I don't think the rich really get anything out of it, but in the Nordic countries, fines increase in proportion to your wealth. I remember reading about a Nokia exec getting pulled over for speeding. His ticket was like $75,000! http://www.npr.org/templates/story/story.php?storyId=1670583
I've often thought some fees should be adjusted for wealth. For example, a quarter a day isn't really enough to get me to take my library books back on time. Maybe for me it should be $2 a day.
In Sweden many fines are defined in "dagsböter" or literally "day fines" as opposed to an actual amount. Basically one "dagsböter" is equivalent to one days wages. So the judge decides that you should pay 60 days wages, without actually have to take any stance to how much you actually pay.
In Sweden equity compensation is made so prohibitively expensive it ensures that everyone gets paid more or less appropriate market salary.
Of course very rich guys have their workarounds anyway, for example I recall reading that Ingvar Kamprad pays himself avg IKEA worker salary. Still better than those ridiculous $1 salaries of SV execs.
They do actually give away money - although with some strings attached (like your government not using open source!)
IKEA itself - not the owner - is a charity, registered in Holland to be in the Eu but actually in the Dutch antilles so they don't pay Dutch tax and they can keep secret any donations
Do you have a reference to back up the OSS prohibition? It sounds like an urban legend and I couldn't find anything searching, but I've seen weirder things before.
It sounds like you are against equity compensation and in favor of the Swedish laws that make it prohibitively expensive. Why is that? US technology startups are heavily based on equity compensation, so probably many folks here would assume it is a good thing.
no, actually I don't have an opinion whether swedish system is good or bad, as I haven't experienced it personally, only heard and read about it and know few people who had problems with it. in the end they seem to be doing fine.
but I think there needs to be more optimal solution than just equity compensation or just cash-salary compensation.
I'm not an expert, but I don't believe debt reduces your net worth. Irresponsible use of that debt does, but if I borrow $250k to buy a house, the value of that house offsets the debt. It's a wash in the end, is it not?
What are some legal ways for an individual to be compensated that wouldn't appear in the tax documentation of either the individual or the company in question?
"Legal" is used here to mean "would stand up in a court of law in the relevant jurisdiction."
The fact is that if Eric Schmidt were fined 100% of his "net worth" he would be among the rich again within a year or two.
Suppose a professional gambler made exactly the same amount as Eric Schmidt per year. This "system" would fine them equally. But the gambler relies on his bankroll as his asset, whereas Schmidt relies on his reputation and personal network.
1) Whether yearly income is representative of present and/or future net worth is entirely unrelated to whether the magnitude of said income is discoverable.
2) Everyone has a different definition of "fair." Which one are you using?
(1) The original question is ["elsewhere it's like [this], is that better?"]
I merely point out a major caveat.
(2) From the article: "In reality, fairness is not so much about the actual distribution of loot as it is about the psychology of how you feel about it."
And I want to point out that it makes very much sense to have fines adjusted to one's wealth.
When speeding, you're endangering people's lives. There has to be some measure that will make you think twice about speeding the next time around -- if you know that the ticket fine will be a paltry amount to you (relative to your total wealth), that is no deterrent.
If you get a ticket for exceeding the speed limit by 1 mph, there are larger issues at hand than how much this ticket will cost you.
Yes, speed limits are to an extent arbitrary, but practical alternative is a total judgment call.
Do you always know the entirety of the condition of your car, and if not, should you be limited to 30 mph? Should drivers' licenses include a quantifiable evaluation of your skill and ability to drive and be tied into different speed limits, and how will that be tested? How will police officers know who is exceeding their license's conditions and therefore who to pull over?
Perhaps we should acknowledge that a simple single number "your speed" is a significantly flawed measure of the level of risk you're exposing the rest of society to, and while speed enforcement is a good _revenue_ generator, it does not do nearly as much to reduce the full range of risk behaviours as we might desire.
What continually boggles me is seeing people lose their drivers licence for 6 months or more for a string of speeding tickets - without having actually had an accident, while I read newspaper stories about people who actually do crash and hurt of kill someone receiving more lenient sentences.
How about we start punishing people who actually have and/or cause "accidents" rather that people we claim are increasing the risk of accidents by exceeding some arbitrarily set limit? Sure doing 90 past a school is "wrong", as is driving in a way that causes someone else to crash, but surely we're at a point where technology can help there - for less than $100 I could have 4 video cameras with ~1hr of recording time fitted to my car. Is it a crazy idea to say we encourage people to record other drivers, and pay them a commission on the fines their cameras generate from actual risk events, rather than risk behaviours?
(Full disclosure: I'm a motorcyclist. I enjoy going fast. I'm fully prepared to accept responsibility for my actions, and in one sense I don't mind current speed enforcement since my personal opinion is I'm happy to go fast where it doesn't affect anyone else, and if I _do_ get "caught" speeding it's a sign that I wasn't paying enough attention - if there was someone in position to catch me speeding I shouldn't have been speeding there. I'm not happy with cops who "hide" while doing speed enforcement, but I've also never been caught by one hiding...)
What driving culture are you referring to? The wealthy everywhere have a preference for sports cars. That alone doesn't constitute "driving culture", but a lot of what you're talking about is just compression. The US has much more wide open space than Germany does.
A much more stringent and in consequence structured driving environment. As others have noted, obtaining a license is more difficult. Uncooperative driving behaviour is heavily frowned upon and prohibitions actually enforced: driving in left lane, but also attempts to bully others out of the left lane and overtaking on the right.
As for compression, compare driving in NYC to driving in Berlin.
This isn't to mean that North Americans wouldn't be able to reach this standard if they decided to, but it would take decades.
I guess he's referring to the fact that there are no actual speed limits on "Autobahnen" in Germany, there's a recommendation of ~80mph (130km/h), but itn't a rarity to see people going over 120mph...
To sum up: people drive faster here.
And from what I've heard, it's way harder to get a driving license in Germany (and Europe in general) than in the US.
From discussions with my Dutch friends, I know that it is ridiculously easy and inexpensive to get your driving licence here in Australia when compared to the Netherlands.
I imagine that Germany has very similar standards as The Netherlands, and I could imagine that many US states take a more relaxed approach.
Perhaps this is the "driving culture" to which the parent is describing?
It's also been shown that you can maximize the throughput of a highway if the speed limit is 45mph. Too high, and you need to increase the space between cars.
Although 55mph != 45mph, it's pretty close. It also doesn't serve the individual, but if can't get the cars through fast enough, the traffic will build up eventually.
How was it debunked that 55 saves gas? I'm interested in this, as I sometimes like to drive in such a manner as to economize, and according to my instant and average mpg readouts cruising at or below 60mph consumes far less gas than cruising at or above 70mph.
Obviously, an old guy in a very old rusty driving at 5 mph over the limit is more dangerous than a young professional nascar pilot, running a brand new porsche at the same speed.
However this is a bout equality versus equity. Equity means : you pay fines proportionally to what you earn; on the other hand you could then discuss the fact that different drivers and different vehicles may be treated differently (for instance, the speed limit is the speed at which your vehicle comes to full stop in 2.5 seconds). equality means everybody is treated the same way. The current system tends to equality, but is not equitable.
Except with wealth you can pay a local lawyer to plead it to a non-moving violation, a ludicrously inflated "court cost", and a "donation" to the local law enforcement retirement fund. (Kirksville Missouri, I'm looking at you.)
The wealthy can opt for a "pay X now" instead of "Y over time where Y>X" option. Wealth buys you a discount.
And all of that is likely to cost much more than just paying the fine and moving on. It sounds like the rich guy got taken to task for his attempts to weasel out of it in the case you're referring to. He eventually got what he wanted, I guess, which is no points, but it sounds like it cost a lot of money (unless his donation to the pension fund and his lawyer's hourly rate was $25).
The points would have cost much more in future insurance policy premiums.
The total cost of the fix is about $250 and you get to keep your "safe driver" rate or whatever the insurance company does for point-free/accident-free drivers.
I find it interesting that the points have only been talked about in terms of the money they can cost you as a direct affect....The fact that they can make you lose your right to drive a car, and the myriad costs that carries, has been completely ignored.
The biggest pieces of the pie are things we are UNWILLING to cut (not incapable of cutting)! Its time for us to make some difficult decisions about what cuts we should make instead of relying on other peoples' money to solve other peoples' problems.
Democrats will have to be the one to do it too. Republicans don't have the credibility. It's the Nixon in China thing where a Republican can open dialog with a communist leader but a Democrat would appear to be socialist for doing so.
Says the former comptroller-general of the US. http://en.wikipedia.org/wiki/I.O.U.S.A. Cutting out the military now might fix today's deficit (and it should happen) but that baby boomer time bomb is ticking.
One thing that at least some rich people will pay for is status symbols (expensive watches, sports cars that will never exceed 100mph, mansions with rooms that are used only a couple of times a year, $500 t-shirts). Status signaling is ultimately a zero-sum positional arms race that can lead to some pretty ridiculous conclusions(1) and doesn't really leave anyone better off (other than, perhaps, luxury goods suppliers).
The bad version of this idea would be a special ID card and/or bumper sticker or t-shirt or watch that was given to top-bracket taxpayers. It would have to be reasonably hard to forge (or at least as hard to forge as, say, a Rolex) and able to be either displayed publicly or flashed discreetly in situations where one wants to assert status.
Another variation could be some kind of property tax where certain sub-neighborhoods would have exceptionally rates, say 100x what the ordinary tax on the land and improvements would be. Then people could signal status by living or staying in those areas. (This is actually not too different than somewhere like Manhattan or San Francisco currently, except the windfall is going to existing property owners rather than the government).
The nice thing about status symbols is that, like fiat currency, they can be rather cheaper to produce than what their value to the status-seeking public is. That is the government could potentially retain a very high seignorage, as it were, on this stuff.
Ultimately it would have to be determined whether the status symbols could be legally transferrable, and what, if any, penalty there would be for forging them.
As an aside, it strikes me that this sort of thing would be extremely similar to fiat currency, maybe identical.
The problem is that it's hard to create a high status item. Say you invent the "US Govt. Certified Top 0.1% Badge" - do you really think Peter Thiel, John Paulson or Alex Rodriguez will really give a crap?
Taxing existing luxury status symbols could work, and is very likely a good idea. Creating new status symbols is likely to fail horribly.
Also, the tax on certain neighborhoods neglects the very large non-status reason why those neighborhoods are valuable: proximity to something cool. Manhattan is expensive not just because it raises your status to live there, but also because if you work at Goldman Sachs, you are willing to pay $3000/month rent + ridiculous NYC income taxes to avoid a 1 hour commute.
I suppose we could also bring back the Sumptuary laws:
A special ID that gives you status isn't so hard to imagine: it is basically like the Black Card, which is actually pretty shitty in terms of benefits but rich people (and people who want to appear rich) want anyways because it is a status symbol you can whip out when ever you want.
The top %0.1 card that basically give's tourist visa-free Permanent Residency status in nearly every country in the world? Kind of like clear/nexus cards for immigration? That would be an awesome 'status' badge.
My tax plan is to eliminate income tax up to $90,000. After that, income is taxed at 100%. The government awards tax credits for everyone making less than that, so that everyone's salary + tax credits = $90,000.
"But wait," you say "How will we incentivize entrepreneurs if they can't earn more money?" For everyone making over $90,000 (approx. 11% of the population), their pretax salary is used to assign them national ranking that's publicly available, much like a ladder tournament, which could be subdivided into regions, industries, etc.
The rationale for this system is that we use one system - money - for two unrelated social purposes: reducing suffering and establishing status which incentivizes production. In my system, these purposes are less coupled.
