4 ms·

Why shouldn't they? In the US, the top 20% do have something around 80% to 85% of the wealth. http://i.imgur.com/1Thy8LJ.jpg http://i.imgur.com/1Thy8LJ.jpg

by zyxley 12y ago

prostoalex 12y ago
Generally speaking, an economy that depends on such a small number of participants for financing is setting itself up for unpredictable revenue stream, which results in pretty rough times when some of those guys decide to take the rest of the year off, or "spend more time with the family". US wealth calculations are also so heavily biased towards real estate prices that any year house prices head downwards, the balance of wealth shifts towards the top. Any time the housing markets stabilize and grow, everybody is suddenly more equal.
- rileymat 12y ago
  And we know the work they were doing will not be filled by anyone else.
  - prostoalex 12y ago
    Sure, the revenue structure based on the assumption "10 guys, most of them hedge fund managers, will make over a billion dollars, guaranteed" seems sustainable. Most of such income is off one-time events http://www.forbes.com/sites/robertwood/2013/12/20/mark-zuckerbergs-2-billion-tax-bill/ http://www.forbes.com/sites/robertwood/2013/12/20/mark-zucke... You can hope they're repeatable, and that works during the boom years, but during the bust years it becomes a "California double whammy" - not only your projections are over-blown, but the high-income tax events (which tend to be IPOs or big hedge fund wins, judging by the caliber of people stuck with multi-billion dollar tax bills) have also been eradicated by a stagnating/falling economy.
- dalke 12y ago
  The chart shows that the top 1%, which the 3 million people making over $615K/year, pay 45.7% of the income tax. For people with $1 million/year or higher of income, most of the income is from sources other than salaries and wages. http://www.taxpolicycenter.org/UploadedPDF/2000134-composition-of-income-reported-on-tax-returns-in-2012.pdf http://www.taxpolicycenter.org/UploadedPDF/2000134-compositi... . If all 3 million people decided to take a year off then the worst case would be a 20% drop in income tax or 10% drop in the US tax revenue. More than likely, some of the people under 99% would suddenly have new jobs, with a higher income. I find it hard to think of 3 million people as a small enough number to be in the unpredictable range for a ~1 year fluctuations. 300? Certainly. 30,000? Maybe. But the 1% is still the population of Iowa.
  - prostoalex 12y ago
    > If all 3 million people decided to take a year off Well, the risk here is over-dependence on capital gains. Not only it's a voluntary tax with people choosing simply not to sell, or sell less than they originally intended to, economic downturns bring in capital losses, which can be deducted against the gains, which then accounts for dramatically volatile shifts in capital gains revenues. You're right, though, the situation is much more distributed within that 1%, and thank you for the graph.
  - deleted 12y ago
    [deleted]
refurb 12y ago
Because we tax income, not wealth? I'll bet there are plenty of people in the 20% that owns 80% of the wealth and pay no tax at all. Plenty of people of people in the lower 50% do pay taxes.
- amunicio 12y ago
  Exactly. Let's say you are born with a $20M trust fund and never work. You never get taxed on it (yes, I know sales taxes, property taxes and so on..., but we are talking income taxes). If you play one year in the MBA make the same $20M all that seame year and get injured and cannot work anymore, you get taxed much more than someone making the same $20M during their life time. The issue is that there is not an easy way to tax people on their wealth (which is really what the state warranties through police, justice, infrastructure, defense, etc...). So we use income as a proxy for wealth (which is a really bad proxy and benefits disproportionately people that are already wealthy). There is an argument to be made that you where already taxed when you made that money, but the problem is that you don't stop benefiting from the state warranties after making that money. One of the issues with taxing wealth, which is fairer in my opinion, is that it is very difficult and prone to gaming evaluating anyone's wealth. Not even talking about how politically viable it would be to propose taxing 2% of each american's wealth each year instead of a much larger percentage on their income. Personally, I think it would the right thing to do if viable, because the tax would be proportional to how much the government and its institutions are warranting your property (aka, how much you have at stake).
  - vasilipupkin 12y ago
    that's why taxing consumption, not income is one of the most efficient ways of taxation. Consumption is a proxy for wealth, doesn't require us to measure wealth precisely and doesn't penalize productive investments
    - amunicio 12y ago
      Consumption is a very bad proxy for wealth, even worst than income. If you live hand to mouth, you get taxed on 100% or your wealth. If you make $100M a year and have $10B in the bank, you only get taxed on the $15M or so that you spent this year.

