in alot of different ways. Tax income more, they'll take it as dividends. Tax dividends more, they'll take it as capital gains. Tax capital gains, they won't realize their capital gains until they can offset them with realized losses or they'll just get bank loans again't their stock holdings. Tax assets on death and they'll pass them o n in trusts. Some will move money off shore if they think they can get better returns that way. The problem is that no tax code can close all loop holes because you just can't foresee the creative ways people will out maneuver the tax code. Who would have thought 25 years ago that companies would buy other companies in different countries, not to acquire their products or markets, but to acquire their headquarters address to lower the tax paid in the US. I don't think anything has changed.

theseatoms 9y ago
Because the wealthy have more resources to maneuver their assets and income streams, tax policy complexity is a regressive tax.
tici_88 9y ago
"The problem is that no tax code can close all loop holes because you just can't foresee the creative ways people will out maneuver the tax code." I disagree. I simple flat tax rate where everything is taxed at a single rate would close every single one of the loopholes above, if only by making it moot. The fact that the rich can maneuver themselves into a much lower tax rate than the average person presents a significant, unfair advantage in my opinion. A flat tax rate would make things much more equitable. Plus it would asimplify the tax code tremendously.
- jrimbault 9y ago
  And then we'd have to redo/relearn the last millenium of why we do the things the way we do them.
  - inetknght 9y ago

sharemywin 9y ago

I'm not sure why so many people look up to the rich. They fail at kinder-garden. I have to work very hard to help my 4 year old to understand how to share. If your using money to keep score your probably using the wrong system to keep score. I've been using weight watchers lately and keep score with the right system helps a lot.

neonhomer 9y ago
> If your using money to keep score your probably using the wrong system to keep score. I think another side of the problem is 99% of people who are not rich are using the same score and since they are "losing" they hate the rich. If we all stop using money as the score we'd all be better off.
- UK-AL 9y ago
  Remember there a lot of people where more money can actually make a huge difference in their lives. Most people have a tiny amount of savings, and are struggling to get by.
- Blackthorn 9y ago
  That's very easy to say when you have money, and not really possible to do when you don't have money.
- sharemywin 9y ago
  You can keep score how ever you like.
- sordidasset 9y ago
  What quantifiable system of keeping score is as universally applicaple as money? Money is an awful way to keep score on a global scale, but it seems to be the best we have.
  - wu-ikkyu 9y ago
    What does the score of money measure?

Girlang 9y ago

The problem is, with interest rates at 0.1%, you need $20MM in the bank to be able to retire.

qaq 9y ago

I think the thing we keep forgetting is if "everyone" makes more the only thing that is going to change is housing and food prices and you will gain 0.

nicktelford 9y ago
The issue here is not the exact value of earnings (which changes with inflation), but the income distribution, which has become massive. To cite the article, in the 50s and 60s, CEOs earned on average 20 times the average workers' salary; this is now 247 times the average workers' salary.
- djrogers 9y ago
  So what problems does this 247x gap cause for someone earning a median income?
onion2k 9y ago
If everyone makes $10,000 a year more then rich people will barely notice. Poor people would be able to afford to heat their homes and buy insurance. I think everyone who's poor would consider that much a gain.
- conductr 9y ago
  So the energy and insurance tycoons are the big winners? Also - What makes you think poor people will make such practical spending decisions? I hardly believe they will buy insurance. More likely to buy nicer food/dining out/entertainment and nicer cars/clothes/signals of wealth. Again, this materializes mostly as profit in companies owned by the rich.
- djrogers 9y ago
  If everyone earns an extra $10k, prices in the most basic consumption items will rise, including housing.
wu-ikkyu 9y ago
A reduction in housing and food prices would be a net gain for society, and would in turn reduce crime rates and healthcare costs

aaronchall 9y ago

I don't understand the obsession with financially successful people. If you have ambitions for financial success, learn a skill that is in high demand or find another way to create value for society. If you have no ambitions for financial success, you have no right to go around complaining about the success of others. Stop fetishizing successful people who deprecate their success. Some, like Warren Buffet, are disingenuous and fairly transparent panderers. Others, like George Romney here, may well be sincere. But they achieved success by creating value and making careful and studied decisions about the allocation of capital. > Quite often in the pursuit of more wealth, they trample on the little guys, leaving them to struggle more. Show evidence. > Or through fraud, graft, and knowing who to bribe (see "campaign finance"). Show evidence. Not baseless allegations.