The $90,000 number was calculated by dividing the total US income by the number of workers, so this would need to be adjusted yearly. If this system was applied globally, the average salary would be $25,000 which is quite a step up for billions of people. It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class.
Ok - if your system is ever enacted, I'm cutting my work hours back by 50% or more.
I'm also hoping that not everyone does this, because if everyone did, there would be far less than $90k/person floating around. But that won't happen, right?
It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class.
This assumes that the total cost of providing the same middle-class resources to everyone in the world is equal to the present marginal cost of doing so.
If the plan provides for everyone to earn 90k regardless of what they actually do, there is no incentive to be productive at all, (much less to be productive enough to account for those who produce very little). Having my name on a list as the X most productive person is not incentive. Being able to spend the money I earn, is.
What do you need to spend money on that you can't afford with $90K? And why do you want to buy it over something that you could afford?
In my experience, virtually everything that falls into that category is some sort of status symbol. The grandparent poster is suggesting replacing these implicit status symbols with an explicit one.
The part about his proposal that I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years, and then do something more interesting during that time. But if you're earning $90K regardless, that wouldn't matter, because you'd be able to do the more interesting stuff anyway.
Actually, that leads to the real problem in his proposal: you lose the information-carrying capacity of money. I'm basically ambivalent about most of my income over a number that's a lot less than $90K; I don't spend it anyway. But if I'm faced with two jobs that look equally interesting, I'll take the one that pays more; the additional money is a proxy for how much that business is valued by the marketplace, and I'd rather work on things that will make lots of people happy. Same with when I start a business: there're lots of projects that are interesting, but profit is a way of telling which ones are interesting and useful to others.
OTOH, a stack ranking does that as well. The problem with the stack ranking is that you can't pass along that surplus down the value chain. So, for example, if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to, because the government would take the money you would otherwise have paid the graphic designer.
"What do you need to spend money on that you can't afford with $90K?"
Salary caps are, in my opinion, a backwards view. When someone says "basketball players shouldn't be able to make $10 million a year," what they're really saying is "people shouldn't be willing to spend $50 on game tickets," or "more of the income the team makes should go to the coach," or something like that. The money is flowing in already, based on the market's decisions. Shouldn't the players get a big chunk of it? They're making it all possible, after all.
Similarly, trying to cap the salary of a doctor or a CEO or whatever is really saying "nobody should value your services enough to give you that much money." But... they do. How can you keep people from paying what they're willing to pay? And if they can't pay more, how can they compete for the best doctor or CEO or programmer or whatever? They will find other ways to compensate.
> I'd miss is the ability to save up your high income for a few years so that you could compensate for a low income the next few years
I was thinking that people could work part-time and earn 50% of standard income. Median household income is around $50k right now, so this is a decent standard of living.
> if you provide some useful service and that service would be made more useful if you could hire a graphic designer to make it pretty, you wouldn't be able to
A two-person household where both members worked full time would be making 3.6x the current median household income, which is way more than they need. This surplus could be used as investment capital, where it would be distributed and decentralized, so it would be much easier to do Kickstarter-style funding. If we accept $75k at the point where money stops having an impact on happiness, individuals would have 20% above that line to play with for those kinds of things. Essentially, the stack ranking converts your surplus productivity into status for you, and distributed evenly to your friends and neighbors, who have the power to return it to you if they think your project is socially or economically valuable.
Some good points though, especially the part about profit as an index of what makes people happy. The problem with our current system is that this is only true if your profits come from people who make less than $75k. 40% of consumer spending is driven by people in the top 10% ($82,500 annual income), so it's fair to say that that spending is misallocated and doesn't contribute to overall happiness.
China is not really a communist country as originally envisioned. Certainly, there are large disparities in income between the party elite/entrepreneurs and some random farmer.
You're not offering any real evidence for your side, so it seems pretty arrogant to expect anyone to give you any credence. You claim it "works better than anything else," while citing a country that has brought a fraction of its population out of absolute squalor by abandoning communist ideology — that is very specious.
> The government awards tax credits for everyone making less than that [...]
> [...] dividing the total US income by the number of workers [...]
So, for that $90k figure to be attainable, you need those who aren't "workers" not to get any of this money. Which means that becoming a "worker" will suddenly mean getting an extra $90k/year, whatever the job. Which means that there will almost certainly suddenly be a lot more "workers". Which means you can't manage $90k/year after all.
Also: Your system relies on taking away a great deal of money from rich people in order to give it to a larger number of people who would otherwise be much less well off. I have no problem at all with this as a general approach, but the more you do it the harder those rich people are going to try to avoid paying; and rich people can generally afford a lot of expert assistance with not paying, arrange for a great deal of lobbying to get the rules changed, etc. -- which means that you probably can't get nearly as much money out of them as just looking at their salaries suggests. For instance, duh, suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year. Suddenly 90% of that tax revenue has gone. Whoops, everyone else's annual salary is now $9k/year.
Also: as others have pointed out, it is ... not obvious ... that being given a low number in some official government ranking would be as strong a motivator as actually getting rich. Yes, one reason why people want to get rich is because wealth brings high status. But there is some reason to think that they also want to get rich because wealth brings large houses, good food, nice holidays, fast cars, and all the other stuff that one can buy if one has enough money.
> Which means that there will almost certainly suddenly be a lot more "workers".
You mean a low unemployment rate?
> Your system relies on taking away a great deal of money from rich people... the more you do it the harder those rich people are going to try to avoid paying
Not really, no. Money in excess of $90k isn't confiscated, it's still used to purchase status just as it is today. The only difference is that it's purchased from the government instead of BMW, De Beers, etc. Status markers are essentially arbitrary anyway, why not just have a single number? It's much more efficient.
> suppose that every employer that currently pays anyone $(90k+x)/year decides to pay them, say, $(90k+0.1x)/year
They could do that, and it would lower everyone's rank. This would cause some people to quit those jobs and find other jobs that offered more status, lowering supply and causing the price to go up again. If salaries drop because of market forces, the savings would be used to invest in the business: hiring other employees, improving operating efficiency, R&D, etc.
> they also want to get rich because wealth brings large houses, etc.
Any income above $75k doesn't contribute to personal happiness, and standard income is already 20% above that. Luxury goods don't contribute to happiness, they're just a wasteful and inefficient way of signaling status. That money that could be used to improve lives or fund innovation.
Status markers are much more complicated than you imagine, and they tend to be extremely expensive to produce. If you think that the govt. could make a status marker that rich people actually care about, you're dreaming.
The finer things in life really are finer, and it becomes nonlinearly more expensive to produce them the finer they are.
A $500 meal at Per Se in NYC isn't just for signalling, if it is at all. It's an extremely memorable experience.
Study cognitive neuroscience. Much of the reason that $500 meal at Per Se is such an amazingly memorable experience is because it's so expensive; evolution has taught your brain to feel good about signalling status.
Actually, I think status markers created by the government would be far, far more appealing to the wealthy. It's like Hegel's master-slave dialectic - a master doesn't feel like a real master because he knows all the struggles and difficulties of maintaining his position. If he really is a master, not just an ordinary man who finds himself with power, why does he have to work so hard to maintain it? The only time he really sees himself as a master is when he catches a glimpse of himself as his slave sees him, and paradoxically, this makes him dependent on the slave's recognition of him. The master is desperate to impress him and provoke envy. That's why in all Ayn Rand novels, the protagonist's problem isn't just the fact that the masses interfere with his projects and thwart his greatness - the problem is that they do this because they don't recognize him as superior. That's what really burns. The whole purpose of going Galt is to force society to recognize them.
If the rich are so desperate for our approval, why not give it to them? They don't need to play stupid and wasteful status games to seduce us into admiring them, they can compete with each other, we'll add up the score, everyone gets ranked and that will be the end of it. OK, maybe there will be an awards ceremony on TV every year.
The main obstacle to this system is that most of the rich wouldn't go for it because they'd never admit that they crave recognition from people they consider inferior.
I wonder if you're confusing reality with Rand novels. As far as I'm aware (since I'm not one of them), most wealthy people aren't trying to impress anybody. They're just enjoying their lives, relatively quietly. The incentive provided by wealth is not status, but enjoyment. A BMW is much more enjoyable to drive than a Buick. Go ahead and pry all the logos off my car, it'll still be more fun to drive.
What's more, "status" is only a proxy for wealth and power. Status is only as useful as the additional influence it brings. Consider it from an evolutionary biology perspective: higher status means higher capability to support mates and offspring. If you take away the additional wealth that brings higher status, then the higher status is lost as well, as it doesn't actually signal a higher capability to provide.
I love my old M3, but I wonder if it falls in a special category distinct from other luxury items--as Aldous Huxley said, "speed provides the one genuinely modern pleasure."
I think you have a pretty simplistic view of rich people - on average, they're much more complex than just wanting to show off to the masses. I fall into the same trap with a lot of things, but it's important to realize that a lot of them are extremely smart, and there are a lot of motivations there.
But with your original point on luxury goods, luxury goods are usually subjectively, if not objectively better than less expensive alternatives, even when noone knows which one costs more. Your govt. ID, if it's only a pure status symbol and carries no weight, might be valued by some, but truly rich people wouldn't care. They don't need validation from "people they consider inferior". You're describing a small subset there. In general, they just want the best of everything, and the marginal utility of the money they're giving up is meaningless in comparison.
That's why in all Ayn Rand novels, the protagonist's problem isn't just the fact that the masses interfere with his projects and thwart his greatness - the problem is that they do this because they don't recognize him as superior.
I have no idea why so many people feel the need to comment on Ayn Rand without reading it.
If you read the Fountainhead to the end, you'd realize that Roark was completely happy toiling in anonymity, as long as his building was built properly.
A farmer who has difficulty plowing straight lines because his oxen are recalcitrant doesn't get his feelings hurt and write lengthy books in oxen language for the oxen to read whining about how he is a superior type of animal and why can't they just realize that! Then the farmers says "I'm tired of being unappreciated!" and leaves the farm in a huff just to show the oxen that if without him, there'd be no-one to feed them or clean out the stables. The reason this doesn't happen is that the farmer really is superior to the oxen, so he doesn't need to prove anything - for him, recalcitrant oxen are just one of many obstacles involved in farming.
Despite all claims to the contrary, the very fact that Rand even bothered to write a book at all betrays her secret, perhaps unconscious need for recognition. Here, the medium is a message - if Rand's audience is the superior people, why did she choose to communicate her ideas in the format most accessible to the "oxen" of society, the novel, instead of a dense philosophical treatise? She even helped to make the movie version of The Fountainhead, an even more accessible format.
I really don't know where you get the idea that 75k is some sort of big compensation... earning 75k puts lots of limits on what one can do, hobbies/businesses one can start, and how secure one is in the future.
Status - is derived from what one can get with money. For instance, being able to fly anywhere in the world and stay at an amazing hotel and eat great food, etc at the drop of a hat.
Completely flattening income is a horrible idea. Everyone would try to get the easiest job possible, because the income is the same. Yes, some people do their job because they love it. But most people bust their butt so they can make a good living.
"But in my system, everyone makes a good living," you say. What about inherently scarce resources? There is limited beachside property. Who will get it? Currently, busting your tail through medical school gives you a better chance than dropping out of high school. How would you decide when everyone makes the same?
And the income equality would be an illusion, anyway: some skills are inherently more valuable than others. Transactions would just go off the grid. You need a roofing job done? The roofer is all booked up. Oh, you can barter with your web design skills? Well, that's more valuable than the guy who offered yard service, so you win. But darn if bartering isn't awkward - if only we had some system to store this inherent value...
