The Economics of Soaking the Rich

  
Via:  Bob Nelson  •  2 months ago  •  80 comments

The Economics of Soaking the Rich
What does Alexandria Ocasio-Cortez know about tax policy? A lot.

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512I have no idea how well Alexandria Ocasio-Cortez will perform as a member of Congress. But her election is already serving a valuable purpose. You see, the mere thought of having a young, articulate, telegenic nonwhite woman serve is driving many on the right mad — and in their madness they’re inadvertently revealing their true selves.

Representatives Alexandria Ocasio-Cortez of New York and Jahana Hayes of Connecticut on the House floor in Washington on Thursday.
Carolyn Kaster/Associated Press

Some of the revelations are cultural: The hysteria over a video of AOC dancing in college says volumes, not about her, but about the hysterics. But in some ways the more important revelations are intellectual: The right’s denunciation of AOC’s “insane” policy ideas serves as a very good reminder of who is actually insane.

The controversy of the moment involves AOC’s advocacy of a tax rate of 70-80 percent on very high incomes, which is obviously crazy, right? I mean, who thinks that makes sense? Only ignorant people like … um, Peter Diamond, Nobel laureate in economics and arguably the world’s leading expert on public finance (although Republicans blocked him from an appointment to the Federal Reserve Board with claims that he was unqualified. Really.) And it’s a policy nobody has every implemented, aside from … the United States, for 35 years after World War II — including the most successful period of economic growth in our history.

To be more specific, Diamond, in work with Emmanuel Saez — one of our leading experts on inequality — estimated the optimal top tax rate to be 73 percent. Some put it higher: Christina Romer, top macroeconomist and former head of President Obama’s Council of Economic Advisers, estimates it at more than 80 percent.

Where do these numbers come from? Underlying the Diamond-Saez analysis are two propositions: Diminishing marginal utility and competitive markets.

Diminishing marginal utility is the common-sense notion that an extra dollar is worth a lot less in satisfaction to people with very high incomes than to those with low incomes. Give a family with an annual income of $20,000 an extra $1,000 and it will make a big difference to their lives. Give a guy who makes $1 million an extra thousand and he’ll barely notice it.

What this implies for economic policy is that we shouldn’t care what a policy does to the incomes of the very rich. A policy that makes the rich a bit poorer will affect only a handful of people, and will barely affect their life satisfaction, since they will still be able to buy whatever they want.

So why not tax them at 100 percent? The answer is that this would eliminate any incentive to do whatever it is they do to earn that much money, which would hurt the economy. In other words, tax policy toward the rich should have nothing to do with the interests of the rich, per se, but should only be concerned with how incentive effects change the behavior of the rich, and how this affects the rest of the population.

But here’s where competitive markets come in. In a perfectly competitive economy, with no monopoly power or other distortions — which is the kind of economy conservatives want us to believe we have — everyone gets paid his or her marginal product. That is, if you get paid $1000 an hour, it’s because each extra hour you work adds $1000 worth to the economy’s output.

In that case, however, why do we care how hard the rich work? If a rich man works an extra hour, adding $1000 to the economy, but gets paid $1000 for his efforts, the combined income of everyone else doesn’t change, does it? Ah, but it does — because he pays taxes on that extra $1000. So the social benefit from getting high-income individuals to work a bit harder is the tax revenue generated by that extra effort — and conversely the cost of their working less is the reduction in the taxes they pay.

Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.

And that’s something we can estimate, given evidence on how responsive the pre-tax income of the wealthy actually is to tax rates. As I said, Diamond and Saez put the optimal rate at 73 percent, Romer at over 80 percent — which is consistent with what AOC said.

An aside: What if we take into account the reality that markets aren’t perfectly competitive, that there’s a lot of monopoly power out there? The answer is that this almost surely makes the case for even higher tax rates, since high-income people presumably get a lot of those monopoly rents.

So AOC, far from showing her craziness, is fully in line with serious economic research. (I hear that she’s been talking to some very good economists.) Her critics, on the other hand, do indeed have crazy policy ideas — and tax policy is at the heart of the crazy.

You see, Republicans almost universally advocate low taxes on the wealthy, based on the claim that tax cuts at the top will have huge beneficial effects on the economy. This claim rests on research by … well, nobody. There isn’t any body of serious work supporting G.O.P. tax ideas, because the evidence is overwhelmingly against those ideas.

Look at the history of top marginal income tax rates (left) versus growth in real GDP per capita (right, measured over 10 years, to smooth out short-run fluctuations.):

original

What we see is that America used to have very high tax rates on the rich — higher even than those AOC is proposing — and did just fine. Since then tax rates have come way down, and if anything the economy has done less well.

Why do Republicans adhere to a tax theory that has no support from nonpartisan economists and is refuted by all available data? Well, ask who benefits from low taxes on the rich, and it’s obvious.

And because the party’s coffers demand adherence to nonsense economics, the party prefers “economists” who are obvious frauds and can’t even fake their numbers effectively.

Which brings me back to AOC, and the constant effort to portray her as flaky and ignorant. Well, on the tax issue she’s just saying what good economists say; and she definitely knows more economics than almost everyone in the G.O.P. caucus, not least because she doesn’t “know” things that aren’t true.

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Bob Nelson
1  seeder  Bob Nelson    2 months ago
Why do Republicans adhere to a tax theory that has no support from nonpartisan economists and is refuted by all available data? Well, ask who benefits from low taxes on the rich, and it’s obvious.
 
 
 
bbl-1
2  bbl-1    2 months ago

Cortez is correct.

Supply Side Economics concentrates the wealth.

Soak the rich?  The rich have been 'soaking' the poor and middle class for decades.

Besides, Eisenhower's top tax bracket was nearly 90% and the American Economic Engine at the time was the most powerful in the World.  And the rich, well, they were still rich and getting richer.

