
How to Tax Our Way Back to Justice - tysone
https://www.nytimes.com/2019/10/11/opinion/sunday/wealth-income-tax-rate.html
======
xhkkffbf
I hate to be a jerk about this, but the headline bugs me. When I first heard
the phrase "social justice", I assumed it meant that the people who did the
work reaped the rewards. Sort of like the Little Red Hen.

But here, "justice" seems to mean the opposite. No matter how the poker game
works out, the dealer redistributes the winnings to everyone including those
who made foolish bets.

For what it's worth, I think that capital gains should be taxed at a lower
rate because people are putting their own wealth on the line. Someone who buys
a stock with $100 could lose the entire $100. Yet if that person gets a
dividend of, say, $3 in return for the investment, the authors want this $3 to
be treated like ordinary income. But people in regular jobs don't put any
capital at risk. The worst that can happen is that the boss cheats them and
they don't get paid. In other words, they don't get the $3. They don't put any
of their savings at risk.

~~~
qntty
If they don't get paid, they have lost the entire value of their labor. Why is
this worth less than money? If anything it should be worth more. There are
only so many hours in the day.

~~~
DennisP
Well yes, but if you don't get paid your promised wages, you can generally
call up a government agency and get them to make your employer pay up. If you
buy stock and it drops by 90%, nobody is going to help you.

~~~
throwaway_law
>you can generally call up a government agency and get them to make your
employer pay up.

Thats not how it works, you can pay out of pocket for a lawyer to help you,
but people in this position can't generally afford a lawyer. Take a look at
all the stories of Trump not paying employees, they didn't have a government
hotline to call that got Trump to pay up.

~~~
DennisP
> The Department of Labor's Wage and Hour Division (WHD) is responsible for
> enforcing the Fair Labor Standards Act (FLSA). The most common remedy for
> wage violations is an order that an employer make up the difference between
> what the employee was paid and the amount he or she should have been paid.

> The WHD conducts investigations as a part of its enforcement of the FLSA and
> many investigations are initiated by worker complaints.

Not only that, but it can go beyond civil actions:

> Employers who willfully violate the minimum wage or overtime laws are
> subject to civil penalties of up to $1,000 for each willful violation.
> Willful violations of the FLSA may result in criminal prosecution and the
> violator can be subject to a fine of up to $10,000. A second conviction may
> result in imprisonment.

[https://employment.findlaw.com/wages-and-benefits/how-to-
rep...](https://employment.findlaw.com/wages-and-benefits/how-to-report-
unpaid-wages-and-recover-back-pay.html)

~~~
throwaway_law
Yes, but to couch Department of Labor's Wage and Hour Division as a phone
number you call to get your money is not how it works.

Nearly 50% are denied after a 6 month process on average. Like disability
claims or VA claims or immigration application...or any other administrative
legal action, you generally need a lawyer to navigate through the process
successfully.

But perhaps you have a personal experience you can share where you called and
they got your unpaid wages from your employer.

~~~
DennisP
A 50% chance of recovery in 6 months is still a drastic improvement over a 0%
chance of recovery if you lost money in stocks.

