> We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy.
I'd be interested in hearing from those who consider this a surprising result. To me it seems entirely expected, but with online echo-chambers being what they are I have no doubt my lack of surprise could just mean I'm in an informational cul-de-sac.
> I'd be interested in hearing from those who consider this a surprising result. To me it seems entirely expected, but with online echo-chambers being what they are I have no doubt my lack of surprise could just mean I'm in an informational cul-de-sac.
What people think causes wealth inequality: Low tax rates on higher income people.
What actually causes wealth inequality: Corporate mergers, consolidation, lack of antitrust enforcement.
When does Zuckerberg have more wealth? When Facebook has a 900 billion dollar market cap and he pays a 70% tax rate, or when Facebook has a ten billion dollar market cap and he pays a 30% tax rate? (Hint: 30% of 900 billion is a lot more than 70% of ten billion. Also, he doesn't pay the tax until he sells anyway, which he doesn't.)
The problem with all of these studies is that people think the top tax rates were significantly reduced during Reagan, which is around the same time we stopped enforcing antitrust, so they see the effect of the latter and ascribe it to the former.
But we can distinguish them because the first one never actually happened. The nominal tax rates decreased a lot during Reagan, but that's because it coincided with the closure of a ton of tax loopholes that meant that high income people never actually paid those rates. Government revenues as a percent of GDP have basically been flat since the end of WWII and are about the same now as they were under Kennedy and LBJ:
So any study that purports to use this to show what happens when you "lower taxes" faces the trouble that the tax lowering never really happened in practice.
> When does Zuckerberg have more wealth? When Facebook has a 900 billion dollar market cap and he pays a 70% tax rate, or when Facebook has a ten billion dollar market cap and he pays a 30% tax rate?
This is a bad example. All else being equal, society doesn't care if there's one 100-billionare, or 100 1-billionares, if the rest of the income- and wealth- distributions remain the same. What really drives the inequality is, as you noted, consolidation, lack of antitrust enforcement. When a market is reduced to a handful of companies, that don't compete, but collude. And lack of labor organization to serve as a counterweight.
(This is meaningful because, if you split ownership of a company among more people, their personal wealth may be lower, but the company still acts as a unit on the market.)
Very interesting comment. Im not arguing for or against antitrust laws, just adding to the conversation.
If we had more companies competing in the same areas (5 equally sized search engines instead of google, 5 online shopping sites instead of Amazon, etc) - theres a strong possibility those 5 wouldnt be able to compete with giant international companies that arent subject to the same antitrust laws. (baidu, alibaba, etc)
So I wonder if America is better off owning these tech giants with all the harm they cause, or not having them at all.
> (This is meaningful because, if you split ownership of a company among more people, their personal wealth may be lower, but the company still acts as a unit on the market.)
That's the point of the example.
Zuckerberg owns a given percentage of Facebook. That isn't what increases over time. If he ever wants to spend any of the money, that only ever goes down. The reason he's a multi-billionaire is that a given percentage of Facebook causes him to be when Facebook is a single 900 billion dollar company when it wouldn't if there were a hundred Facebooks each of 1% the size and he only owned the original percentage of one of them.
> And lack of labor organization to serve as a counterweight.
Labor organization is just a different kind of consolidation. It's only useful against a monopoly -- otherwise the business has thin margins and there is nothing for a labor monopoly to extract -- but the correct response to a business monopoly is to smash it to pieces.
It's actually worse than that because we have a tax code that actively promotes corporate expansion.
If you're Walmart and you're making money and you've got a billion dollars in after-tax profit, what do you do with it?
You could reinvest the money in the company. Open more Walmarts. Then you have a billion dollars to invest.
You could pay it out as dividends to the shareholders. Then the shareholders, they're investors, they go invest in something else. Somebody goes out and builds more Walmart competitors. But dividends are income, even if you reinvest them. So if Walmart keeps the money and uses it to build more Walmarts, they get a billion dollars. If they pay the money out to the investors to invest in something else, and there is a 15% tax rate on dividends, there is only $850M to invest in the competitors. That's a huge disadvantage for the competitors, which induces the shareholders to prefer to invest in building more Walmarts.