jimbokun 9y ago
"But they achieved success by creating value and making careful and studied decisions about the allocation of capital." Or through fraud, graft, and knowing who to bribe (see "campaign finance").
goda90 9y ago
Quite often in the pursuit of more wealth, they trample on the little guys, leaving them to struggle more.

chimeracoder 9y ago

Like most treatments of this topic, when comparing tax rates from the 1950s and 1960s to today, it fails to note that very few people actually paid this much higher marginal rates. Instead, the high taxation on the upper income brackets encouraged companies to offer perks and benefits that would not be classified as income, and the wealthy would take advantage of these instead. Furthermore, yes, tax rates are lower today if you exclude Social Security and OASDI[0], but tax revenue as a percentage of national income is higher. That's a sign that the higher tax rates did actually suppress economic activity, and that both the government and its citizens are actually better off with tax rates closer to what they are today than what they were 50-70 years ago. [0] SS/OASDI tax rates have increased sevenfold since they were introduced in the late 1930s

JumpCrisscross 9y ago
> the high taxation on the upper income brackets encouraged companies to offer perks and benefits that would not be classified as income, and the wealthy would take advantage of these instead An interesting anecdote on this is in the origin of American private health insurance. It came about from war-era wage freezes. Companies wanted to differentiate, were barred from doing so with price, and so shifted to benefits [1]. [1] https://en.wikipedia.org/wiki/Health_insurance_in_the_United_States#History https://en.wikipedia.org/wiki/Health_insurance_in_the_United...

fulminatorz68 9y ago

Hard to make $$ in a country that worships established wealth without getting into the old boys club. You can make great money with a good idea but working two jobs for 170K gets old.

JustSomeNobody 9y ago
Probably not as old as working 2 jobs for 17K. Perspective.
- fulminatorz68 9y ago
  I'd suggest the same (perspective) to you. I understand fully what you are trying to say but this world is not about pity and never has been. It is about making the best of things and helping who you can as you can while remaining sane.

bko 9y ago

> The theory behind all those high-end tax cuts — a theory that I once found persuasive, I admit — was that it would unleash entrepreneurial energy: The lure of great wealth would inspire business leaders to work harder and smarter, and the economy would flourish. That's one reason I suppose but it's important to note that despite large differences in top marginal tax rates, the percentage of tax revenue as a percentage of GDP has stayed remarkably stable since the 40s. So perhaps something else is going on. [0] https://upload.wikimedia.org/wikipedia/commons/7/75/U.S._Federal_Tax_Receipts_as_a_Percentage_of_GDP_1945%E2%80%932015.jpg https://upload.wikimedia.org/wikipedia/commons/7/75/U.S._Fed...

sddfd 9y ago
This is extremely interesting and deserves more attention.

slowmovintarget 9y ago

The damning phrase in the article is "which has left less money for everyone else." The economy is not a zero sum game.

waisbrot 9y ago
It's not zero-sum, but it's also not the case that your money and mine are unrelated.

computerwizard 9y ago

Taxation is theft.

vorotato 9y ago
Counterpoint, taxation is the money you pay to the corporation called the USA for the ability to work and live in land they own. They then use that money to make the land more appealing attracting more occupants.
- SoMisanthrope 9y ago
  Your comment is so deeply flawed. But it reflects a generalized misunderstanding of what U.S. federalism is about. The government doesn't own the land, the people do. The government was supposed to support and defend the personal rights to property and personal assets, which are the fundamental resources of commerce. Socialism has failed everywhere that it has been tried.
- crusso 9y ago
  If that were true then we could sue this USA company for breach of contract (the Constitution) whereby the company was never authorized to own all the land or use its corporate power to attract more occupants.
  - vorotato 9y ago
    Well you can, but the court system is also owned by the same corporation. Monopolies are a pain aren't they....
sctb 9y ago
Please don't spam the site with sound-bites; we're after a conversation here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- computerwizard 9y ago