And what would you do with existing billionaires? Rip them of their money, like when USSR was formed? Or leave them their money to freeze the status quo forever?
The laffer curve would indicate that people would stop working and contributing once they stop getting incentivized. I would stop every year, once I hit the threshold.
sounds like knighthood titles and special last name salutations (I don't speak Polish, but my understanding is that last names ending with a "tzky" indicate some royal/lord designations). Some of these are transferrable.
Scott Adams, like the politicians in Washington DC, is living in a dream world.
Cut all discretionary and defense spending to 0, and we would still be running a deficit due to entitlements. Tax "the rich" at 100%, and we would still be running a deficit. Tax corporations at 100%, and we would still be running a deficit.
On the left, politicians make it sound as though we're just a few tax hikes and some defense cuts away from a sound federal budget. On the right, they make it sound as though all we need are some cuts to programs like the UN or foreign aid and some tax cuts to spur economic growth.
They are both in a DREAM WORLD. Some taxes will have to go up, but most importantly, Social Security and Medicare will have to be substantially reduced. Whether it means privatization, defined contribution, or some combination of solutions, no one in my generation (I am currently 24) will see either of these programs as our parents did. In fact, current retirees and soon-to-be-retirees will also probably need to have their benefits reduced. There is just no way around it.
Our revenue is about $2.4T. Entitlements are $2.0T.
Taxing the rich at 100% would generate about $2T in additional revenue each year. Which would pretty much cover entitlements. Of course its absurd to do that -- and its not as if people will continue to generate revenue if all of it is taxed, but lets not spread myths, even in hyperbole.
Maybe not this year, but according to the CBO Social Security enters a deficit this year (originally projected to be 2016). And in any case, cutting discretionary and defense spending to 0 is an unobtainable watermark, as is taxing the rich at 100% as you point out. The deficits being run by Social Security and Medicare will only expand as the Baby Boomers retire. Can we agree there is no budget solution that does not include entitlement reform?
no one in my generation (I am currently 24) will see either of these programs as our parents did.
You're gonna laugh, but I thought the same thing when I was 24 (twenty years ago) and Social Security is still solvent for the next thirty.
That system ain't broke. It's just that they really, really, really want that money. If they manage to get us to break it for them, your pessimism is - quite literally - a self-fulfilling prophecy.
These things often take longer to unwind themselves than you'd expect. Still, the CBO projections are pretty clear, and we now know that Social Security is officially in deficit this year. Medicare has been so for a long time. In truth, Medicare is where the real troubles lie. I have only seen a handful of politicians try to address this honestly. Chris Christie and Paul Ryan are who come to mind. They are both Republicans, so if there are any Democrats out there talking about it, please excuse me for not remembering their names.
The 2011 SS deficit is expected to reverse in 2012 and does not represent a short-term crisis. It would be much more sensible to bring up dates like 2025 -- when SS is projected to start dipping into principal -- and 2037 -- when the principal would be exhausted, if no policies are changed [1]. I support long-term planning to remedy the situation, but it seems to hinder productive discussion when someone implies SS will be unable to send out checks tomorrow or in the next decade.
Medicare: Chris Christie is a state governor so has no meaningful relationship to Medicare; you are probably referring to proposals to cut Medicaid benefits for the poor/indigent. This is not very similar to issues affecting Medicare. Paul Ryan does have a legitimate proposal for limiting Medicare growth (I suspect it will increase inefficiency and decrease health outcomes overall, maybe disproportionately for the poor), but it is a legitimate approach.
But: the stimulus & healthcare reform both already contain several very serious efforts to improve Medicare efficiency long-term, especially IPAB. Its short term savings are relatively small, but this is a deeply good (Democrat-associated) proposal.
I'm still trying to get my mind around your attitude that "these things often take longer to unwind". If it takes longer than fifty years to unwind, I'm thinking perception bias on your part.
> Cut all discretionary and defense spending to 0, and we would still be running a deficit due to entitlements. Tax "the rich" at 100%, and we would still be running a deficit. Tax corporations at 100%, and we would still be running a deficit.
OK, so that covers the first sentence, except maybe "because of entitlements." (Although you'll note that without TARP we'd be just about breaking even in that scenario.)
It doesn't cover the second half, which claims that taxing "the rich" at 100% wouldn't cover the deficit even though the total income of the richest 1% of Americans is almost as much as the entire federal budget. (23.9% of income, GDP is 14.27T, 14.27 * 0.239 = 3.41T)
It's not far off. The US deficit in 2010 was $1.42 trillion, while discretionary spending was $1.36 trillion [1]. The total household income in 2006 was ~$7 trillion [2], of which the top 1% ("rich") make over 20%, which would be around $1.4 trillion in 2006. Presumably the number is lower in 2010. Additionally, we couldn't really take 100% of that money in taxes, because they are already being taxed at 40% or so. It's not clear to me how to calculate total corporation income, but the deficit is about 10% of the GDP, so it's probably not true.
As far as I can tell, none of these numbers are exceptional (percentage-wise) compared to other countries.
Wait, wha? I thought the US was one of the nations that paid the least in social benefits in the western world.
I mean France _really_ need to look at their social spending, but the US? I figured they barely bothered (relatively speaking).
The US certainly pays out fewer of the sort of benefits we would call "welfare" (unemployment, food stamps, EITCs, etc.) than most nations in the Western world. Our pension systems are as generous as anyone's though, particularly Medicare. That is the real source of the trouble.
"It just happens that they get far far less for what they pay."
The health chart is titled "Public and private health spending as percentage of GDP in selected countries, 2002." This relates the spending to GDP, not as a per capita rate. The reference does not support your statement about others ("they get far far less for what they pay").
See: http://ucatlas.ucsc.edu/spend.php, "The Cost of a Long Life." Quote from that: "In 2000, the United States spent more on health care than any other country in the world: an average of $ 4,500 per person. Switzerland was second highest, at $3,300 or 71% of the US. Nevertheless, average US life expectancy ranks 27th in the world, at 77 years. Many countries achieve higher life expectancy rates with significantly lower spending."
See also: http://www.oecd.org/dataoecd/46/2/38980580.pdf. Be sure to read section "Health status and risk factors" - it is an eye opener. Quote from that: "The United States spent 7,538 USD on health per capita in 2008, two-and-a-half times greater than the OECD average of 3,060 USD (adjusted for purchasing power parity). Norway spent 5,000 USD per capita, and Switzerland 4,627 USD per capita. Americans spent more than twice as much as relatively rich European countries such as France, Germany and the United Kingdom. "
Defense spending is a jobs program: There are about 1.5 million people in the armed forces! (Down from over 2 million 15 years ago.) And an even large number are employed indirectly.
First steps - maybe, but does it really have to be full aristocracy? What if the ideas were just a really simple separate ideas not affecting others in more than 2% of some arbitrary measure for each of them?
If we could offer packages that would be available to everyone but easy to buy at the same time, wouldn't it be good for everyone? For example you can pay $X for the "lexus lane", $X for another privilege, etc. - this way if someone actually wanted the privilege, but wasn't "really rich", they could still get it - not a total aristocracy and noone is forced to do anything.
Private companies have been doing this for a really long time as small benefits. Think about airport/travel if you pay extra: you can get express checkin on the airport, no security queue, better comfort of travel (business class), better quality food, pick-up service on arrival, luggage transport taken care of, complete booking / planning from a third-party. I have never heard of people complaining about "visible aristocracy" when travelling though. Could the taxes work as a payment gateway for small luxury services?
Meanwhile - it doesn't prevent anyone of us from getting the same. Want a better place on the plane? You can still get it without going for the whole "rich person package".
>If we could offer packages that would be available to everyone but easy to buy at the same time, wouldn't it be good for everyone? For example you can pay $X for the "lexus lane", $X for another privilege, etc. - this way if someone actually wanted the privilege, but wasn't "really rich", they could still get it - not a total aristocracy and noone is forced to do anything.
This is completely different because everyone would be eligible for the Lexus Lane. It's very likely that plenty of middle-class people would choose to pay for it. The defining characteristic of an aristocracy is special rights under the law for an elite class. All you're talking about is a service the government is offering with an aim to profit.
Scott Adams on the other hand is talking about restricting to the top 2%. That's what makes it an aristocracy.
I'm not saying a visible aristocracy codified in legislation is bad.
Also I don't think your concept "full aristocracy" has meaning. All aristocracies exist on a sliding scale somewhere between "Lexus Lanes" and "slavery".
Anyway personally I'm not really against a visible aristocracy. I actually think it probably makes sense to recognize power, because at least then there would be accountability.
If Bill Gates, Warren Buffet, and George Soros are unofficial Kings due to their enormous wealth, it's probably actually a good thing to make them official Kings because then they become accountable for getting results. Everyone would know who to blame - King Bill III.
That puts all the incentives in order.
I kind of suspect that our current elected officials are mostly just a trivial front-end for the true deciders who prefer to remain invisible because then they can't get lynched. Making them visible doesn't seem like much of a negative to me.
Aristocracy is different from this. Generally, aristocracy is both hereditary and disconnected from actual wealth.
In the UK, JK Rowling, even though she is richer than the Queen, is not an aristocrat. She is, in fact, upper middle class. Someone who's born into the aristocracy, even if they're not especially wealthy, is an aristocrat.
You're just noticing the difference between a 1000 year old aristocracy and a burgeoning one.
Aristocracy always begins with a way to define the elite. Over time social mobility will decline and people will start to notice that it's mainly the children of elite who become elite. Eventually this will lead to the belief that only the children of elite can be elite. Once this belief is entrenched, it's natural for the new reality to be codified in law.
Do remember that even in England there was social mobility. If you performed a great service for King and Country you would be granted land and title.
Social mobility exists in all societies. Just some more than others. In America we are observing the emergence of a natural aristocracy - a story as old as history itself.
I wonder if we're headed towards a hereditary aristocracy as well, because of assortative mating. People tend to marry others in the same social class; rich marry rich, smart marry smart, and highly-educated marry highly-educated. And then they tend to pass on those advantages to their children. It doesn't take all that many generations before that becomes entrenched and it becomes impossible to jump from one class to another.
People can move up or down a social class or two. I know people who came from fairly little wealth who earn decent urban-professional six-figure salaries, and people come out of families in the upper-middle professional class and become multimillionaire entrepreneurs. (Likewise, other people move down.)
Entrenched aristocracies happen when you have old money that looks down on the "nouveau riche". Every country has an old money class that considers itself more elite than the nouveau riche, of course, but they aren't really an entrenched aristocracy unless the rest of society agrees with them.
It's neither. It's just part of the aristocracy (the other part being the willingness of the rest of society to humor old money in their self-perception as being aristocratic).
I think it's held throughout history, but then again, throughout history most of the world has had some sort of aristocracy.
The historical exception is the U.S. from 1945 to 1973, as well as perhaps a few other examples (maybe Scandinavia today, or the U.S. in the early/mid 1800s?). In that time period - really, no more than a generation - we saw a big leveling of income distribution, where people born to modest families suddenly had the creature comforts that a generation before had been reserved for the aristocracy. I think most people would agree that this is a generally desirable state for a society, so it might be worth asking what was different about those time periods that made them the historical exception?
Whether it's a hereditary or mercantile aristocracy, it's still an aristocracy. A hereditary aristocracy would be worse, certainly, but that doesn't mean a mercantile aristocracy would not be very, very bad.
