> Tax billionaires, tax the upper-middle-class, tax profitable corporations,
Where do you think our tax revenue is coming from? the 12% tax bracket of someone making 20k a year in government-subsidized housing, or the 37% tax bracket from someone making $10million a year paying property taxes on their 20 million dollar house?
a serious, informed discussion starts with an honest recognition of reality. if you think taxes need to change thats fine, but acting like billionaires and successful companies pay no taxes when they represent the overwhelming majority of tax revenue, you sound like a blind ideologue rather than someone who knows what theyre talking about.
It’s just ridiculous that C-suites and their direct entourage get paid billions (and can afford to buy mansions that used to be the final reward to a successful career with what amounts to pocket money to them) for funneling more and more taxation to tax havens.
Plenty of companies live off government subsidy and refuse to pay their share; costing government revenue and forcing it to cut services and squeeze the suckers that don’t have the resources to hide their stash.
And seriously, you Americans should ditch company paid health insurance and switch to any of the systems here in Europe...
It's also ridiculous to paint any of this like a meritocracy. America is a land of private kings and peasants. There is a finite amount of wealth in the borders of this country, a finite number of jobs, and a finite number of C level positions, and probably a thousand vastly more qualified people for every CEO out there.
We don't choose to stratify our wealth based on any intelligence or merit or skill. For every doctor, lawyer, scientist, or business executive making serious money, they aren't there because they crossed some intelligence bar; there would be 1000x as many of these positions if intelligence were the only bar. These knowledge workers we value so much and idolize in society were simply born in the right place at the right time, and opportunities snowballed from there. This is a land of blind luck, highly influenced by who your parents were and what color your skin is.
But also look at where our tax revenue used to come from:
> In 1981, Reagan significantly reduced the maximum tax rate, which affected the highest income earners, and lowered the top marginal tax rate from 70% to 50%; in 1986 he further reduced the rate to 28%.
The top marginal tax rate was in the 90%'s for much of the 1900s. Also, the estate tax was in the 80% range for much of the 1900s, now it's effectively zero. Moving huge quantities of un-earned wealth from generation to generation is a great way to create and maintain inequality.
I find their conclusion that taxes "weren't that much higher" not supported by their graph. In 2010 the rate they show was 30% (it is a bit higher now) and in the between 1945 and 1970 it was roughly 45%. Thats 50% higher. That's a lot higher.
given how "spiky" the graph is, your numbers are pretty much cherry-picking:
1945-1970 is ranging from 35% to 45% -- and it definitely won't average to 45%, which it only reaches once
2000-2017(?) is ranging from 30% to 42%
You've basically taken the high point of range 1 and compared it to the low point of range 2 -- and "a bit higher" doesn't really cut it when you're talking about what looks to be about 37% for the latest datapoint... about half the distance between your cherries.
And it's important to remember that changes in the effective rate aren't only due to changes in tax code. During a recession, when equities are doing poorly, you'll see a decrease in capital gains (which are taxed at a lower rate).
I don't think there's any evidence that generational wealth transfer is the cause of income inequality; the major deviation in income inequality began in 1973 with the productivity gap it's only been maybe a generation and change since then and moreover, this was even before Reagan-era tax changes.
> I don't think there's any evidence that generational wealth transfer is the cause of income inequality.
Well, it was in reference to general inequality. It absolutely creates wealth inequality. If you are born to poor parents, and your buddy Steve inherits a $1M San Francisco apartment from his family, well, Steve has a big head start over you.
That directly translates into income equality too, as inherited investments yield 7% returns invested in the S&P, or that $1M apartment generates $3-4000 per month in rent for Steve, while you have nothing.
You know what they say, time in the market beats timing the market -- the sooner you have money the more money you will have thanks to geometric returns.
Had Steve's family donated that money before they shuffled off this mortal coil, or the state collected it in taxes, that wealth could have been used to raise the minimum standard of living for everyone in the next generation -- not just Steve.
Generational wealth transfer isn't just your inheritance either:
> It has not been easy for me. And you know I started off in Brooklyn, my father gave me a small loan of a million dollars.
Makes it a bit easier to start a business when you can just ask your parents for a million dollars. Imagine growing up with the idea that a million dollars is a "small loan."
The way you put it, it sounds like geometric returns are the primary cause of wealth inequality, with generational transfer being a minor blip. Transfer alone is roughly O(1) over time; geometric returns are O(k^t). And imagine if your k < 1!!
Maybe that's the cause of wealth inequality and we should examine that. It seems like income taxation and social subsidies O(t) are unlikely to outcompete exponential processes as ameliorations for the root problem.
Geometric returns are, in a way, the primary cause of wealth inequality. However, if everyone starts at the far left flat end of the curve, it's a fair playing surface allowing for meritocratic rewards for those who provide outsize value.
On the other hand, if you start at the parabolic upward portion of the geometric return curve, having demonstrated no value of your own, you've destroyed meritocratic rewards.
The founding fathers were historically against generational wealth, after all, they fled such a system in Europe.
> It seems like income taxation and social subsidies O(t) are unlikely to outcompete exponential processes as ameliorations for the root problem.
Taxation can absolutely outcompete potential exponential processes, that's why we have progressive taxation. Progressive taxation is exponential in dollar terms.
Progressive wealth taxation is another way of approaching this, but so is an estate tax. That short-circuits the whole process.
To be clear, I believe in wealth inequality, and I believe in income inequality, so long as it's coupled with social mobility (i.e. everyone has the ability to reach higher tiers), and so long as the minimum standard is a decent existence, not death.
If progressive taxation outcompetes exponentiality, empirically it never has, not even in the most progressive states, as we see that the wealth gap still increases, even in most European nations.
I don't mind that, though, I think outsized reward is fair for outsized value creation. Where I disagree is that it should last more than a generation, and I believe that higher taxes should be levied to raise the standard of living for the bottom rung.
> I think outsized reward is fair for outsized value creation
How do you define "fair" and how do you define "value creation"? And how do I get to be the administrator who gets to make those calls, so that I can make sure that my friends and family's "value creation" classes are put before everyone else's?
While I agree that the inheritance tax should be somewhat higher, I think you’re discounting the extent to which parents specifically work to give their kids that head start. They’re also working to give them head starts in many other ways. That’s a feature, not a bug. Perhaps there should be a limit over which the tax rate becomes fairly high, but to try to stamp out any head start is a very bad idea, IMO. The limit should be far higher than your apartment example.
> The median person is a minimal contributor to government already.
The numbers in the linked article are for high-income earners who, yes, paid the majority of Federal Income Taxes.
My understanding is that the wealthiest people in the United States pay relatively little tax because their wealth accrues largely through investments not income. In addition to being taxed at a much lower rate than income, such investments also qualify for deductions which often reduce and/or eliminate any final tax obligation.
You would also need to account for long term capital gains tax being at most 20% cap which is where much of the wealthy make the bulk of their wealth. And if you have a good accountant then you can easily find ways to even offset this.
Where do you think our tax revenue is coming from? the 12% tax bracket of someone making 20k a year in government-subsidized housing, or the 37% tax bracket from someone making $10million a year paying property taxes on their 20 million dollar house?
a serious, informed discussion starts with an honest recognition of reality. if you think taxes need to change thats fine, but acting like billionaires and successful companies pay no taxes when they represent the overwhelming majority of tax revenue, you sound like a blind ideologue rather than someone who knows what theyre talking about.