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Progressive income tax reduces wealth inequality. People start in a very unfair game and it prevents the rich getting richer, and the poor getting poorer. Wealt

Progressive income tax reduces wealth inequality. People start in a very unfair game and it prevents the rich getting richer, and the poor getting poorer. Wealth inequality tears communities apart.

lettergram 7y ago
I don’t actually see evidence of that, but if you read my comment I pointed out that’s what estate tax is for. Having come from a poorer family myself and now making a lot of money I find progressive income tax ridiculous. I have student loans, mortgage, etc. things the wealthy already don’t have. Which is my point progressive income tax punished making money, not wealth already obtained.
throwawaysea 7y ago
What does it mean for inequality to "tear a community apart"? That feels like emotional hyperbole. I also don't think reducing wealth inequality is a foregone goal that takes priority over other criteria. A progressive income tax also reduces the incentive to create economic value. And most of the time, the increased tax revenue is not managed efficiently - for example, California doesn't have "better communities" or improved services for all the tax it collects.
- aplummer 7y ago
  > What does it mean for inequality to "tear a community apart"? A decent enough summary: https://en.wikipedia.org/wiki/Effects_of_economic_inequality https://en.wikipedia.org/wiki/Effects_of_economic_inequality _British researchers Richard G. Wilkinson and Kate Pickett have found higher rates of health and social problems (obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use), and lower rates of social goods (life expectancy by country, educational performance, trust among strangers, women's status, social mobility, even numbers of patents issued) in countries and states with higher inequality. Using statistics from 23 developed countries and the 50 states of the US, they found social/health problems lower in countries like Japan and Finland and states like Utah and New Hampshire with high levels of equality, than in countries (US and UK) and states (Mississippi and New York) with large differences in household income_ > I also don't think reducing wealth inequality is a foregone goal that takes priority over other criteria. See above "bad stuff". > A progressive income tax also reduces the incentive to create economic value. And most of the time, the increased tax revenue is not managed efficiently - for example, California doesn't have "better communities" or improved services for all the tax it collects. There's maybe 15 socialist democracies with a higher HDI than the USA, with higher taxation (and more progressive taxation). People still work through higher brackets, buy expensive things etc.
  - throwawaysea 7y ago
    Thanks for sharing. However, the paper the Wikipedia article is quoting is not publicly available, and therefore I can't verify how they establish causality between inequality and those outcomes. Furthermore, even if there were a causal relationship, that doesn't mean the US is doing anything worse than these other countries. For example, countries like Japan or Finland may have different health outcomes that could wholly be due to genetic traits, eating habits, lifestyle choices, and other cultural elements. A statistical test wouldn't be able to easily introduce a qualitative variable like culture into the study, to separate the effect of such a variable relative to another input variable like income distribution. But the point I was originally making regarding communities is slightly different. Even if there is variance in income locally, I feel like I belong to a community and city. Most people around me would likely say the