The wealth gap.

Apologies everyone if this is bad form on here, but a conversation was begun on the introductions thread, so I thought I ought to move it to here.

Conversation so far.
I started by saying I was sympathetic to the poor and this probably makes me a bit of a leftie.

 

Wealth in the USA is available to everyone. I am a living example of rags to riches. I don't waste my time or my thoughts on those who lack the ambition to do well in this country.

 

The wealth gap was created by all those
bipartisan changes to the tax code since JFK.

If we kept the Eisenhower Tax code continuous since 1960
we'd be better off today.


Imagine the total wealth of the nation is one dollar.
Too few possess over 95 cents of that dollar.
Is that healthy for the American economy? @Just A Man

​

It isn't just about the poor and needy.
It is also about a healthy economy.
And that requires more of those pennies being spent / circulated by more people and not sequestered as happens.
Please spare me the argument that invested pennies are as valuable to the economy as circulating pennies.


Moi
Taxation by equal pain

Make Pay
Its' Fair Share!​

A few years ago, Jimmy Carter commented that working people
don't live much better than welfare folks. Working folk use to be "Middle Class" and that meant something regarding quality of life.
Middle Class, GWTW

 

I am also a living example of rags to riches, I own a business with six centres across the UK in leisure and its currently expanding (well it will again after Covid)
My view is different.
I am grateful for being allowed to build my business in a country that gave me security from robbery, corruption and attack. Provided me with fit well educated workers, a stable and capable economy and gave me a safety net if I failed.
In return my country expects me to pay more into its coffers if I do well, they told me this at the beginning of my journey. It would seem petty for me to grumble about the deal now I've made it.
Yet many rich folk go to extreme lengths to avoid paying the tax they are asked for.

 

There will always be a wealth gap because there will always be a worth gap. Some people sinply have more valuable skills than others. And one of those skills is the ability to sacrifice and suffer hard work and scarcity now for prosperity later, and some folks simply can't escape their 'now'.

But that doesnt explain how some folks are nearly trillionaires. That incomprehensible level of wealth is only achievable by monopoly, which is only achieveable in the modern day with the help of corrupt government.

Eliminating the wealth gap is not possible. Reducing it requires that we take the international corporations' power of monopoly away. And the only way to do that is to reduce the power over all of us they have via the govts they control. The bigger we make govt, the more resources they pour into turning its authority to their favor. We have to make government smaller so the corporations have less authority to turn against the people.

And for those who still believe the govt is the people- can you really demonstrate that it serves the common folk more than the corporations? Or can you see how the more we regulate, the more we are regulated while the elites are exempted?

 

Agreed. I would not want to remove the wealth gap, I worked very hard to achieve my current position and I enjoy the fruits of this.
What I'm against is those who want to avoid the tax that goes with that wealth, for the reasons I have given above.

 

Can you expand on this please, as I don't understand your point.
To me it is governments (Especially of superpowers) that have the ability to bring Corporations to heal. the EU forced Amazon to increase its EU tax payment from a couple of million in 2018 (through complicated accounting) to $250,000,000 in 2019.
They did this by having the customer base of the whole EU, which gave them leverage.

 

Too many people make the wealth gap too complicated.

 

There really aren't extreme lengths, just the law. Welcome, by the way. The US has a progressive income tax system that some wealthy are punished by after paying 6.4% of the first $100K+ of each of their employees' wages/salary. The caveat is that the long term capital gains tax rate that is lower than the ordinary income tax rate. It used to be fixed, but now it's also progressive, running from 0% to 15% to 20% depending on the taxpayers status and taxable income.

The complaint is that only wealthy people enjoy paying tax on income at capital gains rates because only wealthy people invest. Fact is, for starters, that Long Term rates are available to assets held more than a year, thus the income isn't pure income. There's an inflation component that doesn't get factored into the complaint since personal assets are tied up in the investments. There is a risk component in investing in the economy, which generates more prosperity for more people. Further, consider that some of the most egregious incomes are attributed to the sale of businesses after what could be a 35 year career of reinvesting in the business and selling to be able to afford retirement. Should an asset built over 35 years be taxed as ordinary income in the year it is liquidated?

Further, punishing the wealthy with Long Term cap gains rate increases almost always decreases cap gains collections. Decreasing the rates almost always increases collections. So, who's being helped by attacking high earners?

The US and Eritrea share the distinction of taxing citizenship. That's why a Facebook co-founder renounced his citizenship before the IPO.

Another favorite target of the complainers was Exxon. At the time I looked, 75% of Exxon's production was offshore and taxed where the profits were earned. While Exxon was a largely global operation, it is headquartered in the US, paying 6.4% of its US payroll + income tax to the Feds. What is reported by the complainers is the global profit and US corporate income tax ,,, oh, and whining that Exxon gets to deduct the value of the crude produced in the US from US revenue --- ya know, depreciation.

