Distribution of Wealth

Gee, Lumpy, then why isn’t everyone rich? Can’t we all grab from the bag of public goods and go Buffet? I’m sure, of course, that Warren and his lib-rich pals are signing checks equal to the amount given back to them by the Bush tax cuts. I’m quite sure of it indeed.

I guess the term proportionality means nothing to you. Yes, we all may use some public goods to some degree, but does that mean that those in the upper tax brackets have to pay what surely must amount to extortion for them?

Right Side Up- You are a prime candidate for one of those Risky Business go to school, learn something lines.

Social contract and wealth distribution and all of that. News flash- there can be no cabal of experts to decide on how wealth is to be distributed. Oh, sure, folks can use various schemes to make rules and all of that, but in the end people will respond how they respond. I encourage you to mosey on down the hall to the Econ Dept and have them explain to you Unintended Consequences.
I think anyway that you have confused a statistical distribution, like a Bell Curve say, with the notion of something like, I don’t know, a beer distributor. While you are down there, ask about incentives and labor supply curves too. Take Lumpy with you- I doubt he would learn much (he seems to know everything anyway), but maybe he could take a few minutes, and a few deep breaths, and calm down a bit.

By the very fact that you are taxing people very differently has to make it a moral issue of sorts. Taxation, in the end, involves force- don’t pay and eventually you will see what I mean, from behind some vertical iron bars with your new pal Bubba. Why should some pay vastly more than others? Don’t we participate in our government ultimately by one vote at a time? Why should some have to pay nothing for their vote and other thousands and a few millions? That doesn’t seem very fair to me.

Where is the evidence that all of that money taken from the rich actually benefits the poor anyway? There is actually a mountain of evidence to the contrary- that in fact all of that crafty design of welfare programs was smashed to bits by…unintended consequences. By the way, is it an unstated premise of your argument that all government spending is legitimate, or moral, perhaps?

RSU- what does your compassion have to do with other people’s money anyway?

Back to Lumpy- Why do you assume that because ZEB it for one thing he is automatically for or against another? And the starving and freezing to death- that’s not going to happen, because morally superior people like you are going to feed and shelter them, out of your own kitchen and in your own bedrooms. That’s the price of being you, better than the rest of us.
Um, Lumpy, you might want to screw your thinking cap on somewhat tighter here. A government could, theoretically cut tax rates and actually gain more in revenues- depending on the collective reaction to the new set of incentives. Lord Keynes said something to that effect before Laffer ever put the pen to the napkin on the coffee table. A government could also pay for current deficits with future spending cuts. Alternatively, they could inflate away the real value of the debt(been done many times before), or just default(a less popular option).

A more general question for you lefties, libs whatever- all of this blah, blah, blah about paying society back. There have to be at least a few freeloaders in the good ole US of A. Don’t you think that they should pay something, anything back for being lucky enough to live in a rich, capitalist society that can afford throw some crumbs there way? Maybe they can help you out in the kitchem, Lumpy.

Oh, and another thing:

RSU, when you and Lumpy are through at the Econ Dept, gently guide him (remember his temperment) to the Stats Dept. Have them explain to him, and this may take a while, a long while, the whole correlation-causation thing- you know, how they are not the same thing. The kind of women who finish college would probably do okay in the kid raising department anyway.

Come to think of it, take a day off and then go see the nice folks over in Political Science. Have them explain to him how groups use labels, images, words, phrases to sound reasonable and objective when in fact they push a pre-determined ideology. Have fun kids!

Make no mistake, I’m all for “teaching people to fish.” But how about lessening the distractions of poverty so I can concentrate on what your teaching me. Do you really think I’m going to apply everything you teach me when I have to go home to a run down apartment with no electricity and no food? You can teach me, but give me a stable environment to learn in first.

I know it’s hard for many people to understand, but it is difficult hard to live with the distractions and obstacles of poverty. In addition, there are people and companies everywhere preying on the poor and uneducated. You really have to live it to understand. I, also believe that many recipients of government aid are more disciplined and hard working than people really see. They just don’t know where or how to use their hard work.

