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Though I support the idea that wealthy people should pay high taxes, perhaps even higher taxes than they do now, I think it's also worth noting that the US alre

Though I support the idea that wealthy people should pay high taxes, perhaps even higher taxes than they do now, I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%[1]. As long as we're keeping capitalism, I don't buy the argument that simply being rich is wrong. I'm also fairly skeptical of set limits on income, as setting those limits is very hard. What goes into it? How much money per year is the limit of a "Just" income? I don't think those questions have a definitive answer. I think repealing the bush tax cuts is a good idea. I think we should keep the estate tax. I think the "buffet rule" isn't bad, but it's no solution. I just wonder when people will say it's enough. Rich people pay less tax today than they did a decade ago - but they're making massively more money as well. If we add all those taxes, and there's still a massive income imbalance, what then? I think it's in everyone's interest to live in an equal society, for reasons that I don't want to get into right here. However, I'm dubious that can be achieved through targeting one social class or another. It seems like the American right is targeting the poor, while the left is targeting the wealthy. Everyone feels like a victim and just wants to keep what they have now. What a crappy situation. Edit: I missed some words. [1] http://www.taxfoundation.org/news/show/250.html#table6 http://www.taxfoundation.org/news/show/250.html#table6

Arelius 14y ago
>Though I support the idea that wealthy people should pay high taxes, perhaps even higher taxes than they do now, I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%[1]. You do realize that if you make about $80K/year, you are already in the top 10% right? With that perspective, I feel that 70% of taxed income is absurdly low, the fact that 30% of all US tax dollars come from people making less than $80K/year is completely absurd to me. Edit: According to your table, the number is actually: $112,124 I still think my point stands.
- eli_gottlieb 14y ago
  Your point doesn't stand. Read the rest of the data. Namely, notice that according to this data, the median AGI of the United States is $32,396/year. So half the population is making less than $32k/year. Yes, the top 10% and the top half of the population are taking on almost all of the income-tax burden.... because they (we, in my case) have almost all the income. There's nothing fair about demanding tax money from people who are just plain poor. You tax the rich, because rich people have money. Now, we could talk about distributing the tax burden "fairly" across the rich and the middle class, but that assumes we have large, broad middle class. Which we don't: making a "middle-class salary" like, say, $66,193/year already puts you on the border of the top 25% of the country. And then notice that to get from the top 25% to the top 10%, you have to make almost twice as much money. Top 10% to top 5% isn't that large of an increase, but top 5% to top 1% requires more than doubling your income. So, to be clear: To go from median to top 25%, you need to roughly double your income. To go from 75th percentile to 90th percentile, you need to almost double your income. To go from 95th percentile to 99th percentile, you need to more-than-double your income. We're operating a tax system designed for a bell-curve income distribution when what we actually have is a power-law income distribution.
  - djloche 14y ago
    FYI, when you look at individual median income instead of household, it's worse: individual median income: $26,680/yr, single: $18,881/yr, married: $32,033/yr, divorced: $28,668/yr, widowed: $18,485/yr Half the population is making less than $26,680.
  - meej 14y ago
    "We're operating a tax system designed for a bell-curve income distribution when what we actually have is a power-law income distribution." Well said. I'd upvote more than once if I could.
georgieporgie 14y ago
I think it's also worth noting that the US already gets 70% of all its taxes from the top 10% Why is that worth noting? That only further demonstrates the income inequality in the United States. Furthermore, wealth is far more important to take into account than income in any discussion of taxation or inequality. Also, I have yet to hear anyone make an argument that sounds anything like "simply being rich is wrong."
- waterlesscloud 14y ago
  "That only further demonstrates the income inequality in the United States. " So is this the basic issue, then? That there's income inequality? Because that's always going to be the case. Even in the most socialist nations, or even communist nations. There is always a strong disparity of income and power. Always. And there always will be.
  - toyg 14y ago
    The problem is not the disparity, but how wide it is. Inequality in the US is currently so wide, it's absurd. It's widening in Europe as well, but not as fast and not as radically as in the US in the last 30 years. This is not healthy, it's polarizing society and eroding the social contract. The only way to effectively balance this trend is through higher taxation.
    - crusso 14y ago
      First of all, doesn't anyone see the correlation between increased government power (revenue/spending) and an increase in the income inequality gap? Look at a graph showing govt spending as a percentage of gdp vs the inequality gap. Secondly, assuming that the "inequality gap" is necessarily a bad thing, which I don't think anyone has shown... Why do you assume that higher taxation will decrease the income inequality gap? If anything, higher taxation means more money (ie power) in the hands of the government. More power in the hands of the government just leads to more crony capitalism that concentrates even more money and power into fewer hands. Worse, those companies that then have access to all that money and power are the worst sorts of companies that don't even need to provide good products and services to consumers. Instead they get more bang for the buck by sucking tax dollars out of the system.
timwiseman 14y ago
Well said. To go a bit further, limits on income are likely to encourage people not to try truly hard or truly risky ventures. Paul Graham addresses this at http://paulgraham.com/gap.html http://paulgraham.com/gap.html
- georgemcbay 14y ago
  "limits on income are likely to encourage people not to try truly hard or truly risky ventures." When people say things like this it reminds me of religious fundamentalists who claim that a world without belief in God would be some sort of anarchist murder-on-the-streets hellscape because people wouldn't have a reason to act morally or ethically anymore. Not only is it incredibly pessimistic to believe either of these things, but you don't have to look far to see tons and tons of real-world examples that prove that the statement is completely ridiculous.
- leot 14y ago
  There's an important difference between wealth and income that PG does not go into. Sure, I'll buy the idea that taxing income discourages work (though its impact is far more muted than some people would like to suggest). However, I've not yet seen any argument that taxing wealth itself discourages work or wealth creation. If anything, taxing wealth keeps people from sitting on their assets and doing mere "wealth preservation". If I were a Ramen-profitable startup entrepreneur, I'd much rather be taxed at 2% of my net wealth than at 30% (or even 15%) of my capital gains. Indeed, if I were anyone who planned on leveraging my capital to actively create wealth (c.f. Elon Musk) I should much prefer wealth taxes over capital gains taxes. If we live in a meritocracy then anyone with a lot of wealth should be able to relatively easily average >6% ROI year-over-year.
- davekinkead 14y ago
  Yeah, because high tax rates always discourage entrepreneurship </sarcasm> Norway - with one of the highest tax rates & comprehensive welfare states on the planet - has higher rates of entrepreneurship than the USA does. http://blogs.reuters.com/felix-salmon/2011/01/20/norway-entrepreneurial-paradise/ http://blogs.reuters.com/felix-salmon/2011/01/20/norway-entr... If you look at international entrepreneur rates, its pretty clear that there is no relationship between income tax rates and start-up activity (that's not to say that specific tax policies don't make a difference). http://www.internationalentrepreneurship.com/total-entrepreneurial-activity/ http://www.internationalentrepreneurship.com/total-entrepren... For every argument about high tax discouraging risky ventures, there is a counter-argument that high safety nets reduce the risk of start ups.
mikeash 14y ago
You say 70% of all taxes, but your link only discusses income taxes. That is horribly misleading.
fl3tch 14y ago
> I think it's also worth noting that the US already gets 70% of all its taxes from the top 10% Yes, but they also own 70% of all the wealth[1], according to 2007 numbers (the percentage is almost certainly a little higher today), so that's perfectly proportional. If you own 70% of the wealth, you should pay 70% of the taxes. http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4#half-of-america-has-25-of-the-wealth-2 http://www.businessinsider.com/15-charts-about-wealth-and-in...
- ojbyrne 14y ago
  Actually, since almost every country in the world thinks progressive income taxes are the right thing to do, then this is an argument supporting higher taxes on the wealthy.

