9 ms·

The economic consequences of major tax cuts for the rich

69 points by rustoo 5y ago

nightski 5y ago
I'm not sure using taxes as a way to combat income equality is effective either. Just because taxing the rich less allows them to make more money does not imply taxing them more allows the non-wealthy to prosper.
- eigenrick 5y ago
  I think the point is not that it's taking money from the rich. I mean, that's a necessary part of it. The point is that that money is forced to recirculate in the system. The thing people seem to forget is that taxed money doesn't just disappear. It right back into the economy. The target, predominately, is the working class, either directly via Gov't employee wages, or social programs. Or it goes back indirectly, through Gov't contractors. At which point it filters back up the system to the rich.
  - nightski 5y ago
    The rich do not usually sit with cash in their bank account, and even if they do the system is built to keep that money recirculating. Banks use fractional reserve lending to take those deposits and lend them out several times forward. Otherwise the money gets invested in companies from your large caps, small caps, VC, to angel funding, etc... Basically there is no such thing as stagnant money imho. What taxes imply (again in my opinion) is that we believe the government is better at investing that money than the economy participants themselves. In some cases that is true where the return is over several decades or there is little to no direct monetary return at all (but still very necessary - social programs). But in many cases it is not.
    - DimitriPetrova 5y ago
- abeppu 5y ago
  I think it's also key to distinguish between wanting to "combat income equality" and "allow[ing] the non-wealthy to prosper." There's that old Thatcher parliament quote responding to concerns about rising inequality, where she characterizes the left as being pleased if the poor become poorer so long as the rich fall further. I think taxes (if we plug various holes) can decrease income inequality, but the challenge is efficiently spending the proceeds in a way that lifts up everyone ... and not creating firehoses of public spending that primarily benefit the same small pool of companies.
  - DarylZero 5y ago
    Lifting everyone up is mostly pointless. Absolute consumption levels are not important. Most of the things that matter are "positional." Making the rich poorer reduces the competitive stress that everyone is under. Even if everyone else gets poorer, it's worth it.
nathan_phoenix 5y ago
> We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy. The conclusion taken from the abstract.
- nimbius 5y ago
  an unsurprising find, considering its birthright was US president Ronald Reagan who had invented it out of whole-cloth to evangelize and tantalize neoliberal reforms during his presidency. It strikes me as fascinating that so many of these reforms, once touted as essential and prudent, have over two or more decades proven to be outright political grifting.
  - lapetitejort 5y ago
    Didn't the idea start with the Laffer Curve [0] during the Ford admin? [0]: https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve
- subroutine 5y ago
  As part of the series on "Rising tides not lifting all boats", and "tax cuts for the rich don't tend to trickle down"... https://cushman.host.dartmouth.edu/books/CommonSenseFM/Chap5.pdf https://cushman.host.dartmouth.edu/books/CommonSenseFM/Chap5...
  - nightski 5y ago
    That same saying could be used for the other argument. Rising taxes not lifting all boats. Taxes for the rich don't tend to trickle down.
carbonguy 5y ago
From the abstract: > We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy. I'd be interested in hearing from those who consider this a surprising result. To me it seems entirely expected, but with online echo-chambers being what they are I have no doubt my lack of surprise could just mean I'm in an informational cul-de-sac.
- aemreunal 5y ago
  I don't think this is surprising either. The whole "trickle-down economics" arguments for such tax cuts have always sounded... bullshit (for lack of a better word), exacerbated by the fact that decades of it (since the Reagan era in the US, for example) has only served to make the rich richer, poor poorer and erode the middle class completely. If it was a brilliant idea (i.e. the idea that the the only thing holding back the rich from elevating everyone else from poverty were those pesky low 10s of percent taxes) that worked, everyone would've been favor of it and we would've eliminated taxes for the rich completely by now. It's always good to have scientific data and analysis confirm your intuition, though.
  - wang_li 5y ago