Now guess what happens to that incentive if you raise the tax rate on dividends to 25%.
We could fix this by making dividends a tax deduction to the corporation. Right now Walmart makes a dollar, they pay corporate tax on it, then if they reinvest it themselves, no more tax. If they pay it as a dividend, it's taxed again before it can be reinvested in anything else. If the dividend was a deduction to the corporation, it would be taxed either to the corporation or to the shareholder, but not both as it is now -- and so there would be no preference for keeping the money inside the corporation and increasing its size.
This sounds like "tax cut for corporations / rich people" but it's really just doing away with the tax penalty for removing money from a corporation to invest it in a different one. Which is the thing that reduces wealth inequality.
But even if the corporation reinvests that money back into the corporation instead of distributing dividends, wont shareholders have capital gains tax if they try to sell the stock after it increases in value from the reinvestment?
I don't think this is surprising either. The whole "trickle-down economics" arguments for such tax cuts have always sounded... bullshit (for lack of a better word), exacerbated by the fact that decades of it (since the Reagan era in the US, for example) has only served to make the rich richer, poor poorer and erode the middle class completely. If it was a brilliant idea (i.e. the idea that the the only thing holding back the rich from elevating everyone else from poverty were those pesky low 10s of percent taxes) that worked, everyone would've been favor of it and we would've eliminated taxes for the rich completely by now.
It's always good to have scientific data and analysis confirm your intuition, though.
The poor are not getting poorer and the middle class is becoming rich. In the US anyway. Fundamentally the problem is that people think that someone having more money than then is some kind of ethical issue. Not to mention something like 100% of these analyses are univariate and that makes no sense at all since it's perfectly rational that a 20 year old has much less wealth and income than a 60 year old with an advanced degree and 40 years of work experience.
We could just as easily be outraged that some people have more life expectancy than other people. Seems unfair that a person who is 60 and has 15-20 years of life left has to work 40 hours per week to maintain their lifestyle which is exactly the same amount of hours a 20 year-old who has 55-70 years remaining expects to work in a week.
Citations? (I recall reading an article claiming this is what happened to the middle class about a decade ago, but I don't remember where or how trustworthy. It's hard to reconcile with the real lack of increase in real wages.)
I feel like this is a straw man arguement - There is a presupposition that the only purpose of tax-cuts here is trickle down effects. There is also a concern of increasing inequality.
Modern Inequality is _not_ driven by tax rate. The tax system in the USA is a income tax (the only thing authorized in the constitution). What folks here have created is wealth that is relatively il-liquid. What has changed is that interest rates are low enough that the wealthy have used loans against their stock to generate revenue. This is also because of the government working to keep interest rates artificially low.
On the flip side, the poor in America pay virtually no federal income tax, and rarely state income once tax credits and rates are worked in.
So who would increasing the tax rate hurt? The middle class - upper middle class in particular. They don't have the capacity to do investment backed loans to circumvent income tax, nor do they qualify for reduced tax rates (often zero at a federal tax level) for poorer Americans.
I suspect the point where tax rates for the rich matters sailed a long time ago. It was effective in some places, ineffectual in some other places. It certainly was part of the financial breakthrough in the 1980s, but had other problems.
So instead, a more basic question - what is a fair level of taxation given equal protection clauses in the USA? and also given that we don't want to disincentivize people working to better their own financial situation.
Thank you! If you want to focus on inequality and the lavish spending of the rich look at a progressive sales tax, value-added taxes, inheritance taxes, and progressive capital gain. That is a hyper rich have unrealized wealth, whereas the middle class relies on income.
If the hyper wealthy get a 0% loan on assets to make a purchase, there is still a sale which is a taxable event
In the distant--but not too distant--past, "the rich" often meant business owners who might make a lot of money, but employed a lot of people. The idea of cutting taxes would mean more available capital for business expansion.
