[quote name='Prefect' timestamp='1303921582' post='4803598']
On the other hand, it should be clear that having a stable wealth distribution over time is something desirable. So some regulation that stabilizes the wealth distribution and counteracts the forces that cause increasing inequality is simply necessary and common sense. The only question is what a desirable level of inequality is, and when you look at it that way, pretty much everybody (across the political spectrum) wants a more equal distribution than what we have today in almost all countries.

But how do you do that fairly? In the US at least, the richest people have the most wealth, but they also pay a lot more taxes. Not necessarily as a percent of income, but they pay a greater percent of the taxes than the percent of the wealth they hold. How would you propose making the distribution more equal?

Risking sounding like a broken record, our distribution of quality education is far more disturbing than our distribution of wealth. Near 15% of americans haven't graduated from high school. Near 50% of americans never graduated from college (2 year or 4 year). Only 29% have bachelors degrees or higher. 7% have masters degrees, and 2% have doctoral degrees. When viewed with that in mind the wealth distribution isn't nearly as negative.
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The wealth doesn't have to be redistributed directly though, sending more tax money into public schools or for state scholarships for higher education will enable poor people to get a better education and thus increase their chances of breaking out of poverty through their own work, some inequality is necessary to keep people motivated. (Hard work has to pay off or people in general will simply try to do as little as possible).

As for the US the best way forward is probably to shift spending away from the military and towards more useful things (in 2010 US military spending was almost 20% of the total federal budget), the US is miles ahead of its potential enemies in terms of firepower and also has quite many reasonably strong allies, the risk that any country decides to attack the US is pretty much non existant. (Terrorists are a bigger threat but fighting those using a conventional army isn't very effective)

The wealth doesn't have to be redistributed directly though, sending more tax money into public schools or for state scholarships for higher education will enable poor people to get a better education and thus increase their chances of breaking out of poverty through their own work, some inequality is necessary to keep people motivated. (Hard work has to pay off or people in general will simply try to do as little as possible).

My point was that wealthy people are already paying a disproportionate amount of money into the system despite the wealth inequality. I am all for everyone being at an equal level, but I am very much against people being unfairly taxed/treated because they were successful. It's not a simple solution for sure, but I think the fairest solution should work to ensure even wealth distribution for the next generation rather than balancing out the current generation; obviously that's just my opinion.

Just a disclaimer, I am not rich, nor is my family especially rich; pretty much average middle class.

An interesting article on what I mean.

edit: I never realized that hyperlink text was exactly the same color as standard post text.

But how do you do that fairly? In the US at least, the richest people have the most wealth, but they also pay a lot more taxes. Not necessarily as a percent of income, but they pay a greater percent of the taxes than the percent of the wealth they hold. How would you propose making the distribution more equal?

Risking sounding like a broken record, our distribution of quality education is far more disturbing than our distribution of wealth. Near 15% of americans haven't graduated from high school. Near 50% of americans never graduated from college (2 year or 4 year). Only 29% have bachelors degrees or higher. 7% have masters degrees, and 2% have doctoral degrees. When viewed with that in mind the wealth distribution isn't nearly as negative.

The richest pay more in taxes in large part because the tax code is so messed up, and also because purchasing power has eroded for the vast majority of Americans for the last five decades. There's not any way to have people from the middle class down pay more in taxes unless their purchasing power goes up, which is not something that any policy moves have really done. Instead, wealth accrual has accelerated for the already wealthy, so there's no one else who can pay the taxes. And, as I've argued before, the wealthy have far more influence over policy, so it makes sense that they should pay at least somewhat more for it.

A huge segment of the American population compensated by binging on credit to maintain a standard of living, but that's phantom wealth, which is hard (and not totally logical) to tax. Plus even that is currently a shadow of what it used to be.

As for education, the numbers are indeed disturbing. But when the returns for working at any level have decreased for 50 years, how much of an incentive is there to get that education? It's less of an issue with something like high school, which is effectively free for students. But every level of education beyond that is massively expensive, and gets more expensive every year, faster than inflation, while purchasing power continues to decline.

Sure, people with more education make more money. But they also have way more debt almost automatically. There are people who get scholarships and such, but there aren't enough of those for everyone. You can work your way through school, even if it takes you longer to graduate, but as above, that gets harder every year both on the expense side and the income side. These trends make the incentive for the higher education a lot less appealing in the face of the massive up-front costs. Every year you work harder for less opportunity on the other side.

[quote name='SimonForsman' timestamp='1303925810' post='4803628']
The wealth doesn't have to be redistributed directly though, sending more tax money into public schools or for state scholarships for higher education will enable poor people to get a better education and thus increase their chances of breaking out of poverty through their own work, some inequality is necessary to keep people motivated. (Hard work has to pay off or people in general will simply try to do as little as possible).