Why shouldn't they? In the US, the top 20% do have something around 80% to 85% of the wealth. http://i.imgur.com/1Thy8LJ.jpg http://i.imgur.com/1Thy8LJ.jpg

by zyxley 12y ago

Why shouldn't they? In the US, the top 20% do have something around 80% to 85% of the wealth. http://i.imgur.com/1Thy8LJ.jpg http://i.imgur.com/1Thy8LJ.jpg

prostoalex 12y ago

Generally speaking, an economy that depends on such a small number of participants for financing is setting itself up for unpredictable revenue stream, which results in pretty rough times when some of those guys decide to take the rest of the year off, or "spend more time with the family". US wealth calculations are also so heavily biased towards real estate prices that any year house prices head downwards, the balance of wealth shifts towards the top. Any time the housing markets stabilize and grow, everybody is suddenly more equal.

rileymat 12y ago
And we know the work they were doing will not be filled by anyone else.
- prostoalex 12y ago
  Sure, the revenue structure based on the assumption "10 guys, most of them hedge fund managers, will make over a billion dollars, guaranteed" seems sustainable. Most of such income is off one-time events http://www.forbes.com/sites/robertwood/2013/12/20/mark-zuckerbergs-2-billion-tax-bill/ http://www.forbes.com/sites/robertwood/2013/12/20/mark-zucke... You can hope they're repeatable, and that works during the boom years, but during the bust years it becomes a "California double whammy" - not only your projections are over-blown, but the high-income tax events (which tend to be IPOs or big hedge fund wins, judging by the caliber of people stuck with multi-billion dollar tax bills) have also been eradicated by a stagnating/falling economy.
dalke 12y ago
The chart shows that the top 1%, which the 3 million people making over $615K/year, pay 45.7% of the income tax. For people with $1 million/year or higher of income, most of the income is from sources other than salaries and wages. http://www.taxpolicycenter.org/UploadedPDF/2000134-composition-of-income-reported-on-tax-returns-in-2012.pdf http://www.taxpolicycenter.org/UploadedPDF/2000134-compositi... . If all 3 million people decided to take a year off then the worst case would be a 20% drop in income tax or 10% drop in the US tax revenue. More than likely, some of the people under 99% would suddenly have new jobs, with a higher income. I find it hard to think of 3 million people as a small enough number to be in the unpredictable range for a ~1 year fluctuations. 300? Certainly. 30,000? Maybe. But the 1% is still the population of Iowa.
- prostoalex 12y ago
  > If all 3 million people decided to take a year off Well, the risk here is over-dependence on capital gains. Not only it's a voluntary tax with people choosing simply not to sell, or sell less than they originally intended to, economic downturns bring in capital losses, which can be deducted against the gains, which then accounts for dramatically volatile shifts in capital gains revenues. You're right, though, the situation is much more distributed within that 1%, and thank you for the graph.
- deleted 12y ago
  [deleted]

refurb 12y ago

Because we tax income, not wealth? I'll bet there are plenty of people in the 20% that owns 80% of the wealth and pay no tax at all. Plenty of people of people in the lower 50% do pay taxes.

amunicio 12y ago
Exactly. Let's say you are born with a $20M trust fund and never work. You never get taxed on it (yes, I know sales taxes, property taxes and so on..., but we are talking income taxes). If you play one year in the MBA make the same $20M all that seame year and get injured and cannot work anymore, you get taxed much more than someone making the same $20M during their life time. The issue is that there is not an easy way to tax people on their wealth (which is really what the state warranties through police, justice, infrastructure, defense, etc...). So we use income as a proxy for wealth (which is a really bad proxy and benefits disproportionately people that are already wealthy). There is an argument to be made that you where already taxed when you made that money, but the problem is that you don't stop benefiting from the state warranties after making that money. One of the issues with taxing wealth, which is fairer in my opinion, is that it is very difficult and prone to gaming evaluating anyone's wealth. Not even talking about how politically viable it would be to propose taxing 2% of each american's wealth each year instead of a much larger percentage on their income. Personally, I think it would the right thing to do if viable, because the tax would be proportional to how much the government and its institutions are warranting your property (aka, how much you have at stake).
- vasilipupkin 12y ago
  that's why taxing consumption, not income is one of the most efficient ways of taxation. Consumption is a proxy for wealth, doesn't require us to measure wealth precisely and doesn't penalize productive investments
  - amunicio 12y ago
    Consumption is a very bad proxy for wealth, even worst than income. If you live hand to mouth, you get taxed on 100% or your wealth. If you make $100M a year and have $10B in the bank, you only get taxed on the $15M or so that you spent this year.