It's not really the case so much anymore. A decent Silicon Valley salary would put you in the top 10% of earners, and a Python programmer doesn't usually hire a lot of people. Top 1%ers tend to be of the financial rent-seeking sort, who might hire some people, but they're not expanding the concrete pylon plant to another state or anything like that, which would expand middle class wages and/or employment.
The gutting of the industrial base since Reagan cut high tax rates for the top earners demonstrates that things don't always work out how you expect.
Business investments have always been a deductible expense. The idea that by saving rich people money, they would invest it in their business, is obviously bullshit; they can just invest the money and not be taxed on it anyway.
It's doubly bullshit given that businesses are also separate taxable entities. Don't take the money out of the business if you don't want it to be taxed as income; invest it back in so it becomes an expense, and neither you nor the business (effectively) pay taxes on it.
So, no. Even with a solid industrial base, "trickle down economics" was still just as obviously bullshit.
A RAND Corporation study from a couple of years ago concluded the upward redistribution of income has cost American workers $50 trillion over the past several decades:
> We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy.
an unsurprising find, considering its birthright was US president Ronald Reagan who had invented it out of whole-cloth to evangelize and tantalize neoliberal reforms during his presidency.
It strikes me as fascinating that so many of these reforms, once touted as essential and prudent, have over two or more decades proven to be outright political grifting.
I doubt tax cuts for the rich would do it alone. Perhaps when combined with a 40 year copyright extension will we really see a flourishing of the poors.
We've almost cracked it. Let's lower the definition of high speed internet to 500 Kbps, raise the short term interest rate cap to 3600%, and repeal the Onion Futures Act.
I'm not sure using taxes as a way to combat income equality is effective either. Just because taxing the rich less allows them to make more money does not imply taxing them more allows the non-wealthy to prosper.
I think the point is not that it's taking money from the rich. I mean, that's a necessary part of it. The point is that that money is forced to recirculate in the system.
The thing people seem to forget is that taxed money doesn't just disappear. It right back into the economy. The target, predominately, is the working class, either directly via Gov't employee wages, or social programs. Or it goes back indirectly, through Gov't contractors. At which point it filters back up the system to the rich.
The rich do not usually sit with cash in their bank account, and even if they do the system is built to keep that money recirculating. Banks use fractional reserve lending to take those deposits and lend them out several times forward. Otherwise the money gets invested in companies from your large caps, small caps, VC, to angel funding, etc...
Basically there is no such thing as stagnant money imho.
What taxes imply (again in my opinion) is that we believe the government is better at investing that money than the economy participants themselves. In some cases that is true where the return is over several decades or there is little to no direct monetary return at all (but still very necessary - social programs). But in many cases it is not.
I think it's also key to distinguish between wanting to "combat income equality" and "allow[ing] the non-wealthy to prosper." There's that old Thatcher parliament quote responding to concerns about rising inequality, where she characterizes the left as being pleased if the poor become poorer so long as the rich fall further.
I think taxes (if we plug various holes) can decrease income inequality, but the challenge is efficiently spending the proceeds in a way that lifts up everyone ... and not creating firehoses of public spending that primarily benefit the same small pool of companies.
I see this argument thrown around a lot. It seems like previous research has also indicated that this was the case. However, I have some questions:
1. If "The Rich" (This paper defines them as the top 1% income earners) having tax reductions does not grow the economy or reduce unemployment, is there a wealth bracket in which tax reductions do grow the economy?
2. Does raising taxes on "The Rich" grow the economy?
It seems like this is the kind of research done to solve an argument, but if we actually think that tax rates should factor into economic policy, then we should determine the actual effect of taxation policies on every quantile, not just the top 1%.
Is it possible that it moves the Overton window? I mean, in the US there has been serious funding for decades aimed at moving the needle around things like guns and taxes. And that organized long term effort has been very successful. Possibly some of these things may result in some swing back to the middle?
One thing that really holds back the US is that we have no major left-wing parties. The Democratic Party is to the right of the Tories on health care, and about where Germany’s CDU is on the environment. The middle isn’t even in our Overton window.
