Wealth inequality

[Art_Critic]

23 minutes ago, lana-banana said:

...they should? Everyone with the ability to pay taxes should indeed pay taxes, myself included? I don't understand what argument you think I'm making. I agree it would be much more fair if the very wealthy paid more.

It seems you are just trying to twist my words, first it was saying I don't think taxes shouldn't exist and now it's you are saying that I don't understand the argument you are making, all the while I do..

You are making the argument that the rich should pay more in taxes for the free entitlements and the people who are not so rich shouldn't.

I'm making the argument that money is property and who is one person to tell another that they should give up their property all the while you keep yours.

IMO, if any freebies like free insulin are to be given they we all as tax payers should shoulder the burden so that it is fair to all, fair to the person getting the freebie and fair to who is backing the payment of the freebie.

If only one segment shoulders the burden because they make more that is wrong and they are being singled out solely on their income

 

Edited July 3, 2020 by Art_Critic

[thefooloftheyear]

 

2 minutes ago, lana-banana said:

No, it isn't. "From each according to his ability, to each according to his needs" is a lot closer to the "very definition" of fairness. The people who have and consume more resources should give more than those who can't and don't.

For most people it takes a lot of time, sacrifice,  and effort for the "have's" to have what they have...If it's mandated to give it away to many that can't or wont, , then what's the motivation to do it??

I mean, all systems that are "good' have provisions and safety nets for those in need, but at some point, it has to be limited, otherwise it makes no real sense to beat your brains in...There is a point where it is absolutely unfair....

TFY

[Weezy1973]

A fair system would be one where everybody pays the same percentage of tax at the same level, but as your wealth or income gets higher, the percentage increases on the higher amount. For example:

First 20K = 0% tax

2nd 20K = 5% tax

3rd 20K = 10% tax

Next 60K = 15% tax

Next 100K = 20 % tax

Next 500K = 25% tax

Everything higher = 50% tax

 

The numbers are just an example. That everybody is taxed the same amount, but as someone gets richer they pay more tax, but not so much that it’s not worth making the extra amount. 

[pepperbird]

28 minutes ago, Weezy1973 said:

A fair system would be one where everybody pays the same percentage of tax at the same level, but as your wealth or income gets higher, the percentage increases on the higher amount. For example:

First 20K = 0% tax

2nd 20K = 5% tax

3rd 20K = 10% tax

Next 60K = 15% tax

Next 100K = 20 % tax

Next 500K = 25% tax

Everything higher = 50% tax

 

The numbers are just an example. That everybody is taxed the same amount, but as someone gets richer they pay more tax, but not so much that it’s not worth making the extra amount. 

Would you be okay with a system where everyone had the same "basics" (food, shelter, medical care) but anything extra they would have to pay for themselves with money they earned?

It could be because I'm not american, but right now, we pretty much have that system here in Canada, at least in my province. If you're a "have not" the system looks after you, at least if you're able bodied.

If you're able bodied but can't find work, you can apply for social assistance. Those who do receive enough for rent, food, dental care, eye care, medications etc. There's programs to help them with home heating in the winter, they get free public transportation, educational grants ( if you're under a certain income, most of your student loan is covered by a patchwork system of grants) and due to initiatives like HST rebates and tax breaks, if their income is under a certain level ( different for individuals/families) they pay no federal/provincial income taxes. There's free programs to help with job searching, vocational training, literacy, ones that cover the fees to get kids into sports, tutoring, etc. We even give tax breaks to people with a low income so they can go to a summer cottage or camping.

These are all just the government programs set up to help the poor, and doesn't include those in the private/ not for profit sector. They can all also be accessed by those with low wage income, such as the working poor. Most of the taxes they pay are returned to them in the form of rebates, deductions and free/low cost services. I pay to see the optometrist- someone who is low income or on social assistance does not. If I have enough medial expenses that they eat up a set percentage of my income, I can claim them as a deduction.

Oddly enough, if you're better off being just "poor" here than disabled. Unlike social assistance, disability allowances are very limited. While someone on SA (especially if they have children) can scrape by ( not easy, but they can do it) those living with a disability and need government support may find they don't get enough to even live on. A fair chunk end up on homeless on the street, utilizing food banks, etc.

We're a "have not" province with an unemployment rate that has traditionally sat between 8 and 10 percent. Depending on the government is all old hat to us here, but for all the supports and social programs, nothing has really changed. I don't know why- I wish I did.

Edited July 3, 2020 by pepperbird

[Ellener]

16 hours ago, pepperbird said:

you're better off being just "poor" here than disabled.

