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The point is that wealth is distributed along a power law and people making $200k/year from a W-2 job are not in the meaty part of the curve. You seem really in

by imgabe 7y ago

The point is that wealth is distributed along a power law and people making $200k/year from a W-2 job are not in the meaty part of the curve. You seem really invested in shaming them and demanding they pay more in taxes when if you're making that as a wage you're probably already paying close to 50% of your income in Federal and State taxes. At the same time they don't qualify for many of the deductions and subsidies that lower income people would so they're already paying more for the same things. How much more do we need to take from them? Yes, if they are in any way reasonably responsible they can live comfortably and have all their needs met. That's great. We should work on extending that possibility to more people instead of taking it away from one group of wage slaves and handing it to another. Meanwhile people making orders of magnitude more money are paying 15%, 10% or 0% in taxes. That's the "upper class" for all practical purposes.

rayiner 7y ago
First, your premise is false: https://en.wikipedia.org/wiki/Distribution_of_wealth#In_the_United_States https://en.wikipedia.org/wiki/Distribution_of_wealth#In_the_.... As of 2007, the top 1% owned 35% of wealth, while the next 19% owned 50%. The top 20% is a net worth of about $500,000 including home equity, which pretty much any household making $200,000 will as they get older. Moreover, the wealth of the top 20% is going to comprise to a much greater extent ownership of scarce resources (housing in desirable areas, etc.) than the paper wealth of the top 1%. Second, what we care about at the end of the day is the distribution of access to consumption. Income models that better than wealth. Mark Zuckerberg might have an unrealized gain of $1 billion, but he can't out-compete someone else for access to scarce resources unless he realizes that gain. Indeed, Zuckerberg's wealth in particular is just a proxy for the right to receive a portion of Facebook's profits in the future based on the future labor of Facebook's employees. It doesn't represent anything tangible that exists right now. It's realized capital gains, not unrealized paper wealth, that is the proxy for goods and services that could be used to meet peoples' needs in the present. Third, the folks paying "15%, 10%, or 0% in taxes" represent an extremely small portion of total income. Eliminating the preference for capital gains, for example, would raise just a couple of hundred billion more in taxes (compared to the almost $7 trillion we already raise). It's something that makes a few people very rich, but they don't account for a very large portion of overall income. Fourth, and finally, someone making $200k/year isn't paying "close to 50%" of income in taxes. In Maryland, it's just over 30%. We're one of the few developed countries that taxes the top 5% so little.
- imgabe 7y ago
  > Mark Zuckerberg might have an unrealized gain of $1 billion, but he can't out-compete someone else for access to scarce resources unless he realizes that gain. When 99.99% of people don't even have 0.1% of Zuck's net worth he doesn't need to realize anywhere close to $1 billion of gain to out-compete them. The distribution is so lopsided that he could realize gains encompassing most other people's entire net worth and it would be a rounding error in his accounting. That's without even getting in to the fact that at that level your brokerage will happily give you a low-interest loan to do things like buy a house or whatever you want so realizing gains is not at all necessary to have access to funds for consumption. "Realized capital gains" does not even begin to tell the story of the disparity in access to consumption.
  - rayiner 7y ago
    The question is whether realizes gains reflects the consumptive access of billionaires as a category than unrealized increases in paper wealth. While an individual billionaire can in fact get a low interest loan against paper wealth for purposes of consumption, that loan will have to be paid back with cash. That cash has to either come from ordinary income, or through realization of capital gains. Unless billionaires as a category as just not paying off those personal loans, the consumption associated with those loans should be reflected in their income and realized gains.
- hundt 7y ago
  > It doesn't represent anything tangible that exists right now. It's realized capital gains, not unrealized paper wealth, that is the proxy for goods and services that could be used to meet peoples' needs in the present. I'm not going to argue the broader point about who is really "rich" but is this really true? My understanding is that there are ways to use assets to meet your needs without realizing capital gains. An obvious one is to borrow money with the asset as collateral, but I think there are others as well.
- closeparen 7y ago
  It's kind of a sleight of hand to piggyback on the panic about income inequality but target your attack based on consumption. If consumption is what matters, we should also use it to measure the level of inequality. And when we do that, we find (as in your parent comment) that it's not nearly so dire. How much variation in outcome should we allow? Beating the median by a factor of 2 doesn't seem particularly crazy.
deleted 7y ago
[deleted]

