What is "rich"?

[Resha Caner]

Part of the problem is a tendency to focus on what is nasty about the rich, but not necessarily what is nasty about the poor. I've been involved with various charities, and it's hard to keep a smile on your face when you try to help someone and their response is, "You suck." Also, gold diggers are real. So, there are reasons the rich become reluctant.

I'm not saying their reluctance is justified in all cases, but there are reasons.

 

[Snowden]

That's not because of them not collecting enough, they're spending too much. If the govt stopped all of the unnecessary military intervention and got rid of the the interest-based currency, the tax plan I described would give them more than they need.

That's like my uncle (real story), he's in big debt but has a nice boat, a sports car, puts vacations on his credit card...and then complains that the problem is that his company is ripping him off and not paying him enough and that's why he's in debt.

Mortgage insterest and charitable donations would work the same way they do today (deduct it from your income), however no more deductions for children. I know this is always unpopular when I say this, but you should get yourself to a position where you can bring in enough money to afford children before you have them, not have the kids first then say "someone needs to make sure I have more money because I have kids now"

I agree that the government spends way too much. But until our political system stops encouraging politicians to buy votes by refusing to cut public welfare programs (such as social security, Medicare/Medicaid) and fund significantly less to military defense contractors for what is essentially a huge jobs program, the government will never get smaller.

I also agree on kids not being deductible. And how about we require churchs to begin paying real estate taxes? They use the same community services that other businesses are required to pay through their real estate taxes. Churchs should also lose their tax exempt status except for truly charitable functions. Revenues received to pay the salaries of church employees and cover the cost of religious programs should be taxed the same as any other business.

 

[EddyMabo]

It's an interesting study. Do you have a link to the actual study this video is referencing. I'd like to see the data and controls they used for this.

The reason I ask is that the example they provides was the software industry. I'm in the software industry. I'm a Lead App Dev for my company on their Software Solutions team (essentially our group is the IT team that the other IT teams come to when they can't figure something out). I've been with this company for 6 years and the results they're presenting in this study aren't consistent with what I've seen in the IT business world. Maybe it differs from country to country (they mentioned that their test company was from Austrailia), but in our region, the average turnaround time on an employee is 3 years. In 3/4 of the exit interviews, the reason cited for leaving is the developer wanting more money. Our company offers weekend bonus projects of varying payouts. The ones that pay out more always get more volunteers. Like I said it could be a regional thing. If this company they're referring to already pays big buck to all developers, I could see this being more likely, however in a company like mine, there's 6 different levels/job titles for developers with 6 different pay grades.

Interesting. I've got no further info on the video. I'm reminded about it each time I stumble across a labour/capital/motivation discussion. What you say I've no doubt is also correct but as you can see the possibility exists that it isn't the only way to view the topic.

 

[ThatRobGuy]

Interesting. I've got no further info on the video. I'm reminded about it each time I stumble across a labour/capital/motivation discussion. What you say I've no doubt is also correct but as you can see the possibility exists that it isn't the only way to view the topic.

I agree, there's multiple ways to look at every topic.

Although, the shifted payscales might play a huge factor in that.

According to payscale.com,
In Aus, 77% of the development jobs pay over $65,000 (US dollar equivelent)
In Usa, only 26% of the development positions exceed $65,000. So what that study is claiming probably does hold some water in certain regions. If a person already has a great income, they're probably not going to be as inspired by the thought of a $10k a year raise as a person who's only making $40k/year.

For me personally, my first year out of college when I got hired here 6 years ago, I was only making $36k/year, and had to try to cover all of my bills + the $40k student loan...all I could think about is "I need to knock it out of the park and impress these guys so I can make more money".

Thankfully, I'm doing a lot better than that now...not motivated as much by money, but the incentive is still there to make more, not necessarily for luxury items, but the goal of being able to retire before I'm old and crippled up.

 

[Paradoxum]

With the flat tax of 15% that I mentioned, a person with $20mil/year salary would be paying $3 million a year back to society (not to mention the tax they would pay on the interest they made on any savings account and investments)

I would think that's a pretty big contribution to society.

