The Flawed Concept of "Wealth Redistribution"

[The Rabbi]

Where do rich people come from?

Most earn it. Why you ask?

You're right. Most earn it. Which means they come from the poor and middle classes. So, if you got rid of all of the rich people, all it means is that the poor and middle classes would make more.

It was EXACTLY that kind of thinking that led to the expulsion of the Lebanese from Uganda, the Ibo from Nigeria, and the white farmers from Zimbabwe. If we get rid of the people with all the money, there will be more for the rest of us.
Too bad it doesn't work that way. Rich people are rich because they have habits and values that enable that.

 

[The Rabbi]

One question for all you lib money thieves out there.....


If all the rich that you hate weren't rich all the sudden... how does that help you or the economy?

Please answer the question and refrain from resorting to namecalling just because you dno't have an answer.

Once again overly dramatic hysterics from the right

Nobody is advocating making rich people poor. The super rich in this country will always be super rich. The reallocation of wealth being advocated is to revoke tax and labor incentives given to the wealthy which enable them to claim a larger slice of the pie.

Working Americans are putting in more hours for less. Their ability to afford a home, car, energy, education for their children, healthcare...have all diminished in recent years while the rich get............richer

You are again asserting a fact that I have called you out on. What labor and tax incentives are given to "the wealthy" that have cost "working Americans" money? Please name these. I have already pointed out that most of the wealth-draining measures were advocated by labor unions and government bureaucrats,not "the wealthy".

 

[Foxfyre]

So... what is your solution? How do get poor people to make more money? Be specific please.

The living wage for working Americans has steadily decreased over the last 20 years. They work more hours for less reimbursement. Health costs are out of reach for many. Education debt is ruining the next generation. Housing and energy costs exceed take home pay. The American dream is turning into just a dream.

I don't advocate a Robin Hood handout of cash. I do advocate more tax incentives for healthcare and education costs. I would like to see more Government subsidy of affordable housing and energy credits.

Do you blame the rich man who took greater risks and worked smarter and invested more wisely and now pretty much affords what he wants for the plight of the one who was lazy or played it safer, made some unwise choices, and invested less wisely and now struggles to make ends meet?

It is always interesting to me to read the life stories of the self made rich. Almost without exception, each failed miserably at one more things or went broke at least once until they finally found a formula that worked for them or they just plain got lucky. The one common denominator among all of them was a desire to succeed and a tenatiousness that kept them trying even when it seemed most hopeless. They believed in themselves and they didn't give up.

And THAT is what we should be teaching the poor. Stay in school. Educate yourself by whatever means you have to do to do that. Stay away from illegal substances. Don't have kids until you are married and can support them. Be willing to work as an apprentice at low wages or hold whatever Mcjobs are necessary to acquire a work ethic and references, learn marketable skills, and then make yourself as valuable as you can to your employer. . .or customers if you go directly into entreprenourship.

We do them no kindness by reinforcing a sense of victimization or being disadvantaged or a sense of entitlement. We do them no kindness by helping them feel secure and less uncomfortable even though they do little or nothing to help themselves. Parents bless their children by loving each other, setting a decent example, and assuring the kids that their lives can be even better. Kids should grow up seeing their parents or parent getting up every day, taking care of things, going to work, bringing home a paycheck, and providing for the family. They should never grow up seeing their parents depending on a government check and subsidies just to get by and never expecting anything better.

It is a hard thing, but the government should not be encouraging poverty by making it more pleasant to be poor.

 

[Foxfyre]

Just a side point...

I will pose it as a question:

Who did Robin Hood rob?

Also... that is one hot chick on my avatar... don't ya think?

Well actually Robin Hood robbed the government. Some here think that is exactly what we want to do when we suggest that the government reduce taxes and spend less.

Is that chick on your Avatar you?

 

[PatekPhilippe]

Working Americans are putting in more hours for less. Their ability to afford a home, car, energy, education for their children, healthcare...have all diminished in recent years while the rich get............richer

Ha ha ha ha ha ha ha...tripe from Huffington.

 

[Nonelitist]

Just a side point...

I will pose it as a question:

Who did Robin Hood rob?