by imgabe 7y ago

rayiner 7y ago

First, your premise is false: https://en.wikipedia.org/wiki/Distribution_of_wealth#In_the_United_States https://en.wikipedia.org/wiki/Distribution_of_wealth#In_the_.... As of 2007, the top 1% owned 35% of wealth, while the next 19% owned 50%. The top 20% is a net worth of about $500,000 including home equity, which pretty much any household making $200,000 will as they get older. Moreover, the wealth of the top 20% is going to comprise to a much greater extent ownership of scarce resources (housing in desirable areas, etc.) than the paper wealth of the top 1%. Second, what we care about at the end of the day is the distribution of access to consumption. Income models that better than wealth. Mark Zuckerberg might have an unrealized gain of $1 billion, but he can't out-compete someone else for access to scarce resources unless he realizes that gain. Indeed, Zuckerberg's wealth in particular is just a proxy for the right to receive a portion of Facebook's profits in the future based on the future labor of Facebook's employees. It doesn't represent anything tangible that exists right now. It's realized capital gains, not unrealized paper wealth, that is the proxy for goods and services that could be used to meet peoples' needs in the present. Third, the folks paying "15%, 10%, or 0% in taxes" represent an extremely small portion of total income. Eliminating the preference for capital gains, for example, would raise just a couple of hundred billion more in taxes (compared to the almost $7 trillion we already raise). It's something that makes a few people very rich, but they don't account for a very large portion of overall income. Fourth, and finally, someone making $200k/year isn't paying "close to 50%" of income in taxes. In Maryland, it's just over 30%. We're one of the few developed countries that taxes the top 5% so little.

imgabe 7y ago
> Mark Zuckerberg might have an unrealized gain of $1 billion, but he can't out-compete someone else for access to scarce resources unless he realizes that gain. When 99.99% of people don't even have 0.1% of Zuck's net worth he doesn't need to realize anywhere close to $1 billion of gain to out-compete them. The distribution is so lopsided that he could realize gains encompassing most other people's entire net worth and it would be a rounding error in his accounting. That's without even getting in to the fact that at that level your brokerage will happily give you a low-interest loan to do things like buy a house or whatever you want so realizing gains is not at all necessary to have access to funds for consumption. "Realized capital gains" does not even begin to tell the story of the disparity in access to consumption.
- rayiner 7y ago
  The question is whether realizes gains reflects the consumptive access of billionaires as a category than unrealized increases in paper wealth. While an individual billionaire can in fact get a low interest loan against paper wealth for purposes of consumption, that loan will have to be paid back with cash. That cash has to either come from ordinary income, or through realization of capital gains. Unless billionaires as a category as just not paying off those personal loans, the consumption associated with those loans should be reflected in their income and realized gains.
hundt 7y ago
> It doesn't represent anything tangible that exists right now. It's realized capital gains, not unrealized paper wealth, that is the proxy for goods and services that could be used to meet peoples' needs in the present. I'm not going to argue the broader point about who is really "rich" but is this really true? My understanding is that there are ways to use assets to meet your needs without realizing capital gains. An obvious one is to borrow money with the asset as collateral, but I think there are others as well.
closeparen 7y ago
It's kind of a sleight of hand to piggyback on the panic about income inequality but target your attack based on consumption. If consumption is what matters, we should also use it to measure the level of inequality. And when we do that, we find (as in your parent comment) that it's not nearly so dire. How much variation in outcome should we allow? Beating the median by a factor of 2 doesn't seem particularly crazy.

deleted 7y ago

[deleted]