    The poor are not getting poorer and the middle class is becoming rich. In the US anyway. Fundamentally the problem is that people think that someone having more money than then is some kind of ethical issue. Not to mention something like 100% of these analyses are univariate and that makes no sense at all since it's perfectly rational that a 20 year old has much less wealth and income than a 60 year old with an advanced degree and 40 years of work experience. We could just as easily be outraged that some people have more life expectancy than other people. Seems unfair that a person who is 60 and has 15-20 years of life left has to work 40 hours per week to maintain their lifestyle which is exactly the same amount of hours a 20 year-old who has 55-70 years remaining expects to work in a week.
lostcolony 5y ago
I mean. I guess I'm glad someone is out there actually looking at the data. Unfortunately I'm pretty sure it's not going to actually sway anyone.
- lapetitejort 5y ago
  Sure, tax cuts haven't work yet, but that's because they're still too high!! One more should do it.
  - labster 5y ago
    I doubt tax cuts for the rich would do it alone. Perhaps when combined with a 40 year copyright extension will we really see a flourishing of the poors.
    - lapetitejort 5y ago
      We've almost cracked it. Let's lower the definition of high speed internet to 500 Kbps, raise the short term interest rate cap to 3600%, and repeal the Onion Futures Act.
slickdork 5y ago
Question I'm asking in good faith: will this proof have any consequence for the bottom 99.99%? Is there a way this research helps shape policy?
- dnate 5y ago
  Not unless the bottom 99.99% take action. As most already suspect what this research shows, the sad answer is: No
- jimhefferon 5y ago
  Is it possible that it moves the Overton window? I mean, in the US there has been serious funding for decades aimed at moving the needle around things like guns and taxes. And that organized long term effort has been very successful. Possibly some of these things may result in some swing back to the middle?
  - labster 5y ago
    One thing that really holds back the US is that we have no major left-wing parties. The Democratic Party is to the right of the Tories on health care, and about where Germany’s CDU is on the environment. The middle isn’t even in our Overton window.
- nickff 5y ago
  It's not a 'proof', it's a statistical study, and econometrics rarely convince anyone of anything.
- imtringued 5y ago
  If you had a free market, then the rich would either invest their money or they would lend the money out at a reasonable interest rate. The latter doesn't actually happen because they also have the option of simply holding onto it if nobody borrows it. (Of course in fractional reserve banking new money is created with every loan but the lender's money is out of circulation). Money has an insurance effect. Simply having money lets you pay off random expenses. It also doesn't spoil like goods. If we had a grain money system, then the central bank would pass the cost of grain storage onto the holder of the dollar bill which would give the lender an incentive to lend it out even at 0% interest, which protects the lender from the storage costs. This is known as liquidity preference. The borrower has to compensate the lender for giving up the liquidity benefits of money. Right now cash itself has no storage costs, so nobody will lend it at 0% interest. In theory giving the rich money through lower taxes lowers the interest rate because they lend it out. However, as I said, there is no mechanism that actually lets it fall to 0% (extreme cases like deflation can in theory justify negative rates). If you were to charge a negative interest rate on a bank account to enable 0% loans, then people just pull their money out and hold cash instead. The free market basically ends the moment markets are saturated and everything only makes enough money to cover its own costs with 0% profit. This is one of the areas where Marx was correct. Once profit is gone, the system collapses because someone forgot to enable the 0% interest feature of money.
andrewl 5y ago
A RAND Corporation study from a couple of years ago concluded the upward redistribution of income has cost American workers $50 trillion over the past several decades: https://democracyjournal.org/arguments/how-much-has-inequality-cost-workers/ https://democracyjournal.org/arguments/how-much-has-inequali...
oa2022 5y ago
- vannevar 5y ago
  Does your "Toddler's Guide to Economics and Taxation" say anything about freeloaders who leverage public services in a stable republic to build a fortune and then refuse to pay their share of upkeep on those services and that republic?
- giraffe_lady 5y ago
  If stealing corrects unjust inequality then it is, in fact, good. Yes. This is literally the principal behind "if you are starving it is not morally wrong to steal food." Which I know a lot of people disagree with and I don't need to hear the arguments about again. But my conscious is clear; some forms of theft are not wrong.
  - oa2022 5y ago
    [flagged]
    - giraffe_lady 5y ago