Interesting isn't it. I just read that disability advocate groups in the UK are requesting a public enquiry, stating that one third of all UK Covid deaths are disabled people.

Here, I have been working around my disability until the pandemic, now I'm finding that there's weird stuff around work requirements for jobs which preclude me, but I am not 'eligible' to apply for jobs I can do as I am not registered 'disabled' beyond a parking pass....I don't want disability benefits, just to be treated equally!

In America lawyers take over disability benefit claims for a percentage fee, because claims are automatically denied then appealed. 

[pepperbird]

The poor here are in all races- no one group has the corner on that. We do our best to help, but you can't force someone to bring themselves up. For all the social programs, all the supports, all the assistance, these people will still remain stuck in the grind of poverty. It's even gotten to a point where we've developed a cadre of "permanent students" because we pay them to go to school. These people end up well educated, but not working.

A lot of it is cultural. It's a way of life here, and it continues on and on. The ones who want to get away leave for greener pastures if they can. A lot join the military, and , the ones that do usually benefit greatly, at least in terms of their self esteem.  personally, I don't like that as a career choice, but to some, it's a good job that teaches them self discipline, the importance of organization and the value in being part of something larger then themselves. It becomes  question of "we" and not "me".

[Ruby Slippers]

On 7/2/2020 at 10:56 PM, thefooloftheyear said:

Want to get out of generational poverty?  How about start by not doing the idiotic things mentioned that are completely in your control...Then, if you really believe "the man" is holding you back, then make your own way...Its never been easier than right now...

I agree with you that there are those who whine and complain about how unfair it all is... but at the same time, aren't willing to apply some good old-fashioned hard work to the problem.

I think what holds a lot of people back, what held me back for much longer than it should have, is a scarcity mentality. A friend and I were discussing that he had an uncle who encouraged him from a very young age to pursue a particular career path, do X, Y, and Z, and it wouldn't be long before he'd be rich. From younger than 10 years old, humble beginnings and all, he was fixated on the idea of taking that path, and that's exactly what he did.

I, on the other hand, had the idea that "there's never enough money" drilled into me. I wanted to believe I could overcome that, but essentially, that idea and others like it were echoing loudly in my mind for many, many years. I struggled and sacrificed a great deal as I began my upward climb, hit setback after setback. I didn't give up... but I can understand why some people do. At a certain point, it becomes exhausting, and you start to give in to the idea that you'll never, ever be able to get ahead.

We become what we think. 

As I increase my financial success and security, I feel more and more driven to do what I can to uplift people and help them uplift themselves, to teach them that financial success and security is possible for anyone willing to focus, learn, and work hard. 

[major_merrick]

On 7/3/2020 at 6:57 AM, lana-banana said:

Because taxes exist and should be used for a society's benefit. If you believe taxes shouldn't exist, there's not much for us to talk about.

Put me in the "taxes shouldn't exist" camp. 

At least, as far as personal income and property taxes are concerned.  This nation got along fine for many years with mostly just tariffs, a few excise taxes, and taxes on corporations.  Having everybody pay income and property tax is mostly a post-WWII thing, especially in flyover states that aren't supporting big cities and leftist agendas. 

Funny thing, the period of lower taxes also coincided with a period of less wealth inequality.  The era of the Robber Barons before WWI was not controlled through taxing, but through breaking up monopolies and improving labor conditions.  Our modern-day robber barons have found a way to make companies bigger without getting broken up (here's looking at you, Amazon and Walmart) and they've escaped labor restrictions by going to foreign nations. 

Ultimately, those in control of the political machine find a way around the taxes that they create for everybody else.  The rich continue to benefit from this corruption.  While I dislike billionaires as much as the next person, I don't see that increasing taxes will affect them.  It will, however, rip off those of us who make some level of success for ourselves.  With inflation in play, being a millionaire is NOT what it used to be.  Why should we pretend that people making $250k are actually wealthy? 

And if you really want to help out poor folks - let them own a home without having to pay property taxes each year.  That is a significant barrier to ownership and maintenance, and keeps a lot of people renting.  But that's a state/local issue.

Edited July 7, 2020 by major_merrick

[sothereiwas]

On 7/3/2020 at 6:29 AM, lana-banana said:

The people who have and consume more resources should give more than those who can't and don't.

Why?

Are their rights more precious and thus more costly to protect somehow?

 

48 minutes ago, major_merrick said:

Put me in the "taxes shouldn't exist" camp. 