Most workforce training programs out there are garbage anyway. Do you really think training someone to do a $10 an hour job is going to get them out of poverty? A lot of public inner city schools are horrible, too. The quality of teachers that these places attract are low and children fail to learn basic life skills.

Forced sterilization and government taking children was brought up earlier and it really made me think. I don’t like the idea, and I really tried to think of a way to punish people that bring children into a disadvantaged situation. I don’t have an answer for it. It’s unfair that children to be brought into a world where they are already fighting a uphill battle with life. Tell me a way to fix that problem and we would make a huge dent in the poverty problem.

I am also definitely not a “it’s for the children” advocate. I just believe that being born and rasied in poverty is the main cause of poverty. Using children for other political agendas is sickening.

I guess I am a little off target with my argument here. More tax money does not automatically equal more money to fight poverty. And even if it does mean more money; it doesn’t necessarily mean quality help for the poor. Poverty is a huge problem in this country and I want to see more quality help for those in need. If it can be done with tax cuts, so be it.

On the other hand, I still believe that if you live in this country and are wealthy, I think you owe a little more to the country that allowed you the chance to prosper. You worked hard and succeeded in America, and those that are disadvantaged should be allowed the same opportunity to succeed.

[quote]Lumpy wrote:
ZEB
How do you feel about government’s “welfare” for big energy companies, subsidizing factory farmers, bailing out the Savings and Loan companies, bailing out the airlines, etc etc?[/quote]

Lumpy -

In case you were unaware, all four of the industries you listed as receiving gov’t welfare are some of the most regulated industries in this country.

With that said, it makes sense that the Gov’t should step in and bail them out when they get in trouble.

If the gov’t’s hand wasn’t stirring the pot in the first place, then the industries you accuse of receiving welfare probably wouldn’t have been in the mess they got into.

Your ignorance of economics is laughable.

Oh - by the way-
Warren Buffet, et al, that you reference in your little anti-rich guy post, may feel that way about their earnings, but I’ve worked my ass off for what I got. I’ll be damned if you, or any other liberal, are going to guilt me into thanking the gov’t for what I’ve done.

This is the land of opportunity - not Gov’t handouts.

Many good points made by many!

Maloneted,

If we all have to pay a flat 20% tax rate a person making $100,000 per year is in fact paying more than a person who makes only $40,000 per year.

And in this case the difference is significant! $20,000 paid in taxes vs $8,000. The “rich” person is paying two and a half times more than the other guy!

This should cover everyones desire to see the more wealthy individual pay more.

Lumpy,

I am against “corporate welfare.” I think that this is an inherently corupt system. However, if you look at the amount in the budget for this in comparison to the welfare problem I think you will see why myself and others complain about welfare.

I think you made some very good points regarding society helping many achieve. However, you did site three liberals in the process. At least two of the three have given large amounts of money to the democratic party (I have no idea regarding the thrird person, but I bet he did). They see their success being more related to society helping them than perhaps is the case.

Would you be opposed to a flat tax? I am interested to hear your thoughts on this.

By the way, I too grew up in a middle class home and count myself fortunate. Poverty is indeed a major problem. Those who live in poverty are at an extreme disadvantage. However, handing them money is a mistake. Handing them an opportunity is something I would be for!

[quote]Lumpy wrote:
ZEB
How do you feel about government’s “welfare” for big energy companies, subsidizing factory farmers, bailing out the Savings and Loan companies, bailing out the airlines, etc etc?

How come “wealth redistribution” is so horrible when it goes to some little old lady in Peoria, but it’s A-OK when huge amounts of taxpayer money goes to big energy companies that are already extremely profitable, or companies that have used bad (or illegal) business practices?

Wealthy people can say they don’t want to pay for social programs and safety nets for other less-fortunate Americans. I would like to know what kind of country would they like to live in? One where people freeze to death in the Winter?

As an aside, I heard that the number one indicator for a person’s success in life is whether or not their mother went to college. Social safety nets keep peoples’ heads above water. As a person who has been lucky enough to have been born squarely into the middle class, I can recognize that some people in our country are born less-priveleged than others. I don’t mind paying a high rate of taxes if it means that none of my fellow Americans are starving to death!!!