 
 
 
Bob Nelson
2.1  seeder  Bob Nelson  replied to  bbl-1 @2    2 months ago

A couple years ago, a study showed 70% to be an ideal top rate, with the bottom tax brackets being negative - the declarer does not pay, but rather receives.

 
 
 
Mark in Wyoming
3  Mark in Wyoming    2 months ago

highest tax rate happened during WW2 in 1944 @ 94% prior to the war it fluctuated between the mid 20s and mid 60 percentile for the top bracket dependent on national conditions.

One of the reasons the top bracket went to 94% was the war itself , war is expensive , AND government contracts pay out money , so the government got a lot of what they paid out in contracts back in taxes in that top bracket. one of the reasons it stayed there was to help pay for the war itself , and after the war it gave the government the funds to put the men that went to war back to work in the civilian sector ,example? the national interstate system.

another reason that high top tax rate could be afforded was after the war , there were basically only 2 industrialized nations that were left somewhat untouched and intact the soviet union , they moved their industry away from the main areas of fighting and attack , and the USA,  to simplify , they were the only 2 stores left open on the block .

 during the late 40s and through the 50s the world recovered from the effects of the world war , and rebuilt bringing more and more into the supply chain, no longer the only 2 stores on the block.

as a result , the top tax rat dropped in the 60s to 70 % why? industry found they could make things in new industrial areas cheaper.

And from then on that has been the main reason for the top becket fluctuating it went into the 30 percentile in the 80s and lower , but also went up as high as the low 40 percentile usually dictated by national politics and national conditions.

Way I see it , the progressive tax rates go down when more people are in need of jobs , the tax rates supposedly act as incentives to do business and hire workers , doesn't always work that way  though. and they go up when more people are actually out of work.

The income tax system in this country has only existed since 1913 and if one looks at its history , its not hard to see when the high tax years are.

it shall be interesting to watch, we do live in interesting times.

 
 
 
Bob Nelson
3.1  seeder  Bob Nelson  replied to  Mark in Wyoming @3    2 months ago

I wonder if there's any way to estimate the health of the economy, at different top tax rates.

 
 
 
Mark in Wyoming
3.1.1  Mark in Wyoming  replied to  Bob Nelson @3.1    2 months ago

i think that's whats been going on since the war years and the high top tax Bob, trying to find that perfect balance where manufacturing is not driven off shore yet the optimum amount of tax can be collected , thing is the situation is ever changing , opertunities get to expensive one place , but there is places it is less expensive to do business. guess what I am saying if a high tax rate even in just the top bracket , there will always be someplace that will tax less. if its kept competitive , chances are that tax base just stays where it is and cannot justify the expense of the move.

Another thing I see. those in that top bracket , do not take cash as compensation sometimes , they take their pay in other ways , such as stock options . that also has a tendency of lowering once actual tax rate.

I will make a bet, none of the Trumps own any of the cars they use , I bet they are all owned by their companies , and devalued as write offs , but yet , even though they belong to the company , it is theirs to use as they see fit. all non taxable to them , maybe under corperate taxes , but not personal income.

 
 
 
Bob Nelson
3.1.2  seeder  Bob Nelson  replied to  Mark in Wyoming @3.1.1    2 months ago
i think that's whats been going...

Certainly, there have been university people trying to calculate the ideal tax rate... but politics is, sadly, rarely driven by notions of efficacy.

The last fifty years have been the Republican Party reducing taxes on the already-rich. There is no economic logic behind this. Just servitude.

 
 
 
Ender
3.1.3  Ender  replied to  Mark in Wyoming @3.1.1    2 months ago

Some may say that corporate taxes are or have been high but at the same time, with loop holes and deductions, most never paid at that rate.

Lowering the tax rate and keeping those loop holes and deductions seems to be only a gift to them. As we saw with this last one, companies just used the extra profit for buy backs and the like. Only helping their own bottom line. Only little of that has gone to employees.

As for offshoring, I guess it is cheaper to pay some workers 2$ a day than 15$ an hour. Then ship it over. I figure one of these days, as these under developed countries rise up, wages will go up. The companies will run out of places to off shore. Likely then look for other ways to increase profit.

 
 
 
Bob Nelson
3.1.4  seeder  Bob Nelson  replied to  Ender @3.1.3    2 months ago

These topics are all interrelated. No single one should be "decided" without considering, and maybe modifying, the others.

 
 
 
Hal A. Lujah
4  Hal A. Lujah    2 months ago

We have conservative members here who claim OAC's "ideas are dangerous".  How much of a snowflake do you have to be to be scared of an idea from a single congress member?  We also have a member who likes to call Elizabeth Warren a 'crony capitalist', which is hilarious.  Of course there's nothing to back that up, but that doesn't stop him.  She terrifies anyone who makes a living off of predatory lending.

 
 
 
igknorantzrulz
4.1  igknorantzrulz  replied to  Hal A. Lujah @4    2 months ago
She terrifies anyone who makes a living off of predatory lending.

Plus, they're just plain frightened, by strong women. She has some very legitimate concerns about our screwed up system and rightfully so. Our country is controlled by wealth that has found, by dumbing down America, they are able to continue to fleece the whole country. 

Example A)   The election of Donald Trump

We need more like her, to bring attention to the erosion of the middle class, as the rich continue to get richer, and most everyone else gets poorer, or not much change. 

This is Wrong. America was supposed to be an equal opportunity for All to prosper, not just those who manipulate a flawed system. A system where via loopholes imbedded for only those who can afford top accredited CPA's to decipher and unbedd them , tend to prosper, as the tax laws were written by and for, those who benefit the most from them.

They prosper at ridiculous rates, as they are privy to a system so stacked for those at the top, it is truly frustrating and down right unfair.

As we watched Trump supporters in record numbers vote against their own best interests, we see that the dumbing down effect, has paid handsomely to those that pushed it.

Ignorance was never meant to rule.

 
 
 
Hal A. Lujah
4.1.1  Hal A. Lujah  replied to  igknorantzrulz @4.1    2 months ago

As we watched Trump supporters in record numbers vote against their own best interests, we see that the dumbing down effect, has paid handsomely to those that pushed it.