Anyway, drink the Kool-Aid if you choose or do your own research. I recommend the latter.

 

The wealth gap use to be far more extreme than it is today so I don't know why people think it's worse.

Probably because they hear about it more or the population is simply bigger.

The wealth gap now compared to the industrial revolution is not even close. There was nobody in between back then, you were either very wealthy or dirt poor.

 

Trying to compare the two is fraught with problems. Everything from how much free land you owned, to how much tax you paid.
It doesn't really work, what's more the industrial revolution has never been held up as an example of humanity at its best.
If you look in more recent times you will see the gap growing with globalisation and automation.

 

It's called MONEY here in the colonies. PACs (Political Action Committees) funneling millions of dollars into political campaigns, 90,000 dollars a plate and up "fund raising dinners", corporate sponsored "fact finding tours" to exotic locales replete with the finest wine, women, and songs. If your businesses were over here you too might purchase a few politicians to pull strings in your personal or businesses favor. Cynical? Not a bit, it's how we do things here.

 

Doesn't matter how far back you go...the wealth gap has always been tremendous. Globalization has made it smaller.

The overall gap between the very wealthy and the rest may be a bigger dollar gap but it's far less people. Also there is not a clear defined role between rich and poor because now you have more people in all the different brackets.

Remember that the middle class is a relatively new thing in all of human history. It really doesn't take much to move up brackets like it used to. Hell, one popular Youtube video can make you not poor.

 

@mitchscove
If you assessment was correct and taxes were working we would not see a growing wealth gap.
Fact is the world has changed and taxation needs to change with it.
Globalisation has meant manufacturers can take labour to the cheapest bidder.
Automation means that skilled jobs once done ay 6 men are now done by one.
More and more people are moving into low paid retail and leisure jobs, but the same amount of money is being made. The obvious result is a smaller number of people getting a larger share.
I see no way of closing this gap between the needs of a civilisation and the tax needed to supply them, than to move the tax to where the money has gone.

Ah, understood. We call it lobbying. That's down to the government you elect I guess, not the size of it.
But yes, it is the government that needs to change tax law, not the corporations. How you achieve that is the tricky one.

 

As I say historical comparisons don't really work.
No one I know would want to go back to the wonderful days when one in three children died and disease meant life expectancy was 48 years.
In the modern world government provides things that were unimaginable even 50 years ago, but these things cost money. So the question becomes, how do you raise the taxes to pay for them and if not which ones do you remove.
In my experience anyone asked that question, quickly draws a line around the things they want to keep and points to those outside as unnecessary or too costly.

 

Incidentally Spooky. In the industrial revolution benefactoring was a very big thing, so anyone who came up with a new device could expect to get help building it and a fair share of the resulting profit.
Any gentleman taking advantage of this system would be black balled and become persona non grata.

 

Tricky indeed! Many a newly elected politician may be heading to the legislature with reform in their hearts, but once there party leaders take them aside to make clear just who runs the party and what they're allowed to do as newcomers. Add to that having a taste of life on the gravy train and going along to get along becomes the norm. Tricky ain't the word!

 

I didn't say there isn't a wealth gap. I did say that claiming the wealth gap is the result of an unfair tax system is not supported by the facts.

The gap driving the disparity in outcomes has been a power gap ,,, and that is exploding. Wealth is concentrating around Washington DC and has been for some time. Those who thrive on power have been working to break up families, and to marginalize religion and, more recently, to criminalize the practice of religion. Some of those same forces, being unconstrained by codified limits, are more powerful than the executive branch of government. Twitter can silence free speech ,,,, Facebook can not only silence speech, but evidence is building that they can nullify the choices of voters by enlisting their own vote counters.

We have a growing gap caused by technology that will cause a shift in society, but the powerful want to exacerbate that gap by opening our borders and allowing less educated people to flood the lower tier, denying opportunity for our citizens.

 

Yes, the wealth gap can be wide.
So is the distance between the horse who left the starting gate and walked the wrong way, and the smart one who ran hard and won.
With a few exceptions, most of the ultra-wealthy have become wealthy through exceptional ideas and performance, and in the process- created jobs and economic benefits for vast numbers of people.
Along the way, they have made millions of ordinary people into millionaires. Had you invested $1,000 dollars with Warren Buffet in 1964, you would now be worth $16 Million dollars. If you had invested $1,000 every year, you would be worth $124 million. The have less haven't been shut out of the potential for wealth- they just chose not to participate in it.


The complaints are a lot like a man failing to put in a garden but claiming that his neighbor who did and who produced a grand harvest- stole it from him and so he is entitled to part of the neighbors crop.