What if we did 15% flat tax with a $30,000/year standard deduction...meaning your first $30k a year would be tax free, then anything you made over that you'd pay 15% on?

0-30,000 = Tax free for the year
50,000 = Pays 3,000 income tax
150,000 = Pays 18,000 income tax
1 million = Pays 145,500 income tax
etc...

all capital gains and interest gains taxes would still apply.

I would think that would be a very fair tax structure, would you agree?

The progressive tax structure has some overlaps in it where you could potentially get a raise, but actually take home less money depending on where you're at in your current bracket.

I don't know enough about money to give much of a reply to this. All I can say is I don't want to reduce tax on the wealthy.

 

[quatona]

The incentive isn't so much in "I want to be ultra rich", but seeing your hard work pay off. If everyone got to have an equal amount of luxury regardless of occupation, I'm quitting my job tomorrow and going down to the movie theater to tear tickets (as would a lot of people). Where's the drive to excel in a career path of high complexity and sacrifice if you can accomplish the same thing in a career that only requires the skills and experience of an average 16 year old?

I have never found money to be particularly motivating. I find tearing tickets boring, uninspiring, unchallenging and unfulfilling.

 

[Wiccan_Child]

With the flat tax of 15% that I mentioned, a person with $20mil/year salary would be paying $3 million a year back to society (not to mention the tax they would pay on the interest they made on any savings account and investments)

I would think that's a pretty big contribution to society.

What if we did 15% flat tax with a $30,000/year standard deduction...meaning your first $30k a year would be tax free, then anything you made over that you'd pay 15% on?

0-30,000 = Tax free for the year
50,000 = Pays 3,000 income tax
150,000 = Pays 18,000 income tax
1 million = Pays 145,500 income tax
etc...

all capital gains and interest gains taxes would still apply.

I would think that would be a very fair tax structure, would you agree?

I would not. The remaining income for those figures would be:

50,000 = Keeps 47,000
150,000 = Keeps 132,000
1,000,000 = Keeps 854,500
Etc

It's not a question of what percentage people pay, it's how much money is actually accumulated - that's what pays for state funded things like schools, hospitals, roads, and the emergency services.

So the person who gets to keep over £800,000 literally has more they could give. An important issue is the value of money: the poorer you are, the more valuable your money is, and the richer you are, the more you can give back without it really affecting you.

That's why I prefer progressive tax. The rich man may well have worked hard for his money, and the poor person may well be exploiting the benefits system, but the fact remains that the former has more to give, and is less imposed by tax.

Even in your own tax scenario, the 'flat' tax is actually progressive, as it's null for 0-30,000, and 15% for 30,001+.

The progressive tax structure has some overlaps in it where you could potentially get a raise, but actually take home less money depending on where you're at in your current bracket.

That's not how progressive tax works. When you move into a higher tax bracket, the higher tax rate is applied to money earned above that limit.

For instance, say the brackets were:
0 - 10,000 = 0%
10,001 - 50,000 = 15%
50,001 - 150,000 = 40%

If I earned exactly 50,000, the first 10,000 is taxed at 0%, and the next 40,000 is taxed at 15%, so I pay a total of 6,000, so I take home 4,000.

If I get a rise of 1 and now earn 50,001, I'm now in the next tax bracket. So the first 10,000 is taxed at 0%, the next 40,000 at 15%, and the last 1 at 40%, meaning I pay 6,000.40, so I take home 44,000.60.

So I've moved into a new tax bracket, thus I pay tax at a higher rate, but still I take home more money that I did before the raise. When you move into a new tax bracket, you entire income isn't taxed at the new rate, only the excess.

 

[ebia]

It's an interesting study. Do you have a link to the actual study this video is referencing. I'd like to see the data and controls they used for this.