You got that right.

A Trump-supporting protester was arrested outside an Elizabeth Warren event after allegedly hitting an attendee with a selfie stick.

 
 
 
igknorantzrulz
4.1.2  igknorantzrulz  replied to  Hal A. Lujah @4.1.1    2 months ago

good article

proving my moniker so true

unfortunately,

but also spotlighting Warrens priorities and competence, something seriously lacking in our current POTUS

 
 
 
Jack_TX
4.1.3  Jack_TX  replied to  igknorantzrulz @4.1    2 months ago
Plus, they're just plain frightened, by strong women.

So....who's the Governor of Iowa?  Oklahoma?  South Dakota?  Alabama?  Or is it only "young women who make embarrassing comments but are liberals so we pretend they're strong" that are supposedly frightening? 

She has some very legitimate concerns about our screwed up system and rightfully so.

Yes.  But she is just ridiculously naive about the actions she thinks will be "solutions".

Our country is controlled by wealth that has found, by dumbing down America, they are able to continue to fleece the whole country. 

That's like blaming people who eat right and go to the gym for the rest of America being fat.

They didn't dumb down America.  WE did that.  

We've been lowering standards continually for decades.  We rubber stamp any kid who manages to show up a requisite number of days and declare them a "graduate" without regard to their actual abilities.  

 
 
 
Jack_TX
4.1.4  Jack_TX  replied to  igknorantzrulz @4.1    2 months ago
As we watched Trump supporters in record numbers vote against their own best interests,

The outrageous arrogance of this phrase is still astonishing, even after the 1000th time I've heard it.  

The idea that you know their bests interests better than they do is what causes shit like "President Trump".

 
 
 
Bob Nelson
4.1.5  seeder  Bob Nelson  replied to  Jack_TX @4.1.3    2 months ago
So....who's the Governor...

They're irrelevant to this seed.

Its topic is AOC's tax policy. ... Which you do not address at all.

... she is just ridiculously naive...

You may believe this without any support, if you wish... but if you'd like to persuade others, you probably should propose some data/analysis.

 
 
 
Bob Nelson
4.1.6  seeder  Bob Nelson  replied to  Jack_TX @4.1.4    2 months ago
The outrageous arrogance of this phrase is still astonishing, even after the 1000th time I've heard it.  

The idea that you know their bests interests better than they do is what causes shit like "President Trump".

I have a cousin who is pro-Trump. He has one son who is very ill, and totally dependent on government healthcare. Another son is gay, in a stable relation for twenty-odd years. He himself is not rolling in money, and needs his Social Security checks.

He doesn't like Latinos, so Trump's anti-Latino stance is enough to make him ignore all the rest.

In supporting Trump, he is feeding his childish inner self, while - objectively - voting against his own interests and those of his family.

Saying this is not arrogance. It is describing reality.

 
 
 
igknorantzrulz
4.1.7  igknorantzrulz  replied to  Jack_TX @4.1.3    2 months ago
That's like blaming people who eat right and go to the gym for the rest of America being fat. They didn't dumb down America.  WE did that.

Question there Jack

did you vote for Trump

( I won't hold a none of your business as a strike against you)

just curious where you are coming from.

 
 
 
igknorantzrulz
4.1.8  igknorantzrulz  replied to  Jack_TX @4.1.4    2 months ago
he idea that you know their bests interests better than they do is what causes shit like "President Trump".

Again , ill inquire, did U vote for Donald Trump ?

 
 
 
Jack_TX
4.1.10  Jack_TX  replied to  Bob Nelson @4.1.5    2 months ago
They're irrelevant to this seed.

They directly refute a comment that you let stand as relevant.  Therefore they are relevant.

Its topic is AOC's tax policy. ... Which you do not address at all.

The phrase was "ridiculously naive about actions she believes will be solutions".

You may believe this without any support, if you wish... but if you'd like to persuade others, you probably should propose some data/analysis.

Thinking the US is going to enact a 30+% tax increase certainly constitutes "ridiculously naive".  

Thinking we're going to double everybody's taxes to socialize health insurance (which is what it will take), when a super-majority of Democrats couldn't pass a public option is naive on a "still believe in Santa Claus" level.

 
 
 
Jack_TX
4.1.11  Jack_TX  replied to  Bob Nelson @4.1.6    2 months ago
Saying this is not arrogance. It is describing reality.

No....it's outrageous arrogance.  

Has gay marriage been outlawed under Trump?  Has Social Security been cut?  Has Medicare been cut? 

No?

So your idea of his "best interests" is to be afraid of stuff that isn't actually happening.   Maybe....just maybe....he's a grown man capable of making his own decisions about what's best for him and his family.

 
 
 
Jack_TX
4.1.12  Jack_TX  replied to  igknorantzrulz @4.1.7    2 months ago
Question there Jack did you vote for Trump

I did not.   Can't stand the bastard.  The Democrats would have to run Bernie or somebody worse to get me to vote for Trump.

( I won't hold a none of your business as a strike against you) just curious where you are coming from.

Fair question.  I'm a centrist and a pragmatist.  Which means the fearful and hysterical objection to everything Trump does is more repulsive to me than Trump himself.  I'm also 52, which means I've seen worse times and worse presidents in my lifetime.

 
 
 
bbl-1
4.1.13  bbl-1  replied to  Jack_TX @4.1.11    2 months ago

Has Social Security or Medicare been cut under Trump?  No.  But McConnell and a few others are looking at it.

 
 
 
Jack_TX
4.1.14  Jack_TX  replied to  bbl-1 @4.1.13    2 months ago

Looking at it.  O...M....G....   They're LOOKING!!!  Run for the hills.  Hide the women and children.  Keep your passports close.

They're looking at extending the retirement age.  Which is appropriate, given the longer lifespans of Americans and the desire to keep the program going for the long term.

Or don't you think Millennials deserve Social Security?