At least, as far as personal income and property taxes are concerned

Income taxes are dumb IMO, property taxes actually make sense. One of the few legitimate functions of government is to protect the citizens rights to own property, and the value of the property one owns is a very good proxy for the value of protecting that right. An asset tax and a tax on transactions (sales tax) should be all we need. 

[Piddy]

On 7/7/2020 at 12:01 AM, sothereiwas said:

Income taxes are dumb IMO, property taxes actually make sense. One of the few legitimate functions of government is to protect the citizens rights to own property, and the value of the property one owns is a very good proxy for the value of protecting that right. An asset tax and a tax on transactions (sales tax) should be all we need. 

Not a good idea.  So in your world renters pay no tax?  And what about voting?  Only property owners can vote?   

[sothereiwas]

6 minutes ago, Piddy said:

So in your world renters pay no tax? 

Assets are not limited to real estate, and even in the case of real estate the costs associated with ... do I really need to draw a picture? Also, a sales tax falls on everyone. 

 

6 minutes ago, Piddy said:

Only property owners can vote?   

What?

Edited July 9, 2020 by sothereiwas

[Piddy]

On 7/3/2020 at 9:49 AM, Weezy1973 said:

A fair system would be one where everybody pays the same percentage of tax at the same level, but as your wealth or income gets higher, the percentage increases on the higher amount. For example:

First 20K = 0% tax

2nd 20K = 5% tax

3rd 20K = 10% tax

Next 60K = 15% tax

Next 100K = 20 % tax

Next 500K = 25% tax

Everything higher = 50% tax

 

The numbers are just an example. That everybody is taxed the same amount, but as someone gets richer they pay more tax, but not so much that it’s not worth making the extra amount. 

It's kind of what we have now.  With the marginal tax rate.  The top tax rate is 37%, but you only pay the 'top rate' of 37% on income over the marginal rate which is roughly 510,000 for singles and 612,000 for married couples.

One could argue that the top marginal rate should be increased vastly.  Someone making $100,000 million should pay more that just 37% over the first $510,000.  But our tax system favors the wealthy.

Remember Warren Buffet saying he paid a lower tax rate than his secretary because his income came for capital gains and dividends.  

Also, for those who advocate a flat tax system, that is unfair as well.  Because lower incomes pay a higher percentage of their income on things just to live (i.e. rent, food etc.).  Compared to the wealthy who pay a much smaller portion of their income on living expenses.

Your idea of a much higher marginal rate is what's needed.  I also liked Elizabeth Warren's 2% wealth tax on income of $50 million and 3% on income of $1billion. 

Also, raise the cap (currently $87,000) on payroll taxes.  

Edited July 9, 2020 by Piddy

[Piddy]

16 minutes ago, sothereiwas said:

Assets are not limited to real estate, and even in the case of real estate the costs associated with ... do I really need to draw a picture? Also, a sales tax falls on everyone. 

Wouldn't raise enough money, so a bad idea.  

16 minutes ago, sothereiwas said:

What?

Just checking.  Some who advocate what you're advocating want to give property owners more rights.  Glad to see you're not in the camp.

[sothereiwas]

2 minutes ago, Piddy said:

Also, for those who advocate a flat tax system, that is unfair as well.  Because lower incomes pay a higher percentage of their income on things just to live (i.e. rent, food etc.).  Compared to the wealthy who pay a much smaller portion of their income on living expenses.

Unfair how? What are taxes for, what is their function?

 

2 minutes ago, Piddy said:

One could argue that the top marginal rate should be increased vastly. 

One could argue the moon is actually made of cheese. Doesn't make it true.

 

3 minutes ago, Piddy said:

Remember Warren Buffet saying he paid a lower tax rate than his secretary because his income came for capital gains and dividends.  

This is because (mostly) our tax code is insanely complex, so much so that we support an entire industry of tax preparation domain experts, a software industry for the same, and so on. Warren Buffet is able to summon the resources needed to shape his income and other assets in a way to legally minimize his tax liability. This is known as tax avoidance, and unlike tax evasion, tax avoidance is legal. Gameable systems will inevitably be gamed. To minimize this, the system should be as simple as possible. The FairTax and several other proposals are extremely simple as one of their design goals. 

[sothereiwas]

4 minutes ago, Piddy said:

Wouldn't raise enough money, so a bad idea.  

A lot of domain experts disagree. US citizens hold, last I checked, something north of $200 trillion in assets. Couple a miniscule tax on that with a 20% sales tax and we'd have a lot of tax revenue. 

[schlumpy]

On 7/6/2020 at 10:09 PM, Ruby Slippers said:

We become what we think. 