The reason I ask is that the example they provides was the software industry. I'm in the software industry. I'm a Lead App Dev for my company on their Software Solutions team (essentially our group is the IT team that the other IT teams come to when they can't figure something out). I've been with this company for 6 years and the results they're presenting in this study aren't consistent with what I've seen in the IT business world. Maybe it differs from country to country (they mentioned that their test company was from Austrailia), but in our region, the average turnaround time on an employee is 3 years. In 3/4 of the exit interviews, the reason cited for leaving is the developer wanting more money. Our company offers weekend bonus projects of varying payouts. The ones that pay out more always get more volunteers. Like I said it could be a regional thing. If this company they're referring to already pays big buck to all developers, I could see this being more likely, however in a company like mine, there's 6 different levels/job titles for developers with 6 different pay grades.

If you grab a copy of "Punished by Rewards" it's got plenty of citations to psychological studies on the demotivation that comes from external rewards. The effect is universal - global and age independent.

Note that the studies do NOT show people being unconcerned about money - if that were the case rewards would have no effect at all and the studies nearly all show rewards having a negative effect. If you reward people they will try to do the task to get the reward (and stop when the reward goes away). But they wont do the task as well because what they are trying to do is get the reward, and that interferes with doing the task excellently.

 

[ThatRobGuy]

I would not. The remaining income for those figures would be:

50,000 = Keeps 47,000
150,000 = Keeps 132,000
1,000,000 = Keeps 854,500
Etc

It's not a question of what percentage people pay, it's how much money is actually accumulated - that's what pays for state funded things like schools, hospitals, roads, and the emergency services.

So the person who gets to keep over £800,000 literally has more they could give. An important issue is the value of money: the poorer you are, the more valuable your money is, and the richer you are, the more you can give back without it really affecting you.

That's why I prefer progressive tax. The rich man may well have worked hard for his money, and the poor person may well be exploiting the benefits system, but the fact remains that the former has more to give, and is less imposed by tax.

Even in your own tax scenario, the 'flat' tax is actually progressive, as it's null for 0-30,000, and 15% for 30,001+.


That's not how progressive tax works. When you move into a higher tax bracket, the higher tax rate is applied to money earned above that limit.

For instance, say the brackets were:
0 - 10,000 = 0%
10,001 - 50,000 = 15%
50,001 - 150,000 = 40%

If I earned exactly 50,000, the first 10,000 is taxed at 0%, and the next 40,000 is taxed at 15%, so I pay a total of 6,000, so I take home 4,000.

If I get a rise of 1 and now earn 50,001, I'm now in the next tax bracket. So the first 10,000 is taxed at 0%, the next 40,000 at 15%, and the last 1 at 40%, meaning I pay 6,000.40, so I take home 44,000.60.

So I've moved into a new tax bracket, thus I pay tax at a higher rate, but still I take home more money that I did before the raise. When you move into a new tax bracket, you entire income isn't taxed at the new rate, only the excess.

Actually, here's the US tax table data: http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

I picked two random adjacent ranges
51,000 - 51,050 pays 8,881
51,050 - 51,100 pays 8,894

So a person who grossed 51049 would pay 8881 leaving them 42168. You take a person that makes 51051 (two dollars more than person A) and they pay 8894 leaving them 42157. So even though person B makes more, due to the tax structure they take home less.

You mentioned that the person who still gets to take home 800,000 has more that they could give, so if I'm getting the vibe correctly, you view that as the problem? Technically everyone has more that they could give, but is it wrong for someone to want to keep some of the excess money they made for some of their own goals, or should they just be paying their bills, keep an extra $20 to go to the movies, and then sign the rest of it over to the government to redistribute?

 

[ThatRobGuy]

I don't know enough about money to give much of a reply to this. All I can say is I don't want to reduce tax on the wealthy.

How about this, let's just say for a moment, that universal healthcare, universal college, and public services were all 100% free (obviously this couldn't ever happen), but let's just pretend that it could. And in this scenario, since those things are free, the government literally needs to collect no tax....tax rate for everyone is zero, zilch, notta.

Would it then be okay for everyone to keep their own money? Mind you, all necessities are 100% taken care...at that point would it be acceptable to let the person who makes $20,000 keep all of it and the person who makes $300,000 keep all of it?