 
 
 
bbl-1
4.1.15  bbl-1  replied to  Jack_TX @4.1.14    2 months ago

No.  No.  And No.

 
 
 
igknorantzrulz
4.1.16  igknorantzrulz  replied to  Jack_TX @4.1.14    2 months ago
don't you think Millennials deserve Social Security?

from my experiences,

probably not.

 
 
 
Snuffy
4.1.17  Snuffy  replied to  Jack_TX @4.1.10    2 months ago
Thinking we're going to double everybody's taxes to socialize health insurance

It's more than double...

To just look at numbers, 

In 2017 there were approx 141 million tax paying citizens in the US, who according to recent data paid $1.45 trillion in federal income tax or an average of $10,739 per person. In 2017, US Health Care spending reached $3.5 trillion dollars.  So if you add that into the current federal income tax (as we all know politicians almost never reduce a tax) and break it down by tax paying citizen,  the average federal tax paid would be $35,106.

 
 
 
Bob Nelson
4.1.18  seeder  Bob Nelson  replied to  Snuffy @4.1.17    2 months ago

You're adding apples and oranges, and forgetting to subtract the bananas.

Exactly how the system should be financed is open to debate. Through taxes, or via insurance, or whatever. No matter.

It's the total cost for the citizen that's important:

original

Americans spend twice as much for healthcare, because the American system is not designed to deliver healthcare. It is designed to deliver maximum dividends to shareholders.

That's what must change.

 
 
 
Snuffy
4.1.19  Snuffy  replied to  Bob Nelson @4.1.18    2 months ago

I was responding to a direct quote of having to double taxes to pay for it.  And showed that just doubling taxes would not pay for what was being discussed by the Democrat left. That has a potential price tag of 42 Trillion dollars over 10years.  I agree that Americans spend too much on health care, but changing the process is very complicated.  Too many people want that silver bullet fix and that just doesn't exist.

 
 
 
Bob Nelson
4.1.20  seeder  Bob Nelson  replied to  Snuffy @4.1.19    2 months ago
that just doesn't exist.

How can you say that, knowing that the silver bullet already exists in every advanced country... except America?

 
 
 
katrix
4.1.21  katrix  replied to  Jack_TX @4.1.14    2 months ago
They're looking at extending the retirement age.  Which is appropriate, given the longer lifespans of Americans and the desire to keep the program going for the long term.

It seems appropriate ... but some workers have jobs that they can't keep doing once they get old.  They're too demanding (i.e. my friend who climbs and cuts trees is only 55, but he really can't do that work for much longer).  And many people's health makes them stop working earlier than they had planned. 

Another question - what do we do with those who got paid under the table (again, my tree guy comes to mind) and won't be getting SS?  They gamed the system so they could avoid paying taxes, and now they're realizing they screwed themselves (no Medicare either, so we'll be stuck paying for their health care via Medicaid).  I know quite a few people who make a living by doing odd jobs for cash.  It's hard for me to sympathize - they use the services my taxes pay for, after all - but we don't like to see old people starve because they can't support themselves.

 
 
 
Bob Nelson
4.1.22  seeder  Bob Nelson  replied to  katrix @4.1.21    2 months ago

I have a more basic question: Why should the age of retirement be raised?

Why must the proletariat work until it drops dead?

 
 
 
katrix
4.1.23  katrix  replied to  Bob Nelson @4.1.22    2 months ago

It's a matter of keeping the Social Security fund solvent.  It was never intended to fund retirements that last 20 or 30 years.  And with the boomers retiring, we have fewer people paying into the system to support those who have retired and are collecting Social Security.  Although I'm not sure it's at all reasonable to extend the age of retirement past age 70; many people simply aren't capable of working once they're that old, or can't find people who will hire them.

Some people advocate for removing the cap on SS withholding - but since it is not an entitlement (if you don't pay into it, you don't collect it when you retire), we'd then have to increase the SSN checks for those people because they would be contributing more, IMO.

 
 
 
Bob Nelson
4.1.24  seeder  Bob Nelson  replied to  katrix @4.1.23    2 months ago
It's a matter of keeping the Social Security fund solvent.

Sure. But let's remember that there are two ways of eliminating a deficit:

 - You can reduce expenses, in this case raise the retirement age

 - You can increase revenues. I suggest taking the money from the people who have been confiscating it for the last thirty years.

I know that life expectancy is low in the US, thanks to a crappy healthcare system... but let's imagine that Americans live longer... much longer. Would you have them work until eighty, and then die at eighty-three?

America is the richest nation in the history of the world. It is shocking that some of its leaders pretend that it cannot take care of its elderly.

 
 
 
Trout Giggles
4.1.25  Trout Giggles  replied to  Bob Nelson @4.1.24    2 months ago

I think we should raise the salary gap on the SS tax.

 
 
 
Bob Nelson
4.1.26  seeder  Bob Nelson  replied to  Trout Giggles @4.1.25    2 months ago

It's not rocket science. Adjust the rates until you get a balanced budget at the level of service you want.

Why are the rich favored, in SS, as in everything? They should be paying a high rate on all their income. Would that be transfering wealth from them to the less fortunate? YES!! For over three decades, the wealthy have gotten wealthier, while the average Joe has stagnated.

And now they want Average Joe to keep working until he drops. The wealthy have no shame at all...

 
 
 
katrix
4.1.27  katrix  replied to  Trout Giggles @4.1.25    2 months ago

But SS wasn't intended to be an entitlement - so that would mean we would need to increase the payouts to them as well.

 
 
 
Bob Nelson
4.1.28  seeder  Bob Nelson  replied to  katrix @4.1.27    2 months ago
...we would need to increase the payouts to them...

Why?

Don't cap what must be paid into SS, but do cap benefits. Once again, the purpose is to transfer wealth.

 
 
 
katrix
4.1.29  katrix  replied to  Bob Nelson @4.1.24    2 months ago
I suggest taking the money from the people who have been confiscating it for the last thirty years.