As far as tax cuts, never before in our history has a tax cut been enacted during a time of war! It seems like some of the Righties here love the war in Iraq, but don’t want to pay for it.

There is no such thing as a tax cut when it causes deficits! All you are doing is postponing the pain, and passing on the bill to another time. You are putting tax cuts on a credit card and running up interest, and sending the bill to your kids.[/quote]

Lumpy:

Once again, your entire post and position are beside the point. I’m beginning to wonder whether you are incapable of understanding the main points of threads, or whether you just have things you want to post so you put them in the middle of wherever they might be tangentially related.

Straw man #1: Corporate welfare. What gave you the idea that anyone supported corporate welfare? Was there anything, in any post prior to yours that was pro corporate welfare? You remind me of the student government at my college, passing resolutions against childhood prostitution in Southeast Asia – as if there was a large contingent on campus of people who were pro childhood prostitution in Southeast Asia against whom they were arguing or from whom they were attempting to distinguish themselves.

Straw man #2: People have to pay taxes. Where was anyone arguing against paying any taxes, or for any social safety net? Do not the concepts of flat taxes and consumption-based taxes imply a level of taxation? The argument revolves around the progressive tax system and confiscatory tax rates. There is not a dichotomy of socialistic rates and progressive rates on one hand and no social safety net on the other.

Completely unrelated to the topic of this thread: Self-made millionaires. Thank you for the update that government investment in roads, education and enforcing private property rights have helped people make money. Next you can tell us all how gravity helps apples to fall out of trees. FYI, if one were to debate on this subject, the topic would not be whether services/items were necessary, but whether the government would be the best one to provide them, so simply showing that, as they exist at present, such government programs help people to make money, would be insufficient and generally worthless to such a discussion.

Also unrelated: Tax cuts in war time. Aside from the fact that this debate was on general philosophy, and not on the specific policies in place currently, you can’t cherry pick your history. I’m glad you have read up on your war time history. You know what else doesn’t tend to happen in war time, historically? Social spending. In fact, generally resources were redirected toward the military and away from private consumption. Food, fuel and other items were rationed. Travel was restricted. Habeus corpus was suspended. I take it you wish we were acting in a manner consistent with past war efforts?

As a final observation concerning you, I am glad you are so concerned about providing heat to the poor in the winter time. I presume you realize the best way to ensure that the poor have access to heat in the winter is to ensure low energy prices. Why don’t you go picket for drilling in Alaska? That will give you something to do other than provide non sequiter posts.

Sorry to everyone else who stayed on topic – sometimes simply ignoring Lumpy just isn’t satisfactory.

[quote]BostonBarrister wrote:

Once again, your entire post and position are beside the point.
[/quote]

I think the entire thread has been tossed off course.

This thread was started because PtrDr mistakenly represented what Michael Moore said on the O’Reilly Craptor. Upon correcting his mistake, I was pegged - somehow - as one who supported the rich being taxed 60 - 70%. Rainjack demanded my position on taxation, so I complied, and posted this thread since it could stand alone.

Now, my original post is broad and opinionated. It echoes my general sentiments. I think a flat tax makes the most intuitive sense, but at the same time, I am sympathetic toward the poor and believe systems need to be in place to aid them. No one seems to disagree with this - it is the systems of choice that a few disagree upon.

ZEB, I agree with much of your last main post. Thanks.

Schaup…I mentioned compassion because I think it is a quality that might steer one’s thinking on an issue such as this. We can debate the meaning of compassion and even its relavence, but I think it’s largely a side topic.

I agree with what Lumpy as alluded to, regarding the depth of the causes of poverty. I am a very strong believer in the cliche, “The apple doesn’t fall far from the tree.” It takes tremendous focus, discipline, motivation, and resolve to be raised in a family of poverty and dig your way out of that hole. It is a cycle that is hard to break.

Can we all agree now, that THIS ISSUE IS COMPLICATED? If not, you better just agree with Rainjack.