 

[Paradoxum]

How about this, let's just say for a moment, that universal healthcare, universal college, and public services were all 100% free (obviously this couldn't ever happen), but let's just pretend that it could. And in this scenario, since those things are free, the government literally needs to collect no tax....tax rate for everyone is zero, zilch, notta.

What about defence and the up keep and improvement of infrastructure, etc?

Would it then be okay for everyone to keep their own money? Mind you, all necessities are 100% taken care...at that point would it be acceptable to let the person who makes $20,000 keep all of it and the person who makes $300,000 keep all of it?

So you are saying should people pay taxes to improve society beyond necessities?

I see massive amounts of money as being good only as far as they are necessary for the improvement of society anyway. I have a hard time believing anyone deserves to be super super rich.

So maybe that person could be taxed. I am open to being convinced on economic matters though, since I know so little.

 

[ThatRobGuy]

What about defence and the up keep and improvement of infrastructure, etc?

For this hypothetical I'm describing, free, free, and free

So you are saying should people pay taxes to improve society beyond necessities?

If i'm understanding your question, for this fake scenario, there are no taxes of anykind for anything that the government currently provides.

I see massive amounts of money as being good only as far as they are necessary for the improvement of society anyway. I have a hard time believing anyone deserves to be super super rich.

I don't believe anyone "deserves" to be super rich, nor do I think anyone "deserves" to drive a Dodge Viper, I just feel that if someone works hard to better their financial status, they should be able to aquire those things if they so choose.

When I say "deserves", I mean as a sense of entitled, not sure if you were using the word in the same way.

So maybe that person could be taxed. I am open to being convinced on economic matters though, since I know so little.

Remember, for this one, we're pretending that no tax is required.

Everything that the government provides today come from thin air and they can satisfy their needs without collecting a cent from any citizen.

 

[Paradoxum]

For this hypothetical I'm describing, free, free, and free

I thought so.

If i'm understanding your question, for this fake scenario, there are no taxes of anykind for anything that the government currently provides.

Ok. I don't understand what point you are trying to make though.

I don't believe anyone "deserves" to be super rich, nor do I think anyone "deserves" to drive a Dodge Viper, I just feel that if someone works hard to better their financial status, they should be able to aquire those things if they so choose.

When I say "deserves", I mean as a sense of entitled, not sure if you were using the word in the same way.

Well if I were were to pick an apple from a wild apple tree then it could be said that I deserve the apple because I put work into the the acquisition of the apple. So in terms of money, is the money they get out equivalent to the work they put in? Ie: If I work 10 times better I deserve 10 times more money.

Remember, for this one, we're pretending that no tax is required.

Everything that the government provides today come from thin air and they can satisfy their needs without collecting a cent from any citizen.

So what is the question? Should we take money away from people for the sake of justice and equality?

 

[ebia]

I don't believe anyone "deserves" to be super rich, nor do I think anyone "deserves" to drive a Dodge Viper, I just feel that if someone works hard to better their financial status, they should be able to aquire those things if they so choose.

why?

 

[ThatRobGuy]

Well if I were were to pick an apple from a wild apple tree then it could be said that I deserve the apple because I put work into the the acquisition of the apple. So in terms of money, is the money they get out equivalent to the work they put in? Ie: If I work 10 times better I deserve 10 times more money.

So what is the question? Should we take money away from people for the sake of justice and equality?

Actually you nailed it, that's what I'm trying to find out. I just didn't word it that way because people often give dodgy, circular logic answers when I've asked it using those words, so I was seeing if I could coax it out one question at time...but now that you blew my cover

Personally, I feel if you work 10 time harder, or come up with an idea that's 10 times better, you should get 10 times the income. But once you do get 10 times the income, should more than half of that be taken way just so things are "fair"? I get the impression that's what some people want, but I don't think it would ever translate to any other type of situation but money.