Arelius 14y ago

>Though I support the idea that wealthy people should pay high taxes, perhaps even higher taxes than they do now, I think it's also worth noting that the US already gets 70% of all its taxes from the top 10%[1]. You do realize that if you make about $80K/year, you are already in the top 10% right? With that perspective, I feel that 70% of taxed income is absurdly low, the fact that 30% of all US tax dollars come from people making less than $80K/year is completely absurd to me. Edit: According to your table, the number is actually: $112,124 I still think my point stands.

eli_gottlieb 14y ago
Your point doesn't stand. Read the rest of the data. Namely, notice that according to this data, the median AGI of the United States is $32,396/year. So half the population is making less than $32k/year. Yes, the top 10% and the top half of the population are taking on almost all of the income-tax burden.... because they (we, in my case) have almost all the income. There's nothing fair about demanding tax money from people who are just plain poor. You tax the rich, because rich people have money. Now, we could talk about distributing the tax burden "fairly" across the rich and the middle class, but that assumes we have large, broad middle class. Which we don't: making a "middle-class salary" like, say, $66,193/year already puts you on the border of the top 25% of the country. And then notice that to get from the top 25% to the top 10%, you have to make almost twice as much money. Top 10% to top 5% isn't that large of an increase, but top 5% to top 1% requires more than doubling your income. So, to be clear: To go from median to top 25%, you need to roughly double your income. To go from 75th percentile to 90th percentile, you need to almost double your income. To go from 95th percentile to 99th percentile, you need to more-than-double your income. We're operating a tax system designed for a bell-curve income distribution when what we actually have is a power-law income distribution.
- djloche 14y ago
  FYI, when you look at individual median income instead of household, it's worse: individual median income: $26,680/yr, single: $18,881/yr, married: $32,033/yr, divorced: $28,668/yr, widowed: $18,485/yr Half the population is making less than $26,680.
- meej 14y ago
  "We're operating a tax system designed for a bell-curve income distribution when what we actually have is a power-law income distribution." Well said. I'd upvote more than once if I could.

