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Source: (consider it)
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Thread: Taxes – where inequality is good
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Jay-Emm
Shipmate
# 11411
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Posted
quote:
Originally posted by Dave W.:
....
I suspect we're writing with very different images of "owners" in mind; if you think of the owners of a struggling mom and pop corner store in an otherwise thriving city, does their increased risk vs. that of their employees seem more believable?
Possibly, although if they are struggling then they ought to be gaining from a progressive tax.
Posts: 1643 | Registered: May 2006
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Ruudy
Shipmate
# 3939
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Posted
quote:
Originally posted by Dave W.:
I suspect we're writing with very different images of "owners" in mind; if you think of the owners of a struggling mom and pop corner store in an otherwise thriving city, does their increased risk vs. that of their employees seem more believable?
Marginal income of all business owners - whether mom and pop or large corporation - should be treated the same as the marginal income of workers. If the original capital invested in the business was after-tax capital then they should not have to pay taxes on the return of that capital, but returns on that capital should be taxed at the same progressive tax rates as ordinary income.
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The shipmate formerly known as Goar.
Posts: 1360 | From: Gatorland | Registered: Jan 2003
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no prophet's flag is set so...
Proceed to see sea
# 15560
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Posted
quote:
Originally posted by Ruudy:
Marginal income of all business owners - whether mom and pop or large corporation - should be treated the same as the marginal income of workers. If the original capital invested in the business was after-tax capital then they should not have to pay taxes on the return of that capital, but returns on that capital should be taxed at the same progressive tax rates as ordinary income.
Which to a degree happened in the 1970s, with major changes to business/corporate income tax with the Reagan/Thatcher/Mulroney/others era. The brilliant idea was to reduce gov't services and provide small income and other tax cuts to the average individual taxpayer, and massive cuts to corporate tax. The ideology was that businesses would use the money they keep for 'innovation', 'job creation' and society and everyone would be better off as that all gushed down. Instead, the result was increased corp income, privatised gov't services and other things like railways and utilities which resulted in increased consumer costs, reduced real wages (what income can purchase), and the beginnings of off-shoring of jobs because free trade was also part of the ideology. They also massively increased military spending. We're all still paying for their conservative international debts and mismanagement.
My point is that you'd have to reverse 35 years of ideology, globalisation and received wisdom.
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Out of this nettle, danger, we pluck this flower, safety.
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Posts: 11498 | From: Treaty 6 territory in the nonexistant Province of Buffalo, Canada ↄ⃝' | Registered: Mar 2010
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Bullfrog.
Prophetic Amphibian
# 11014
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Posted
quote:
Originally posted by Eliab:
quote:
Originally posted by leo:
quote:
Originally posted by Marvin the Martian:
If that's so obvious, why does virtually everyone in the entire world have (and agree with) the concept of personal property?
Original sin - selfishness and greed.
And yet "Thou shalt not steal" made it into the big ten. As well as "Thou shalt not covet...anything that is thy neighbour's".
Either the decalogue is 20% redundant, because those commandments have no content if your neighbour owns nothing to be stolen or coveted, or there is a concept of private property which is consistent being fair, honest, not greedy, not selfish and not envious.
Original sin precedes the Decalogue. It's what makes law necessary.
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Some say that man is the root of all evil
Others say God's a drunkard for pain
Me, I believe that the Garden of Eden
Was burned to make way for a train. --Josh Ritter, Harrisburg
Posts: 7522 | From: Chicago | Registered: Feb 2006
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Dave W.
Shipmate
# 8765
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Posted
quote:
Originally posted by Ruudy:
quote:
Originally posted by Dave W.:
I suspect we're writing with very different images of "owners" in mind; if you think of the owners of a struggling mom and pop corner store in an otherwise thriving city, does their increased risk vs. that of their employees seem more believable?
Marginal income of all business owners - whether mom and pop or large corporation - should be treated the same as the marginal income of workers. If the original capital invested in the business was after-tax capital then they should not have to pay taxes on the return of that capital, but returns on that capital should be taxed at the same progressive tax rates as ordinary income.
As I've said, I'm not arguing that differing risk justifies different tax treatment - just that the risk actually is different.
And on reflection I'd agree that the risk isn't always greater for an owner, though it may be. My first real job was for a startup founded by a fellow grad student. He put all the money he could scrape together, plus a fair amount of what he would have been paid as an employee, into the company. That money was at risk - he would have lost it all had the company failed, as it nearly did at one point. As an employee, I would have been (at least) very seriously inconvenienced - but at least my savings weren't tied up in that company, so it wouldn't have been nearly as bad for me.
As it happens, the company was bought by one of its customers. (And there was much rejoicing.) The purchasing company had an employee stock purchase plan. Eight years after leaving, I still have some shares left, so I'm now an "owner" and not an employee. But now, because of the diffuse nature of ownership of a publicly traded company, I'd say the risk of a failure is far more serious for an employee than for me or the vast majority of the other owners.
Finally, I don't think that the idea that investors somehow deserve to be rewarded for taking risks is the standard argument for lower tax rates on dividends and capital gains - at least, it doesn't appear to be the one that economists use. According to Wikipedia quote:
...the most common argument is that it encourages investment, which creates jobs and helps the economy grow, even providing more revenue than a higher rate.
The connection is disputed, however - that article includes a plot from a study arguing that changes in the capital gains tax rate appear to have no discernable effect on GDP growth.
Posts: 2059 | From: the hub of the solar system | Registered: Nov 2004
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Soror Magna
Shipmate
# 9881
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Posted
quote:
Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top
of the income distribution. The share of income accruing to the top 0.1% of U.S. families
increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009
recession. The evidence does not suggest necessarily a relationship between tax policy with regard to the top tax rates and the size of the economic pie, but there may be a relationship to how the economic pie is sliced.
Posts: 5430 | From: Caprica City | Registered: Jul 2005
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Soror Magna
Shipmate
# 9881
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Posted
quote:
Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top
of the income distribution. The share of income accruing to the top 0.1% of U.S. families
increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009
recession. The evidence does not suggest necessarily a relationship between tax policy with regard to the top tax rates and the size of the economic pie, but there may be a relationship to how the economic pie is sliced.
Taxes and the Economy: An Economic
Analysis of the Top Tax Rates Since 1945,
CRS Report for Congress
Prepared for Members and Committees of Congress
The report the Republicans don't want you to read. (PDF)
Posts: 5430 | From: Caprica City | Registered: Jul 2005
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