As I was reading the article, I actually had the thought that establishing a House of Lords would be in line with his "extra vote" power incentive. I don't think I'd advocate it (it's really another Bad Idea), but it's interesting to try to predict how the chips would fall on that one. :)
I think several of Scott Adam's proposals would be more palatable if we avoid the T-word. Giving high tax payers an express lane at the DMV smacks of elitism and pandering. But, giving an "express process" option for $1k doesn't sound so bad to me. Someone else mentioned auctioning off carpool-lane passes, it's a similar principle.
More importantly, it directly ties the cost to the reward. The biggest problem with Adam's system is that if you don't directly tie revenue to entitlements, then the rich would still push for lower taxes, while also wanting to keep the corresponding entitlements. The connection between the two has to be strong enough to resist politics.
The best ideas in this framework would use sliding rewards. But they will never happen.
Take the HOV lane idea. Giving the top 1% access to HOV lanes is political suicide. But awarding hours for a special fast lane, linked to the infrastructure-based taxes you pay, sounds fairer. The family of 4 making $60K a year gets a few hours they can use when they need them, tax-exempt employees get nothing, and a CEO gets more hours than she can realistically use in a year.
But opponents would say you're giving advantages to those who are "ahead." Talented-yet-poor people have less time to strike it rich. It's a Catch 22 - you need time to make money, and money to get more time, and you have neither when you start anew.
This cuts to the heart of optimizing nations for the individual, versus optimizing for the nation as a whole. I'm not sure the answer is straightforward, or if the two answers are mutually exclusive.
The HOV-lane idea starts out in the wrong place. If you want to raise money from apportioning a scarce resource (in this case space on the road), you use prices, not taxes.
Congestion charges have become very popular and successful in London—it's too bad Bloomberg's attempt to install them in New York failed.
> Congestion charges have become very popular and successful in London
Popular and successful with who, exactly? I don't know a single person that likes it. Traffic was reduced for a few years but now it's just as bad as ever. And the cost of public transport continually rises above inflation. At least they recently shrank the chargable area.
So what has it done, exactly, except raise income for the city and raise prices for businesses on the border and those who need vehicles to function?
The winners are the poor (who don't get around by car anyway) and the very rich (who think that five pounds a day is a small price to pay in order to have somewhat less traffic). The losers are everyone else.
The biggest winner is always the politicians, who get chauffered around in cars which are exempt from the charge, and find that they no longer have to wait in traffic. This is why such schemes are disturbingly popular among politicians.
It's probably more accurate to say that the infrastructure has gradually become... less amenable to cars, intentionally and otherwise. Bus lanes, pedestrianised roads, roadworks, that kind of thing.
Not if you buy a bike, which is also the fastest way to get around London. In my experience it's about twice as fast as cars (average speed is less than 10mph anywhere near the centre) and still faster than trains, unless you happen to work right by one of the major terminals and live by a train station.
It costs around 12p per mile to run a bicycle including capital cost, maintenance, additional food etc (though until you hit around 10k miles the costs may be hidden from you). I commute around 1k miles a month and so it costs me around £6 per day to commute by bike, and it is £16 for a slower equivalent train journey. Cars really aren't an alternative as they're too slow.
Maybe not for you. I did a little calculation at http://listentotaxman.com/ and put in the minimum wage for a 37.5 hour week. If you need to take a few buses to get to work, over 10% of your £190 weekly pay packet gets eaten up on travel.
It's definitely cheaper (though less flexible) than running a car on your own, but some of the costs of a car can be spread between more than one person, which isn't the case with public transport.
However, I was pleasantly surprised to see that teenagers now get free bus travel and discounted Tube fares. I could've done with that a few years ago!
London doesn't allow you to tranfer to another bus with a single ticket? Here in Ottawa busses are $3.25 and about to go up, and I think that's more than fair.
There's a potentially dangerous line that the US is approaching where, factoring in all the exemptions, credits, and deductions, a majority of the population will not be paying income taxes at all. Thus, a majority of the population will be deciding (via their votes) how much and on what the taxes of the minority will be spent.
The only saving grace, if you can call it that, is that the people who actually place the votes (senators and reps) are themselves almost exclusively from that well-off minority.
This is pretty disingenuous. I've held low-wage jobs, and so have most of the members of my immediate family, and taxes took a serious bite out our paychecks. You are referring to the federal income tax, as many people do in debates like this, but lower-middle class people pay a much greater percentage of their income in payroll taxes than do wealthy people; the "income tax" debate is misleading.
A person making $20,000 pays the same US federal payroll tax rate as a person making $100,000 (7.65% in 2010, 5.65% in 2011). This tax pays for Social Security and Medicare (retirement income and retirment healthcare). Federal income tax pays for most of everything else: national defense, public safety, infrastructure, education.
In 2009, 47% of US households paid zero federal income tax. We are close to the point where the voting power of non-tax payers exceeds that of tax payers - the point at which people can make decisions they don't have to pay for.
Name your issue: foreign wars, Wall Street bailouts, universal healthcare, bridges to nowhere, prescription drugs for seniors, cash for clunkers. I don’t know about you, but I want the people making those kinds of decisions to have some skin in the game.
It is not at all disingenuous to have concerns about this.
Second, payroll taxes are capped; you stop paying them after ~100k.
Third, your overall point is bankrupt. Regardless of what particular bucket of money their taxes are paid into, working people at all income levels are stung by our tax rates, which are in turn lower than virtually every other western industrialized nation. It is simply not the case that the working class has no skin in the game.
One: right. The employee pays 7.65%. The employer pays the other half.
Two: right (the rate is actually 1.45% on wages over $106,800 in 2010) - the idea being that you shouldn't have to pay in infinitely given that the benefits are capped.
Three: it is ironic that you mention bankruptcy... that is what tends to happen when the people making spending decisions face no direct consequences.
Let me give you a scenario for the sake of discussion. Suppose everyone paid a 10% federal income tax rate. Now suppose the government said, "We are considering a trillion dollar war, a trillion dollar bailout, and a trillion dollar stimulus package. You, taxpayer, can have all of the wonderful benefits of these things for the low cost of changing your federal income tax rate to 30% for the next 10 years. How about it?" You might have more people questioning these decisions.
I don't know what point you're trying to make. You cited a payroll tax rate that was half what people really pay in, and implied that it was the same rate that wealthy people paid. Of course you were wrong on both counts. It takes no great insight to notice this; the same observation is at the center of Warren Buffet's complaint that his tax rate is effectively lower than his secretary's.
Your analysis is just dead wrong, and no hypothetical digs you out of it.
So far, my "overall point is bankrupt", my "analysis is just dead wrong", I am in some kind of hole I need to dig myself out of, and the point I attempted to defend is "pretty disingenuous". Ok, may we proceed?
The original point is this: "There's a potentially dangerous line that the US is approaching where... a majority of the population will not be paying income taxes at all." That statement contains two contentions: 1) the US is approaching the line where 50% of the population will be paying no income tax at all, 2) this is potentially dangerous.
The first contention hasn’t been disputed. The second is what I believe we are debating.
You interject that the whole discussion ("the income tax debate") is "misleading"/"disingenuous" because it doesn’t consider payroll taxes - something that "lower middle-class people" pay a disproportionate amount of (relative to their income) compared to "wealthy people.'
I attempted to point out that payroll tax isn’t really relevant to the question because everyone pays the same rate up until the point that the tax is capped, which is commensurate with the point at which the benefits are capped.
I will give you that $100,000 per year isn’t all that "wealthy." And I'll give you the following: A person making $500,000 will pay 2.77% of wages in payroll tax (6.2% of the first $106,800, plus 1.45% of total wages). A person making $200,000 will pay 4.76% (same rules). People making $20,000 and $100,000, will both pay 7.65% (same rules).
If I am wrong that the employee pays half of the payroll tax (7.65%) and the employer pays the other half (another 7.65%) please let me know. However, I don’t feel it is relevant to the central question under debate.
I don’t feel your point about payroll taxes is significant enough to dismiss the question about income taxes. Is the 50% threshold "potentially dangerous" or not?
The person the government sends the tax bill to is rarely the person whose wealth is reduced by the tax. Since all employers must pay payroll tax, there are few practical alternatives for earning a living (inelastic supply of labor), and employers are price-sensitive and will employ fewer people if they cost more (elastic demand for labor), even the employer's portion of the tax comes from wealth that would've gone to the employees.
A person making $20,000 pays the same US federal payroll tax rate as a person making $100,000 (7.65% in 2010, 5.65% in 2011)
Correct me if I'm wrong, but I thought the federal payroll tax was about 15%. Your employer is only allowed to list 7.65% on your pay stub/W2, but that's a different thing.
That doesn't mean much. First, if employers didn't pay it, they could increase compensation (either directly or via health benefits). Second, freelancers and temp workers pay both sides.
That's only because payroll taxes were sold as a retirement plan contribution for yourself. The idea is that you get all of that money back plus interest. Sadly, it's not run that way. People have the let the money be spent on other items for years, and now they are retiring and it's not there.
In an accounting sense, but it will start drawing from income sources other than payroll taxes as soon as outlays exceed those incomes, which will happen a lot sooner. The trust fund is an accounting fiction, and a debt to yourself is not an asset.
You realize that many of the exemptions, credits and deductions disproportionately benefit well off people, right? I mean, something like the home mortgage interested deduction is off no use to many homeowners because they don't earn enough to itemize deductions. Plus the deduction saves you more money the bigger and more expensive your house is....
A lot of the decline in lower-end taxpaying has been just due to a decline in how much money they make, though, so it's hard to do much about it without either: figuring out how the lower end can make more money, or actively decreasing the tax system's progressivity.
In the 1970s, the bottom 50% typically earned around 17-20% of total income, and paid around 6-9% of total taxes. Today, they earn around 11% of total income, and pay around 2% of total taxes. With no change in progressivity, sure, that should've been around 3 or 4% rather than 2%, but that's still not much. It's hard to tax income that doesn't exist!
The problems of the world summed up in a thread: the average IQ of hacker news is way above average and yet people feel the need to: comment on issues when they have no idea of the underlying numbers, use terms that they clearly haven't bothered to even look at on wikipedia or a dictionary, repeat fallacies that any undergraduate econ student knows is false, propose vast social engineering schemes with no regard as to their unintended effects.
I mean if we're the smart ones and we're pulling this bullshit what hope does the world have? engineers are supposed to know better. :(
My idea along these lines, which I may have explained in this forum before, is to replace one of the houses of parliament (or congress, or whatever you call your local bicameral legislature) with the "House of Taxpayers", where representatives are elected by taxpayers whose vote counts in proportion to how much tax they pay. The other house remains a "House of Commons" where the one man/one vote rule applies.
The point of this idea is that every new piece of legislation must be approved (in effect) by two groups: the people who are affected by it (everybody) and the people who have to pay for it (disproportionately the rich).
His idea about a 10% cut across the board is so common-sense - I've heard it before - yet we never ever hear this from anyone in Washington (not that I've heard, anyway). Why not?
10% may seem extreme - fair enough - but why not 2%? Could we try one year where every federal department has 2% less to spend than they did the year before? 2% isn't a lot, and would go a long way toward each dept rooting out their own 'waste/fraud/abuse', instead of making govt larger by adding oversight processes and staff.
And I do not mean "2% less than what we'd projected to increase our budget by next year". I mean if your department had a budget of $1,000,000, you only get a budget of $980,000 this year. Shaving 2% off a 3.5 trillion budget would be - what? - 70 billion? While that doesn't quite get us out of the mess we're in, it's a good start.