As I increase my financial success and security, I feel more and more driven to do what I can to uplift people and help them uplift themselves, to teach them that financial success and security is possible for anyone willing to focus, learn, and work hard. 

I truly wish you luck with Ruby but I had very little success with my friends and especially my family. I was only partially successful with my sister. The person you want to help has to be in the right frame of mind or it's like talking to a wall.

So, try to help and if you can't don't let it depress you.

Be prepared for jealousy.

[Piddy]

20 minutes ago, sothereiwas said:

Unfair how? What are taxes for, what is their function?

Already explained it.  Again, lower incomes pay a high percentage of that income on living expenses and rich people don't = unfair.

Quote

One could argue the moon is actually made of cheese. Doesn't make it true.

 

'I would argue' that the top marginal rate should raised.  Nothing about true or false.  Just opinion.  My opinion.

Quote

This is because (mostly) our tax code is insanely complex, so much so that we support an entire industry of tax preparation domain experts, a software industry for the same, and so on. Warren Buffet is able to summon the resources needed to shape his income and other assets in a way to legally minimize his tax liability. This is known as tax avoidance, and unlike tax evasion, tax avoidance is legal. Gameable systems will inevitably be gamed. To minimize this, the system should be as simple as possible. The FairTax and several other proposals are extremely simple as one of their design goals. 

No.  Again, Buffet pays a lower rate than his secretary because his income is from capital gains and dividends which are taxed at a lower rate that his secretaries income which is taxed at a higher rate because it's not from capital gains and dividends.

Takeaway.  Wealthy people like Buffet pay a lower tax rate because our tax system favors the wealthy who can derive their income from capital gains and dividends.

 

Edited July 9, 2020 by Piddy

[sothereiwas]

2 minutes ago, Piddy said:

lower incomes pay a high percentage of that income on living expenses and rich people don't = unfair.

Why is that unfair? What do those taxes pay for, and how does the value delivered (cost of services vs benefit of same) compare for various incomes? To me it seems that lower income people are getting an incredible value for the pittance paid in taxes. 

[sothereiwas]

5 minutes ago, Piddy said:

capital gains and dividends

Those are part of the tax code ....

[Piddy]

25 minutes ago, sothereiwas said:

Why is that unfair? What do those taxes pay for, and how does the value delivered (cost of services vs benefit of same) compare for various incomes? To me it seems that lower income people are getting an incredible value for the pittance paid in taxes. 

It's really so simple.  Rich people pay less under a flat tax system.  Middle class etc. get screwed.   Do the math. 

And I was actually arguing a VAT tax is also unfair to the middle class / lower incomes for the reasons I stated that lower incomes use more of their income for living expenses, where the wealthy pay a much smaller percentage of their income for their living expenses.

Summary.  Both a Flat and VAT (Value Added Tax or sales tax) are considered a regressive tax system.  Middle class and working people in general do much better under a progressive tax system. 

As someone once said:   "For middle-class people, a flat tax means that they will have to pay more taxes. If people think it would be fairer that they pay higher taxes, then the Republican Party has the presidential candidates for you" 😉

End of Story.

Edited July 9, 2020 by Piddy

[sothereiwas]

1 minute ago, Piddy said:

It's really so simple.  Rich people pay less under a flat tax system. 

No, they pay more. The math is simple, 20% of a small thing is smaller than 20% of a big thing. 

But that's not the question. Fundamentally, the question is what should taxes pay for? Once that is determined, figure out what benefit is derived from the services paid for by taxes. If the cost/benefit isn't evenly distributed, that's unfair and should be corrected. 

 

4 minutes ago, Piddy said:

VAT tax is also unfair to the lower incomes

The FairTax has both a flat sales tax, which is not identical to a VAT by the way, and what is essentially a UBI component that serves to reduce the tax burden for poverty level living to 0%. 

An asset tax is not regressive. 

[Piddy]

6 minutes ago, sothereiwas said:

No, they pay more. The math is simple, 20% of a small thing is smaller than 20% of a big thing. 

But that's not the question. Fundamentally, the question is what should taxes pay for? Once that is determined, figure out what benefit is derived from the services paid for by taxes. If the cost/benefit isn't evenly distributed, that's unfair and should be corrected. 

 

The FairTax has both a flat sales tax, which is not identical to a VAT by the way, and what is essentially a UBI component that serves to reduce the tax burden for poverty level living to 0%. 

An asset tax is not regressive. 

Nope.  Nice try though.  Let's see if this helps.  If not I give up.