If you had a free market, then the rich would either invest their money or they would lend the money out at a reasonable interest rate. The latter doesn't actually happen because they also have the option of simply holding onto it if nobody borrows it. (Of course in fractional reserve banking new money is created with every loan but the lender's money is out of circulation).
Money has an insurance effect. Simply having money lets you pay off random expenses. It also doesn't spoil like goods. If we had a grain money system, then the central bank would pass the cost of grain storage onto the holder of the dollar bill which would give the lender an incentive to lend it out even at 0% interest, which protects the lender from the storage costs. This is known as liquidity preference. The borrower has to compensate the lender for giving up the liquidity benefits of money.
Right now cash itself has no storage costs, so nobody will lend it at 0% interest.
In theory giving the rich money through lower taxes lowers the interest rate because they lend it out. However, as I said, there is no mechanism that actually lets it fall to 0% (extreme cases like deflation can in theory justify negative rates). If you were to charge a negative interest rate on a bank account to enable 0% loans, then people just pull their money out and hold cash instead.
The free market basically ends the moment markets are saturated and everything only makes enough money to cover its own costs with 0% profit. This is one of the areas where Marx was correct. Once profit is gone, the system collapses because someone forgot to enable the 0% interest feature of money.
I'll approach this from a different perspective, in the last 20 years can pro-higher tax proponents provide proof of a single program that actually improved the quality of life of US citizens in the middle class? I suspect, many will spring up and suggest Obama Care, but where is the data to support this? I know myself and my families health insurance continues to rise and rise (self employed). My mother is on Medicare and pays absurd prices for her diabetes medication and testing equipment (smart device). Democrats continue to fail to address the costs of medical care for middle class and even upper middle class. There are programs for low-income but once you reach middle class levels all these programs no longer qualify.
We all work hard for our money (ok maybe not all), but my mentality is let me accumulate as much wealth as I can (I'm better at investing and returning yield on money) in my younger years. I'll make the decisions which programs/charities and people I wish to support.
So what you're saying is "because I personally don't see the benefit, I don't want the rich to be taxed higher", and for some reason are conflating your middle class income with that of the uberrich?
I don't think anyone is suggesting "Hey, let's increase taxes on those making under a million a year". But there is no good reason that the people making a billion a year are paying the same 37% as the people making $600k.
Except that's not what is being proposed (they claim their tax hikes only affects the ultra rich which is patently false). Also, I am not middle class, and I plan and have goals to continue to make more income and grow my wealth for myself and my family.
Biden's plan to eliminate capital gains or increase it is bad for everybody and investment and growth. The income cap to be able to contribute to roth-ira (tax free growth) is absurd. Everybody should be able to contribute the maximum to a roth regardless of income. Ok, I'll do back door conversion or mega backdoor (Biden plan calls for elimination of back door conversions).
There is a war on wealth, and it's not just against billionaires. This is just what they want you to believe.
Okay, so you're asking for examples of improvements to the middle class, because you don't see them...and that's coming from a place of legitimately not knowing what it's like to be middle class. Fair enough then.
The income cap to be able to contribute to a Roth IRA is indeed absurd, but has also been around for a long time; that's not a Biden thing. Biden's plan isn't to eliminate capital gains (what even...), but to tax it as income for those making over a million; while certainly debatable, that doesn't equate to "bad for everybody and investment and growth" without, you know, some sort of argument as to why (trickle down economics maybe? :P)
There is a war on wealth - really? An increase of 2.6% on dollars earned above $539,900 (higher if filing jointly). Yes, that's clearly a war on wealth; clearly, that's going to make everyone destitute.
I think now is a really hard time to ask "what have my tax dollars gotten me?"
- We all got free vaccines, produced in record time.
- A lot of people are getting the child tax credit.
- A lot of people got extended or expanded unemployment benefits.
- Some jobs were sustained by PPP funding.
- A lot of people were able to stay in their homes both because of eviction moratoriums and rent repayment programs.