For small percentages, I'd say that's actually the most common budget-cutting proposal. Politicians want to save money, but don't want to propose any actual services or programs be cut, so they tend to instead propose that every department should "find waste" equal to 1-3% or something. See: http://news.google.com/archivesearch?q=%22percent+across+the...
sort of, but not really. the people making the rules - proposing and approving budgets - don't get the money themselves. They do get power by apportioning it out though.
BUT... if everyone had their relative power reduced equally by truly 'across-the-board' cuts, there would't be any real change in the 'my budget is bigger than yours' contests that undoubtedly go on.
Of all those that agree with such argument, I'd like to get an answer to these questions:
1) have you traveled to a developing|third-world country?
2) if you haven't, you should. if you have...
2a) what price tag do you put on first-class infrastructure that makes your business run smoothly, not to mention make it safer to deliver?
2b) what price tag do you pay to ensure that you have a well-nourished and healthy work-force that is more intelligent, stronger and efficient?
2c) what price tag do you pay to ensure that everyone has access to a world-class education (again, compare to a third-world country, I know ours sucks compared to others') that is again, more knowledgeable, more creative, etc and will one day help you boost margins, compete globally, etc?
And I could go on...
You see.. safety goes hand in hand with:
1) economic stability
2) health (ever wonder why some people risk their own lives to cross borders? their families are starving/dying!)
3) education
4) and much more than just a strong military, uncorrupt/just police/court system
And those things cost money. If you'd rather grow wealthy in another country, I dare you to try! And if you're already wealthy and you think taxing you more is unfair, I dare you to move to countries like Mexico where many business owners now have to pay "taxes" to drug gangs or else, they just don't go to prison, they get killed!
I'm not arguing that our tax system doesn't need reform or that current rates are fair, I'm arguing that if you want to be wealthy one day or are already, it's in your best interest to contribute more. Consider it an investment where you can. Yes, surely there is waste, but focus on that, don't whine about the fact that you're getting punished because YOU ARE NOT... you were rewarded with all these great opportunities and public goods and services you seem to take for granted, that's all (again, see my first question above).
You're arguing that education, infrastructure, and a non-corrupt court system is responsible for this country's success, which may well be true. However, only a tiny amount of spending is on those things. 85% of spending is on social security, the military, and medicaid. We could cut all of those things dramatically without a corresponding decrease in the country's economic output.
Preventing old people and sick people from dying in the streets is just one of those costs you're going to have to pay for, like it or not. Raise Social Security to 68, maybe. Cut it off, though, and you'll find that the country will still pay, one way or another. (Maybe force kids to support their parents - it could be a completely different solution from Social Security, but that money is going to get spent.)
I'm glad you bring up that idea out at the end (by now, few will read it, but that's okay). It pains me to learn that some people in this great country (for cultural reasons?) don't do this. It's a "crazy" idea, but one that works very well in other countries. Latin Americans, Indians, and others will attest to that. I wouldn't call for forcing families to take care of their elderly, but I'd find ways to motivate that because it's simply sad that we have to take care of others' parents.
And yes, the whole problem with our health care system isn't so much that we're paying (we have to no matter what, either by premium increases or footing the bill for emergency patients). The problem is that it sucks at preventing major health problems that later cost more if undetected and not treated early.
No, I'm including the whole package including health care (see 2b) and military spending which I know just about everyone agrees we need to have some of (see 4), and so on.
Really? I think the ecosystem created around large government contracts is pretty significant, and that it would cease to exist without government spending, which naturally would decrease economic output in that a lot of people would be unemployed, a lot of businesses whose customers are the employees of these businesses would shut down, etc etc. It is most obvious in the case of military spending related to manufacturing, but just think about it for medicaid as well.
I should be clear: more than people who are in the middle/lower classes in terms of the effective tax rate (not just marginal), and given our current situation, it may have to be even more than it is today (along with cuts) or the alternative is that the system could collapse.
That my friend is the central question of domestic politics. Right now 'the line' is at historically low levels, and we're facing massive budget deficits. And fresh from a US election year where everyone agreed the deficit is the most important issue facing us, the first thing the government did was vote to extend those historically low rates.
The rich are taxed a lot? They're taxed at a lower level than any other time in the past twenty years -- that's not a lot. The richest people around today -- Gates, Jobs, Ellison, Buffett -- made a significant portion of their money during a time (the '90s) when the top marginal rate was higher than today's. Clearly, that didn't stop them!
By living and working in a country such is America, you are accepting a social contract: if you do well, you will be taxed, if you do poorly, you will at least receive some services to support you. This strikes me as an entirely reasonable contract, though there are others that are different. In Abu Dubai, you can do well, and keep all your money, or do poorly and wind up in debtor's prison.
To complain that you're taxed too heavily after you have already become wealthy and secure strikes me as akin to looking back on your healthy, illness free life and complain that you should get a refund on your insurance payments, since they didn't do anything for you.
The above is not to argue that one system is superior to the other, but rather that you're in one, and very probably complaining about it now that you know you're well prepared enough that it's clear that you'll probably never be destitute.
In a perfect world, we might ask everyone how much risk they want. Unfortunately, so much is determined in your youth. You (I assume) grew up in a family that raised you well, and left you with reasonable earning potential. If we just asked everyone at 18, we would wind up with an upper class that would rarely suffer financial failures, and would accept risk, and those who know they won't get rich on their own, and accept no risk, and so for the most part, this system would be unfundable. As a compromise, and as many of us feel quite strongly that it's simply not acceptable to have people destroyed when they suffer financial ruin, we have some basic social services.
If you get your property by exploiting the contract, then get to leave the contract instead of paying your side of it, it's not worth much as a contract.
In the good ole days, taxation consisted of the lord owning the land (the means of production) and taxing the peasents.
This is pretty much what happens when you're employed - someone else owns the means of production, and you are paid less than the value that you create (hopefully for the company, anyway). For me this is a form of taxation - The main difference is that insead of being paid the gross amount and being hit for x%, you get the net amount.
On a macro level, it's similar. The country IS the ultimate means of production, and you pay a tax to use it.
You've reinvented the core thesis of Marxism: that the difference between what the worker earns and the capitalist sells is a theft of value. The problem is that it assumes that labour is the true source of value -- this has turned out to be a troublesome assumption. In practice value is subjective.
That's not quite what I meant. I was referring to the value your employment adds to the company, not the sales value of the final product.
And yes, that's extremely difficult to evaluate, but it seems to me that on average everyone has to be paid less than their contribution, otherwise there would be no profit or funds to pay salaries for people not directly contributing to production.
Nor was I passing judgement, by the way, so I don't go along with the "theft" thing. I do however think it is a form of taxation.
Sorry if I gave the impression that you were passing judgement. I just find it interesting that smart people come up with the same ideas again and again.
"Taxation" is not the best way to put it. It is a market exchange. In exchange for a fixed portion of your value output (which will be variable), the company guarantees a certain payment upon a fixed input (usually hours-per-week).
Thus the company is essentially taking on the risk that you will produce enough value to cover the cost and leave some space for profit.
If you or the company disagree about the values involved, the employment relationship ends.
The concept that a capitalist's profits come from the risk he or she takes to earn them is the other half of what is missing from the Marxist theory of economics -- following almost inevitably from the adoption of the labour theory of value.
The whole industry didn't fall. It was about a dozen extremely large insitutions, and the extremely small institutions that depended on that group.
There were institutions in the middle who weren't involved in the mess. See BB&T, as an example, they were actually forced by the government to accept a bailout, as to make it seem like the whole industry failed.
Agreed. The whole industry bailout was a huge punishment to BB&T, which otherwise probably would have profited tremendously from taking over much of the business of the failed banks.
The way the bailout was sold to us was that if these failing institutions were allowed to collapse, they would have brought down the rest with them. I actually hold that to be true and for me that equates to an overall failure of the industry.
So true. Everyone knows that every businessman has completely bootstrapped from scratch all of the roads, utilities, schools, hospitals, scientific research, and a thousand other things that they took advantage of to make their fortunes. No one else made any contributions to their success and that's why it's only fair that we should be required to hand over a significant portion of our incomes to them.
That's right, let's justify stealing from businessmen based on the fact that they grew up in a society that was already stealing from businessmen.
None of the things you mentioned need to (or should) be funded by loot.
In fact, utilities and hospitals didn't used to be in the U.S., and only partially are now. The US education system is a stagnant cesspool that still uses a model developed in the Middle Ages. And the government expropriates more wealth created from non-government funded scientific research, than it generates from funding scientific research.
Look, nobody has a duty to serve as a sacrificial animal to anybody else. You do not have the right to demand that businessmen sacrifice for you or for society.
I agree. I think the first thing we need to do to bring about your utopia is to bring back personal liability and eliminate the corporate entity (which after all is a construction of government). Then if a businessman's activities injured someone, we could be sure that a court could strip them of their personal assets in order to compensate the victims of their negligence.
That's sort of unrelated to my point, but it's an interesting question.
A corporation's rights and responsibilities just derive from the rights and responsibilities of those who own it. I think this is the premise behind "corporate personhood" and I think it works correctly almost all the time. (I'd be interested to see examples where that's not the case.) For example, a corporation can exercise free speech, because the people who own it can exercise free speech; so if you deny the corporation from exercising its free speech, you are denying those who own it their right to exercise free speech.
I'd think that in the case of personal injury caused by a corporation, if the corporation's full assets are not enough to compensate the victims, then the owners could then be held responsible to cover the difference. (Whether that is actually legally the way it works now, I don't know.)
A corporation's rights and responsibilities just derive from the rights and responsibilities of those who own it.
It doesn't work that way, unfortunately; if it did there would be no reason to have 'corporate personhood' since the owners could simply assert their own right of free speech. A corporation can assert its own right of free speech completely apart from its officers or owners. In theory a corporation with no living officers and only the estate of a deceased person as a shareholder could nonetheless legally assert a right of free speech based on computer generated messages. Not that it's ever been tested. Angry mobs, on the other hand, are not generally viewed as persons, nor are parades, crowded beaches, or book clubs.
I'd think that in the case of personal injury caused by a corporation, if the corporation's full assets are not enough to compensate the victims, then the owners could then be held responsible to cover the difference.
It doesn't work that way, either. In the case of big liability, a corporation's owners frequently try to shuffle as much of the corporation's assets as possible off the books and then declare bankruptcy in the face of the liability. The personal assets of the shareholders are generally untouchable. Turns out that when you tell people their only responsibility is to create shareholder value, they take it pretty seriously (particularly if they're the shareholders in question).
Without the entrepreneurs and executives organizing companies and the engineers designing products, there'd be nothing for everyone else to work on but subsistence farming. Should providing something for the rest of us to do go unrewarded?
But those contributions don't go unrewarded. They are compensated highly, otherwise we wouldn't be having this discussion. The problem here is that higher tax rates are being mistaken as punishment when they're just a reflection of reality. The rich leverage society's institutions more to acquire their wealth, consequently they pay a greater share of their income for them.
A flat tax rate, by charging a higher dollar amount to the rich person than the poor person, is still punishing success and rewarding failure, because the rich person pays a hell of a lot more for the same services than the poor person.
I propose that we charge everyone an equal dollar amount, that's surely the only way to be fair - after all, if you go out to dinner with five people and rack up a $200 bill, everyone pays $40, that's "fair".
Imagine company, which has 10000 shareholders. You own 10% of company. Company needs some financial helps, e.g. $250M. How much you should pay? $100? $250M/10000?