My point was that wealthy people are already paying a disproportionate amount of money into the system despite the wealth inequality. I am all for everyone being at an equal level, but I am very much against people being unfairly taxed/treated because they were successful. It's not a simple solution for sure, but I think the fairest solution should work to ensure even wealth distribution for the next generation rather than balancing out the current generation; obviously that's just my opinion.

Just a disclaimer, I am not rich, nor is my family especially rich; pretty much average middle class.

An interesting article on what I mean.

edit: I never realized that hyperlink text was exactly the same color as standard post text.
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omg I bet you are a teapartier aren't you? All your posts reek of tea party ideaology...even in threads besides this one. ;o

Sorry but someone making millions per year SHOULD be taxed more because they are NOT equal to someone making like $50,000 a year even though that person making $50k might be living comfortably.

Just a disclaimer, I am not rich, nor is my family especially rich; pretty much average middle class.
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Idiot.

The richest pay more in taxes in large part because the tax code is so messed up, and also because purchasing power has eroded for the vast majority of Americans for the last five decades. There's not any way to have people from the middle class down pay more in taxes unless their purchasing power goes up, which is not something that any policy moves have really done. Instead, wealth accrual has accelerated for the already wealthy, so there's no one else who can pay the taxes. And, as I've argued before, the wealthy have far more influence over policy, so it makes sense that they should pay at least somewhat more for it.

My point is only that they already DO pay more for it. It's a sticky situation to try to redistribute wealth simply by taxing them and even then you won't do much to harm their accrued capital if they just stop investing. They'll just continue being wealthy but make less money.

As for education, the numbers are indeed disturbing. But when the returns for working at any level have decreased for 50 years, how much of an incentive is there to get that education? It's less of an issue with something like high school, which is effectively free for students. But every level of education beyond that is massively expensive, and gets more expensive every year, faster than inflation, while purchasing power continues to decline.

Sure, people with more education make more money. But they also have way more debt almost automatically. There are people who get scholarships and such, but there aren't enough of those for everyone. You can work your way through school, even if it takes you longer to graduate, but as above, that gets harder every year both on the expense side and the income side. These trends make the incentive for the higher education a lot less appealing in the face of the massive up-front costs. Every year you work harder for less opportunity on the other side.
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I agree, but we should be working to make education more productive and more readily available rather than pretending it isn't a core part of the wealth distribution problem. The solution should be to get more people good education and by extension good jobs. Raise the bottom vs lower the top so to speak.

omg I bet you are a teapartier aren't you? All your posts reek of tea party ideaology...even in threads besides this one. ;o

Sorry but someone making millions per year SHOULD be taxed more because they are NOT equal to someone making like $50,000 a year even though that person making $50k might be living comfortably.

I am independent, but my beliefs fall mostly toward libertarian (ideology, not party).

Idiot.
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Thanks so much.

[quote name='Prefect' timestamp='1303921582' post='4803598']
On the other hand, it should be clear that having a stable wealth distribution over time is something desirable. So some regulation that stabilizes the wealth distribution and counteracts the forces that cause increasing inequality is simply necessary and common sense. The only question is what a desirable level of inequality is, and when you look at it that way, pretty much everybody (across the political spectrum) wants a more equal distribution than what we have today in almost all countries.

But how do you do that fairly? In the US at least, the richest people have the most wealth, but they also pay a lot more taxes. Not necessarily as a percent of income, but they pay a greater percent of the taxes than the percent of the wealth they hold. How would you propose making the distribution more equal?
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Certainly the answer somewhat depends on the specific situation of a country. The education that you mention is certainly something that is dear to me, but it is somewhat beside the point. In the context of inequality, it is important that opportunities for education do not depend on where you come from in society, so that one does not get lower and upper classes by inheritance. However, it is natural that not everybody achieves the same type or level of education. This is of course not to say that we shouldn't strive to improve education, but even if we improve education significantly, we will simply end up with inequality at a higher level - being at a higher level is good, but it doesn't eliminate inequality. So I guess my point is that stabilising the wealth and income distributions cannot be done via education.

Another important thing to realize is that inequality largely comes from the attitude of society towards pay differences (ignoring the super-rich for a moment). Scandinavian countries, and other Western countries in the past, have (and had) a much more compressed wage structure than e.g. the US at present.

Finally, it is totally obvious that the share of taxes paid by the rich must be larger than their share of the income / wealth - otherwise the taxes would do nothing to counterbalance the tendencies of the system towards increasing inequality. So if you say that you don't want taxes for the rich to be disproportionally larger, then you're simply missing the point (or the arithmetic).

As for what I would do concretely in the tax code, I have to admit that I simply do not know enough about it. However, there is one thing that I would do: eliminate unemployment, partly via direct employment measures, partly via demand-oriented fiscal policy. Once you have eliminated unemployment, this changes the power equilibrium in such a way that those who are on the lower end of the income spectrum can more easily bargain for a better deal in a natural way, without government involvement becoming necessary. That way, the increase of inequalities in income distribution can be tackled directly, instead of trying to patch things up after the fact via taxes.

