Fixing Inequality through Taxes

People who made accurate claims, OTOH, found that the greatest factors in the Great Depression were bad Fed and other -government- policies, explaining Eccles' motivation for shuck and jive deflection nicely.

 

So, if a person is poor, it means, by definition, they have not "worked hard enough"?

 

And who might these people be who made "accurate" claims?

 

Evidence your claim other than from someone with an obvious conflict of interest concerning the Depression and its causes, and I might tell you.

 

Very clever how you ignored half of what I wrote, but in a nutshell, it's that they don't feel the need to work anymore that they do, and are perfectly fine with being supplemented by tax payers. They are not shameful of it as so many would have us believe, many of them even are proud when they get an increase in their snap benefits or the fact that medicaid paid for all the expenses to have baby #5. To believe that all the poor people are shamed of the situation they are in and would do anything to get out of it just isn't realistic. If they are willing to do that, they don't stay poor for long. It's really that simple. The country has been trying to lift people out of poverty for so many decades and it's only gotten worse. Everything these days seems to revolve around the poor and how the poor can benefit, but it's still not getting better. It's simply because you can't help someone who doesn't want to be helped.

 

Meaningless opinion with no evidence

 

Please explain the mechanism by which a person owning wealth siphons purchasing power from someone else. For instance, lets say Joe owns a lot of Apple stock. Please explain how Joe siphons purchasing power away from others.

 

There are no accurate claims other than FDR's brand of Socialism is what enabled us to pioneer the first world.

 

Are you limiting "hard enough" to mere physical effort on the job?

 

Well first max out your 401k plan if you don't have one then your IRA. Then the magic of compounding returns kicks in and when you retire you have a nice some of money to live off during your retirement.

 

Absolutely not. Absolutely not.

 

It isn't the wealth per se that causes the loss of purchasing power but instead it's the distribution of the wealth that is created and what is that wealth being used for. The worker creates the wealth, not the owner of "Microsoft" shares. How much of the wealth being created by the worker goes to the worker and how much of it are they allowed to keep? What we find is undercompensation for the creation of the wealth by the workers and then the workers are subject to much higher taxation than the "owner of Microsoft stock" with the same income because "earned income" is taxed at much higher rates than "unearned income" under our tax codes.

Additionally the worker typically spends a much larger percentage of income on consumption, often 100% (and even more if they receive welfare assistance) and that drives the necessity for more wealth creation by workers. The wealthy, on the otherhand, spend a much lower percentage of income on consumption, generally investing their surplus income, so they do little for the economy because they don't drive the creation of wealth with their income by spending it on consumption. By investing as opposed to spending on comsumption of goods and services the wealthy don't drive a necessity for labor to create the products and services provided for by workers and that reduces the amount of income for the workers resuling in less spending by the workers.

 

Most of the value of Apple shares are grounded in Apples ability to successfully use the legal system to stop competitors. Suppose that you decided to build cell phones. You better not invest all the money in production, you better keep a substantial amount of capital in reserve, for all lawsuits that Apple will be hitting you with; Apple employs an army of full time lawyers with nothing better to do.

So, to answer your question, Joe siphons purchasing power away from others by owning shares of a company (Apple Inc) that specializes in removing the opportunities of others to produce what consumers want. The end result is higher consumer prices, lower wages, and more relative purchasing power for Joe, because everyone else is afraid to compete, for fear that Joe's lawyers will bankrupt them.

 

Then what are you talking about?

 

This is totally backwards thinking. Capital cannot produce wealth without labor … but labor can produce both capital and wealth without capital … so long as labor has access to what nature provided.

Place labor on an island with no capital or wealth, so long as labor has access to what nature provides (land), then labor can produce both wealth and capital. Labor comes before capital, always … hence, jobs come before capital. Think about it. You are trying to make it sound as if labor cannot produce wealth unless capital is supplied first, but that is totally backwards from reality. Starting from scratch, how could capital exist if labor did not produce it?

This is exactly right. As long as labor has access to what nature provided for free, then jobs and companies do form out of thin air … or to be more precise, out of the desire for wealth. If labor disappeared today, then no more wealth would be produced, but if capital all disappeared today, then labor (given access to land that nature provided for free) would start making more capital tomorrow. I don't know any easier way to say this so that you can understand.

The only way that labor can possibly be dependent on capital (as you claim it is) is if landowners are preventing labor from accessing what nature provided for free. Give labor free access to land (like mother nature intended) and capital will always follow.