While noone likes to leave someone behind, you can not make legislation that impacts a society based on the needs of the few. What I mean by this is that if there are a few “good” people on welfare then we should support the rest of the “bad” people. I don’t want my money that I have earned going to anyone but me or the heroes that defend my way of life, ie military, police, fire, paramedics. Even better why do military personell pay taxes, it has already been shown in this thread that joining the military helped a kid out of a bad situation. Along the same lines why does the lack of material goods or wealth make popping out babies a good idea as a teenager. I really shouldn’t rant I mean it is not thier fault they have a child or they are not educated, or the enviroment is bad. Last time I checked “nice” and “rich” enviroments are made by those living there. If your neighborhood sucks then point your finger at your neighbor not the govt. I am pretty sure that free public education is provided to teach kids a foundation and that education is most likely governed by a state level requirement that ensures the ciriculum on the nice side is the same as the bad side. If you can’t feed yourself don’t have babies, and if you are against abortion there is a good chance that same book tells you to keep your yourself to yourselves. This whole issue of taxation and welfare is all a matter of personal responsability. It is interesting that the big hero of all the people who want in my pockets said “Ask not what you country can do for you, but what you can do for your country” Yeah what a great guy; you know Vietnam, Bay of Pigs, I am sure Kerry will do just as well as the Democrats due in a wartime office. Sorry to rant just got alittle spun up there since I looked at my pay slip. Flat tax is the way to go. There are some drawbacks though, all those unemployed H&R Block employees.

just thought i’d interject a little commentary from the Econ Dept. “down the hall”…

its great to debate these issues, but for those who dont think that government should be involved in the “moral” issue of redistribution of wealth, let’s not forget that economics began as a branch of moral philosophy. the base intention was to improve the welfare of society by studying the choices we make under constraints of scarcity. the free market works great for the purpose of efficiency, it has no response to issues of equity. generally as a society, we are willing to give up some degree of efficiency in order to trade it for what is considered an acceptable level of equity in the distribution of wealth. the definition of what is equitable as well as the degree to which this tradeoff is desirable are supposedly the choices we make as citizens and voters. so one of the purposes of government (in theory) is in fact to redistribute the society’s wealth for this purpose.

let us also not forget that for a long part of this country’s history, the idea of an income tax was taboo. it now constitues by far the largest part of government revenue. it is distortionary in that it acts as a disincentive to work and saving. but any tax creates distortions. moving to consumption taxes would certainly act as a disincentive to consumption, which seems like a more reasonable way to go long term to me, but then my field is environmental econ. in the shorter term, given the consumer base of our society, we have seen what a drop in consumption does to our economy.

the point is that government has a role to play in the economy and that role should be determined by the values of the citizens of that society, but not necessarily by each individual. an argument can be made for all types of systems, ultimately depending on our values as a society.

lots of good points have been brought up here, and no one’s views should be dismissed simply because they may have different values.

Yeah, but I’m right - just ask RSU.

Good post Mohara.

Mohara- you write very well for an economist, very well indeed, and you have a great grasp of the central issues you discuss- in my humble opinion anyway. I think that we are arguing past each other.

Some things that I, as a fellow economist, was trying to point out:

Fairness is in the eye of the beholder so to speak. What may seem fair to one or many may not seem so to others.

Taxation involves coercion, and if we are going to involve force, then the issue revolves around more than dry numbers- the ought becomes very important indeed. Taking something from someone implies that you have a better use for it than they do- their opinion to the contrary not withstanding. That is a moral issue if there ever was one. I think that sort of thing should be kept to a minimum.

Individual and collective decisions may be made, but the outcome and the intention may not be nearly the same thing. We may want to raise revenue by increasing tax rates on the ‘rich,’ only to find they have gone to the golf course to work on their short game instead of working the extra hours that made them wealthy in the first place. Said fiscal inhancement measures might also negatively skew their risk-taking behavior too, again at the expense of the public treasury. Thus the majority has twice blessed itself and the minority.
Even if the money does go to those the majority deems worthy, that doesn’t mean that any net ‘better’ will result. Suppose, for the sake of argument that some well-meaning folks have just seen someone shoot himself in the foot. They clean him off, take him to the hospital to get him treated, pay for his care, leture him on the dangers of playing incorrectly with guns, hand him some cash and send him on his way.
Time passes, and this group, to its astonishment and horror, sees the same young man shoot himself in the other foot with a bigger handgun. They again get him fixed up and ask him why he would do such a deranged thing? He says come on, I healed up alright, you paid me, I got some time off and workman’s comp from my crappy job, and the painkillers they gave me made it all worthwhile, and then some. Of course this whole episode is ludicrous on the face of it to most, but then again, people do crazy things all the time, and more of them when the consequences are softened.