"Here’s the problem with flat tax. In reality, everyone pays more or less the same amount of money for life-sustaining necessities, like milk and gasoline. Sure, the Koch brothers get their milk from endangered white rhinos. But the initial couple of bucks that you pay for your dairy products, rich people pay, too. Then they pay for extra luxuries on top of that original cost.

Hence, a flat tax isn’t really flat. A flat tax means that poor people are going to pay a much higher percentage of their income on necessities than are rich people. Let me simplify and try to fit this explanation on the back of a postcard...

Let’s say that a person needs to spend ten grand a year for basic survival: food, shelter, Netflix. And this assumes you’re eating frozen dinners every night and your home is, well, literally a shelter. Now let’s say the flat tax is at ten percent. Okay, so one person makes $20,000 a year and another person earns a million dollars a year. With me so far?

Now flip over the postcard. I need to use the other side...

Fifty percent of the poor man’s income goes to pay for necessities- that’s $10,000. Meanwhile, the rich guy spends only 1% of his income on basic survival. And according to studies, one needs to survive. But a flat tax doesn’t take this important percentage into consideration.

But there’s more...

The first man makes $20,000 a year. Subtract the ten-thousand he needs for basic necessities. He’s left with $10,000. The rich guy- oh, let’s call him Richie- makes a million dollars a year. Now take away the ten-thousand he needs for basic survival. He is now left with $990,000, or, as I call it, “the nouveau poor.”

Now do the flat tax math again. Each person has to pay ten percent of his overall income. After the poor person pays his “fair share”, $2000, he’s left with $8000. In other words, not counting the survival money (which is the same for both men), he is left with 80% of his original income. Meanwhile, Richie has to pay $100,000. So he’s left with $890,000. That means that Richie still has almost 90% of his original income to spend on trips to Cancun and hockey game luxury box seats.

The poor person is being taxed twenty percent on his extra income. Richie is being taxed about ten percent on his extra income. Got that? God I hate math. But the point is that the flat tax is always going to be a little bit flatter for rich people... and a little s***tier for poor people."

 

 

[sothereiwas]

23 minutes ago, Piddy said:

Hence, a flat tax isn’t really flat.

No, it really is. Math says it is. That doesn't make it FAIR. 

 

Maybe I'm old fashioned, but I still believe the government should exist to serve the people, and not the other way around. This means very literally that the government exists to provide services to the people. That's the legitimate function of government. So the question then becomes, what does each person pay, and what services do they get in return? In the case of rich vs poor I think it's clear that the rich person likely consumes more of some government services. The government provides a system that protects property rights, and rich people by definition have more property. The rich might very well perform more transactions, by value at least, and those transactions are facilitated by law and order and so on, so they consume, maybe, more of those services. 

So I suspect you're imagining you're arguing against something I never said. Maybe I'm wrong. All I stated was a mathematical fact. 

The larger question of how to find a good proxy for consumption of services is the question. For me, a blend of asset value and transaction value is a good proxy, in that it models how government services are consumed reasonably well, and is relatively simple to administer. 

The FairTax proposal adds a UBI as part of the tax code, in an effort to reduce tax burden on the poor. This isn't really in interests of fairness so much as pragmatism and kindness as far as I can tell, but it's not unreasonable. 

Edited July 9, 2020 by sothereiwas

[SumGuy]

On 7/9/2020 at 11:16 AM, Piddy said:

The poor person is being taxed twenty percent on his extra income. Richie is being taxed about ten percent on his extra income. Got that? God I hate math. But the point is that the flat tax is always going to be a little bit flatter for rich people... and a little s***tier for poor people."

Think you combined sales tax with flat tax, yes sales tax on essentials impacts the poor much more heavily.

I believe the idea behind a flat tax is at least the rich pay something instead of avoiding tax liability all together.  As long as the flat tax is low it is a better deal for the poor, and perhaps one could make it a graduated flat tax.

The idea of the flat tax is alluring because it appears to promise to remove all the loopholes...so that is what makes it a dream. 

The complexity and nuances of the tax system arose for a reason, the reason being to provide certain types and amounts of income ready legal vehicles to avoid taxation, avenues not available to most and avenues that have a barrier to entry.   Let's not talk about how all that is made even worse by how enforcement efforts themselves are very un-level in this very un-level playing field.

[sothereiwas]

29 minutes ago, SumGuy said:

Think you combined sales tax with flat tax, yes sales tax on essentials impacts the poor much more heavily.

The key words were, in my estimation, "extra income", where someone not the earner decides what part of the earner's income is essential and what part is "extra". Once we go down that road all manner of justification is possible. From each according to ability and to each according to need. He didn't need that extra part, even though he earned it. Should be glad he got to keep some, I reckon.