I don't consider people who make a lot of money to be 'confiscating' it.  If Jeff Bezos starts a successful company, good for him.  Sure, people make a valid point that he couldn't have done that without the resources we have in America - but by the same token, someone else could have utilized those same resources and built a successful company, and they didn't. 

Life expectancy is actually fairly high in the US - much higher than when SS was implemented.  That's one of the reasons it will be insolvent at some point.  As I stated above, it was never intended to fund a 20 or 30 year retirement.  It's a safety net, not a pension. 

I agree that we need a progressive tax, but driving it by hatred of the rich isn't the way to get a reasonable solution to the problem.   You're not as bad as one of my friends who thinks that people like Bezos should be shot, however ;)  (it's ironic, he smokes pot all day and has no real ambition ... so his outrage is probably a lot less reasonable than yours)

 
 
 
Trout Giggles
4.1.30  Trout Giggles  replied to  katrix @4.1.27    2 months ago

I didn't realize that SS payments were paid based on how much you paid into it.

 
 
 
Split Personality
4.1.31  Split Personality  replied to  Trout Giggles @4.1.30    2 months ago

One of the biggest reasons for staying in the military til retirement or getting the heck out after one contract.

It kicks the crap out of your SS account if your enlisted and stay for multiple tours without getting to retirement.

 
 
 
katrix
4.1.32  katrix  replied to  Trout Giggles @4.1.30    2 months ago

Yep.  You should be getting something in the mail (or at this point, I think you need to check online - I haven't gotten a letter in a few years) each year that tells you what you'll be getting.  You have to work a certain number of quarters to be eligible in the first place.  So, people who don't pay into the system don't get anything back from it. 

https://www.ssa.gov/pubs/EN-05-10070.pdf

"We base Social Security benefits on your lifetime earnings. We adjust or "index" your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or "primary insurance amount." This is how much you would receive at your full retirement age "

For Social Security Disability:

"From age 18 to 24, workers must work roughly 18 months to be eligible for disability. From 24 up to age 31, workers must have worked roughly half of the time since they turned 18 years of age to have sufficient work credits for disability insurance. After age 31, the number of years of work needed for eligibility gradually rises, and averages about five out of the past 10 years"

 
 
 
katrix
4.1.33  katrix  replied to  Bob Nelson @4.1.28    2 months ago
Don't cap what must be paid into SS, but do cap benefits. Once again, the purpose is to transfer wealth.

The purpose of SS is not to transfer wealth. 

 
 
 
Trout Giggles
4.1.34  Trout Giggles  replied to  katrix @4.1.32    2 months ago

Ah, I see now. Thanks

 
 
 
Bob Nelson
4.1.35  seeder  Bob Nelson  replied to  katrix @4.1.29    2 months ago

I have no problem with Jeff Bezos making a lot of money. The question, of course, is "how much?".

He could perhaps make do with just one or two billion, and pay his employees a bit better.

Alternatively, he could pay near-confiscatory taxes, and his employees could get a tax rebate.

It's not Bezos's money that's wrong. It's the monstrous difference between his revenue and his employees'.

 
 
 
Bob Nelson
4.1.36  seeder  Bob Nelson  replied to  Split Personality @4.1.31    2 months ago

Wouldn't it be cool if retirement didn't depend on the employer? Both employees and employers could pay into a fund...

Oh, wait... that's what my employers and I did all those years...

 
 
 
Bob Nelson
4.1.37  seeder  Bob Nelson  replied to  katrix @4.1.33    2 months ago
  The purpose of SS is not to transfer wealth. 

Why not?

 
 
 
Jack_TX
4.1.38  Jack_TX  replied to  Bob Nelson @4.1.35    2 months ago
I have no problem with Jeff Bezos making a lot of money.

You don't sound that way.

The question, of course, is "how much?".

Why would that be the question?  It's his money.  Why would it be up to you or me or anybody else to tell him how much he can earn?

He could perhaps make do with just one or two billion, and pay his employees a bit better.

Why?  His employees agreed to their wages.  

Alternatively, he could pay near-confiscatory taxes, and his employees could get a tax rebate.

Bernie, AOC and company could attempt to impose such taxes.  But the idea that they would ever actually collect them a bigger fantasy than a Harry Potter novel.  Tax attorneys make big bucks for a reason.

It's not Bezos's money that's wrong. It's the monstrous difference between his revenue and his employees'.

Jeff Bezos recorded total compensation of $1,681,840 in 2017.

Why is that "wrong"?    Why isn't LeBron James' money "wrong"?  Or Ellen Degeneres?  Or Taylor Swift?

 
 
 
Jack_TX
4.1.39  Jack_TX  replied to  Bob Nelson @4.1.36    2 months ago
Wouldn't it be cool if retirement didn't depend on the employer?

It hasn't since 1974.

Both employees and employers could pay into a fund...

It's called a 401(k).  Or 403(b), if you work for a non-profit.  Or SIMPLE IRA if you work for a small company.  Or a SEP if you're self-employed.

 
 
 
bbl-1
5  bbl-1    2 months ago

In a sense an argument could be made that the current Supply Side tax system is unfair to the poor and the rich.

The poor because they receive no real benefit.

The rich because there is always that underlying specter of unrest arising from wealth concentration.

Speaking of taxes, the idea of trillion$ being hidden/sequestered in offshore money holes is...…….fill in the blanks.  Who does that wealth serve and how does it serve them?

 
 
 
Jack_TX
5.1  Jack_TX  replied to  bbl-1 @5    2 months ago
In a sense an argument could be made that the current Supply Side tax system is unfair to the poor and the rich.

The current system is unfair.  But that has little to do with taxation.

The poor because they receive no real benefit.

They have roads, bridges, schools, food, and housing in a peaceful country free from invasion, occupation or foreign threat....and they don't have to pay for any of it.

The rich because there is always that underlying specter of unrest arising from wealth concentration.