If a teacher ran their class like that (One kid works hard and get's an A, the other kid blows off studying and gets a F), and the teacher, in the interest of fairness takes 10 points away from the A student and gives it to the F so they both get a C so it's fair, there would be some upset parents and students.

We could obviously go over a bunch of other examples, but for the sake of time, I think you catch my drift...it seems like the only time people think that the "take from one to give to the other" scenario is acceptable is when it pertains to money or things with monetary value. I'm just trying to figure out why.

 

[ThatRobGuy]

why?

Which of my two statements are you asking "why"?

Why nobody is inherently entitled to be rich? Or why you should be able to enjoy the results of your hard work?

 

[ebia]

Which of my two statements are you asking "why"?

Why nobody is inherently entitled to be rich? Or why you should be able to enjoy the results of your hard work?

Why should the right to accumulate wealth be intrinsically important.

 

[ebia]

Actually you nailed it, that's what I'm trying to find out. I just didn't word it that way because people often give dodgy, circular logic answers when I've asked it using those words, so I was seeing if I could coax it out one question at time...but now that you blew my cover

Personally, I feel if you work 10 time harder, or come up with an idea that's 10 times better, you should get 10 times the income. But once you do get 10 times the income, should more than half of that be taken way just so things are "fair"? I get the impression that's what some people want, but I don't think it would ever translate to any other type of situation but money.

If a teacher ran their class like that (One kid works hard and get's an A, the other kid blows off studying and gets a F), and the teacher, in the interest of fairness takes 10 points away from the A student and gives it to the F so they both get a C so it's fair, there would be some upset parents and students.

Why do we give grades for schoolwork in the first place? It serves no useful purpose.

 

[Paradoxum]

Actually you nailed it, that's what I'm trying to find out. I just didn't word it that way because people often give dodgy, circular logic answers when I've asked it using those words, so I was seeing if I could coax it out one question at time...but now that you blew my cover

Well I found it hard to answer when I wasn't exactly sure what the question was

Personally, I feel if you work 10 time harder, or come up with an idea that's 10 times better, you should get 10 times the income. But once you do get 10 times the income, should more than half of that be taken way just so things are "fair"? I get the impression that's what some people want, but I don't think it would ever translate to any other type of situation but money.

Well the argument I tend to make is that people should give something back to society. In some sense it is alot based on luck. Such as ones genetics, upbringing and therefore personality and talents being outside ones control. If you have been blessed to be able to be rich it doesn't seem like much to to stay rich but give some away to your more unlucky brothers and sisters.

That would be the positive obligation. The negative obligation is not to take so much that little is left for everyone else.

If a teacher ran their class like that (One kid works hard and get's an A, the other kid blows off studying and gets a F), and the teacher, in the interest of fairness takes 10 points away from the A student and gives it to the F so they both get a C so it's fair, there would be some upset parents and students.

I don't think this is a fair analogy because it is much harder to say who deserves what money and also because ones grade doesn't help or harm others.

I think better analogies could be based around people living on a island. For example, if you are exceptionally skilled at collecting food or fencing off property, you still shouldn't take so much food that is causes everyone else on the island to fall into near starvation.

Also, for example, as you are a genius among idiots on an island. You know if you all work separately you will all just simply survive, so you decide to set up a mini society and give each idiot simple rules to follow for the profit of the society. Of course you can decide to give yourself most of the perks while the idiots state of life remains only slightly improved. But your system would only works because of them and your genius is random luck anyway. So I would say that recognising your ultimate equality with the people should lead you to trying to improve their lives too.

Of course self-interest will try to fight the more reasonable and virtuous side of things, so a little nudge from a higher authority may be needed.

We could obviously go over a bunch of other examples, but for the sake of time, I think you catch my drift...it seems like the only time people think that the "take from one to give to the other" scenario is acceptable is when it pertains to money or things with monetary value. I'm just trying to figure out why.

I would say because the interaction of people and money in society is more complicated. To take something from another assumes they deserve it to begin with.

I admit my second analogy probably needs work by the way.

 

[apmercer]

I heard someone say that in NZ the poverty line is measured against not having a DVD player.