Also... that is one hot chick on my avatar... don't ya think?

Well actually Robin Hood robbed the government. Some here think that is exactly what we want to do when we suggest that the government reduce taxes and spend less.

Is that chick on your Avatar you?

It is interesting how many people think that Robin Hood robbed the rich... he actually robbed the government like you said.
haha.. no that hideous thing isn't me... it is my wife.

 

[antagon]

flat taxes are pies in the sky for idiots to eat. name a country that subscribes to such a garbage system... then explain how such a backwards marginal economy stands to compare to the US and other developed economies among which NONE have adopted a retarded flat tax scheme.

Yeah... because equal treatment and equality are garbage systems

Flat tax takes power away from government.. and government's don't readily give that up... THAT is why you have not really seen it happen... easier to get votes when you vilify and promote class warfare

your paranoid perspective takes no account for the possibility that good codes only aim to tax excesses of income?

It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

what is so fair about a flat tax? such a tax would burden small businesses and middle class significantly more than wealthy, large firms and their owners.

think...
lets assume that the over-all tax burden is a constant.

with 2,000,000 units at 20% tax, entity A pays 400k.

with 20,000 units at 20% tax, entity B pays 4k.

if basic subsistence costs 15k, the flat tax rate accounts for 400% of entity B's retained earnings.
in consideration for entity A, the flat tax rate accounts for virtually the same 20% of his retained earnings.

thats a nicely paid exec and a broke-ass barely getting by, but these extremes indicate the nature of the situation.

where the exec makes substantially greater use of society, his burden doesent reflect as much, while the broke-ass is enslaved by taxation.

note that the 20% rate is rather conservative considering our original presumption the overall burden is constant. to affect the constant with a flat rate, im sure it would be higher yet.

 

[Gadawg73]

Wealth is never to be redistributed.
Wealth is and should always be EARNED.

So if a multi-million dies his estate should go to the state, not his beneficiaries (after all, they didn't earn it)....

WTF? "multi-million"?
Don't you mean multi millionaire?
Where did I state that?
Why not post something worth a look instead of making it up as you go?
Wealth SHOULD be earned. Your example is redistribution, the state.
Try again.
Wake up, the world is passing you by.

 

[rightwinger]

So... what is your solution? How do get poor people to make more money? Be specific please.

The living wage for working Americans has steadily decreased over the last 20 years. They work more hours for less reimbursement. Health costs are out of reach for many. Education debt is ruining the next generation. Housing and energy costs exceed take home pay. The American dream is turning into just a dream.

I don't advocate a Robin Hood handout of cash. I do advocate more tax incentives for healthcare and education costs. I would like to see more Government subsidy of affordable housing and energy credits.

Ok... so how does the govt pay for those programs?

Simple..

Remove previously granted tax breaks on the wealthy and "trickle them down" to the working class

 

[beowolfe]

Most earn it. Why you ask?

You're right. Most earn it. Which means they come from the poor and middle classes. So, if you got rid of all of the rich people, all it means is that the poor and middle classes would make more.

It was EXACTLY that kind of thinking that led to the expulsion of the Lebanese from Uganda, the Ibo from Nigeria, and the white farmers from Zimbabwe. If we get rid of the people with all the money, there will be more for the rest of us.
Too bad it doesn't work that way. Rich people are rich because they have habits and values that enable that.

And it probably would have worked if Uganda and Zimbabwe were run by rational people and that was what they were doing. And rational people would not decided to expel the most educated and technically proficient in their nations who were not rich but just happened to be white. The Ibo were not expelled from Nigeria, they, unfortunately, were the targets in Nigeria's attempt at doing a Rwanda. It's a good thing someone came to their senses in Nigeria before the Ibo were exterminated. BTW, not all Ibo were rich, but they were the leading ethnic group in Nigeria because they where chosen by the British to be that.

 

[Foxfyre]

flat taxes are pies in the sky for idiots to eat. name a country that subscribes to such a garbage system... then explain how such a backwards marginal economy stands to compare to the US and other developed economies among which NONE have adopted a retarded flat tax scheme.