 

Define labor. IMO, labor is unorganized individuals needing to be organized and provided a plan and equipment. This does not happen naturally. It has to be organized by someone with a plan and a product design. Sure, you can put people on an island and they will produce food, clothing and shelter, but they will not be able to build an economy without organization(capital/plan).

 

You confuse wealth with dollars that merely represent wealth. When the worker creates the "widget" that is wealth creation. The "widget" has a trading value related to other "gidgets" on the market. "Dollars" are mererly documents represent the "wealth" (widget and gidgets) that they can purchase. The employer, that doesn't have the "gidgets" that the worker needs is responsible for providing the worker with fair trading value in dollars for the wealth the worker created when they made the "widget" for the employer.

The workers is not "overhead" to the enterprise but instead is an "asset" of the enterprise because without the worker the enterprise creates no wealth.

The owner of the enterprise is not entitled to take more of the wealth created by the worker than what it costs for the worker to produce the wealth. We don't expect enterprises to operate at a loss and we shouldn't we expect the worker to operate at a loss. Of course there is a pragmatic difference between an enterprise and the worker. An enterprise that can't at least break even financially can simply cease to exist but the worker, short of committing suicide, can't cease to exist.

Several points that are mixed together a little so I'll try to sort them out.

The purpose of taxation is to fund the authorized expenditures of government. We have deficts where the authorized expenditures are not being funded and that is a tax code (revenue) problem. This is one place the "right-wing" gets it wrong. All authorized expenditures have been determined to be "necessary expenditures" by Congress and you can't cut "necessary" expenditures but instead must impose the "necessary tax" to fund the expenditures.

Many on the "right" would like to see "welfare spending cut" as opposed to "welfare spending reduced" by the federal government. A "cut" ignores the "necessity" for the spending so instead to reduce the spending we need to "reduce the necessity" for the spending. In short we need to reduce welfare spending by reducing the poverty that necessitates the spending. The government should not cut "necessary spending" but instead needs to "reduce or eliminate the necessity" for the spending.

The belief that higher taxation results in lower government revenues is based upon the theoretical Laffer Curve but the assumption would have to be made that we're already at the peak or to the right of the peak for taxation and that is an unsupported assumption. In point of fact the Laffer Curve is overly simplistic because it's highly dependent upon who's being taxed. Increased taxation on income used for consumption reduces the amount of goods and services (wealth being created) so there is less revenue to the government because less wealth (income) is produced by the workers. Taxation of income not used for consumption does not reduce the government revenues because it doesn't affect the amount of wealth being created and the taxation is really based upon the creation of wealth.

The belief that the wealthy pay the most in federal taxes is false. Based upon this chart from 2009 those in the 15% income tax bracket (i.e. incomes below $72,500 for married filing jointly) pay more in taxes than the top two brackets and capital gains taxes combined. Admittedly the tax rates have increased since then but this chart is still relatively accurate.



Of note, based upon this more recent chart from 2013 comparing capital gains taxes to income taxes for two households with the identical income of $72,000 those with earned income are in a 15% income tax bracket while an investor with long term capital gains pay zero in taxes.



References are made to "investments" funding the capitalization of enterprise that provides funding to a corporation for expansion. While most expansion of enterprise is funded from profits there is some funding from outside investments into corporations but that's only related to direct stock offering by the corporation where the corporation is selling the stock. If "Bill" owns stock in "Corp A" and sells it the "Jill" none of that money goes to the corporation. Only when the corporation sells the stock does it receive the funds from then investment and can use those funds for capital investments of the corporation. I've always known that this was a small percentage of all "investments" but yesterday I actually took the time to find out how small it was.

To figure this out I used the "new IPO's (Initial Public Offerings) for corporations issuing over 1 million share of stocks and compared them to typical monthy transactions that are covered by the SEC. I had always believed this represented less than 1% of all investments but boy did I over-estmate it.

The number of IPO stocks being issued for the month I addressed equaled about 25 million individuals shares of stock being offered but for a typical month of SEC tracked activities there were about 150 trillion transactions in individual shares of stocks, commodities, futures and other investments tracked. Dividind the IPO stocks by total "individual" transactions resuted in 4.666666666666667e-7 or only 0.00005% of the "investments" fund corporations. If we rounded it off to 1/1000% the result would to 0% of investments fund corporations that create jobs and produce wealth.