      Oh shit really? I actually don't know much about politics, is that what socialism is? I do think I'm a leftist, but so are a lot of people who don't hold this view, so I don't think that alone would be sufficient to communicate it. Plus, the weight of this conviction has much more of a basis in my religion than my politics so it's arguably not even relevant. Anyway I am quite well paid myself these days, so I have no need or moral justification to steal.
- the_why_of_y 5y ago
  Okay, let's talk about stealing: Nationally it is estimated that workers are not paid at least $19 billion every year in overtime[12] and that in the US $40 billion to $60 billion in total are lost annually due to all forms of wage theft.[13] This compares to national annual losses of $340 million due to robbery, $4.1 billion due to burglary, $5.3 billion due to larceny, and $3.8 billion due to auto theft in 2012.[14] https://en.wikipedia.org/wiki/Wage_theft https://en.wikipedia.org/wiki/Wage_theft
ajsnigrutin 5y ago
I live in a former socialist country, with current "left" (red star in the logo) parties, who scream a lot about "tax the rich". In reality, if you look at their proposed policies: * nothing happens to the poor (since they already pay almost zero taxes) * nothing happens to the rich, because they start a company in bosnia, or delaware or panama (I have no idea how the panama papers were forgotten by the people and the media), funnel the money, and again pay (almost) zero tax * and me, an engineer with an above-average paycheck, but way below "rich"? I get fucked with the higher taxes. I don't need the rich to have higher taxes, I'd be happy if they atleast paid the current ones, or atleast the same percentage of income (in real sense, not accounting sense, since there are many ways to earn very little on paper, but buy a lot of stuff with that) as I do.
- naveen99 5y ago
  Someone is employing you. The tax burden is effectively split between you and them, even if nominally you are paying it. You pre tax salary is an expense to your employer, which if not expensed, would likely get taxed at the highest tax rate. Wealth is again, mostly just leverage on the working class future product. in that sense they already own atleast half of it, just defining it as income instead of wealth.
  - ajsnigrutin 5y ago
    What I'm saying is, that I, in slovenia, pay around a half of my gross income in different taxes and "benefits" to the government. If my income is around the slovenian average (average is a bit below 2k eur montly, but i'll round it up), my "gros-gross" from 2k(what my employer has to pay, because of additional taxes) is 2.322eur, and I get 1300eur net to my account (55%) - the rest goes to the government. (employer pays 27.864 yearly, and you get 15.600 yearly) If you're average, or a bit above average, you pay around a half of what you make to the government. Due to income tax brackets, this percentage changes (eg, my 10k gross, means 11.610eur the employer, and I'd get 5176eur (~45%) into my account)... 10k is basically "rich" here. (Employer pays ~140k yearly, and you get ~62k net yearly) But, if your employer is willing to pay 11.610eur per month for you, and you want to get more out of that, you can become an independent contractor in slovenia (to have medical and pension insurance), and this will cost you ~500eur per month (including the costs of minimum accounting and a new bank account), so ~6k per year. Then you open a LLC in bosnia, which will cost you a smiliar amount of money (paperwork, accounting,...), so another 6k eur. Then your bosnian company charges the 140k for your work to your employer, and get taxed by bosnian rates, at only 10% on the first 100k of profit (so 140k-12k is 128k, so the first 100k is taxed at 10%, and i'm not sure about the next bracket, but let's say 30%, so 90k net from the first bracket, and ~20k from the second one), which means you get ~110k net income, or a bit over 9k monthly (almost 80%) So, if you don't earn a lot, you're stuck with high taxes. If you earn a lot (by slovenian standards, 10k is a lot), you can avoid most of the taxes, by starting a company in bosnia. If you earn a lot-lot (millions), you have even more posibilities of avoiding taxes, and pretty much every rich person does this to minimize their taxes. So, I don't want the current 55% (sum of all) taxes to be raised to 90% (or whatever) for the rich, I just want them to pay the current 55% at all, and not be able to avoid them and pay only 20% (which is less percentually than a minimum wage worker pays).
justinzollars 5y ago
I used to believe taxes were a good way to redistribute wealth. That is until I moved to San Francisco and saw how a welfare super state prioritizes its spending. $75,000/tent/year homeless camping sites, 2 million heroin needles, community ambassadors who aimlessly wonder the mission district with multilingual pamphlets on how to sign up for welfare benefits. Billions funneled to nonprofits, who in turn support politicians. Lavish state retirement benefits at the expense of cutting community services. Sure, raise taxes on the rich, but the plot is lost.