Yeah... because equal treatment and equality are garbage systems

Flat tax takes power away from government.. and government's don't readily give that up... THAT is why you have not really seen it happen... easier to get votes when you vilify and promote class warfare

your paranoid perspective takes no account for the possibility that good codes only aim to tax excesses of income?

It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

what is so fair about a flat tax? such a tax would burden small businesses and middle class significantly more than wealthy, large firms and their owners.

think...
lets assume that the over-all tax burden is a constant.

with 2,000,000 units at 20% tax, entity A pays 400k.

with 20,000 units at 20% tax, entity B pays 4k.

if basic subsistence costs 15k, the flat tax rate accounts for 400% of entity B's retained earnings.
in consideration for entity A, the flat tax rate accounts for virtually the same 20% of his retained earnings.

thats a nicely paid exec and a broke-ass barely getting by, but these extremes indicate the nature of the situation.

where the exec makes substantially greater use of society, his burden doesent reflect as much, while the broke-ass is enslaved by taxation.

note that the 20% rate is rather conservative considering our original presumption the overall burden is constant. to affect the constant with a flat rate, im sure it would be higher yet.

But 'barely getting by' for most folks is a strong incentive to improve one's lot and produce more and thereby generate more wealth from which 'broke ass' would benefit as well as society as a whole. Take away the tax burden and 'broke ass' would have no incentive to move into a bracket in which he would acquire one. He would likely be perfectly content to be exempt from any obligations to society. He also has strong incentive to elect people who would ensure that he continue to receive all the benefits of society with no expectation that he contribute to society.

Take away the mostly free ride, however, by making him endure the same consequences of government policy and practices as the rich do, and he would likely be interested in electing people who would promote the general welfare that benefits everybody. By thus untethering the poor, any rising tide that ensues will lift all boats and not just that of the rich.

 

[SpidermanTuba]

The premise of "wealth redistribution" is that it is unfair when one person has more wealth than another.

That's not the premise.

 

[rightwinger]

So... what is your solution? How do get poor people to make more money? Be specific please.

The living wage for working Americans has steadily decreased over the last 20 years. They work more hours for less reimbursement. Health costs are out of reach for many. Education debt is ruining the next generation. Housing and energy costs exceed take home pay. The American dream is turning into just a dream.

I don't advocate a Robin Hood handout of cash. I do advocate more tax incentives for healthcare and education costs. I would like to see more Government subsidy of affordable housing and energy credits.

Do you blame the rich man who took greater risks and worked smarter and invested more wisely and now pretty much affords what he wants for the plight of the one who was lazy or played it safer, made some unwise choices, and invested less wisely and now struggles to make ends meet?

The super wealthy 1% of this country who control 34% of the available wealth do not get that way by taking risks. They get that way by making sure there are no risks.
The golden rule of "He who has the gold, makes the rules" ensures that the super wealthy just get richer

 

[SpidermanTuba]

Do you blame the rich man who took greater risks and worked smarter and invested more wisely and now pretty much affords what he wants for the plight of the one who was lazy or played it safer, made some unwise choices, and invested less wisely and now struggles to make ends meet?

Its hard to comprehend how a question premised on such black and white extremes could have any value whatsoever.

 

[The Rabbi]

The living wage for working Americans has steadily decreased over the last 20 years. They work more hours for less reimbursement. Health costs are out of reach for many. Education debt is ruining the next generation. Housing and energy costs exceed take home pay. The American dream is turning into just a dream.

I don't advocate a Robin Hood handout of cash. I do advocate more tax incentives for healthcare and education costs. I would like to see more Government subsidy of affordable housing and energy credits.

Ok... so how does the govt pay for those programs?

Simple..

Remove previously granted tax breaks on the wealthy and "trickle them down" to the working class

OK. Maybe third time's a charm.
What programs and policies that "the rich" have instituted have contributed to draining money away from "working Americans"?
The fact that you are avoiding answering this tells me you have no answer. But the very fact that some people are very wealthy and others very poor suggests to you that there must be something diabolical in the system to account for it.

 

[The Rabbi]

You're right. Most earn it. Which means they come from the poor and middle classes. So, if you got rid of all of the rich people, all it means is that the poor and middle classes would make more.