The best way of taxing the rich is producing luxury goods. The fact that you can buy food, transport, housing, clothing at a magnitude or two (or more) higher cost is a sort of volontary tax. When you buy a $1000 bottle of champagne instead of drinking water, a large part of that money takes a pretty short path to pay the wages of people that never would buy the same bottle themselves. And would maybe be out of a job if they didn't take a small part in producing that bottle of champagne. So the fact that luxury goods exist is a sort of tax that spreads the wealth of the people that choose to afford it.
It follows that whenever you see someone in driving a car you couldn't afford or eating in a restaurant that you would consider too expensive, don't think "ahole", think "thanks for distributing your wealth".
Yes, luxury goods amount to a tax on the status-conscious who can afford them--but the problem is that they send a price signal that more luxury goods are needed, when what we really need is investment in infrastructure, basic and applied research, etc.
In reality, fairness is not so much about the actual distribution of loot as it is about the psychology of how you feel about it. That's important to understand because the rich won't give up their cash unless they feel they are getting something in return.
I appreciate his attempt at a nuanced view of the subject, but I can't see taking your possessions under threat of violence as anything other than reprehensible.
I think most of the rich people as described in the article (top 2%) already get most, if not all, of the perks he lists. It may not be in the law, but make no mistake.
These people don't go to the DMV (who cares about the express lane), don't read their own mail (so much for gratitude letters), often don't drive their own car (carpool eligible in most places), don't care about social services and how much they cost and already have a large influence on the election process.
Scott feels as if he's "on a path toward certain doom" when paying attention to news. In my case it's when I think about how little hope there is to radically change the system considering that the people in charge are the ones who profit the most from that system, by a long shot.
Eliminate all federal taxes and print the money needed for government operations. Effectively this becomes an inflation tax. Automatically it affects the wealthy in direct proportion to their wealth as opposed to their most recent earnings. No loopholes, no games, no misallocation of resources for tax breaks.
This would hit people with savings in cash (or bonds), i.e. the middle class. The rich tend to have assets (or foreign holdings) which should be largely inflation-proof.
I admit to not taking my own idea here too seriously but still want to add a couple of points.
There would only be inflation if the amount of money printed exceeded the production of new goods and services. Could congress control how much they spend? Not too likely but it's not very likely now and at least this way everyone including the poor would have a reason to resist excessive spending. Would the production of new goods and services increase? I think so.
There would be other benefits as well, including:
1. Eliminating the costs of compliance with tax law.
2. Eliminating the costs of collecting the tax.
3. Severely cutting back the power of congress to control through tax policy.
Not true. Your pension adjust for OFFICIAL inflation, I invite you to make a simple shopping cart on Excel with your most important expenses and compare with official figures. Official's is allays less(all govs massage the numbers as there is so much money at stake).
Approximately nobody holds physical cash these days, and I expect bank accounts would still pay interest like they do now (and higher interest if there was higher inflation). Bonds would also pay higher interest, you can see they're already priced to include expected inflation by looking at inflation-protected ones.
Interesting idea, but already the reason we are so concerned about government debt when inflation is so low and the economy is so bad is that inflation hurts the rich, and they control the discourse. I do not think they would go for a superinflation senario like this.
I like the "rich" driving lane idea - put up X licenses for auction in each city, let people bid up the price, let the market decide how much time is worth.
I always thought that institutionalized speeding would be very successful both in terms of additional revenues and time saved. Right now highway speed limits are set to a sort of common denominator: safest for the worst car and driver on the road. But if you're driving a modern, well-maintained car and are adequately trained, there's no evidence that you'd be unsafe driving 20 mph over the speed limit. So, why not for an extra, non-nominal, fee, raise speed limits on interstate highways to qualified drivers? Of course they'd have to take additional driving lessons, pass extra driving tests to extend their privilege every year, and drive only approved cars, i.e. no 1996 Ford Explorers need apply.
Correct, except I would say "in the lane" rather than "on the road". Congestion would limit the speed naturally, but existing regulations such as 'slower vehicles stay in right lane' etc would actually have to be enforced for this to work.
This already exists in California to some degree. The state offered a limited number of stickers to hybrid cars that allows them access to the carpool lanes with a single driver. The stickers were quickly exhausted and now cars that have the sticker sell at a significant premium. (see http://www.greencarreports.com/blog/1021405_california-hov-l...)
The value of these stickers has probably declined significantly since that article was written, as the stickers are only valid until July 1, 2011.
A few years ago, my boss (CEO) at my last company bought a Prius at a premium for this reason so he could use the carpool lanes during rush hour. The populist/progressive in me thinks that it isn't "fair" that the rich can pay for faster commutes, but the truth is that he probably created many times more wealth than the several thousand dollar sticker premium by having an extra 30-60 minutes of productive work every day.
This is pretty much the idea behind congestion charges (for example in London). New York City tried to institute them, but the State Assembly stopped them (basically suburban interests trumped city interests). It would have made a big difference in commute times by lowering traffic congestion and the nice thing is that those that benefit pay.
There is one fundamental issue to congestion charges however: You are not paying for the ability to use privileged roads, you're paying to use all roads, because under a congestion charge, all roads are considered a privilege.
Carpool lanes work better in this regard. For example, on 93N heading into Boston, you can use 93N for free. If you have at least 2 people in the car (and I think hybrids and EVs are allowed as well), you can use the carpool lane. However, if you were almost always by yourself, but could pay $2000/year to get a placard to drive in the carpool lane, people would certainly pay it. Motorists without passengers are not required to pay to drive on 93N, however any motorist willing to pay ~$8/workday for the convenience therefore has the option -- that may even exclude the rich, just those who live far enough away from Boston and commuter rail stations where they need the drive (or feel the need to) and are willing to pay for a shorter commute time.
Actually, the more I think about this, the more I like it. If you are actively working towards eliminating congestion by carpooling, you still get it gratis. If you're reducing emissions by driving an EV or Hybrid, you get it gratis until that allowance sunsets, because you're making a positive impact with your vehicle choice. Yet if you're willing to just pay... hey, we'll let you in too, so that money can go towards improving something. I like this. I'm trying to find how anyone loses with this idea, because you can still use the four lanes on 93 like anyone else does for free.
These were kind of proposed in DC (I think they may actually exist in San Diego or somewhere), where you pay a variable rate to use the carpool lanes based on demand. So during rush hour it would cost $6 and 11am on a saturday it would cost $.50.
People didn't like the idea because they would be "Lexus lanes" giving special privileges to the rich. Scott Adams is right that if we really want to solve the budge problems we may need to accept that the people who can help the most may need some sort of special privileges.
"we may need to accept that the people who can help the most may need some sort of special privileges."
Because no-bid contracts, not going to jail when they commit crimes, real education for their kids, not living in crime zones, food that isn't poison, actual health care, living an extra three years, etc. aren't enough already.
To some extent... no, they aren't. They're the status quo. If you change nothing, the rich will still get them. That was the big point really. If you want to share some of their money, propose something else in exchange.
It will only change during an actual complete crash of the value of money. And even then it's not guaranteed, because they will still have access to an extensive network of influential people, while "we" won't.
no bid contracts, not going to jail when they commit crimes
I'd speculate that the vast majority of these benefits are given to government workers, not to the rich. Any government worker with a union has a no-bid contract (it's illegal for competitors to underbid him), and you can find plenty of videos on youtube of cops committing crimes they get away with [1].
[1] Occasionally they are disciplined with a paid vacation.
Utah recently installed variable-toll express lanes. It seems to me they make overall congestion worse by creating traffic jams at the entrances/exits to these lanes.
Why not charge a toll depending on traffic ? As the traffic increases, the toll increases (and vice versa), which will keep the lane fast moving. Not my idea, someone has already implemented this.
Possibly so he doesn't have to waste time defending it; the argument will center on whether this kind of thing is a good idea, not whether this specific idea is good.
A low-hanging fruit would be to retool Social Security to be relevant to the needs of more affluent contributors; they might feel better about paying in if they are assured a payout that might actually support what they would consider to be a reasonably comfortable retirement. As it stands, Social Security is pretty much a total loss for higher income brackets.
As for a power incentive, the only one I might envision is to create a public forum where the public and their representatives can debate how their tax money is being spent, and a user's "karma" or default visibility bonus on the site would be based on their tax contribution.
Recall that uber-rich Steve Jobs has an annual salary from Apple of $1, wears black turtlenecks and jeans (ever anything else?), and is building a modest 5000 square foot home on property he owns outright. What to tax?
In that case, also recall that the "net impact" that he has already had on the world economy in terms of jobs created, sales taxes on products sold etc. is probably much larger than whatever you would tax his income "fairly".
I think the best solution would be to get rid of income taxes and just have sales and property taxes.
Taxing the rich a higher rate is always going to seem unfair to them because the only way those taxes can be lessened is by making less money. Taxing $2 million house at a special rate is a different story, it seems fair because if you don't want to pay the tax you live in a more modest house. Luxury cars, fur coats, yachts, etc. can all have different sales tax rates and they still become a status symbol many of the rich are willing to pay for but not being forced to pay for.
The consumption tax doesn't have to be a flat tax. You pay more tax for a pack a cigarettes than a pack of paper.
Peter Theil makes about 200x more a year than the average person, but he doesn't have to consume 200 times more than the average person if all the items he wants to buy are at a much higher tax rate. They only way to avoid the tax is to not buy luxury items, and if a billionaire wants to live the life of a guy making 50k a year, let him have at it.
You're taxing the wrong thing. Your idea would be great if we wanted billionaires to act like regular joes. But generally, in North America, we don't care about that. The problem was about fixing the deficit.
yummyfajitas was right: consumption taxes are generally considered regressive. Also, the rich, or even the professional class, have many more options to disguise their consumption as business expenses.
Consumption taxes can be regressive. Ideas like the Fair Tax (http://en.wikipedia.org/wiki/FairTax) generally include provisions to reduce the disproportionate effects on people making less money (and proportionally spending more to survive).
Taxing consumption also encourages people to save and invest. In my opinion, this is a much better base for a society than encouraging spending and not saving. Most western countries tax income less and consumption more than the US.
Disguise? There are no exemptions. A significant focus of the idea is to remove the politics, special cases, and loopholes around the tax system.
The 10th largest economy in the world functions on property and sales taxes alone. We call it Texas.
The point is billionaires won't live like regular joes. You think just because the tax is higher they will start purchasing a Timex instead of a Rolex?
Even now it would be hard to justify a $100k car as a business expense, with a simplified sales and property tax code it would be even easier to stop.
But a combination of a consumption tax with a very progressive property tax would probably work rather well, especially if "property" is extended to include assets of all kinds and not just real estate.
One huge problem with this is for people that have already built up savings based on taxed income -- mostly those in or near retirement. If we move over to consumption based, they are now going to live in a far worse tax environment then they planned for or that is fair (it's a kind of double-taxation to tax your income higher while earning income and then your consumption when you are mostly consuming, but not earning)
Not insurmountable, but it needs to be addressed, because it's a large voting block.
Also, we'd need a much better way to enforce it than we currently have. Taxes like these are trivial to dodge and hard to prove.
Retirees are the people in the worst situation but it can be helped a little by not collecting taxes on the IRAs and refunding the tax on the Roth IRAs.
A sales tax my be slightly harder to collect but there will be a lot less people to collect it from. As the IRS, I'd rather deal with a few million merchants than hundreds of millions people.
Kinda, they reach a higher tier of taxes. For example, money above $200K is taxed at a higher rate than $1 to $200K. So their first $200K is taxed just like everyone else's money up to $200k. By taxing the rich, everyone means increasing the tax rate at the highest tiers.
Don't we already have this? If you have lawyers, accountants and possibly lobbyists, you have an entirely different relationship with the gov't than normal people.