- scotu 5y ago
  false dichotomy, even if you believe SF spends money wrong, that doesn't justify the tax cuts for the rich
  - justinzollars 5y ago
    That's not true. If the money is wasted, why tax at all? It seems punitive. Many that wish to see money lit on fire, rather than put to productive use.
    - scotu 5y ago
      I hope nobody reading this actually falls for your weaksauce argument... You are literally using the false dichotomy logical fallacy https://en.wikipedia.org/wiki/False_dilemma https://en.wikipedia.org/wiki/False_dilemma again, those are not the only two options: you say: > I used to believe taxes were a good way to redistribute wealth and then, you don't believe that works because: > I moved to San Francisco and saw how a welfare super state prioritizes its spending So you are suggesting that the ONLY other possible option when the rich are taxed is that those taxes are mismanaged, but that is just not true: certainly there are varying degrees of "mismanagement" possible. In particular some of those mismanagement scenario might still result in better outcomes for less wealthy. Given your other comments I'm sure you are already thinking: "who even cares about the less wealthy" but that seems to be the topic of the discussion, the original post is about how tax cuts don't result in "trickle down", which is how they are marketed and sold to the less wealthy.
nodesocket 5y ago
I'll approach this from a different perspective, in the last 20 years can pro-higher tax proponents provide proof of a single program that actually improved the quality of life of US citizens in the middle class? I suspect, many will spring up and suggest Obama Care, but where is the data to support this? I know myself and my families health insurance continues to rise and rise (self employed). My mother is on Medicare and pays absurd prices for her diabetes medication and testing equipment (smart device). Democrats continue to fail to address the costs of medical care for middle class and even upper middle class. There are programs for low-income but once you reach middle class levels all these programs no longer qualify. We all work hard for our money (ok maybe not all), but my mentality is let me accumulate as much wealth as I can (I'm better at investing and returning yield on money) in my younger years. I'll make the decisions which programs/charities and people I wish to support.
- lostcolony 5y ago
  So what you're saying is "because I personally don't see the benefit, I don't want the rich to be taxed higher", and for some reason are conflating your middle class income with that of the uberrich? I don't think anyone is suggesting "Hey, let's increase taxes on those making under a million a year". But there is no good reason that the people making a billion a year are paying the same 37% as the people making $600k.
  - nodesocket 5y ago
    Except that's not what is being proposed (they claim their tax hikes only affects the ultra rich which is patently false). Also, I am not middle class, and I plan and have goals to continue to make more income and grow my wealth for myself and my family. Biden's plan to eliminate capital gains or increase it is bad for everybody and investment and growth. The income cap to be able to contribute to roth-ira (tax free growth) is absurd. Everybody should be able to contribute the maximum to a roth regardless of income. Ok, I'll do back door conversion or mega backdoor (Biden plan calls for elimination of back door conversions). There is a war on wealth, and it's not just against billionaires. This is just what they want you to believe.
eigenrick 5y ago
I see this argument thrown around a lot. It seems like previous research has also indicated that this was the case. However, I have some questions: 1. If "The Rich" (This paper defines them as the top 1% income earners) having tax reductions does not grow the economy or reduce unemployment, is there a wealth bracket in which tax reductions do grow the economy? 2. Does raising taxes on "The Rich" grow the economy? It seems like this is the kind of research done to solve an argument, but if we actually think that tax rates should factor into economic policy, then we should determine the actual effect of taxation policies on every quantile, not just the top 1%.
s1artibartfast 5y ago
To be fair, the claim was never that tax cuts reduced wealth inequality, it was that they lead to more prosperity for all.
sh4un 5y ago
Funny enough you will always have two type of poor people, ones who will do what it takes to become rich and those who believe since someone else is rich they should be entitled to it because of fairness.. Because why not get paid for no effort, right?