Also, loss of wages accumulates over time and you're probably going to look
for another job or quit if you're not getting paid. But you could easily
invest several _years_ of worth of salary in the stock market, and lose the
majority if it crashes hard enough.

~~~
throwaway_law
>A 50% chance of recovery in 6 months is still a drastic improvement over a 0%
chance of recovery if you lost money in stocks.

Not from a taxation standpoint. And investors shouldn't get better tax rates
than workers because their is a non-zero chance of losing their investment, if
nothing else the deduction of their loss is already built into the system so
why give them additional lower rates?

>But you could easily invest several years of worth of salary in the stock
market, and lose the majority if it crashes hard enough.

The only people who can "invest several years of worth of salary in the stock
market" are independently wealthy people. Again 40% of the country don't have
$400 in savings, the numbers speak for themselves the median savings of the
top 10% is $170k (even that wouldn't be several years of salary for them).

Risk has nothing to do with capital gains being lower than payroll/income
taxes.

------
refurb
An important thing to note about the Saez effective tax rate analysis is that
it ignores transfer payments back to low income individuals. Other important
assumptions have a big impact on calculated rates.

Suffice to say the analysis that Saez did with Piketty, shows that the top
income earners have a much higher tax rate (40% vs. 30%).

This is a pretty good analysis of the issues.[1]

 _Saez and Zucman (2019) argue that the U.S. has a relatively proportional tax
system across all income levels. However, federal taxes are progressive, as
shown by Piketty and Saez (2007), Auten and Splinter (2019), The Urban-
Brookings Tax Policy Center, the Joint Committee on Taxation, the U.S.
Treasury, and the Congressional Budget Office._

[1][http://www.davidsplinter.com/Splinter-
TaxesAreProgressive.pd...](http://www.davidsplinter.com/Splinter-
TaxesAreProgressive.pdf)

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anoplus
After reading some articles and thoughts about this topic, I found this old
quote in one of them which sums up what I feel:

 _We can have democracy in this country, or we can have great wealth
concentrated in the hands of a few, but we can 't have both._

Louis D. Brandeis

This was quoted in early 20th century, but I think it gets even more relevant
with technological progress, as the rich have first access to tools which
further perpetuates their superiority over lower classes. One important tool
is to dominate major media channels, and distract the public discussion away
from things like corruption, transparency and democracy.

------
refurb
I raised this in the previous discussion, but the fact the "top 400 earners"
is a specific subgroup is really suspicious.

Typically you'd pick a nice round number. The top 100, the top 500, the top
1000. But they picked the top 400. Why?

My guess is they ran their analysis and realized their conclusion isn't
supported unless they used the top 400. Notice the tax rate is nice and
progressive for everyone else except _that one subgroup_.

~~~
bryanlarsen
The number 400 was chosen 38 years ago by Forbes.

[https://www.forbes.com/forbes-400/#78c81de07e2f](https://www.forbes.com/forbes-400/#78c81de07e2f)

~~~
refurb
But that's net worth, not income.

And this isn't a magazine article, it's supposed to be a academic analysis. Do
they reference Forbes in the paper?

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dstroot
Tax is money we contribute to a collective fund and then we elect
representatives to spend it for the common good. With me so far?

The people who contribute the most should have a proportional say in how it’s
spent. This is “fairness”. Numerically there will be more people who
contribute less and fewer people who contribute more under a regressive
system.

All of us share the benefits of social programs and health care even if we are
not directly benefiting. Society works, and people can regain health, etc. and
start contributing to the overall pool of tax money again.

At no point should tax become a method to redistribute wealth - although
that’s exactly what it’s become.

We can all agree that some people earn so little they don’t have to pay into
the “common benefit fund” (tax) but then shouldn’t they lose the right to
decide how the funds are spent?

~~~
mhuffman
If we take your thought experiment to the extreme, it could look like this:

The wealth divide continues widening.

After generations, and the "snowball effect", Jeff Bezos' great-grandchildren
end up paying all the taxes because everyone else in the country makes so
little (only enough to survive) that they don't have to pay in.

At this point, a single-family has a say on how the money will be spent.

And you may accept this scenario, but now that same family literally controls
the movement of all food and people (through our road systems), our country's
national defense, and most importantly, the ability of any of the rest of the
poor people in the country to ever not be poor forever after.

So, using proportional representation (as you appear to advocate) and the idea
that even modest returns on very, very large amounts of money will eventually
overtake the rest of the economy, we have moved from a democracy to a monarchy
or oligarchy.

I don't want my hard-earned saving to be taken away, so I am sympathetic, but
there is still the real-world problem that if money isn't forcibly
redistributed at a rate that eats into the "magic" of compound interest, it is
only a matter of time before there is a problem.

And if it must be redistributed, I rather it is redistributed to the
government for the good of all, rather than just handed out evenly among
everyone.

~~~
zbyte64
You can show how X system is not sustainable but if the parent claims X system
is the only "fair" system then the argument falls of deaf ears.

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megaman821
I agree with taxing the rich more, perhaps by adding a few more tax brackets.
The fact that these numbers do not include the EITC (earned income tax credit)
is crazy. That would push the bottom quintile to near-zero or even a negative
tax rate. This is fitting the data to a narrative, and comes off as dishonest.

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helpPeople
Can't we use history to figure out what's going happen next?

The executive branch turns into a dictatorship (by definition, not slander,
and definitely no change to the Constitution or Congress)

Taxes will be too high on the masses, revolt happens, rich politicians
fracture the country.

Isn't this what always happens?