I reject the premise of the entire article that "The hole is too big to plug with cost cutting or economic growth alone." The hole was created by increasing spending, it can be closed by reducing spending.
A salient note about how government austerity works: the Department of Energy labs have decided that as a cost-cutting measure, they will enact a 2-year pay freeze for all employees (except the top-level managers who work for Lockheed, not DoE). Hail the great cost-cutting measures! Except the government will still be putting the same amount of money into the labs andyway; we've been getting emails talking about how they're now trying to come up with ways to spend this windfall of excess cash. So far it sounds like they're going to go for some pseudo-green initiative; maybe we'll just get a new Greenification Department, which inspects all of our workspaces and penalizes us when we're not green enough. (This particular pay freeze is because Dr. Chu wants to make Obama look good. Good policy for a Democrat, screw the researchers but keep the $2 million salary for the head of the lab... wait isn't that what Republicans are expected to do?)
The talk about an across-the-board 10% cut made me think of that--unless it's specified that employee wages and benefits must not suffer, such a cut will probably just end up boning the minions.
The bad version is that anyone who pays taxes at a rate above some set amount gets to use the car pool lane without a passenger. Or perhaps the rich are allowed to park in handicapped-only spaces.
This is all over the place: e.g. London congestion fee (rich have no trouble paying, and it clears the lanes for them as an added bonus). Same for all other: parked in the wrong place? The secretary will send off the fine.
IKEA: Kamprad insists, that he and his family have no control over Ikea, which went entirely to Stichting Ingka Foundation and its subsidiary Inka Holdings, based in Liechtenstein. Billions are spread through Belgium, Luxembourg, Switzerland, Virgin Islands (travel Branson :) and Cyprus. When confronted, Kampard has declared, that Ikea respects the law and pays its taxes, but he added that it doesn't want to pay too much (GOOG comes to mind with Irish-Dutch-Bermuda triangle money laundering scheme).
It is just a structure optimisation, which gives the possibility and flexibility to use capital towards new markets to develop business without the burden of double taxation ...declared Kamprad. [src: SVT]
This is not bad at all. I feel like the government should use game theory everywhere - for the poor they want to succeed and teach themselves, for the rich paying taxes, etc. It's proven to work in so many situations.
There's certainly a lot of merit to this article. I think it's important to remember that the "rich" aren't necessarily people as wealthy as Warren Buffet and Bill Gates. Moreover, while there are many people born into wealth, there are many who make their own wealth through earnest work and frugal investments. They're the ones who are likely more outraged than "taxes on the rich," and it's a very valid argument.
If we look to how the private sector handles this, we see that airlines have their own VIP status system. You might have "Elite Access" status on Continental Airlines, you might have an American Express Platinum card, you might be an HHonors member at Hilton. These companies offer loyalty incentives to hold onto customers, and I think it's a model that the government could eventually adopt.
1. Time: e.g There are already carpool lanes where you can ride by paying an extra fee. Even otherwise, if you are rich enough, you can just pay the fine, which would be the added tax.
5. Power: Rich people already have power by having access to lobbyists or to the appropriate media. If you are rich enough, you can fund a movement on your own.
Others don't make sense in a democracy where everyone is presumably equal, e.g. writing thank you notes to richer people for being kind enough to participate in the functioning of the country. As another comment said, this is like moving toward a visible aristocracy.
Also, it is mostly not true that the country doesn't go to war unless the middle class majority is on board.
"Just paying the fine" undermines the entire argument about saving time. When a cop pulls you over for illegally driving in the carpool lane, he's not going to run out of his car, hand you the ticket, and run back. He's going to keep you there for fifteen minutes, because he wants to waste your time. It's just not worth it.
Regarding power, I think you're overestimating how rich these people are. The people in the highest federal income tax brackets aren't making over a million a year. For 2010, the highest federal tax bracket is 35% for above $375k/year. It's 33% for over $170k. Just for reference, if you're married, filing jointly, and you're both engineers making $90k or something, you would be in the 33% tax bracket. Certainly these people don't have access "to lobbyists or to the appropriate media."
Let's say there are ten people in a room and they each give five dollars to an "elected" member who gets to redistribute that money, after which all the members re-vote on the next elected member. A savvy elected member would redistribute the money to five members, plus himself, thus perpetually stay in power and continue to receive the majority of votes.
I use this illustration to show that as long as one official or group gets to continue in power, they don't have incentive to do right by everyone; rather, they are incentivized to do well to only a slim majority.
The short-term problem this article presents is that our country's budget crisis demands a surplus contribution from the wealthy. For argument's sake, I'll admit it does.
The understated, long-term problem is that elected officials are personally motivated to spend their political power on getting re-elected, which only requires making a little more than half of their constituents satisfied.
My suggestion would be to stop allowing anyone to be re-elected. Once they know that their decisions don't have to be popular, they're free to make decisions that help long-term, even at short-term discomfort or dissatisfaction. There are obvious problems (how this reflects on their party, for example), but I think that there's a solution embedded in this line of reasoning.
Why have the rich suddenly became a bunch of babies? What's with all the whining? Having money isn't enough, now they want to be worshipped like feudal lords.
Do you similarly decry the people who spend extra money at amusement parks to skip lines? Seems like exactly the same thing as this. You pay more: you get more.
By skipping the lines at amusement parks, those who don't pay extra have to wait even longer for their turn than they would if that system wasn't in place. So in effect, those who pay more benefit and simultaneously penalise those who do not.
If there was no fast pass system and people were saying "I'm rich, I'm entitled to a system where people like me get to the front of the queue," then yes, suck it up.
That's the whole point of the article; the rich must perceive that they'll get additional value (ie., no waiting in line) before they'll voluntarily agree to pay additional taxes.
Not quite. New elements are inserted at the end of the regular line, but at the head of the fast line. When you first enter the regular line, this doesn't matter, because everybody (fast line or regular line) would've gotten there before you in the regular line. However, every person that arrives in the fast line after you take your place in the regular line goes before you, yet would've gone after you if the fast line didn't exist.
Total waiting time is the same, but that's not the stat you care about. Your waiting time, as someone in the regular line, is. And that's increased by each person that arrives in the fast line while you are waiting. Their short waiting times are compensated by your long waiting times.
I didn't think the author was whining at all--quite the opposite. Whiners endlessly complain about what's wrong and never posit a solution. Mr. Dilbert has quite a few solutions here that are "bad" albeit, but productive thoughts nonetheless. That's progress if you ask me.
No, the premise of the article is "these are some 'bad' ideas, kick them around in your head and maybe we'll think up something 'good'". It helps to read.
That’s not a premise what you are quoting there. (Please don’t make pointless accusations.)
Scott Adams posits that it is necessary to somehow appease the rich. He doesn’t call them whiners but depending on your perspective that might be a fair extrapolation.
"I spent some time working in the television industry, and I learned a technique that writers use. It's called "the bad version." When you feel that a plot solution exists, but you can't yet imagine it, you describe instead a bad version that has no purpose other than stimulating the other writers to imagine a better version."
"With that technique in mind, I will describe some bad versions of how society might go about the job of convincing the rich to accept higher taxes on themselves. But first I need to address the illusion of fairness."
That is in fact the premise^ of the article.
^"The premise of a film or screenplay is the fundamental concept that drives the plot.", or in this case, the fundamental concept that drives the article.
Scott Adams is at the very least making the assumption that the rich need some sort of appeasement. The specific ideas he mentions aren’t really relevant to this central point.
"As readers might recall, Bill Gates’ father was the lead proponent of the measure. He was fighting Microsoft CEO Steve Ballmer and other technology chieftains who poured millions of dollars into defeating the measure because they said it would cost the state jobs.
“The rich guys don’t want to pay the tax,” Gates père said on 60 Minutes Sunday night. “They’re defensive. I guess you could call it greed, I suppose. Wanting to not write another check, sure.”"
He(Pres Obama) said that it doesn't make any sense that people who have accountants and attorneys can get away with not paying taxes, while the rest of the ppl get stuck with the bill. This translates to, “bye bye middle class.” The Pres was put in offc by the richest men in the world, he is not going 2 make them pay more taxes, hell, they benefit from taxes, especially the biggest of all(inflation). The way to level the playing field is not by stopping tax cuts to the top 2% in income, the way to level the playing field would be to extend tax cuts to the bottom 98% in terms of income. Bigger government won't solve anything. If you look at world history, you will notice that any government that tries to do too much, does not do anything well enough..
The ultra wealthy have done a great job of engineering the system to control how much they pay in - so why do we think incentivizing them would work? It may take time, but every perk that could potentially be offered at a premium would be just one more race to the bottom.
How about just let the rich be rich and get richer, but making it very hard to pass on inheritance. So their kids would be on equal playing field with everybody else. That would make it their vested interest to improve conditions in that field for all.
I think the "power" category is best, but obviously a sensitive topic. What we need is a layered democracy, where the smart people who understand a field and have power to influence laws there (with the advice of experts in whatever fields those laws have side-effects on), but not in a selfish way.
The way congress works now, it's the people with money who influence law, and some of them are doing it either out of self-interest, or in the short-term financial interests of their institutional shareholders (401(k) managers, for example), who don't understand anything about the domain.
But Congressmen and the executive honestly think that they're listening to "the smart people" right now, for the most part. When they consider copyright issues, they listen to the smart people who run record companies and movie studios. When they consider energy policy, they listen to the smart people who run oil companies. (Big oil was in charge of the Gulf oil spill cleanup because the government genuinely didn't have the expertise.) When they consider finance, they listen to the smart people who run the banks. And so forth. Or so they say --- and you can call it rationalization for cashing their lobbyists' large checks, but I think they honestly believe it regardless. After all, these folks do have a record of achievement in their fields, and how else is a Congressman to judge?
What we need is a better answer to that question, which has measures for expertise other than "they made a lot of money at it." Unfortunately, it's hard to see anything like Adams's proposal, of explicit preferential treatment for the rich, as being a step in that direction.
That's the whole point of the article. Taxing the rich doesn't work because they always find a way to subvert the taxes. So we have to give them something they can "buy" rather than taxing them in order to get their money without them fighting us on it.
The rich and their tax situation is really only part of the wider picture of how to govern an economy in a sustainable manner. It's my opinion that we need to take more of a systems approach, making use of lessons from cybernetics.
It's pretty obvious now that the economy is not like an ecosystem with multiple more or less autonomous agents acting independently, but is instead more like a machine where information flows are centralised and significant components of the system can act in concert.
Deliberately proposing bad solutions sounds fun, but wow could that backfire. Applied to software projects, the "bad" version will get the go-ahead, and we'll be stuck maintaining it forever.
You could argue that this is already happening, but the difference is I think the people proposing bad solutions are usually not aware their ideas are bad. I'm sure I've been guilty of proposing and implementing bad ideas in software myself.
We live in a society that uses fiat currency so why does it matter how much we're in debt? Why can't we simply say "that $12,000,000,000,000 we owed? We just hit a triple word score and we have it in the bank now." The USA has carried a debt for the last 190 years and we haven't gone bankrupt yet.
Because Fiat currency is a representation of a promise that is paid for with human life, rather than a precious resource. Our debt is a guarantee that american tax payers have to pay OR the government will need to declare bankruptcy of sorts.
My bad idea: Taxes and number of votes both increase on how "gifted" you are - smarter people would therefore have more say in the government, and have more incentive to make it more efficient and do it's job better.
Not to criticize but I think you missed his point. The way I read it the point of the article is this...