69 points by rustoo 5y ago

I'm not sure using taxes as a way to combat income equality is effective either. Just because taxing the rich less allows them to make more money does not imply taxing them more allows the non-wealthy to prosper.

eigenrick 5y ago
I think the point is not that it's taking money from the rich. I mean, that's a necessary part of it. The point is that that money is forced to recirculate in the system. The thing people seem to forget is that taxed money doesn't just disappear. It right back into the economy. The target, predominately, is the working class, either directly via Gov't employee wages, or social programs. Or it goes back indirectly, through Gov't contractors. At which point it filters back up the system to the rich.
- nightski 5y ago
  The rich do not usually sit with cash in their bank account, and even if they do the system is built to keep that money recirculating. Banks use fractional reserve lending to take those deposits and lend them out several times forward. Otherwise the money gets invested in companies from your large caps, small caps, VC, to angel funding, etc... Basically there is no such thing as stagnant money imho. What taxes imply (again in my opinion) is that we believe the government is better at investing that money than the economy participants themselves. In some cases that is true where the return is over several decades or there is little to no direct monetary return at all (but still very necessary - social programs). But in many cases it is not.
  - DimitriPetrova 5y ago
abeppu 5y ago
I think it's also key to distinguish between wanting to "combat income equality" and "allow[ing] the non-wealthy to prosper." There's that old Thatcher parliament quote responding to concerns about rising inequality, where she characterizes the left as being pleased if the poor become poorer so long as the rich fall further. I think taxes (if we plug various holes) can decrease income inequality, but the challenge is efficiently spending the proceeds in a way that lifts up everyone ... and not creating firehoses of public spending that primarily benefit the same small pool of companies.
- DarylZero 5y ago
  Lifting everyone up is mostly pointless. Absolute consumption levels are not important. Most of the things that matter are "positional." Making the rich poorer reduces the competitive stress that everyone is under. Even if everyone else gets poorer, it's worth it.

nathan_phoenix 5y ago

> We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy. The conclusion taken from the abstract.

nimbius 5y ago
an unsurprising find, considering its birthright was US president Ronald Reagan who had invented it out of whole-cloth to evangelize and tantalize neoliberal reforms during his presidency. It strikes me as fascinating that so many of these reforms, once touted as essential and prudent, have over two or more decades proven to be outright political grifting.
- lapetitejort 5y ago
  Didn't the idea start with the Laffer Curve [0] during the Ford admin? [0]: https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve
subroutine 5y ago
As part of the series on "Rising tides not lifting all boats", and "tax cuts for the rich don't tend to trickle down"... https://cushman.host.dartmouth.edu/books/CommonSenseFM/Chap5.pdf https://cushman.host.dartmouth.edu/books/CommonSenseFM/Chap5...
- nightski 5y ago
  That same saying could be used for the other argument. Rising taxes not lifting all boats. Taxes for the rich don't tend to trickle down.

carbonguy 5y ago

From the abstract: > We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy. I'd be interested in hearing from those who consider this a surprising result. To me it seems entirely expected, but with online echo-chambers being what they are I have no doubt my lack of surprise could just mean I'm in an informational cul-de-sac.

aemreunal 5y ago
I don't think this is surprising either. The whole "trickle-down economics" arguments for such tax cuts have always sounded... bullshit (for lack of a better word), exacerbated by the fact that decades of it (since the Reagan era in the US, for example) has only served to make the rich richer, poor poorer and erode the middle class completely. If it was a brilliant idea (i.e. the idea that the the only thing holding back the rich from elevating everyone else from poverty were those pesky low 10s of percent taxes) that worked, everyone would've been favor of it and we would've eliminated taxes for the rich completely by now. It's always good to have scientific data and analysis confirm your intuition, though.
- wang_li 5y ago
  The poor are not getting poorer and the middle class is becoming rich. In the US anyway. Fundamentally the problem is that people think that someone having more money than then is some kind of ethical issue. Not to mention something like 100% of these analyses are univariate and that makes no sense at all since it's perfectly rational that a 20 year old has much less wealth and income than a 60 year old with an advanced degree and 40 years of work experience. We could just as easily be outraged that some people have more life expectancy than other people. Seems unfair that a person who is 60 and has 15-20 years of life left has to work 40 hours per week to maintain their lifestyle which is exactly the same amount of hours a 20 year-old who has 55-70 years remaining expects to work in a week.