~~~
Qwertystop
You're saying "taxes will be too high on the masses" but this proposal would
reduce taxes on everyone below the 95th percentile (or perhaps 90th?) in
income. If almost everyone gets less taxes, how will that make them too high
for the masses? You can disagree on whether it'd be practical, or whether the
knock-on effects would be good, or whether the philosophy behind the decision
is something you agree with, or any number of other things, but... I don't see
how you can see a proposal that explicitly lowers taxes in almost every
bracket, and say most people are going to complain about their taxes going up.

------
bryanlarsen
The calculation would be even more lopsided if health insurance was considered
a tax. That's the sort of thing you have to do if you want compare American
taxes against taxes in other first world countries.

------
cmurf
I do think taxes on the wealthy are too low. But I also think it's politically
unlikely for the tax rate to get to fairness, and I also think there's simply
not enough money to go around. For sure other countries with more fair tax
systems do have qualitatively less wealth inequality and my bias is I consider
that a social good.

But I think we're getting the diagnosis wrong. Everyone in the economic system
is agreeing to participate in such a way that emphasizes elite labor. And it
is that elitism in labor that causes people lower down on the ladder to see
far lower wage increases. e.g. a doctor today makes 8x the salary of a nurse,
whereas 30 years ago a doctor made 4x the salary of a nurse. OK so which "free
market" is getting that differential wrong? Today's or the one 30 years ago?
There is a cultural perception that, oh I have to see a doctor for this
problem, when a nurse would suffice - this demand of needing only experience.
And what you get are wealthy people seeing docs for b.s. issues because they
can afford it, but it's totally unnecessary, and reduces the capacity for the
doctor for things they should see.

Anyway, it's not a meritocracy, it's not a free market, we have capitalism
failure and govenment failure and all we really have innovated over the past
fifty years is - well not much. Not even the insults in the adversarial
bickering about how to solve it have improved.

More unpopular than taxes, I suspect, would be adding noise (or randomness if
you prefer) to elite education entry requirements. That way it's not just
about wealthy parents lowering ladders in the form of money and access to
elite schools for their very average children. More people need more
opportunity to get ahead. We're not going to get to equal wealth, there isn't
enough of it, and we probably would all agree we would like the looks of such
an engineered society anyway.

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devoply
One interesting rule might be to keep people with a certain amount of money
from meddling in politics. Like you track all the money, and rich people are
not allowed to influence politics at all. That would destroy the strangle hold
that various groups with a lot of money have on American or hell global
politics. Trump should not be allowed to be President. There should be an
inverse relationship between money and power. The more money you have, the
less power you have to do anything political with that money.

Maybe like we make a new category of money that can only do certain things and
is heavily regulated and watched. And that's the sort of money that you can
have way up there in the clouds, you can't have regular people money which is
the money we have right now.

That then would move the discussion from how much they have, to what they can
do with it.

~~~
michaelmarion
This would never pass muster in the context of freedom of speech.

Instead, we should just remove money from politics entirely: campaigns should
be publicly financed at a fixed amount each cycle, and term limits should be
set on all elected offices.

Politics should not be a career. I want a Congress that's comprised of
representatives from a variety of trades and occupations: farmers, doctors,
engineers, construction workers, and so on.

Representing your district or state in government should be a seen as a public
service of finite length — almost akin to a tour of duty in the military.

~~~
WalterBright
> publicly financed

The trouble with that is who gets the government financing? It could easily be
corrupted into an incumbent re-election fund.

~~~
michaelmarion
All candidates get an equal amount — including incumbents — and no outside or
personal funds are eligible for use towards a campaign.

The incumbent advantage would be negated in some part by term limits.

~~~
WalterBright
How is a "candidate" determined?

~~~
michaelmarion
Ahh, I see your point. Good question.