Even I was staggered by how little investments were actually being used to fund corporations that, in turn, used that for corporate expansion that could create jobs. Of course without consumption (sales of the goods/services produced by the employee) the investment really doesn't create any jobs because the corporation will go eventually go bankrupt without sales regardless of the size of the investment.

BOTTOM LINE
The belief that investments primarily fund corporations and create jobs has to be the most delusional myth in America today because based upon the actual numbers of investments relative to investments funding enterprise this virtually never happens. If we rounded it off to 1/1000% the result would to 0% of investments fund enterprise. For all practical purposes it's impossible to show a less significant relationship.

 

Quite true and, as pointed out, in the natural state the "plan and design" is unnecessary but we no longer live in a natural state.

The flip side is also true though. The "plan and design" is worthless without the labor to produce the wealth.

There has to be a mutually beneficial relationship and the "plan" needs to ensure that the "labor" can at least survive based upon the plan because the labor cannot survive based upon nature anymore.

That's the problem I point out. Many enterprises don't have a "business plan" that ensures the necessities of the person (labor) they employ and instead exploit the worker as oppose to ensuring the muturally beneficial relationship between the enterprise and the worker.

So the "plan" is correctly referred to but not all plans are good plans and therein lies the real problem. Seriously, if the "plan" is that "We'll underpay our worker and let the government pick-up that financial shortfall with welfare assistance" would you call that a good business plan? That's one primary problem with "conservative economic philosophy" because that's the "business plan" they believe in.

 

You can either have a free market where labor and capital are both free agents or you can have communism. I much more prefer a free market. The government providing welfare is just another element in the market. Get rid of it and the invisible hand will adjust accordingly.

 

Agreed. Get rid of freedom and you have...well, I'm not sure you'd call it communism, but you don't have freedom. I'm always amazed at the number of people who feel compelled to control the otherwise peaceful actions of their fellow man. It seems the world is full of wannabe tyrants.

 

Not yet. If we could root out those pushing it there would be more prosperity for everyone.

 

Ayn Rand gave us the real answer to the problem of govt. STOP funding them. Stop making one dime more than you need for mere survival. They can't tax what you never make. Result=collapse of govt. then you get the chance to start over. Until govt collapses, you won't get that chance. NOBODY who works for the govt or the military has a real job. they are part of the problem (ie, non productive people leeching off of the productive).

 

You're flat wrong.

The progressive income tax doesn't affect taxpayers based simply upon the actual marginal rates; there are a whole host of other factors to consider, chief among them is write-offs and hedges.

We had lots more of them in the past that you laud was "more fair". I can break down exactly why no one ever paid 94% - the top rate ever levied - and I'm not going to discuss that despite the claims you make, the raw percentage of taxes pulled from the economy hasn't wavered even 2% from the 15% average it has maintained for 60 years. I'm going to go far more basic than that. So basic, in fact, that even a low-info liberal will understand.

In 1920, the M0 - the total amount of money in circulation in the US economy - was about 4.3 billion.

Let that sink in. What's that mean?

It means that the poorest person had as the poorest will always have: zero. But what would the wealthiest person have? In an economy where the sum total currency in circulation was 4.3 Billion?

Were there any billionaires about which to fret, and for liberals to stone? we certainly didn't hear about them. Having 20 million was considered incredibly wealthy.

How about now?

Well, here is what the M0 chart looks like since 1959.

Here it is since 1920:



Now think carefully before you answer this question.

How could class separation NOT happen if we employ Keynesian monetary expansion, and the M0 blows up like this? The current M0 is 4,030,561 MILLION dollars. That's over 4 TRILLION dollars.

I'll ask again.

How could class separation NOT happen? Not only would it happen, it is INTENTIONAL.

I hope this is sinking in, liberals. Your vaunted macro-economic model intentionally causes all those dysfunctions you blame on those who get rich - but they're getting rich because money makes more money, and - WORSE - if you do NOT have money to invest, you CANNOT HELP but fall behind, because the FIXED costs of living continue to increase in cost at a pace which moves faster than your ability to earn.

You literally HAVE to have assets in investments which exceed the rate of inflation - which is (laughably) supposed to be regulated to about 4%, but (in fact) has been far exceeding that (last year's M0 was over 7% LOWER than this year's M0).

I'm going to leave it here right now, and ask you to stop blaming the wrong things. You're being manipulated to believe what they want you to believe.