My point is only that they already DO pay more for it. It's a sticky situation to try to redistribute wealth simply by taxing them and even then you won't do much to harm their accrued capital if they just stop investing. They'll just continue being wealthy but make less money.

I wasn't talking about approaching the distribution of wealth here (sorry if that wasn't clear). I was saying that while the wealthy do pay more, that's an appropriate state of affairs, especially because no one else can shoulder much of the tax burden. Direct re-distribution of wealth via taxes isn't very efficient or popular. But if those tax dollars from the rich funded something like subsidizing improved education, that would begin to correct some of the imbalances of incentives that drive wealth inequality. Although, as Prefect said, that alone won't solve the problem either.

Another important thing to realize is that inequality largely comes from the attitude of society towards pay differences (ignoring the super-rich for a moment). Scandinavian countries, and other Western countries in the past, have (and had) a much more compressed wage structure than e.g. the US at present.

I'd agree that the attitude is wrong. My only gripe is that I don't feel right taking money that has already been earned to redistribute wealth. Rather we should be looking at how to narrow the gap without having to punish people for actions that are already done and were successful.

In game terms, you can change the rules to balance the playing field, but you shouldn't take away a player's previously earned rewards for using the faulty rule set to his advantage.

Finally, it is totally obvious that the share of taxes paid by the rich must be larger than their share of the income / wealth - otherwise the taxes would do nothing to counterbalance the tendencies of the system towards increasing inequality. So if you say that you don't want taxes for the rich to be disproportionally larger, then you're simply missing the point (or the arithmetic).
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I never said that they shouldn't pay more than the average person. The problem happens when it becomes disproportionately unfavorable toward the rich. They already pay a lot more in taxes, in fact paying more taxes after the bush tax cuts, is it right to continuously increase the burden on the rich just because they are rich? The proportion that they pay compared to the percent of money they make is also increasing.

From my previously posted link:

What is significant is that for the top 5 percent and 10 percent of earners, the ratio of taxes paid compared with income earned has risen. For example, in 1980, the top 10 percent earned 32 percent of the income and paid 44 percent of the taxes—a ratio of 1.4. In 2004, this group earned more of the income (44 percent) but paid a lot more of the taxes (68 percent)—a ratio of 1.6. In other words, progressivity—in terms of share of total taxes paid—has risen. On the other hand, for the top 1 percent of earners, progressivity has declined from a ratio of 2.2 in 1980 to 1.9 in 2004.[/quote]

It's a solid read if you go back and read it, even if you disagree with it.

I wasn't talking about approaching the distribution of wealth here (sorry if that wasn't clear). I was saying that while the wealthy do pay more, that's an appropriate state of affairs, especially because no one else can shoulder much of the tax burden. Direct re-distribution of wealth via taxes isn't very efficient or popular. But if those tax dollars from the rich funded something like subsidizing improved education, that would begin to correct some of the imbalances of incentives that drive wealth inequality. Although, as Prefect said, that alone won't solve the problem either.

I agree and I am fine with tax rates as they are. I just hate how often you hear the, "the top 5% of americans own half of the wealth," without seeing the other side of the coin. The argument of holding wealth is also pretty faulty to begin with, because though they hold a lot of wealth, their average income isn't quite as absurd. It's still a large portion, but the numbers that are usually thrown out don't paint a full or accurate picture of the problem. People need to see the full picture.

From my previously posted link:

What is significant is that for the top 5 percent and 10 percent of earners, the ratio of taxes paid compared with income earned has risen. For example, in 1980, the top 10 percent earned 32 percent of the income and paid 44 percent of the taxes—a ratio of 1.4. In 2004, this group earned more of the income (44 percent) but paid a lot more of the taxes (68 percent)—a ratio of 1.6. In other words, progressivity—in terms of share of total taxes paid—has risen. On the other hand, for the top 1 percent of earners, progressivity has declined from a ratio of 2.2 in 1980 to 1.9 in 2004.

It's a solid read if you go back and read it, even if you disagree with it.
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It's always good to look at the actual numbers, that's true. Still, as far as the top 10% are concerned, there is nothing to complain and nothing unfair about what is stated in the quote, at least qualitatively.

I mean sure, the ratio of tax share to income share has gone up for the top 10%. But consider that the income share of those top 10% has gone up as well. Think of it as controls for a dynamic system. As the system goes further away from the desired state, you need to work harder to get it back in the right direction.

Inequality has increased, so it is only logical that the pressure in the opposite direction should be increased as well. Of course one can quibble about what the numbers should be exactly, but at least qualitatively, the fact that the ratio of tax share to income share has increased for the top 10% is the right reaction to how their share of the income has developed.

That the same ratio for the top 1% has gone down is worrying though. Somehow, I doubt that the income share of the top 1% has gone down as well...