same thing. It doesn't make me feel like a "community" is being "torn apart" due to variance on income or wealth. The definition of "community" or what it takes to say that it is being "torn apart" is going to be inherently subjective and personal, and so such a broad claim doesn't seem reasonable to me. Lastly, I think every choice has a tradeoff. It is worth noting that America has produced the bulk of innovations in the last 100 years, both from the work of public agencies and impactful private organizations. Other countries simply have not produced the same output in recent times. It is easy to claim that some other locale has a higher HDI but those same places are benefiting from the output of the American system as it exists today, with the very same tax structures that Gates is criticizing. For example: Washington State, which is specifically called out by Gates, has produced Microsoft, Amazon, Cray (supercomputers), Starbucks, Real Networks, Redfin, Tableau, Costco, Nordstrom, REI, Valve, Bungie, Expedia, Paccar, Boeing, and numerous other globally impactful companies that I have left out. It certainly seems like the impact and benefit on quality of life is there, and it is cultivated by an environment that has the right traits on multiple dimensions. Those socialist democracies you are referencing are not anywhere near in terms of their value add to humanity as a whole, and I think if they were isolated (not benefiting from global export of American outputs) they would definitely not have the same degree of development.
aries1980 7y ago
But wealth in relation to taxation is purchasing power. Wouldn't be more fair when taxation happens as sales tax when the actual inequality happens? When they buy/import and harbour yachts, planes, jewellery, fine art, cars, other luxury items?
beatgammit 7y ago
I don't think that's true, I think it just reduces income inequality. If you have a high tax rate for higher earners, the wealthy will do stuff like $1 income and compensation in stock instead. That doesn't really hurt the wealthy, but it certainly hurts people with a high income, but little wealth. Personally, I don't see the point in trying to reduce wealth accumulation. People who amass a lot of wealth generally do so by creating something of value for society. If you remove the ability to get fabulously wealthy, I think you also reduce innovation. Would you risk everything on an idea if there was no chance of a massive payoff? Probably not. Likewise, if you are successful with one idea, you are much more likely to be successful with another, but if you don't have much capital, you can't pursue additional ideas. For example, Elon Musk wouldn't be able to start Space X, Tesla, etc at the same time (and probably none of them) if his "excess" wealth were confiscated. The whole discussion about wealth/income inequality seems to be missing the mark entirely IMO. The important thing is that innovation continues to happen and the lifestyle of the average and the bottom continue to improve. Let me set up two scenarios, A and B. In A, people have a very similar standard of living (very little wealth inequality), but innovation is fairly low, so quality of life increases fairly slowly. In B, there is a very large wealth inequality, but innovation is quite high, so even the poor experience at least a moderate quality of life increase year over year. So in B, the average "poor" person (say, median of the bottom 10%) has a higher quality of life than the average person in A. Which is preferable? What if B has some people slip through the cracks, but the vast majority are better off? Personally, I prefer B, and choose to donate so those at the bottom are taken care of. However, some of my friends prefer A because people wouldn't know that more rapid progress is possible.