We can't force the rich to pay more because they always find a way out of it. We know this because there were days when upper tax rates were 90% but tax revenue was roughly the same because the rich can lobby for loop holes and pay people to exploit those loop holes. The rich will find a way to keep from paying too much in taxes even if they have to buy some backwards little country and form their own nation.
So the only way to get rich people's money is to find something we can give them which makes them feel like they're spending their money for something rather than giving it away.
So the stupid ideas are in the context of "how can we make the rich give us their money?"
This is called a meritocracy. One way to implement is to have a test at voting facilities that you must pass in order to vote. I'm fairly certain this violates a majority of the Constitution.
There is a potential another problem, except for how to implement it.
After seeing some strange examples the last few years, I wonder if intelligence is at all correlated to rationality.
(Being rich is, I'd assume, more correlated with rationality than being intelligent. At least the rich, unless they inherited the money, did something right.)
Actually, every rich tax payer should be given a free trip to developing countries where poverty and crime is rampant, and the rich are forced to live in gilded prisons because it is so unsafe outside.
Tax the rich too much and then they stop creating jobs for all you whiners who can't hold on to your money. The whole notion of taxing the rich more than the poor seems unfair, what makes you worthy of benefits and him worthy of a penalty? Just because he was more responsible and hard working than you were? Americans are not broke, it's the government that is broke and instead of take the negative consequences, they would rather have someone else do it.
> Tax the rich too much and then they stop creating jobs for all you whiners who can't hold on to your money.
This is true. You're essentially increasing the tax burden on the entrepreneur class. This means less money spent on business formation, job creation and capital investment. The last thing that the US Economy needs right now. Not only that, but many "rich" might just decide to leave the country and go somewhere where they are allowed to keep the money they earn. What will you tax then?
Taxing the rich is a stupid policy. Look at the unintended consequences. There are two sides to every coin.
The problem with the US economy is simply that there is too much government and it's choking the private sector like a giant parasite killing it's host. CUT GOVERNMENT SPENDING.
Or the problem might be that wealth is increasingly concentrated in the hands of a few who are vulnerable to groupthink and consequently triggering financial disasters with their incompetence. DISTRIBUTE MORE OF THE WEALTH.
"Or the problem might be that wealth is increasingly concentrated in the hands of a few who are vulnerable to groupthink and consequently triggering financial disasters with their incompetence. DISTRIBUTE MORE OF THE WEALTH."
"distribute more of the wealth" sounds so clean and nice. What you are really doing is taking this money away by force, which is anything but.
Here is a scenario: Let's say you are a senior developer for a company and you make $90,000/year. A new guy joins the company with almost no experience and your boss tells you that he needs to "distribute more of your wealth". You will make $60,000 so he can make $30,000 more. He is putting in much less effort than you. This is okay, right?
Everyone that wants wealth redistribution should be put into the same situation. I think we would have much less people out there interested in taxing the rich to death.
"consequently triggering financial disasters"
What about the people that took out loans they obviously couldn't afford? It's the same with credit card debt. People blame the credit card companies for giving them the loans in the first place, yet they keep putting themselves into more and more debt buying things they don't need. We need more personal responsibility.
"distribute more of the wealth" sounds so clean and nice. Indeed. Much like 'cut government spending'. My point is that slogan-based solutions are unhelpful.
You sound like someone who takes Ayn Rand seriously as an economist, as opposed to a philosopher. The truth is that most of the wealthy were born into the upper classes of income, and further that wealth tends to create wealth quite apart from the physical or mental effort of the owner. And in all cases, both chance and social institutions that have been built up over centuries contribute disproportionately to becoming wealthy.
So let me give you a counter example: you work very hard in your company as a senior developer. Once day the boss comes and tells you you're fired because he's hired his son to do your job. Now you're on unemployment for months due to an economic downturn, but because there are no income taxes you get no unemployment benefits. To top it off, you lost your health benefits when you lost your job, and now you find you have cancer (33% of us will get it at some point). The good news is, it's curable. The bad news is the treatment is prohibitively expensive, so like all of the losers in society's Randian economic game, we're going to expect you to simply die gracefully in a cardboard box somewhere out of sight. Thanks for playing, though.
So..why did you say it in the first place? It's obviously something you believe.
"You sound like someone who takes Ayn Rand seriously as an economist, as opposed to a philosopher. The truth is that most of the wealthy were born into the upper classes of income"
Define wealthy. You are going to the extremes. Wealthy to me might be $100,000/year if I'm living in the mid-west. You also need to back up that statements with some citations/sources.
I'm really tired of people that don't want to put the time and effort into becoming successful trying to knock the actual successful people down a notch by saying it was luck or they were born into wealth (that must be the only reason they have money).
I have a quote for you:
"Chance favors only the prepared mind." - Louis Pasteur
I have felt this way for years. There are opportunities all around us every day. If you aren't educated enough to act on it, it will pass you by/you won't even be able to recognize it as an opportunity.
With Internet the being so prevalent, you could easily learn a new skill online, without ever having to pay exorbitant education fees. (MIT has free coursework available). Every city I've lived in has had free Internet access through the library. There are no more excuses. If you aren't physically or mentally incapable, you can succeed if you put in the effort.
"so let me give you a counter example: you work very hard in your company as a senior developer. Once day the boss comes and tells you you're fired because he's hired his son to do your job."
The boss owns the company. If he wants to hire his son, it's his freedom. If I was a senior developer, I probably would have the skills to easily find a job somewhere else. In a few months, when the boss realizes his son can't do the job, it will be too late. If it isn't, I will need a much higher salary to come back.
"Now you're on unemployment for months due to an economic downturn, but because there are no income taxes you get no unemployment benefits."
So when did I say we should have no taxes? You are once again taking things to the extreme to further your point. Sounds like a red herring to me.
"To top it off, you lost your health benefits when you lost your job, and now you find you have cancer (33% of us will get it at some point). The good news is, it's curable. The bad news is the treatment is prohibitively expensive"
Treatment is expensive no matter what. The difference is that either the government pays the cost (IE: the tax payers) pr your insurance company pays for it. My problem with all of the current universal health care advocates is that they propose plans that assume medical care is an infinite resource. There needs to be some way to limit doctor visits or people will be coming into the office many more times than they should (because hey, it's free I'm paying for it). There needs to be overall limits in place and after those limits are hit (maybe a yearly visit limit), you need to pay out of pocket. If we got rid of the insurance companies altogether, the hospitals wouldn't be able to charge $100 for a bottle of aspirin.
Another point I would like to make is that in pretty much all countries with socialized medicine, there are long waiting lines for things like cancer treatments. I have many older relatives that live in Canada that have had to come over to the US because they weren't able to get treatments in time.
"so like all of the losers in society's Randian economic game, we're going to expect you to simply die gracefully in a cardboard box somewhere out of sight. Thanks for playing, though."
A problem doesn't have to have a single cause; in fact, most real world problems don't. I think it's a good idea to cut spending. I also think it's a good idea to distribute wealth.
And I don't doubt that there are wealthy people who started poor, and who worked hard. But the fact is that most of them started well-off and got richer. And it's also a fact that it is easier to earn a million dollars if you already have a million dollars. So I don't have a Randian moral problem with taxing the rich at a higher rate. (Full disclosure here: I'm pretty loaded.)
I'm sorry I accused you of being a moral absolutist and opposing all income taxes. But you did say
What you are really doing is taking this money away by force...
So you don't mind if they take 35% by force, but 39% is looting?
As for your anecdotal long lines in Canada, I'm guessing that option would look pretty good from your cardboard box, dying slowly of liver failure.
But you've indicated you're immune to bad luck, that you could always find a place willing to hire a good developer even in the middle of major layoffs and even if you need to take time off every day for chemo. Good for you. But what do we do with all the people who don't have your skills, training or work ethic? What do we do with the losers? Let them die in the streets?
"A problem doesn't have to have a single cause; in fact, most real world problems don't. I think it's a good idea to cut spending. I also think it's a good idea to distribute wealth."
We are already redistributing wealth through taxes and social programs.
"But the fact is that most of them started well-off and got richer."
Citation?
"And it's also a fact that it is easier to earn a million dollars if you already have a million dollars."
It's also easier when you have the mindset of someone that is successful. Poor parents pass on poor decision making to their kids.
"So you don't mind if they take 35% by force, but 39% is looting?"
When did we ever talk about percentages? I seriously doubt that all of the social programs you are talking about would only be a matter of 3%.
"As for your anecdotal long lines in Canada, I'm guessing that option would look pretty good from your cardboard box, dying slowly of liver failure."
I guess it gives them hope. If the waiting lines are so long that you die before you get care, it doesn't really matter.
"But you've indicated you're immune to bad luck, that you could always find a place willing to hire a good developer even in the middle of major layoffs and even if you need to take time off every day for chemo. Good for you. But what do we do with all the people who don't have your skills, training or work ethic? What do we do with the losers? Let them die in the streets?
What do we do with them?"
How do we stop our hospitals from being flooded with people that don't really need care? There needs to be some system in place to force people to only go to the hospitals when they absolutely need it, or the system will eventually collapse. Nobody seems to want to think in the long-term, which is dangerous.
I'm well aware that we're already redistributing wealth, I'm simply advocating we do more of it by raising taxes on the wealthy.
If you Google 'economic mobility' you'll come up with a lot of citations supporting the idea that most rich people come from families in the upper reaches of the economic spectrum. Here's a particularly good study that got a lot of press a couple of years ago: http://www.economicmobility.org/reports_and_research/other?i... . Keep in mind that I'm not saying no one goes from being poor to rich, only that it's a minority of the wealthy. One reason that it may seem like there are more is that those stories are more compelling and so get more media attention (who wants to hear about the upper middle class doctor's kid who became a millionaire?), and because Republicans focus on those stories in their campaign rhetoric to deflect taxation on the wealthy.
It would be terrible to die waiting for treatment; fortunately that doesn't happen any more often in Canada than it does in the free-market US (where, until the recent health care reform, insurance companies could arbitrarily drop sick patients altogether).
And contrary to whatever ideas you may have about hospital life, they're really not all that pleasant. Most people stay away from them unless absolutely necessary, to the point that a lot of people (heart patients in particular) don't go when in fact they should. No doubt there are some hypochondriacs who waste doctors' time, but they are hardly justification for throwing up our hands at helping the truly sick who greatly outnumber them.
"So you don't mind if they take 35% by force, but 39% is looting?"
When did we ever talk about percentages? I seriously doubt that all of the social programs you are talking about would only be a matter of 3%.
You're missing the point. You made an argument based on a moral absolute, that when the government takes your money in the form of taxes that it is taking it by force. I picked 35% and 39% because that's basically the difference between the current rate and the rate if the tax cuts had been allowed to expire. If you really believe the government is looting your bank account when you're taxed, I'm not sure why it's morally OK to loot any of it for any reason.
Communism sucks, so there's no alternative to the 0.1% (winner) takes all (80%) system that we've got.
Of course we have a "vampire squid on our face" (GS) but it seems to be necessary to allow technological progress and the industrialisation of the rest of the world
We have scarcity now, but it won't last. Money will be abolished. The question is how do we spend money now to bring about the end of scarcity sooner. Well conspicuous consumption and luxuries are probably no help.
>Communism sucks, so there's no alternative to the 0.1% (winner) takes all (80%) system that we've got.
Wow, thanks for making things so clear. I had no idea that the alternative to our emerging world of total corporate feudalism was straight-up dictatorial Stalinism! Who'd-a thunkit?
I've often thought some fees should be adjusted for wealth. For example, a quarter a day isn't really enough to get me to take my library books back on time. Maybe for me it should be $2 a day.