It was EXACTLY that kind of thinking that led to the expulsion of the Lebanese from Uganda, the Ibo from Nigeria, and the white farmers from Zimbabwe. If we get rid of the people with all the money, there will be more for the rest of us.
Too bad it doesn't work that way. Rich people are rich because they have habits and values that enable that.

And it probably would have worked if Uganda and Zimbabwe were run by rational people. And rational people would not decided to expel the most educated and technically proficient in their nations. The Ibo were not expelled from Nigeria, they, unfortunately, were the targets in Nigeria's attempt at doing a Rwanda. It's a good thing someone came to their senses in Nigeria before the Ibo were exterminated. BTW, not all Ibo were rich, but they were the leading ethnic group in Nigeria because they where chosen by the British to be that.

I think you jsut contradicted yourself.
Doing so never works because it is a flawed premise. The premise is that the rich are that way just because. But there is nothing fundamentally different between them and the poor. So if we eliminate the rich we can let the poor take over their wealth and they become the new rich.
In fact that is wrong. The rich are fundamentally different because they have different mind sets and habits from the poor, ones which enable them to become rich.
We see this with lottery winners. They often come from working class backgrounds. When they win they are amazingly rich. But a huge percentage of them go bankrupt within 5 years because they do not have the mind set and habits of rich people. And so default to being poor.

 

[beowolfe]

Do you blame the rich man who took greater risks and worked smarter and invested more wisely and now pretty much affords what he wants for the plight of the one who was lazy or played it safer, made some unwise choices, and invested less wisely and now struggles to make ends meet?

Its hard to comprehend how a question premised on such black and white extremes could have any value whatsoever.

If you look at our history, wealth is controlled by those who control it today, not because they worked harder or took greater risks. It's because someone gave their ancestors something that they had taken from someone else and that ancestor was able to get the ball rolling on intergenerational wealth and they passed it down. And the same thing repeated itself over and over again.

Now, there is new money, like Bill Gates, but he got his from stealing the idea of a graphic interface unit from a friend of his and conning IBM into buying something that didn't exist.

 

[The Rabbi]

Do you blame the rich man who took greater risks and worked smarter and invested more wisely and now pretty much affords what he wants for the plight of the one who was lazy or played it safer, made some unwise choices, and invested less wisely and now struggles to make ends meet?

Its hard to comprehend how a question premised on such black and white extremes could have any value whatsoever.

If you look at our history, wealth is controlled by those who control it today, not because they worked harder or took greater risks. It's because someone gave their ancestors something that they had taken from someone else and that ancestor was able to get the ball rolling on intergenerational wealth and they passed it down. And the same thing repeated itself over and over again.

Now, there is new money, like Bill Gates, but he got his from stealing the idea of a graphic interface unit from a friend of his and conning IBM into buying something that didn't exist.

You must inhabit an alternative universe.
In 1900 the wealthiest Americans were John D Rockefeller, Andrew Carnegie, Frederick Weyerhauser, and Henry Ford.
Not one of their descendents is in the top 100 today. And among those only the heirs of Sam Walton and the Cargill families could be said to have inherited wealth.
Almost all of the people in the top 100 worked hard and earned their money.

 

[Toro]

It isn't a matter of which is valued more. It is a matter of the economic dynamics associated with each.

A labor pool is a resource. Labor itself is a commodity--something that has a fixed value and is bought and sold. The value of the product produced by labor increase the wealth of the employer and the earnings received increase the wealth of the laborer. Such wealth then becomes a new resource.

The employer takes a risk when he contracts with the laborer. He is risking wages and benefits and time and other resources by speculating that the laborer will produce as much or more product than the cost of the labor. If the laborer produces less, the employer loses on his investment.

Without the employer taking the risk, however, no wealth is generated for anybody.

And without labor, the investor cannot make money, and no wealth can be generated. See how that works? Its a circular argument. That is not a reason to discriminate against labor. I'm not saying that capital should be taxed more than labor. They should be taxed equally. But you are saying that labor should be taxed more.

Besides, your supposition is wrong. Labor is not a commodity. If it were, then all wages would be the same. Kobe Bryant has a skill I don't have, and he gets paid more than me. Why should Kobe be taxed at a higher marginal rate than a hedge fund manager who makes the same amount of money?