Progressive income tax reduces wealth inequality. People start in a very unfair game and it prevents the rich getting richer, and the poor getting poorer. Wealth inequality tears communities apart.

lettergram 7y ago

I don’t actually see evidence of that, but if you read my comment I pointed out that’s what estate tax is for. Having come from a poorer family myself and now making a lot of money I find progressive income tax ridiculous. I have student loans, mortgage, etc. things the wealthy already don’t have. Which is my point progressive income tax punished making money, not wealth already obtained.

throwawaysea 7y ago

What does it mean for inequality to "tear a community apart"? That feels like emotional hyperbole. I also don't think reducing wealth inequality is a foregone goal that takes priority over other criteria. A progressive income tax also reduces the incentive to create economic value. And most of the time, the increased tax revenue is not managed efficiently - for example, California doesn't have "better communities" or improved services for all the tax it collects.

aplummer 7y ago
> What does it mean for inequality to "tear a community apart"? A decent enough summary: https://en.wikipedia.org/wiki/Effects_of_economic_inequality https://en.wikipedia.org/wiki/Effects_of_economic_inequality _British researchers Richard G. Wilkinson and Kate Pickett have found higher rates of health and social problems (obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use), and lower rates of social goods (life expectancy by country, educational performance, trust among strangers, women's status, social mobility, even numbers of patents issued) in countries and states with higher inequality. Using statistics from 23 developed countries and the 50 states of the US, they found social/health problems lower in countries like Japan and Finland and states like Utah and New Hampshire with high levels of equality, than in countries (US and UK) and states (Mississippi and New York) with large differences in household income_ > I also don't think reducing wealth inequality is a foregone goal that takes priority over other criteria. See above "bad stuff". > A progressive income tax also reduces the incentive to create economic value. And most of the time, the increased tax revenue is not managed efficiently - for example, California doesn't have "better communities" or improved services for all the tax it collects. There's maybe 15 socialist democracies with a higher HDI than the USA, with higher taxation (and more progressive taxation). People still work through higher brackets, buy expensive things etc.
- throwawaysea 7y ago
  Thanks for sharing. However, the paper the Wikipedia article is quoting is not publicly available, and therefore I can't verify how they establish causality between inequality and those outcomes. Furthermore, even if there were a causal relationship, that doesn't mean the US is doing anything worse than these other countries. For example, countries like Japan or Finland may have different health outcomes that could wholly be due to genetic traits, eating habits, lifestyle choices, and other cultural elements. A statistical test wouldn't be able to easily introduce a qualitative variable like culture into the study, to separate the effect of such a variable relative to another input variable like income distribution. But the point I was originally making regarding communities is slightly different. Even if there is variance in income locally, I feel like I belong to a community and city. Most people around me would likely say the same thing. It doesn't make me feel like a "community" is being "torn apart" due to variance on income or wealth. The definition of "community" or what it takes to say that it is being "torn apart" is going to be inherently subjective and personal, and so such a broad claim doesn't seem reasonable to me. Lastly, I think every choice has a tradeoff. It is worth noting that America has produced the bulk of innovations in the last 100 years, both from the work of public agencies and impactful private organizations. Other countries simply have not produced the same output in recent times. It is easy to claim that some other locale has a higher HDI but those same places are benefiting from the output of the American system as it exists today, with the very same tax structures that Gates is criticizing. For example: Washington State, which is specifically called out by Gates, has produced Microsoft, Amazon, Cray (supercomputers), Starbucks, Real Networks, Redfin, Tableau, Costco, Nordstrom, REI, Valve, Bungie, Expedia, Paccar, Boeing, and numerous other globally impactful companies that I have left out. It certainly seems like the impact and benefit on quality of life is there, and it is cultivated by an environment that has the right traits on multiple dimensions. Those socialist democracies you are referencing are not anywhere near in terms of their value add to humanity as a whole, and I think if they were isolated (not benefiting from global export of American outputs) they would definitely not have the same degree of development.

aries1980 7y ago

But wealth in relation to taxation is purchasing power. Wouldn't be more fair when taxation happens as sales tax when the actual inequality happens? When they buy/import and harbour yachts, planes, jewellery, fine art, cars, other luxury items?

beatgammit 7y ago

I don't think that's true, I think it just reduces income inequality. If you have a high tax rate for higher earners, the wealthy will do stuff like $1 income and compensation in stock instead. That doesn't really hurt the wealthy, but it certainly hurts people with a high income, but little wealth. Personally, I don't see the point in trying to reduce wealth accumulation. People who amass a lot of wealth generally do so by creating something of value for society. If you remove the ability to get fabulously wealthy, I think you also reduce innovation. Would you risk everything on an idea if there was no chance of a massive payoff? Probably not. Likewise, if you are successful with one idea, you are much more likely to be successful with another, but if you don't have much capital, you can't pursue additional ideas. For example, Elon Musk wouldn't be able to start Space X, Tesla, etc at the same time (and probably none of them) if his "excess" wealth were confiscated. The whole discussion about wealth/income inequality seems to be missing the mark entirely IMO. The important thing is that innovation continues to happen and the lifestyle of the average and the bottom continue to improve. Let me set up two scenarios, A and B. In A, people have a very similar standard of living (very little wealth inequality), but innovation is fairly low, so quality of life increases fairly slowly. In B, there is a very large wealth inequality, but innovation is quite high, so even the poor experience at least a moderate quality of life increase year over year. So in B, the average "poor" person (say, median of the bottom 10%) has a higher quality of life than the average person in A. Which is preferable? What if B has some people slip through the cracks, but the vast majority are better off? Personally, I prefer B, and choose to donate so those at the bottom are taken care of. However, some of my friends prefer A because people wouldn't know that more rapid progress is possible.