And the fact they have to pay for everything.  BTW, you don't fix wealth concentration through the tax code.

Speaking of taxes, the idea of trillion$ being hidden/sequestered in offshore money holes is...…….fill in the blanks.  Who does that wealth serve and how does it serve them?

Mostly the US treasury. It's not like that money is all $100 bills under some gigantic mattress in the Cayman Islands.  It's invested.

 
 
 
Ender
5.1.1  Ender  replied to  Jack_TX @5.1    2 months ago
They have roads, bridges, schools, food, and housing in a peaceful country free from invasion, occupation or foreign threat....and they don't have to pay for any of it.

I call bullshit on that.

Roads and bridges are paid for at all levels, through gas tax for one.

If you think the rich are buying everyone's food, that is delusional.

Freedom from invasion? Who do you think are on the front lines? 

The rich pay for everyone, that is a lie.

Do some people get a refund? Yes. Do all people? No. I wouldn't call people that make 100 to 200k a year rich.

Contrary to how some believe, the mega rich can pay taxes and not have it impact their bottom line to the point that they would all the sudden be poor.

It is a myth.

 
 
 
Bob Nelson
5.1.2  seeder  Bob Nelson  replied to  Jack_TX @5.1    2 months ago
BTW, you don't fix wealth concentration through the tax code.

Why not?

What alternatives are there, aside revolution?

 
 
 
Bob Nelson
5.1.3  seeder  Bob Nelson  replied to  Ender @5.1.1    2 months ago
I call bullshit on that.

Please don't use language like that.

 
 
 
Jack_TX
5.1.4  Jack_TX  replied to  Ender @5.1.1    2 months ago
I call bullshit on that.

The math is pretty easy.  

Roads and bridges are paid for at all levels, through gas tax for one.

Tens of millions of poor American households get more tax "refund" than they actually pay in taxes.  EIC, child tax credit, etc.  That amount far exceeds any gas tax they're paying.

If you think the rich are buying everyone's food, that is delusional.

I thought we were talking about "the poor".  Are we talking about "everyone"?  Make up your mind and let me know.

Freedom from invasion? Who do you think are on the front lines? 

Employed taxpayers.

The rich pay for everyone, that is a lie.

The top 1% of taxpayers pay 40% of income tax.  The top 10% pay 70% of all income taxes.    If you go out to dinner with a group of 100 people and one guy picks up 40% of the check, he's paying your way.

Do some people get a refund? Yes. Do all people? No.

70% do.

I wouldn't call people that make 100 to 200k a year rich.

OK.  How would you define "rich"?  

Contrary to how some believe, the mega rich can pay taxes and not have it impact their bottom line to the point that they would all the sudden be poor.

I'm not sure anybody actually fails to understand this point, but if you've met them, I'll trust your opinion.

That does not address the idea about whether or not it's fair for 48% of Americans to mooch off the other 52%.  I'm not opposed to progressive taxation, but I do believe everybody ought to contribute something.

 
 
 
Bob Nelson
5.1.5  seeder  Bob Nelson  replied to  Jack_TX @5.1.4    2 months ago
The top 1% of taxpayers pay 40% of income tax.  The top 10% pay 70% of all income taxes. 

When someone who pretends to be knowledgeable insists on "income taxes", they demonstrate either that they do not in fact know what they're talking about... or that they do know and are intentionally misleading.

 
 
 
Jack_TX
5.1.6  Jack_TX  replied to  Bob Nelson @5.1.2    2 months ago
Why not?

There are two ways to attack fiscal inequality.  You can either attempt to bring up the poor or attempt to bring down the rich.  Giving money to poor people who don't know how to get out of poverty is like giving a scalpel and anesthesia to a person with no medical training and expecting them to do their own surgery.   Taxing wealthy people is a great idea in theory, but I'm not sure how many stories we need to hear about billionaire's paying 18% tax rates before we connect the dots on the futility of that endeavor.

What alternatives are there, aside revolution?

Revolution????  Wha???  OK.....no.  What?  No.  Just no.  Good grief.

There are TONS of things we can do, including but not limited to:

Education - enable people to participate in the economy:

  1. Replace non-AP track algebra classes with financial math in public schools.  If you're taking Algebra II as a junior, you're not going to be an engineer, so Algebra II is basically a massive waste of your time.  Let's teach you something you might actually need to know....like taxes or insurance or accounting or finance...instead of more polynomials.
  2. Increase levels of federal assistance based on criteria that break the cycle of poverty instead of perpetuating it.  Give additional support to families if the kids are doing well in school, or if they're studying a skilled trade where the work can't be exported to India (plumbing, electrical, HVAC, etc).   
  3. Institute an English style O-Level or A-Level examination program for public schools.  If an American student "graduates" from high school, they ought to actually know something more than how to fold sweaters at Walmart.
  4. Institute a skilled trade education subsidy, like we have for teachers or nurses, where the lunchbucket guy getting laid off at a factory moving to China can get trained to do carpentry, electrical, plumbing, etc..... so you'll have plenty of people available when you pass your infrastructure bill.

Individual Fiscal Strength - enable/force them to make responsible decisions and thus prosper in the economy:

  1. Institute mandatory financial responsibility measures. Things like setting up a program that sets up a mandatory savings account and requires people to have money deducted from their paycheck whenever their account goes below $2000 or 10% of gross income.  
  2. 40% of people eligible for Medicaid are not signed up.  So integrate Medicaid fully with the ACA exchange.  Suspend all other forms of federal assistance for people who fail to enroll.  It's free.  People need to get off their butts and sign up.
  3. Institute mandatory retirement saving in addition to Social Security.  You can decide where to invest it, and as long as your account balance stays above certain targeted thresholds you can contribute or not.  But not saving a dime for retirement for 30 years because you eat out too much becomes a thing of the past.