quickConclusion 9y ago

"The theory behind all those high-end tax cuts [...] was that it would unleash entrepreneurial energy [...] The first half of that theory may well have come true. Many of the world’s most successful companies are American — not only Amazon, Apple, Facebook and Google, but also Exxon Mobil, Walmart, Johnson & Johnson and JPMorgan Chase." The article fails to mention that even when the tax code was 90% on the highest earners, most of the successful companies were American, including Exxon Mobil, GM, Ford, DuPont, AT&T... Anecdotally, I don't think I have ever met anyone starting a business thinking "If I don't make more than 2 million a year for myself, I won't have a successful business." So increasing tax rate beyond a couple of millions a year, or even before, seems a no-brainer to me, at least until everybody gets healthcare and free education.

JSONwebtoken 9y ago
When the tax code was 90%, the effective tax rate was 10-15%. You clearly aren't informed in your history of American industry. For an individual to make $2 million a year for himself at a 90% tax rate, he would have to own 100% of a company generating $20 million in profit. Assuming the same individual's skills were worth $200k/yr in market salary, you would be suggesting that the individual must have had a greater than 10% chance of growing a $20 million profit business to achieve an expected value of $200k/yr in compensation. You would be wrong. However, if the individual only had to generate $2.5 million a year in profit through their business to take home $2 million a year, that 10% success rate is more realistic.
- quickConclusion 9y ago
  I am not sure where is the misunderstanding here. The article talks about marginal tax rate at 91% on the take home pay, not effective tax rate. So I am talking about marginal tax rate here too. So NN% (number to be argued) would apply after 500K, 1M, 2M, number(s) would need to be TBD, like the existing tax code. I find progressive tax something really nice, since it helps you get started, and is a fair way for everyone to give back when they're super successful (e.g. healthcare, education). You state this is a cancer, but why?
9y ago

mywacaday 9y ago

I wonder how many more jobs would actually be created if CEOs pay was funneled into R&D or expansion or how many job cuts would have been avoided through the years

harryh 9y ago
In 2016 GE (for example) spent 5.5 billion on R&D. Their CEO Jeffrey Immelt made about 20 million. I don't think a 0.363% increase in the R&D budget would make much of a difference.
- waisbrot 9y ago
  So, if I could hire 20 researchers and spend $1m/year each on their salaries and equipment... your guess is that I would accomplish nothing?
  - topgunsarg 9y ago
    If you couldn't have managed that with $5.5Bn then why does an extra $20M help?

common_ 9y ago

There is only one real tax on the wealthy: a revolution in which all property rights are reset. Everything else is a war between the wealthy themselves to redistribute things in their favor.

sol_remmy 9y ago
And there you sit with probably $50k-100k in assets while the average African has less than one thousand dollars. If you truly wanted the "revolution" to be fair, then all the money would go to third world countries and you'd be left with $3000. But nope, you actually want to be allowed to steal from the rich so you can live an American middle class life without having to work.
- waisbrot 9y ago
  The parent post didn't say "and I'll benefit from this". Why can't they have made an honest post -- a truly fair economy would start with most citizens of first-world countries losing everything we've got.
- common_ 9y ago
  I'm not American, and I'm not middle class. Thanks.

joedevon 9y ago

I was surprised when I clicked the link that I saw text there. Expected an empty page. :p

SoMisanthrope 9y ago

What the article fails to mention is that, when top marginal rate was 91%, there were an infinite number of deductions that you could take. Any expense that was even-slightly business-related was booked as a personal expense and deducted. I recognize that the majority of people on HN are progressives. So, I encourage you to think beyond your personal prejudices and recognize that our tax code stifles productivity and innovation. It's neither moral nor appropriate to work the 6 months of every year to pay the government, just to have the privilege of working the last 6 months of the year to try to pay your bills. Frankly, it's insane. A flat tax is moral and would eliminate all of the monkey business (read: wasted productivity) that takes place, relative to tax planning.

deleted 9y ago

[deleted]