- Literal military personnel were setting up and staffing hospitals.
Sure, you might say, but all these things are temporary responses to a short-term-ish crisis. And that's true; and that's also partly what the state is for, right?
But in normal times, I was raised middle class and:
- I went to 3 public schools and a state university
- Growing up my parents regularly took me to the public library. I later became a volunteer there.
- When I commuted daily, it was on public transit.
- I backpack in USFS wilderness zones. I maintain a plot at a community garden managed by my city's parks department. When it's sunny I run through a park with a literal polo field.
- When I am choking on wildfire smoke, I know that state and federal firefighters are trying to control it.
- I haven't had the time yet, but I want to take free Spanish classes at my city's community college.
- I drink clean municipal tap water and flush into a municipal sewer.
- And basically every item I've bought has traveled over public roads, bridges, etc, which I navigate with GPS.
I'm not saying we get a good deal. Public spending is often laughably inefficient or downright corrupt. But to pretend one doesn't benefit at all seems like it's failing to notice a lot of the fabric of our world, or appreciate how much worse it could be.
I used to believe taxes were a good way to redistribute wealth. That is until I moved to San Francisco and saw how a welfare super state prioritizes its spending. $75,000/tent/year homeless camping sites, 2 million heroin needles, community ambassadors who aimlessly wonder the mission district with multilingual pamphlets on how to sign up for welfare benefits. Billions funneled to nonprofits, who in turn support politicians. Lavish state retirement benefits at the expense of cutting community services.
Sure, raise taxes on the rich, but the plot is lost.
We shouldn't tax work at all. We should tax resources and land because they are part of nature and we should use them as little as possible for efficiency's sake.
A tax on work basically tells us to use people as little as possible, e.g. use more automation than necessary. You end up with a situation where you both have too many robots and too many unemployed people.
> We should tax resources and land because they are part of nature and we should use them as little as possible for efficiency's sake.
I own land, and do not believe property should be subject to any tax. Are we citizens with property? Or surfs where the state, grants us the ability to use land?
That's not true. If the money is wasted, why tax at all? It seems punitive. Many that wish to see money lit on fire, rather than put to productive use.
I hope nobody reading this actually falls for your weaksauce argument... You are literally using the false dichotomy logical fallacy https://en.wikipedia.org/wiki/False_dilemma again, those are not the only two options:
you say:
> I used to believe taxes were a good way to redistribute wealth
and then, you don't believe that works because:
> I moved to San Francisco and saw how a welfare super state prioritizes its spending
So you are suggesting that the ONLY other possible option when the rich are taxed is that those taxes are mismanaged, but that is just not true: certainly there are varying degrees of "mismanagement" possible. In particular some of those mismanagement scenario might still result in better outcomes for less wealthy.
Given your other comments I'm sure you are already thinking: "who even cares about the less wealthy" but that seems to be the topic of the discussion, the original post is about how tax cuts don't result in "trickle down", which is how they are marketed and sold to the less wealthy.
I see you live in San Francisco, presumably you haven't lived there long, and presumably you've never actually talked with a homeless person or a "less wealthy" individual who would benefit from your ideas.
SF spends over a billion dollars a year on the homeless, and I have trouble finding a homeless person who receives 10 cents. The money, I'm suggesting, is almost all stolen, it ends up in salaries, pensions and political donations - with almost nothing reaching the homeless.
Collectivism is a great concept. It's academic, and you have the ability to accuse strangers of "not caring about the less wealthy". Personally, I think you are a fool who is being taken advantage of by politicians who are stealing your money to pad their pockets.
My challenge to you, is try to find some of the billion dollars SF spends each year on the homeless to reach just one individual. Just one person. Then come back and ask me for more money.
we got it, you don't like SF government. You don't have to manage tax money like SF does only because you decide not to do rich tax cuts. Again, it's a false dichotomy.
And the fact that SF government doesn't work doesn't negate that tax cuts for the rich don't trickle down, so why should the 99% support these cuts if they are not going to benefit from them?