Boost the economy:

  1. Pass an infrastructure bill.  I mean a whopper of an infrastructure bill that would get AOC dancing with Bernie Sanders in an almost creepy quasi-orgy celebration of government spending that would make even the leftiest of lefty leftists swoon.  Green energy, high speed rail, new roads, bridges, charging stations, schools, airports, subways, whatever.  Solar panels on every roof and a wind turbine on every telephone pole.  You name it.  Pay for it largely with revenue bonds, collecting money from the people who use it most. 

You have "yuuuuuge"  money being spent in America improving American communities with American workers earning American dollars to support their American families growing their own family wealth whether they want to or not.  You force them to seize power over their own lives and finances instead of taking it away from them in exchange for a handout.

 
 
 
Jack_TX
5.1.7  Jack_TX  replied to  Bob Nelson @5.1.5    2 months ago
When someone who pretends to be knowledgeable insists on "income taxes", they demonstrate either that they do not in fact know what they're talking about... or that they do know and are intentionally misleading.

Personal income taxes account for nearly 50% of total government income and are by far the largest source of revenue.

A person who talks about "income taxes" simply understands the math.

 
 
 
Bob Nelson
5.1.8  seeder  Bob Nelson  replied to  Jack_TX @5.1.6    2 months ago
There are TONS of things we can do...

There's just one thing needed. Take the money from those who have been taking it for decades.

 
 
 
Bob Nelson
5.1.9  seeder  Bob Nelson  replied to  Jack_TX @5.1.7    2 months ago
Personal income taxes account for nearly 50% of total government income and are by far the largest source of revenue.

... which clearly means that more than half does not come from income taxes.

Modest families pay payroll taxes.

But you know this, don't you?

 
 
 
bbl-1
5.1.10  bbl-1  replied to  Jack_TX @5.1    2 months ago

Except conservative estimates place the amount of US money offshore and untouchable as being in the range of $21-31 Trillion.

 
 
 
Jack_TX
5.1.11  Jack_TX  replied to  Bob Nelson @5.1.8    2 months ago
There's just one thing needed. Take the money from those who have been taking it for decades.

I'm curious.  

Jeff Bezos has been laboring night and day for 20 years to build a company.  Warren Buffett has spent much longer than that.  And they've even shared the wealth.  You could have bought in at any time, and shared in the prosperity.  

So why do you think you're entitled to his money now?  How is "something for nothing" somehow your right?

 
 
 
Jack_TX
5.1.12  Jack_TX  replied to  Bob Nelson @5.1.9    2 months ago
Modest families pay payroll taxes.

Some do.  Millions do not.

You haven't "paid taxes" if you get it all back when you file your return.   

But you know this, don't you?

 
 
 
Jack_TX
5.1.13  Jack_TX  replied to  bbl-1 @5.1.10    2 months ago
Except conservative estimates place the amount of US money offshore and untouchable as being in the range of $21-31 Trillion.

Citation?

Assuming those numbers are accurate, do you think that money is all buried in a hole in the ground?  It's invested.  

People with enough money to move it offshore are very keen on preserving that wealth.  The safest investments in the world are US Treasuries.  Other exceedingly safe investments are insured US municipal bonds.  All of which are easily purchased in offshore accounts.

So that money is going to finance our ridiculous government spending, as well as more useful local govt spending, like new schools, roads, bridges, etc.

 
 
 
Bob Nelson
5.1.14  seeder  Bob Nelson  replied to  Jack_TX @5.1.11    2 months ago
How is "something for nothing" somehow your right?.

Who said that?

Why do you make stuff up?

 
 
 
Bob Nelson
5.1.15  seeder  Bob Nelson  replied to  Jack_TX @5.1.12    2 months ago
You haven't "paid taxes" if you get it all back when you file your return.  

So you want the family that is so poor that it gets a tax rebate to be castigated?

You know... They'd rather be so rich that they have to pay tons of taxes... but they aren't rich. They're poor. They don't pay taxes. They get a rebate.

Are you really castigating these people?

 
 
 
bbl-1
5.1.16  bbl-1  replied to  Jack_TX @5.1.13    2 months ago

Check it out yourself.  Don't be so effen lazy.  The estimation is correct.

The Panama Papers is just a little itty bit of the 'unaccountable cash' world. 

The problem isn't the lack of money.  The problem is lazy wealth, serving...………….and that is what needs to be determined.

 
 
 
Jack_TX
5.1.17  Jack_TX  replied to  bbl-1 @5.1.16    2 months ago
Check it out yourself.  Don't be so effen lazy.  The estimation is correct.

So it's nonsense then.  

The Panama Papers is just a little itty bit of the 'unaccountable cash' world. 

You do realize a huge number of those accounts were owned by people in other countries, yes?  

The problem isn't the lack of money.  The problem is lazy wealth, serving...………….and that is what needs to be determined.

Why is it any of your business?   What right do you have to that money?  What right do you have to even know what other people do with their own money?  If Zuckerberg wants to convert all his billions to gold bullion and bury it in a treasure chest on a remote island, what business is it of yours?

 
 
 
Jack_TX
5.1.18  Jack_TX  replied to  Bob Nelson @5.1.14    2 months ago
Who said that?

You did.  "Take their money", you said. 

 
 
 
Jack_TX
5.1.19  Jack_TX  replied to  Bob Nelson @5.1.15    2 months ago
So you want the family that is so poor that it gets a tax rebate to be castigated?

Who said that?  Why do you make stuff up?

You know... They'd rather be so rich that they have to pay tons of taxes... but they aren't rich. They're poor.

They can change that.  And we ought to be working to help them change that.  

They don't pay taxes.

I believe they should pay something.  It doesn't need to be much.  Everybody who is protected by the US military ought to have to pay to support it.  Everybody who enjoys all the services and infrastructure our government provides should have to chip in.

They get a rebate.

Filing your taxes should not be a means of profit.  Especially when that profit comes at the expense of hard-working Americans.

Are you really castigating these people?

Not at all.  They are making the most of the ridiculous system  If anything, I'm castigating the bleeding hearts that demand a system where people are handed cash simply because they don't have any.