georgieporgie 14y ago

I think it's also worth noting that the US already gets 70% of all its taxes from the top 10% Why is that worth noting? That only further demonstrates the income inequality in the United States. Furthermore, wealth is far more important to take into account than income in any discussion of taxation or inequality. Also, I have yet to hear anyone make an argument that sounds anything like "simply being rich is wrong."

waterlesscloud 14y ago
"That only further demonstrates the income inequality in the United States. " So is this the basic issue, then? That there's income inequality? Because that's always going to be the case. Even in the most socialist nations, or even communist nations. There is always a strong disparity of income and power. Always. And there always will be.
- toyg 14y ago
  The problem is not the disparity, but how wide it is. Inequality in the US is currently so wide, it's absurd. It's widening in Europe as well, but not as fast and not as radically as in the US in the last 30 years. This is not healthy, it's polarizing society and eroding the social contract. The only way to effectively balance this trend is through higher taxation.
  - crusso 14y ago
    First of all, doesn't anyone see the correlation between increased government power (revenue/spending) and an increase in the income inequality gap? Look at a graph showing govt spending as a percentage of gdp vs the inequality gap. Secondly, assuming that the "inequality gap" is necessarily a bad thing, which I don't think anyone has shown... Why do you assume that higher taxation will decrease the income inequality gap? If anything, higher taxation means more money (ie power) in the hands of the government. More power in the hands of the government just leads to more crony capitalism that concentrates even more money and power into fewer hands. Worse, those companies that then have access to all that money and power are the worst sorts of companies that don't even need to provide good products and services to consumers. Instead they get more bang for the buck by sucking tax dollars out of the system.

timwiseman 14y ago

Well said. To go a bit further, limits on income are likely to encourage people not to try truly hard or truly risky ventures. Paul Graham addresses this at http://paulgraham.com/gap.html http://paulgraham.com/gap.html

georgemcbay 14y ago
"limits on income are likely to encourage people not to try truly hard or truly risky ventures." When people say things like this it reminds me of religious fundamentalists who claim that a world without belief in God would be some sort of anarchist murder-on-the-streets hellscape because people wouldn't have a reason to act morally or ethically anymore. Not only is it incredibly pessimistic to believe either of these things, but you don't have to look far to see tons and tons of real-world examples that prove that the statement is completely ridiculous.
leot 14y ago
There's an important difference between wealth and income that PG does not go into. Sure, I'll buy the idea that taxing income discourages work (though its impact is far more muted than some people would like to suggest). However, I've not yet seen any argument that taxing wealth itself discourages work or wealth creation. If anything, taxing wealth keeps people from sitting on their assets and doing mere "wealth preservation". If I were a Ramen-profitable startup entrepreneur, I'd much rather be taxed at 2% of my net wealth than at 30% (or even 15%) of my capital gains. Indeed, if I were anyone who planned on leveraging my capital to actively create wealth (c.f. Elon Musk) I should much prefer wealth taxes over capital gains taxes. If we live in a meritocracy then anyone with a lot of wealth should be able to relatively easily average >6% ROI year-over-year.
davekinkead 14y ago
Yeah, because high tax rates always discourage entrepreneurship </sarcasm> Norway - with one of the highest tax rates & comprehensive welfare states on the planet - has higher rates of entrepreneurship than the USA does. http://blogs.reuters.com/felix-salmon/2011/01/20/norway-entrepreneurial-paradise/ http://blogs.reuters.com/felix-salmon/2011/01/20/norway-entr... If you look at international entrepreneur rates, its pretty clear that there is no relationship between income tax rates and start-up activity (that's not to say that specific tax policies don't make a difference). http://www.internationalentrepreneurship.com/total-entrepreneurial-activity/ http://www.internationalentrepreneurship.com/total-entrepren... For every argument about high tax discouraging risky ventures, there is a counter-argument that high safety nets reduce the risk of start ups.

mikeash 14y ago

You say 70% of all taxes, but your link only discusses income taxes. That is horribly misleading.

fl3tch 14y ago

> I think it's also worth noting that the US already gets 70% of all its taxes from the top 10% Yes, but they also own 70% of all the wealth[1], according to 2007 numbers (the percentage is almost certainly a little higher today), so that's perfectly proportional. If you own 70% of the wealth, you should pay 70% of the taxes. http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4#half-of-america-has-25-of-the-wealth-2 http://www.businessinsider.com/15-charts-about-wealth-and-in...

ojbyrne 14y ago
Actually, since almost every country in the world thinks progressive income taxes are the right thing to do, then this is an argument supporting higher taxes on the wealthy.