5 ms·

> Increase taxes on the wealthy, etc. Anyone working for a Silicon Valley company as an engineer is almost certainly considered "the wealthy" by most of Americ

> Increase taxes on the wealthy, etc. Anyone working for a Silicon Valley company as an engineer is almost certainly considered "the wealthy" by most of America.

ericmay 6y ago
Yep.
sandworm101 6y ago
>> Anyone working for a Silicon Valley Depending on your definition of wealthy, "anyone working" full stop. A large number of americans do not work (too young/old etc). Others are sick. Many at the top of society don't earn much income (tax voodoo). And automation is coming. If we define "wealthy" as the top 25/15/10% of wage earners, how soon before that is basically just anyone with a fulltime job?
- iso1631 6y ago
  Wealthy is about how much wealth you have, not your income. In 2020, $121,411 was the median household net worth in the United States. This is up from $97,225.55 in 2017. The average household net worth in 2020 was $746,821. It was $692,100 in 2017. The disparity between these two numbers is itself a major problem, but not the point. If you have a net work of $120k you aren't wealthy, even if you earnt that all in the last month. The way you get from having no wealth to having an average amount is by working harder and earning more. However the tax system is built to punish people who earn more money from work, and reward people who gain more wealth through things like capital gains -- you pay more tax if you increase your wealth by a dollar from working than from the side-effect of being already wealthy and seeing your assets gain value. You're also far more likely to have higher outgoings if you're working (higher cost to live near a high paying job, commuting costs etc) If you are on the median ohio wage on 37k a year, so $30,427.47 net, and spending 37k to live, your wealth doesn't increase. If you work an extra 1k, you take home $31,202.47 -- $775, 22.5% tax. If you make 1k in capital gains, you keep $971, 3% tax. Look at twice median wage of 74k a year. Take home 57,439.49. Extra $1k will give you 58,109.69, an extra $670 - 33% tax. Make 1k in capital gains and you pay 18% tax. Earn 10 times the median wage at $370k and you keep 239,713.20, 42% tax. Get 1k in capital gains and you keep $764, 24% tax. https://dqydj.com/average-median-top-net-worth-percentiles/ https://dqydj.com/average-median-top-net-worth-percentiles/ https://www.thebalance.com/breakdown-of-average-monthly-household-expenses-4687519 https://www.thebalance.com/breakdown-of-average-monthly-hous... https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://smartasset.com/investing/capital-gains-tax-calculator https://smartasset.com/investing/capital-gains-tax-calculato...
  - philwelch 6y ago
    You have an interesting thesis here but I think there are some logical consequences you aren’t considering. Prior to COVID the US personal savings rate was under 10%, lower than that of countries like China and India, both of which are materially poorer than the US on a per-capita basis. Relatedly, Americans also have extremely high levels of consumer debt. When you consider just how low US individual income tax rates are by global standards, it’s obvious that disparities in net worth have a lot to do with the fact that a large share of Americans, regardless of their income, effectively choose to live from paycheck to paycheck on the brink of personal insolvency.
  - TotallyHaram 6y ago
    This must be, partially, why the Mennonites and Amish are the wealthiest and fastest growing demographic in the USA. No real income to speak of just immense capital gains. Must be nice.
  - chii 6y ago
    I often hear arguments about capital gains taxes being an unfair advantage, and that it should be taxed the same as income. But often these arguments don't present a full picture - because it only discusses the end result of the dollar received and compare the tax rates. What about the risk? A job-income is 100% guaranteed to be received if one worked. Even if the business paying the said wage doesn't make a profit, they still have to pay the wage. The owner cops the loss. Therefore, to encourage investments, the taxes are lowered on the profits of such type of investment (which is what capital gains are). The person trying to make capital gains income has to take on a risk that a wage earner doesn't, because the capital gains aren't guaranteed. If capital gains are taxed the same, you will find that there will be less investments, which leads to less jobs and less wealth overall.
    - stainforth 6y ago
      The person with a job and the person "risking" their billions in capital are not comparable.
      - 6y ago
heavyset_go 6y ago
Wealthy people don't need to work to eat, keep a roof over their head, see a doctor, or live a lavish lifestyle.