I'm in the process of educating a young relative about this right now. In his late teens first on his own, he rejected parental guidance, and ran life based on what he wanted right then.
No prudence, no consideration of tomorrow.
A few years later, after a car repo and several disasters from terrible decisions, he asked me to teach him how to change and build wealth. I agreed. The first year was slow, such a person has to learn to let go of old ideas to make room for new, then they have to become convinced those ideas are real and it's possible for them. I took him to a Berkshire shareholder convention, to show him what was possible- because there are many thousands of millionaires in the 40,000 people there, from all over the world; and he met many. I taught him the principles of money and life management, got him thinking right. Over the last two years, it's been fruitful. I taught him how to be a prudent buyer and then a prudent investor. He now owns a nice home, bought extremely well less than one year ago, that has grown in value so fast his equity already exceeds the loan balance. I also got him started in the stock market last January- and so far, his small portfolio has doubled in value. School continues, but he's learning pretty fast now. He too will be a millionaire.

The knowledge of how to do most of the vital things in life is hardly secret, and most wealthy people are happy to share what they know with people who genuinely respect the skills they have. Over my life,I've met many wealthy people, and always asked them respectfully to share some of their secrets- and nearly all do. People who blame the wealthy for being wealthy- will never get that help, and couldn't use it anyway. Wrong attitude.

If you want the fruits of a great crop, you have to plant a garden, and nurture it well everyday. If you look at how these ultra-wealthy people got that way, you would find most started with little or nothing. Warren Buffet bought his first stock at age 11 with borrowed money. Bill Gates left school and started what would become Microsoft in a garage- as did a great many other household names you recognize, like Amazon's Jeff Bezos. Today, Buffet employs around 350,000 people. His company now holds over $100 billion in cash, and he's always looking for companies and places to buy and expand. Almost all his wealth- along with that of Bill Gates- is pledged to charitable foundations to benefit all the world's people. Not support them today, but to make the future better and easier for everyone. But you still have to plant your own garden, and you always will. Today is always the tomorrow you failed to plan for yesterday- and that is why you are unprepared to do well.
These visionary men change the world- everyone's world, and make it better. What they do with that wealth nourishes everyone's garden one way or another.

There are some exceptions, but they aren't what defines the role of wealth in society.

 

The misconception here is that small government means less monopoly. The opposite is the case. The free market's natural outcome is a monopoly. Why? Because in the limit of perfect competition, profit reduces to 0. Therefore, for profit to be made, there needs to be competitive advantage, which evolves to monopolies. Can government interference result in monopolies? Yes. Would monopolies much worse without government interference? Absolutely.

One only has to look at he NFL: They have a salary cap and a draft based on reverse order. Thus, the worst teams get the best rookies. That's socialism. Why do they do it? Because without those rules, there would be one or two teams that ALWAYS win the championship. The result would be that people would lose interest and stop watching, thus even the best few teams would lose revenue, even though they would always win. In essence, everyone loses. Is that what we want for our economy?

 

This is going to take some unravelling.
I didn't say you said there wasn't a wealth gap. I said that if taxation was working as it should there would not be a growing wealth gap.
Therefore the tax system is not doing its job in collecting the tax from the right people.
The rest of your post I have no comment on, for as a Brit I have no way of separating fact from opinion.

 

The root cause of the wealth gap is the lack of a more equitable distribution of profit between the "owners" and the working people, not taxes. Rampant offshoring/outsourcing combined with uncontrolled legal and especially illegal immigration completely distorts the labor market depriving the working people of any bargaining power and thus turning the entire population into "cheap" labor.

Incidentally president Trump implements anti-outsourcing/offshoring policies and reins in immigration first time in decades and the median income jumps 13% first time in decades. Coincidence? I don't think so.

Taxation, welfare, minimum wage increases may serve their purposes but they will never even begin to solve the wealth gap issue while the labor market is grossly out of balance, it's just a band-aid at best, not a cure. Lest we forget that 90% of the taxes end up divided between Washington and their corporate donors anyway, the less fortunate would be lucky to get a small percentage of the tax windfall.

 

BRAVO ​

 

So follow leftest policy.
Umm, we have been trying to tell you that for some time now. You cant save your way to financial success, In America you HAVE to spend to make money. Every dollar better be working to make itself, and more.

A conservative that's learned finally.
Lets see if your fellow Trump supporters learn a thing or two.

 

The giant disparity has all occurred since 1980 and the era of DOWNSIZING when American companies began exercising that little phrase in their employee benefits packages. "We reserve the right to alter or amend this agreement at any time". And any similarly worded statements in their contracts with their employees. They then began to systematically downsize all long term employees over the age of 50 who had accrued lengthy service and the accompanying benefits of long vacations and higher salaries. They replaced these employees with new ones who now had a watered down salary and benefits package. Many of the companies that participated in this prided themselves on never laying off during the Great Depression, yet they got into this like there was no tomorrow.