I don't want you to vote against your interests, I want all others to vote in favor of theirs (against politicians that sell the tax cuts as "trickle down economics")
I think you are economically clueless. Reading may help you.
Rather than raising taxes and cutting spending, our leaders, including Democrats and the Fed have printed enormous amounts of money to help the poor. The average American family last year received over $50,000 in COVID related support including the Child Tax Credit, expanded SNAP benefits, Unemployment insurance and ability to wave loans including student debt and mortgages.
What is the point of tax increases when we have exactly the same result printing money?
Ironically, the primary driver of inequality, that you complain about is the FED's purchases of bonds which suppresses interest rates on the long end - and holding interest rates down on the short end. This makes stocks appear to be cheap. The stock market is correlated with the FED's balance sheet. Adjusting income taxes, will do little or nothing to address wealth inequality.
Buddy, this thread is about the long running art of "vote for me, I'll cut taxes for the rich. What you say? You are not rich? No worries, the rich will make sure those cuts help you out as well" and whoever believes it. It makes no logical sense, but people believe it. The article at the top seems to point to those cuts not trickling down.
It's funny because it's not even about increasing taxes, it's just about the CUTS. You are going to be ok, don't be scared...
I see what is happening here. I'm talking about economics and you are talking about political slogans from the 1990's. That doesn't sound very fun - its like talking with a church person. Your point sounds like, no tax cuts because my slogan says so. My point is, it doesn't make a difference either way. The Fed's balance sheet drives wealth inequality. Hard stop. No one is helped or hurt by cuts or increases because we simply printed the money, with no loss or gain.
If it makes no difference either way, then let's finally stop those tax cuts and prove that it doesn't make any difference! Love me some common ground.
Just one thing tho:
> Your point sounds like, no tax cuts because my slogan says so
ehm, nope. I don't have a slogan, I have some research (the original post https://academic.oup.com/ser/advance-article/doi/10.1093/ser... ) that contradicts the 90s slogan that still is used today to justify cutting taxes. So hopefully this and more peer reviewed studies will put the practice justified by the 90s slogan to rest.
Yeah good luck with that. The Democrats hold the House, Senate and Presidency and decided against the policy you argue for (austerity), in favor of debt monetization and liquidity. But they went even further, In the BBB bill, they favored tax cuts for the rich through bringing back the State and Local Tax deduction (SALT). I'm not sure who will enact your punitive tax increases. Any ideas? AOC and Warren represent a very small minority.
Current policy discussion doesn't change the result presented in the article, the only thing I've been discussing.
> your punitive tax increases
again, never even talked bout INCREASES, only stopping cuts. Do you know the difference between not cutting and increasing? If you do are you just trying your hand at fearmongering? Nah... you seem the kinda folk who would only argue in good faith.
Well I'm certainly for tax cuts. Especially in California - a high tax/very low service state. I mean just walk outside of your apartment dude. If you see that as a success story something is wrong with you. I'd never look at SF or California government and say "Keep doing that".
friend, are you seriously going back to the beginning of the thread and trying to say California is bad, then tax cuts are good? Are you stuck in a loop? do you need help?
I live in a former socialist country, with current "left" (red star in the logo) parties, who scream a lot about "tax the rich".
In reality, if you look at their proposed policies:
* nothing happens to the poor (since they already pay almost zero taxes)
* nothing happens to the rich, because they start a company in bosnia, or delaware or panama (I have no idea how the panama papers were forgotten by the people and the media), funnel the money, and again pay (almost) zero tax
* and me, an engineer with an above-average paycheck, but way below "rich"? I get fucked with the higher taxes.
I don't need the rich to have higher taxes, I'd be happy if they atleast paid the current ones, or atleast the same percentage of income (in real sense, not accounting sense, since there are many ways to earn very little on paper, but buy a lot of stuff with that) as I do.
Someone is employing you. The tax burden is effectively split between you and them, even if nominally you are paying it. You pre tax salary is an expense to your employer, which if not expensed, would likely get taxed at the highest tax rate.