lostcolony 5y ago

I mean. I guess I'm glad someone is out there actually looking at the data. Unfortunately I'm pretty sure it's not going to actually sway anyone.

lapetitejort 5y ago
Sure, tax cuts haven't work yet, but that's because they're still too high!! One more should do it.
- labster 5y ago
  I doubt tax cuts for the rich would do it alone. Perhaps when combined with a 40 year copyright extension will we really see a flourishing of the poors.
  - lapetitejort 5y ago
    We've almost cracked it. Let's lower the definition of high speed internet to 500 Kbps, raise the short term interest rate cap to 3600%, and repeal the Onion Futures Act.

slickdork 5y ago

Question I'm asking in good faith: will this proof have any consequence for the bottom 99.99%? Is there a way this research helps shape policy?

dnate 5y ago
Not unless the bottom 99.99% take action. As most already suspect what this research shows, the sad answer is: No
jimhefferon 5y ago
Is it possible that it moves the Overton window? I mean, in the US there has been serious funding for decades aimed at moving the needle around things like guns and taxes. And that organized long term effort has been very successful. Possibly some of these things may result in some swing back to the middle?
- labster 5y ago
  One thing that really holds back the US is that we have no major left-wing parties. The Democratic Party is to the right of the Tories on health care, and about where Germany’s CDU is on the environment. The middle isn’t even in our Overton window.
nickff 5y ago
It's not a 'proof', it's a statistical study, and econometrics rarely convince anyone of anything.
imtringued 5y ago
If you had a free market, then the rich would either invest their money or they would lend the money out at a reasonable interest rate. The latter doesn't actually happen because they also have the option of simply holding onto it if nobody borrows it. (Of course in fractional reserve banking new money is created with every loan but the lender's money is out of circulation). Money has an insurance effect. Simply having money lets you pay off random expenses. It also doesn't spoil like goods. If we had a grain money system, then the central bank would pass the cost of grain storage onto the holder of the dollar bill which would give the lender an incentive to lend it out even at 0% interest, which protects the lender from the storage costs. This is known as liquidity preference. The borrower has to compensate the lender for giving up the liquidity benefits of money. Right now cash itself has no storage costs, so nobody will lend it at 0% interest. In theory giving the rich money through lower taxes lowers the interest rate because they lend it out. However, as I said, there is no mechanism that actually lets it fall to 0% (extreme cases like deflation can in theory justify negative rates). If you were to charge a negative interest rate on a bank account to enable 0% loans, then people just pull their money out and hold cash instead. The free market basically ends the moment markets are saturated and everything only makes enough money to cover its own costs with 0% profit. This is one of the areas where Marx was correct. Once profit is gone, the system collapses because someone forgot to enable the 0% interest feature of money.

andrewl 5y ago

A RAND Corporation study from a couple of years ago concluded the upward redistribution of income has cost American workers $50 trillion over the past several decades: https://democracyjournal.org/arguments/how-much-has-inequality-cost-workers/ https://democracyjournal.org/arguments/how-much-has-inequali...

