Wealth distribution in the US

[Berkut]

Saw this on facebook.


http://beingliberal.upworthy.com/9-out-of-10-americans-are-completely-wrong-about-this-mind-blowing-fact-3?g=2


Assuming it is accurate, and I don't see any reason to believe it is not, I don't think anyone really thinks this is a reasonable state to be in. And well, the article itself makes that clear - over 90% of Americans think this is far, far, FAR from ideal.


Assuming we could muster the political will to fix it in principle, how could you fix it in a practical sense? What kind of legislation would a smart government enact to slowly (or not so slowly) adjust this back to where we as a society would like it to be?


I honestly don't know the answer.

[Richard Hakluyt]

I do have a quibble unfortunately. The presentation was talking about wealth, I would much rather it talked about income.

I have a good example in my family. Both of my grandfathers worked in the coal industry and for the latter 20 years of their working lives it was a nationalised industry with fixed payrates. But, one family had no wealth whatsoever, every payday they would go wild and blow it in the next 4 days. The other had modest but by no means irrelevant wealth, including a paid for house and savings.

Anecdote over. The point being that making wealth more equal requires far more intrusive action by the state than action which makes wages more equal.

[Eddie Teach]

Income disparity isn't as large though.

My proposal would be to raise capital gains taxes.

[Admiral Yi]

Assuming we could muster the political will to fix it in principle, how could you fix it in a practical sense? What kind of legislation would a smart government enact to slowly (or not so slowly) adjust this back to where we as a society would like it to be?

You just do it.  Pass a confiscatory tax on wealth, then redistribute the proceeds.  Then keep doing it whenever anyone accumulates too much.

[jimmy olsen]

Higher, more progressive tax rates would seem the simplest answer.

[Berkut]

Assuming we could muster the political will to fix it in principle, how could you fix it in a practical sense? What kind of legislation would a smart government enact to slowly (or not so slowly) adjust this back to where we as a society would like it to be?

You just do it.  Pass a confiscatory tax on wealth, then redistribute the proceeds.  Then keep doing it whenever anyone accumulates too much.

That is a terrible idea.

That is the kind of idea designed to make it seem like the problem cannot be solved in a reasonable manner.

[Admiral Yi]

Why is it a terrible idea?   

[jimmy olsen]

Assuming we could muster the political will to fix it in principle, how could you fix it in a practical sense? What kind of legislation would a smart government enact to slowly (or not so slowly) adjust this back to where we as a society would like it to be?

You just do it.  Pass a confiscatory tax on wealth, then redistribute the proceeds.  Then keep doing it whenever anyone accumulates too much.

That is a terrible idea.

That is the kind of idea designed to make it seem like the problem cannot be solved in a reasonable manner.

The American economy seemed to function in the 50-60s, even with a high tax rate. The Germans and Swedes seem to do okay now too. It all depends on what society is willing to bear.

[Berkut]

Higher, more progressive tax rates would seem the simplest answer.

No, actually it would be a stunningly stupid answer.

The wealthy did not get wealthy because their taxes were too low, but because our economic system is failing at distributing generated wealth.

The wealthy can stand to have taxes raised on them because they have such a huge share of the wealth, but that isn't the reason it became that way, and it is a horrifically bad idea to try to fix the problem in that manner.

[Berkut]

Assuming we could muster the political will to fix it in principle, how could you fix it in a practical sense? What kind of legislation would a smart government enact to slowly (or not so slowly) adjust this back to where we as a society would like it to be?

You just do it.  Pass a confiscatory tax on wealth, then redistribute the proceeds.  Then keep doing it whenever anyone accumulates too much.

That is a terrible idea.

That is the kind of idea designed to make it seem like the problem cannot be solved in a reasonable manner.

The American economy seemed to function in the 50-60s, even with a high tax rate. The Germans and Swedes seem to do okay now too. It all depends on what society is willing to bear.

I am not saying we should not raise taxes, but that isn't a solution to this problem.

I would almost rather continue down this path rather than try to ahve the government achieve income distribution via such a blunt tool as taxation.

[jimmy olsen]

Government by its very nature is a blunt tool. The government doesn't do subtlety, and looking for anything other than simple answer to a problem, however complex that problem is, will end in nothing but disappointment.

[Admiral Yi]

You could theoretically require everyone to save more or less the same amount, but that would still leave the problem of the existing distribution.  Much easier to just grab it and hand it out.

[Berkut]

Saying taxation is the answer is like saying that the only way to stop people from smoking is to take their cigarettes.

[Admiral Yi]

Your analogy mystifies me.

[OttoVonBismarck]

Yi's suggestion is the only workable one. The alternative is to somehow restructure the entire economy to insure that the results match some pre-defined desirable wealth distribution rate. Even the Euro countries that are/were big on everyone making the same amount of money (think Sweden in the days when you could pay more than 100% of income in tax) did so by taxation after the fact.

Of course the real answer is Berkut, after finished gorging on a few hours worth of articles at Salon.com rolled through Whole Foods and made himself a vegan black-bean truffle infused burrito with a side of fair trade soy milk and then opened up the DailyKos for the day and found another mindless leftist screed to vomit all over the forums.

Wealth inequality is simply put, unimportant. A properly functioning economy is going to give outsize rewards to some, wealth inequality is important in developing countries where those who aren't in the 1% are fighting over blades of grass to eat. In a developed country, as long as prosperity and general wealth are going up for the average individual in society then it doesn't matter how much more Mitt Romney makes than you. I think we've had this exact same conversation before, but generally suffice to say people are better off (across all economic bands) today than they were in 1980 or 1990. They'll probably be better off in 2020 than they were in 2000.