Wealth is again, mostly just leverage on the working class future product. in that sense they already own atleast half of it, just defining it as income instead of wealth.
What I'm saying is, that I, in slovenia, pay around a half of my gross income in different taxes and "benefits" to the government. If my income is around the slovenian average (average is a bit below 2k eur montly, but i'll round it up), my "gros-gross" from 2k(what my employer has to pay, because of additional taxes) is 2.322eur, and I get 1300eur net to my account (55%) - the rest goes to the government. (employer pays 27.864 yearly, and you get 15.600 yearly)
If you're average, or a bit above average, you pay around a half of what you make to the government.
Due to income tax brackets, this percentage changes (eg, my 10k gross, means 11.610eur the employer, and I'd get 5176eur (~45%) into my account)... 10k is basically "rich" here. (Employer pays ~140k yearly, and you get ~62k net yearly)
But, if your employer is willing to pay 11.610eur per month for you, and you want to get more out of that, you can become an independent contractor in slovenia (to have medical and pension insurance), and this will cost you ~500eur per month (including the costs of minimum accounting and a new bank account), so ~6k per year. Then you open a LLC in bosnia, which will cost you a smiliar amount of money (paperwork, accounting,...), so another 6k eur. Then your bosnian company charges the 140k for your work to your employer, and get taxed by bosnian rates, at only 10% on the first 100k of profit (so 140k-12k is 128k, so the first 100k is taxed at 10%, and i'm not sure about the next bracket, but let's say 30%, so 90k net from the first bracket, and ~20k from the second one), which means you get ~110k net income, or a bit over 9k monthly (almost 80%)
So, if you don't earn a lot, you're stuck with high taxes. If you earn a lot (by slovenian standards, 10k is a lot), you can avoid most of the taxes, by starting a company in bosnia. If you earn a lot-lot (millions), you have even more posibilities of avoiding taxes, and pretty much every rich person does this to minimize their taxes.
So, I don't want the current 55% (sum of all) taxes to be raised to 90% (or whatever) for the rich, I just want them to pay the current 55% at all, and not be able to avoid them and pay only 20% (which is less percentually than a minimum wage worker pays).
My point is the employer already effectively pays the 55% tax rate for the minimum wage worker. The employer has to budget for the pretax gross pay of the worker. From the point of view of the rich, poor people’s income tax is rich people’s consumption tax. rich people consume poor people’s labor.
Funny enough you will always have two type of poor people, ones who will do what it takes to become rich and those who believe since someone else is rich they should be entitled to it because of fairness.. Because why not get paid for no effort, right?
Nationally it is estimated that workers are not paid at least $19 billion every year in overtime[12] and that in the US $40 billion to $60 billion in total are lost annually due to all forms of wage theft.[13] This compares to national annual losses of $340 million due to robbery, $4.1 billion due to burglary, $5.3 billion due to larceny, and $3.8 billion due to auto theft in 2012.[14]
Does your "Toddler's Guide to Economics and Taxation" say anything about freeloaders who leverage public services in a stable republic to build a fortune and then refuse to pay their share of upkeep on those services and that republic?
If stealing corrects unjust inequality then it is, in fact, good. Yes.
This is literally the principal behind "if you are starving it is not morally wrong to steal food." Which I know a lot of people disagree with and I don't need to hear the arguments about again. But my conscious is clear; some forms of theft are not wrong.
Oh shit really? I actually don't know much about politics, is that what socialism is? I do think I'm a leftist, but so are a lot of people who don't hold this view, so I don't think that alone would be sufficient to communicate it. Plus, the weight of this conviction has much more of a basis in my religion than my politics so it's arguably not even relevant.
Anyway I am quite well paid myself these days, so I have no need or moral justification to steal.
> We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy.
I'd be interested in hearing from those who consider this a surprising result. To me it seems entirely expected, but with online echo-chambers being what they are I have no doubt my lack of surprise could just mean I'm in an informational cul-de-sac.