11thEarlOfMar 9y ago

As CEO of GE, Jeffrey Immelt earned $17,744,236 last year. GE has 330,000 employees. If Immelt decided to take $0 and share his income equally with the remaining GE employees, he'd increase each worker's income by $53.77 per year. That's not going to do much to close either the wealth or income gaps. Part of what we are seeing is simply that corporations are getting so much larger than they've ever been in history. Therefore, the pay granted to the CEO is for he or she to oversee larger and larger groups of people.

harryh 9y ago
GE employed 304,000 people in 1955. http://247wallst.com/investing/2010/09/21/americas-biggest-companies-then-and-now-1955-to-2010/2/ http://247wallst.com/investing/2010/09/21/americas-biggest-c...
- 11thEarlOfMar 9y ago
  Walmart employs 2,200,000 today. McMillon's total pay is $19,800,000. Per employee, that's $9.
  - harryh 9y ago
    I agree with your top level point about CEO pay not being significant compared to corporate budgets. I'm just saying that companies that employ a lot of people aren't exactly a new phenomenon.
    - 11thEarlOfMar 9y ago
      What is material to me is the notion that somehow the wealthy are responsible for the plight of the middle and lower class. In the US, the wealth that some enjoy is a side-effect of the economy's behavior. The economy behaves in the way it was designed* (not saying the designs are sound in all respects, but it is intentionally designed and its behavior reflects that design). I'm not convinced that the income/wealth gap itself is 'the problem'. Therefore, taxing the wealthy at a greater level will not be 'the fix'. What we want is for lower and middle income families to have more disposable income, less financial stress, and overall better quality of life. I believe that the most potent knob to affect that is the number of jobs available. Increasing the number of jobs increases the demand for workers. Increasing demand for workers increases the average pay. We can talk about the quality of the jobs as well, but I believe the primary influence from a macro-economic view is the number of jobs. US unemployment is at a 10 year low[0]. So we should see pay (and inflation) creeping up over the next few years, barring some unforeseen economic disaster, and the lower and middle class will benefit. [0] https://data.bls.gov/timeseries/LNS14000000 https://data.bls.gov/timeseries/LNS14000000 * One illustration that keeps coming to mind: Two investors invest in the same instrument. That instrument returns 10% per year. They hold the investment for 5 years. Investor A invests $10,000 Investor B invests $100,000. At time 0 the 'wealth gap' is $90,000. At 5 years, A's investment is worth $16,100 and B's is worth $161,000. The wealth gap has grown to $145,000. It seems to me that people are making the observation that this gap is increasing, and it is, but in reality, it's a natural manifestation of capitalist economies. We've been in a bull market for 7 years, it's borderline unprecedented, and one observable effect is that the gap in absolute $ between rich and poor is increasing.

program_whiz 9y ago

Guess I'm the only one that thinks you should just keep your money if you earn it? The article begins by talking about Romney's character and how he didn't try to take every possible dollar, then tries to attribute this to progressive tax codes. Maybe the "problems" we have are due to the erosion of basic virtues, and trying to make an airtight "system" where no one trusts anyone and we assume total greed and power hunger by every citizen is doomed to failure. Also there's little evidence that charging higher taxes is helping anyone (note highest spending by government in history, wages and income stagnant) -- guess its a given in this forum that higher taxes are assumed to be good...

acuozzo 9y ago
> keep your money if you earn it Earned? My ass. A fortune amassed from profits skimmed off of HFT isn't earned and produces nothing of value.

sealthedeal 9y ago

Tax avoidance is your civi duty, tax evasion is illegal.

makecheck 9y ago

When people talk about complex tax codes and the “end of the quarter”, they don’t really consider how these things have evolved into farms of nearly-enslaved workers (accountants). Such horrendous workplaces do exist inside big companies: the job is to figure out how to pay the least tax, and time is of the essence. I knew someone who worked as such a finance person, at a contracting company for the oil industry, 7 days a week from 6 AM to midnight. Oh, he had a day “off” every few months but that was only because the quarter had just ended and literally the next day they started a new march of insanity, all for the numbers. Dozens of workers, hundreds; they all swore at each other, it was a disaster of over-stress and anger, and it was actually more common to find divorced people there than not.