For those of you not too familiar with the dismal science (economics), yes, this are the kinds of things economist think about.

So, yes, RSU, the situation can be very complicated indeed, but we need not make it more so, especially in the face of much, much evidence to the contrary.

At the risk of oversimplifying things, I’ll just let this quote from Hillary Clinton speak for itself:

“Many of you are well enough off that…the tax cuts may have helped you. We’re saying that for America to get back on track, we’re probably going to cut that short and not give it to you. We’re going to take things away from you on behalf of the common good.”

bandgeek,

It’s statements like that from people like Hillary Clinton that make the hair on the back of my neck stand to attention!

Thanks, schrauper, i also have an MA in a humanities field. we know economists cant write anymore, not like the old days…

i think maybe the issue gets clouded as the lines get blurred between the various purposes of taxation. taxation as a means of redistribution of wealth cant be distinguished from taxation for government revenue or for the provision of public goods or what have you. a flat tax may be the way to raise revenue with the least distortion, while if our purpose is intentional redistribution, it would, of course, make no sense. if we could actually clearly distinguish the means and goals, we might have a better sense of what was happening.

personally, i tend to side with those who oppose the income tax completely. as you say, schrauper, there is coercion involved. with a consumption based tax, at least we have a choice to avoid the tax by consuming less. in the short run, this would stunt our economy for a while. but hell, if consumption dropped a lot, maybe the government would be forced to lower the tax rate. sounds OK to me.

great to see such debate in this forum. i get tired of the skinny, pasty faced academic types…

Nice post Goldberg.

I appreciate what you said, Goldberg, and it’s nice to know that you give generously.

If more people cared and gave freely the world would be a better place.

Goldberg,

Really great post. I do think it is the increasing secularization of American society that is detracting from people’s sense of personal responsibility to others. If you tithe at your church, you can be pretty sure you know where the money’s going, whereas with government, well, let’s just say there’s a lot of self interest at work in Washington. I am beginning to believe that people who support the forced redistribution of wealth via the police power of government are in fact abrogating their personal responsibilities to others, while at the same time feeling like they can pat themselves on the back for being “compassionate” (this is a thought I have been developing recently; it’s not intended as an offense to anyone, just something I’ve noticed about people, especially wealthy people, who tend toward the left side of things). The church’s role in charity and social care has been taken over by (perhaps given to?) government, which is not and cannot be compassionate. Free money from the government is a system ripe for abuse by both giver and recipient. Unfortunately, the church (Christian church, specifically) has, in general, become slack in its sense of societal duty as well, which doesn’t help. The average Christian now gives less than 5% of his income to church work.

Help me out, economists. I don’t understand something. How is a consumption-only tax going to stifle consumption? Not being a smart-@$$, I really don’t understand. Follow me here:

If Bob makes $100,000 per year and this puts him in the, oh, let’s say 35% federal bracket, he’s then left with $65,000 with which to “consume,” save and invest. So let’s say Bob has “consumption” expenses of $30K per year. Now, most of the goods Bob consumes are also taxed at various percentages (sales tax, gas tax, the taxes they stick in your phone bill, etc.), meaning some of his leftover income is taxed AGAIN. Let’s average it out to 5% for a total of $31,500 in consumption plus taxes. After federal income taxes, and consumption and related taxes, Bob is left with $33,500 to pay his state and local taxes, and par-tay.

Now, Bob has the same $100K, and an, oh, let’s say 15% consumption tax. So he spends the same $30,000 on “consumption,” with a 15% tax, totaling $34,500. This leaves Bob with $65,500 after federal taxes. This would seem to significantly increase Bob’s ability and propensity to consume, right? Paaaaaaaaar-taaaaaaaaay!

After re-reading your post, Goldberg, I have a question. What did you mean by saying this?

[quote]Goldberg wrote:
You think going to school is hard? Try being a middle class student whos parents cant afford to send you.[/quote]