The investor in stocks, bonds, real estate, like the employer, is also speculating that his investment will increase in value and thus create a capital gain. If it does, he has increased his wealth and those whom he buys his investments from also see their wealth increased. Without the investor taking the risk, property sits unsold, municipalities and other entities are handicapped in being able to efficiently expand their services, and companies are less able to grow and create jobs and more wealth.

It isn't a matter of valuing investors over labor. They are two very different things, and incorporate very different things involving very different economic dynamics. Both are necessary in order for wealth to be created.

It is a matter of valuing investors over labor. You are contradicting yourself in both paragraphs. You are saying that speculation is more valuable than labor.

Do you value food or water more? Or do you see them as equally necessary to sustain life? And yet you do not expect to pay as much for your water as you do for food. Why? because the process for each is very different.

This isn't about market prices. This is about levels of taxation. The market will set the market clearing prices for food and water. That has nothing to do with the level of taxation. Your argument is tantamount to the government deciding that food is more valuable than water, so water is taxed at a higher rate than food. And to make your analogy more complete, you are saying that junk food - i.e. speculation, aka "gambling" - should be taxed at a lower rate than water.

The investor needs a profit margin in order to be able to responsibly take on the risk. The laborer takes no risk at all. He gets paid whether his employer profits or not.

You are contradicting yourself again. This is what you said.

- A laborer who is not paid the wage he is owed has recourse to sue the deadbeat employer. It is a fee for service arrangement. FF has already pointed that out.

If the laborer is not paid and the company goes bankrupt, he is behind the claims of capital. He risks not getting paid. Often, employees of bankrupt companies lose part of their salaries owed. I don't have a problem with labor being behind the claims of capital, but it is not true that the labor has no risk.

Also, the difference between labor and risk capital is that risk capital can pay off spectacularly. Very, very few people get rich being paid a salary. Most people get rich risking capital. That's a good thing, mind you, and I'm all for that, but it is no reason to discriminate between earnings of capital and labor. As I'm sure you know, the fundamental premise of finance is the relationship between risk and reward. The higher the risk, the higher the reward. The lower the risk, the lower the reward. Implementing a tax regime that punishes low risk behavior is one that few economists would agree with.

I don't know if that is what Boedicca is saying, but that is what I am saying. Make it more difficult and risky by lowering the profit for that investor to speculate on that art and wine, and there is likely to be far fewer salaries available to the artist or those guys working in the winefields.

Well, you can say the same thing that by lowering the profit for labor, there will be less labor making wine and art. That's why there should be no discrimination between taxation on capital and labor.

It really comes down to this. If lowering or removing capital gains taxes frees up property and encourages more investment that results in greater economic activity that results in more and better jobs and benefits, why would you object to that? Who could that possibly hurt? What is the downside to that?

Excess investment lead to both the tech bubble and the housing bubble. That is called "mal-investment." It can be enormously damaging to an economy. Some argue that tax breaks to subsidize mortgages contributed to the bubble (though I don't necessarily agree with that).

But if you discriminate between taxes for capital and labor, you will discourage labor and encourage capital. You will have less labor and more capital. Since there will be excess capital in equilibrium, that will lower the returns on capital, which will destroy wealth.

In equilibrium, the marginal value of labor must equal the marginal value of capital. Think of an extreme example. If you taxed capital gains at 0% and labor at 100%, who would work? Everyone would speculate and be a capitalist, or at least those who were lucky enough to have capital to begin with. In your example, you discriminate against labor for capital.

 

[Toro]

We favor capital formation in this country in part because labor has gotten so expensive. Thus we are substituting.
In any case, who said the tax code had to be fair? Why do we not tax primary home sales, even though it is an asset and often results in a sizable taxable gain?
And again, if you are feeling guilty about it, write an extra check to the IRS.

Labor has become no more expensive than capital. In fact, it is probably the other way around.

I'm not feeling guilty about it - not being an American, I can relocate to a tax haven and earn all my income tax free, something I may do in the future. This is about why someone who earns $50,000 from being a laborer pays a lower marginal tax rate than someone who makes $50,000,000 from capital gains.