oa2022 5y ago

vannevar 5y ago
Does your "Toddler's Guide to Economics and Taxation" say anything about freeloaders who leverage public services in a stable republic to build a fortune and then refuse to pay their share of upkeep on those services and that republic?
giraffe_lady 5y ago
If stealing corrects unjust inequality then it is, in fact, good. Yes. This is literally the principal behind "if you are starving it is not morally wrong to steal food." Which I know a lot of people disagree with and I don't need to hear the arguments about again. But my conscious is clear; some forms of theft are not wrong.
- oa2022 5y ago
  [flagged]
  - giraffe_lady 5y ago
    Oh shit really? I actually don't know much about politics, is that what socialism is? I do think I'm a leftist, but so are a lot of people who don't hold this view, so I don't think that alone would be sufficient to communicate it. Plus, the weight of this conviction has much more of a basis in my religion than my politics so it's arguably not even relevant. Anyway I am quite well paid myself these days, so I have no need or moral justification to steal.
the_why_of_y 5y ago
Okay, let's talk about stealing: Nationally it is estimated that workers are not paid at least $19 billion every year in overtime[12] and that in the US $40 billion to $60 billion in total are lost annually due to all forms of wage theft.[13] This compares to national annual losses of $340 million due to robbery, $4.1 billion due to burglary, $5.3 billion due to larceny, and $3.8 billion due to auto theft in 2012.[14] https://en.wikipedia.org/wiki/Wage_theft https://en.wikipedia.org/wiki/Wage_theft

ajsnigrutin 5y ago

I live in a former socialist country, with current "left" (red star in the logo) parties, who scream a lot about "tax the rich". In reality, if you look at their proposed policies: * nothing happens to the poor (since they already pay almost zero taxes) * nothing happens to the rich, because they start a company in bosnia, or delaware or panama (I have no idea how the panama papers were forgotten by the people and the media), funnel the money, and again pay (almost) zero tax * and me, an engineer with an above-average paycheck, but way below "rich"? I get fucked with the higher taxes. I don't need the rich to have higher taxes, I'd be happy if they atleast paid the current ones, or atleast the same percentage of income (in real sense, not accounting sense, since there are many ways to earn very little on paper, but buy a lot of stuff with that) as I do.

naveen99 5y ago
Someone is employing you. The tax burden is effectively split between you and them, even if nominally you are paying it. You pre tax salary is an expense to your employer, which if not expensed, would likely get taxed at the highest tax rate. Wealth is again, mostly just leverage on the working class future product. in that sense they already own atleast half of it, just defining it as income instead of wealth.
- ajsnigrutin 5y ago
  What I'm saying is, that I, in slovenia, pay around a half of my gross income in different taxes and "benefits" to the government. If my income is around the slovenian average (average is a bit below 2k eur montly, but i'll round it up), my "gros-gross" from 2k(what my employer has to pay, because of additional taxes) is 2.322eur, and I get 1300eur net to my account (55%) - the rest goes to the government. (employer pays 27.864 yearly, and you get 15.600 yearly) If you're average, or a bit above average, you pay around a half of what you make to the government. Due to income tax brackets, this percentage changes (eg, my 10k gross, means 11.610eur the employer, and I'd get 5176eur (~45%) into my account)... 10k is basically "rich" here. (Employer pays ~140k yearly, and you get ~62k net yearly) But, if your employer is willing to pay 11.610eur per month for you, and you want to get more out of that, you can become an independent contractor in slovenia (to have medical and pension insurance), and this will cost you ~500eur per month (including the costs of minimum accounting and a new bank account), so ~6k per year. Then you open a LLC in bosnia, which will cost you a smiliar amount of money (paperwork, accounting,...), so another 6k eur. Then your bosnian company charges the 140k for your work to your employer, and get taxed by bosnian rates, at only 10% on the first 100k of profit (so 140k-12k is 128k, so the first 100k is taxed at 10%, and i'm not sure about the next bracket, but let's say 30%, so 90k net from the first bracket, and ~20k from the second one), which means you get ~110k net income, or a bit over 9k monthly (almost 80%) So, if you don't earn a lot, you're stuck with high taxes. If you earn a lot (by slovenian standards, 10k is a lot), you can avoid most of the taxes, by starting a company in bosnia. If you earn a lot-lot (millions), you have even more posibilities of avoiding taxes, and pretty much every rich person does this to minimize their taxes. So, I don't want the current 55% (sum of all) taxes to be raised to 90% (or whatever) for the rich, I just want them to pay the current 55% at all, and not be able to avoid them and pay only 20% (which is less percentually than a minimum wage worker pays).