> Increase taxes on the wealthy, etc. Anyone working for a Silicon Valley company as an engineer is almost certainly considered "the wealthy" by most of America.

ericmay 6y ago

Yep.

sandworm101 6y ago

>> Anyone working for a Silicon Valley Depending on your definition of wealthy, "anyone working" full stop. A large number of americans do not work (too young/old etc). Others are sick. Many at the top of society don't earn much income (tax voodoo). And automation is coming. If we define "wealthy" as the top 25/15/10% of wage earners, how soon before that is basically just anyone with a fulltime job?

iso1631 6y ago
Wealthy is about how much wealth you have, not your income. In 2020, $121,411 was the median household net worth in the United States. This is up from $97,225.55 in 2017. The average household net worth in 2020 was $746,821. It was $692,100 in 2017. The disparity between these two numbers is itself a major problem, but not the point. If you have a net work of $120k you aren't wealthy, even if you earnt that all in the last month. The way you get from having no wealth to having an average amount is by working harder and earning more. However the tax system is built to punish people who earn more money from work, and reward people who gain more wealth through things like capital gains -- you pay more tax if you increase your wealth by a dollar from working than from the side-effect of being already wealthy and seeing your assets gain value. You're also far more likely to have higher outgoings if you're working (higher cost to live near a high paying job, commuting costs etc) If you are on the median ohio wage on 37k a year, so $30,427.47 net, and spending 37k to live, your wealth doesn't increase. If you work an extra 1k, you take home $31,202.47 -- $775, 22.5% tax. If you make 1k in capital gains, you keep $971, 3% tax. Look at twice median wage of 74k a year. Take home 57,439.49. Extra $1k will give you 58,109.69, an extra $670 - 33% tax. Make 1k in capital gains and you pay 18% tax. Earn 10 times the median wage at $370k and you keep 239,713.20, 42% tax. Get 1k in capital gains and you keep $764, 24% tax. https://dqydj.com/average-median-top-net-worth-percentiles/ https://dqydj.com/average-median-top-net-worth-percentiles/ https://www.thebalance.com/breakdown-of-average-monthly-household-expenses-4687519 https://www.thebalance.com/breakdown-of-average-monthly-hous... https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://goodcalculators.com/us-salary-tax-calculator/ohio/ https://smartasset.com/investing/capital-gains-tax-calculator https://smartasset.com/investing/capital-gains-tax-calculato...
- philwelch 6y ago
  You have an interesting thesis here but I think there are some logical consequences you aren’t considering. Prior to COVID the US personal savings rate was under 10%, lower than that of countries like China and India, both of which are materially poorer than the US on a per-capita basis. Relatedly, Americans also have extremely high levels of consumer debt. When you consider just how low US individual income tax rates are by global standards, it’s obvious that disparities in net worth have a lot to do with the fact that a large share of Americans, regardless of their income, effectively choose to live from paycheck to paycheck on the brink of personal insolvency.
- TotallyHaram 6y ago
  This must be, partially, why the Mennonites and Amish are the wealthiest and fastest growing demographic in the USA. No real income to speak of just immense capital gains. Must be nice.
- chii 6y ago
  I often hear arguments about capital gains taxes being an unfair advantage, and that it should be taxed the same as income. But often these arguments don't present a full picture - because it only discusses the end result of the dollar received and compare the tax rates. What about the risk? A job-income is 100% guaranteed to be received if one worked. Even if the business paying the said wage doesn't make a profit, they still have to pay the wage. The owner cops the loss. Therefore, to encourage investments, the taxes are lowered on the profits of such type of investment (which is what capital gains are). The person trying to make capital gains income has to take on a risk that a wage earner doesn't, because the capital gains aren't guaranteed. If capital gains are taxed the same, you will find that there will be less investments, which leads to less jobs and less wealth overall.
  - stainforth 6y ago
    The person with a job and the person "risking" their billions in capital are not comparable.
    - 6y ago

heavyset_go 6y ago

Wealthy people don't need to work to eat, keep a roof over their head, see a doctor, or live a lavish lifestyle.