 
 
 
Bob Nelson
5.1.20  seeder  Bob Nelson  replied to  Jack_TX @5.1.18    2 months ago
How is "something for nothing" somehow your right?.
Who said that?

Why do you make stuff up?
You did. "Take their money", you said.

"something for nothing" and "take their money" the not same.

Misquoting is a form of "being a jerk". Don't do it. That's an official warning.

 
 
 
Bob Nelson
5.1.21  seeder  Bob Nelson  replied to  Jack_TX @5.1.19    2 months ago
I believe they should pay something.

Why? If someone has nothing, why do you wish to take even that?

Filing your taxes should not be a means of profit.

Why? Tax rebates are an excellent means of redistributing the wealth the the ultra-rich are ripping off everyone.

I'm castigating the bleeding hearts that demand a system where people are handed cash simply because they don't have any.

Why do you stop at that point? Why don't you ask the deeper question of why they don't have any money? Please don't say something silly like "because they're all lazy". We talking about some 40% of the population, whose wages have stagnated for over thirty years while the rich have gotten ever richer. The system is rigged, for the rich, against the poor.

 
 
 
Trout Giggles
5.1.22  Trout Giggles  replied to  Jack_TX @5.1.4    2 months ago
 If you go out to dinner with a group of 100 people and one guy picks up 40% of the check, he's paying your way.

Not if I pick up the other 60%.

 
 
 
Jack_TX
5.1.23  Jack_TX  replied to  Bob Nelson @5.1.20    2 months ago
"something for nothing" and "take their money" the not same.

Do explain how taking somebody else's money and getting something for nothing are different.  I'm curious.

 
 
 
Bob Nelson
5.1.24  seeder  Bob Nelson  replied to  Jack_TX @5.1.23    2 months ago

Jack...

I warned you. Now I'm warning you that I will not allow derailing onto Meta. There will be no further warnings.

Don't be a jerk.

 
 
 
Jack_TX
5.1.25  Jack_TX  replied to  Bob Nelson @5.1.21    2 months ago
Why? If someone has nothing, why do you wish to take even that?

Are they, or are they not, receiving value from the US Govt?  If that answer is no, then why are the rest of us paying for something of no value?   If that answer is yes, why should they not contribute to society?

Why? Tax rebates are an excellent means of redistributing the wealth the the ultra-rich are ripping off everyone.

Describe exactly how Mark Zuckerberg has ripped you off.  Or Jeff Bezos.  Or Warren Buffet.  Do tell.

Why do you stop at that point? Why don't you ask the deeper question of why they don't have any money?

I do.  And I'm ever so glad you mentioned it.  Because handing people who are clueless about money a small wad of cash every year and thinking that's a "solution" is akin to handing you or me a scalpel and wishing us good luck fixing "whatever is wrong with your kidney".   I believe I've detailed several ideas in other posts, so I won't beat a dead horse here.

Please don't say something silly like "because they're all lazy".

Well any group that size is going to have some lazy people and some go-getters.  That's just basic math.  But I don't care about the lazy ones.   The go-getters....yeah....they're important.  Helping establish a pathway to prosperity for those people is fundamental to what America is supposed to be about.  

We talking about some 40% of the population, whose wages have stagnated for over thirty years while the rich have gotten ever richer.

Yes.

The system is rigged, for the rich, against the poor.

It favors the rich, yes.  "Rigged" is a term of intellectual laziness.  None of those issues are cured within the tax code.  Nor are they cured with more bleeding heart programs with the exclusive goal of making non-poor people "feel better" about "at least doing something".  

This is the problem with current policy.  It's developed to assuage the guilt of the affluent and middle class.  It reflects nearly zero actual caring about the poor.

 
 
 
Bob Nelson
5.1.26  seeder  Bob Nelson  replied to  Jack_TX @5.1.25    2 months ago
"Rigged" is a term of intellectual laziness.

No.

"Rigged" describes a situation in which one of the interested parties organizes the rules in their favor. That's precisely the situation in America.

Jack... I'm pretty sure you know all this. I'm pretty sure you are just going through the motions. I'd be happy to discuss... but that's not what we're doing. Don't expect me to Reply to you anymore.

 
 
 
Jack_TX
5.1.27  Jack_TX  replied to  Bob Nelson @5.1.26    2 months ago
"Rigged" describes a situation in which one of the interested parties organizes the rules in their favor. That's precisely the situation in America.

Really?  Describe some of those. 

Jack... I'm pretty sure you know all this.

I know what standard rhetoric is about these ideas, yes.  I also know that standard rhetoric is almost always incorrect.

I'm pretty sure you are just going through the motions.

No, I'm challenging you not to just go through the motions.  I'm challenging you to think about things in a different manner than you normally do, and look at issues more closely than you currently are.

Our society is chocked full of people who are positively desperate to do our thinking for us.  They count on us to accept what they say and not examine it too closely.  They use words like "rigged" or "fake news" and count on an audience that is more interested in who wins American Idol than they are about how their country is run.

Now if you're happy with that, that's certainly your prerogative.  Personally, I don't think those people are smart enough to do their own thinking correctly.  I certainly don't need them doing mine.

 
 
 
WallyW
6  WallyW    2 months ago

"From each according to his ability, to each according to his needs"!

Is that essentially what you have in mind?

And please explain just how the "ultra-rich" rip the rest of us off and exactly how it is all "rigged"

You do realize, I hope, that there are not enough really rich people to tax at extreme rates to make much of a difference in the real world, so then it has to start dipping further and further down into the middle class .

 
 
 
Bob Nelson
6.1  seeder  Bob Nelson  replied to  WallyW @6    2 months ago
Is that essentially what you have in mind?

No.

And please explain just how the "ultra-rich" rip the rest of us off and exactly how it is all "rigged"

I suggest you read Capital in the Twenty-First Century by Thomas Piketty

... there are not enough really rich people...

Actually, there are.

 
 
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