justinzollars 5y ago

I used to believe taxes were a good way to redistribute wealth. That is until I moved to San Francisco and saw how a welfare super state prioritizes its spending. $75,000/tent/year homeless camping sites, 2 million heroin needles, community ambassadors who aimlessly wonder the mission district with multilingual pamphlets on how to sign up for welfare benefits. Billions funneled to nonprofits, who in turn support politicians. Lavish state retirement benefits at the expense of cutting community services. Sure, raise taxes on the rich, but the plot is lost.

scotu 5y ago
false dichotomy, even if you believe SF spends money wrong, that doesn't justify the tax cuts for the rich
- justinzollars 5y ago
  That's not true. If the money is wasted, why tax at all? It seems punitive. Many that wish to see money lit on fire, rather than put to productive use.
  - scotu 5y ago
    I hope nobody reading this actually falls for your weaksauce argument... You are literally using the false dichotomy logical fallacy https://en.wikipedia.org/wiki/False_dilemma https://en.wikipedia.org/wiki/False_dilemma again, those are not the only two options: you say: > I used to believe taxes were a good way to redistribute wealth and then, you don't believe that works because: > I moved to San Francisco and saw how a welfare super state prioritizes its spending So you are suggesting that the ONLY other possible option when the rich are taxed is that those taxes are mismanaged, but that is just not true: certainly there are varying degrees of "mismanagement" possible. In particular some of those mismanagement scenario might still result in better outcomes for less wealthy. Given your other comments I'm sure you are already thinking: "who even cares about the less wealthy" but that seems to be the topic of the discussion, the original post is about how tax cuts don't result in "trickle down", which is how they are marketed and sold to the less wealthy.

nodesocket 5y ago

I'll approach this from a different perspective, in the last 20 years can pro-higher tax proponents provide proof of a single program that actually improved the quality of life of US citizens in the middle class? I suspect, many will spring up and suggest Obama Care, but where is the data to support this? I know myself and my families health insurance continues to rise and rise (self employed). My mother is on Medicare and pays absurd prices for her diabetes medication and testing equipment (smart device). Democrats continue to fail to address the costs of medical care for middle class and even upper middle class. There are programs for low-income but once you reach middle class levels all these programs no longer qualify. We all work hard for our money (ok maybe not all), but my mentality is let me accumulate as much wealth as I can (I'm better at investing and returning yield on money) in my younger years. I'll make the decisions which programs/charities and people I wish to support.

lostcolony 5y ago
So what you're saying is "because I personally don't see the benefit, I don't want the rich to be taxed higher", and for some reason are conflating your middle class income with that of the uberrich? I don't think anyone is suggesting "Hey, let's increase taxes on those making under a million a year". But there is no good reason that the people making a billion a year are paying the same 37% as the people making $600k.
- nodesocket 5y ago
  Except that's not what is being proposed (they claim their tax hikes only affects the ultra rich which is patently false). Also, I am not middle class, and I plan and have goals to continue to make more income and grow my wealth for myself and my family. Biden's plan to eliminate capital gains or increase it is bad for everybody and investment and growth. The income cap to be able to contribute to roth-ira (tax free growth) is absurd. Everybody should be able to contribute the maximum to a roth regardless of income. Ok, I'll do back door conversion or mega backdoor (Biden plan calls for elimination of back door conversions). There is a war on wealth, and it's not just against billionaires. This is just what they want you to believe.

eigenrick 5y ago

I see this argument thrown around a lot. It seems like previous research has also indicated that this was the case. However, I have some questions: 1. If "The Rich" (This paper defines them as the top 1% income earners) having tax reductions does not grow the economy or reduce unemployment, is there a wealth bracket in which tax reductions do grow the economy? 2. Does raising taxes on "The Rich" grow the economy? It seems like this is the kind of research done to solve an argument, but if we actually think that tax rates should factor into economic policy, then we should determine the actual effect of taxation policies on every quantile, not just the top 1%.

s1artibartfast 5y ago

To be fair, the claim was never that tax cuts reduced wealth inequality, it was that they lead to more prosperity for all.

sh4un 5y ago

Funny enough you will always have two type of poor people, ones who will do what it takes to become rich and those who believe since someone else is rich they should be entitled to it because of fairness.. Because why not get paid for no effort, right?