When do you consider someone "wealthy" or "rich"?

Discussion in 'Business & Economics' started by Seattle, Aug 8, 2019.

1. billvonValued Senior Member

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You were replying to my post in which I said "We would then defund roughly 95% of the government." Thus your reply "You mean wealth re-distribution" was incorrect.
I'm beginning to think you don't read posts before you reply - you just insert your agenda and start firing away.

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3. SeattleValued Senior Member

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I was responding to Iceaura. I posted just below his post.

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5. iceauraValued Senior Member

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Taxing it, yes.
And also taxing wealth inequality. That's a huge pile of currently very lightly taxed stuff.
I was proposing adding a wealth tax to an actually or "effectively" progressive income tax (a restoration of the income tax structure before Reagan, with capital gains income treated equally) - a wealth tax on the rich progressively extrapolated from the wealth tax the lower classes already pay.

That would tap the entire accumulated productivity gain of the the US economy since the 1980s.

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7. sculptorValued Senior Member

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the us economy contracted 32% since the covid lockdown.
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the average congressman is a millionaire
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the elites will always write laws that favor the elites.
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the elites will always rule
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8. JeevesValued Senior Member

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It will shrink more in the next wave.
Many are multi-millionaires, but not quite: according to wiki:
For 2018, the median net worth of members of Congress was $511,000. Of course. That's what elite means. However, the casting is subject to change. The elite of one period can quite suddenly become the piled headless corpses or, if they're lucky, foreign taxi drivers, of the next period. At this moment, I can readily imagine the US elite waiting to enter, stage right, with rows of coloured ribbon on uniformed chests. But that's only one of the possibilities. 9. SeattleValued Senior Member Messages: 6,028 A capital gains tax is double taxation. Not having it also discourages investment/saving and (historically) the government has raised more revenue when the capital gains tax has been lower. Changing that would be a really bad idea. 10. Xelasnave.1947Valued Senior Member Messages: 7,919 There should be a tax on poverty. Alex 11. JeevesValued Senior Member Messages: 4,570 Just as a disincentive, or to raise revenue to fund the militarization of urban police? Xelasnave.1947 likes this. 12. JeevesValued Senior Member Messages: 4,570 How so? What's being taxed twice? As I understand it, the tax is only on the profit, or part of the profit you make when selling an asset. Conversely, capital losses are generally written off against capital gains, and sometimes against regular income. Most business people wouldn't like to see the second eliminated along with the first - but you really shouldn't get to keep the cake you already ate. First, I don't see how this could be the case. Why would anyone be discouraged by a tax break? Second, investment does not equal saving, and those separate activities are not necessarily influenced by the same conditions. 13. Xelasnave.1947Valued Senior Member Messages: 7,919 And tax religion, not the church but those who attend, a disincentive tax just like taxing tobacco..it's only for the good of those taxed certainly not for the money ... as for the churches etc just a one percent annual wealth tax so we can do away with all other tax. The good thing is attendances would not drop off and the churches can afford much more than one percent... On a serious note tax religious organisations to fund free health care ... even god could not object to that. Alex 14. SeattleValued Senior Member Messages: 6,028 No one is discouraged by a tax break. We are talking about not having a tax break. If you don't keep the asset for a year the rate is the same as ordinary income. It's only if you keep it for more than a year that the rate is discounted. Investment is "saving" your money as opposed to consuming it. 15. SeattleValued Senior Member Messages: 6,028 Regarding the median Congress member having a median net worth of$500k, I don't think I would want someone to be in Congress, in most cases, who had a net worth that low and I don't think it's really reflective of their net worth. The median for Senators is about \$3 million. Even with Representatives there is the present value of the future value of their pension so that number should be much higher if you include that.

For anyone who owns their own house and lives in a big city their net worth should be that much. Most Representatives are old enough to have houses that are paid off.

16. JeevesValued Senior Member

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You wrote
Which I took to mean not having a capital gains tax. If not that, what did you mean?
The rate of what? Do you mean %tax on profit from a property you buy and sell in the year is taxed as part of your income for that year? That makes sense.
How do you mean, discounted? That the % tax on profit from a property you've kept longer is reduced? That sounds like a break - big or small, depending on the property.
So, again, what's being taxed twice?

Nobody I know consumes money. They spend it, save it or invest it.
If they have little take-home income, they have to spend all of it on food, clothes, utilities, shelter and transportation to work - so, yes, some of what they spend it on is consumed. However, the money itself recirculates in the economy, helping to stabilize the movement of staples. It is not consumed.
If they have a little more than they need for subsistence, they might save it in a coffee can. In that case, the money is out of circulation for whatever time they can keep it safe. If the majority of people did this, there would be a shortage of money in circulation and value of the currency would increase, which would do peculiar things to the economy - like make the valuation of trade goods difficult - perhaps force the government to print more currency, etc.
If they save it in a bank savings account, RSP or term deposit, it stays in circulation: the bank lends out their money to make a profit and passes a portion of that profit on to the account-holder. At some point, they presumably spend it, now worth a little more than they put in, either all at once on a major purchase or emergency, or else slowly through their retirement, on staples. But the saving and spending of these moneys is scattered through time, demographics and quantities, so it doesn't affect the economy as a whole .... unless there is a large-scale emergency involving many savers at once - like, say, a pandemic or depression. That would make for interesting events in a saving-oriented nation.
If they have surplus income, they may invest some of it. It is not at all like "saving"; it is very much like gambling. The bets may be small or large, ranging from very safe to wildly speculative, but the principle is always the same:
They hope that whatever they're buying, in whole or in part, will be worth more when they sell it. They're gambling to get more for less.
The money, in this case, is actively involved in and influencing the economy; driving growth. That's why capitalists prefer everyone to invest their surplus income - and even sometimes encourage people to borrow, gambling their future income - and con people into thinking this is like "saving". It's not.

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17. SeattleValued Senior Member

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You earn money from your job, it's taxed. You invest it, it's taxed again (profit). You've already paid a tax on it when you earned it.

If you don't have a reduced tax rate you invest less. As a matter of fact, in the past when rates were higher the government's total revenues from taxes were less than when rates were lower so it's also counterproductive from the government's point of view.

18. sculptorValued Senior Member

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6,901
Question
Inflation:
With the federal government spending billions of borrowed money to control the economic contraction
Do you not expect rampant inflation?
Will savings become worth less as inflation makes money worth less?

19. JeevesValued Senior Member

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4,570
No. You may have to pay sales tax on something you buy at the time you buy it, but there is no more tax until your receive rent or dividends (new income) or you sell the property or stock for more than you paid (profit) - and only on the portion that is in excess of the original investment.
Yes, and never again.

Last edited: Aug 2, 2020 at 1:47 AM
20. JeevesValued Senior Member

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4,570
Lots of opinions. Nobody knows.
The whole global economy will have to be restructured - assuming it doesn't collapse. There have been speculators and insiders cashing in on the crisis since January - at least blockchain went ballistic around then - no telling how much they've stolen and/or hidden, and/or moved around the world, what enterprises they've gutted, what resources they've cornered.
No telling how many unscrupulous government officials in how many nations have used the pandemic as a cover for dictatorial takeover or to demolish regulations and safeguards.
No telling how many industries will not recover, how many jobs are obsolete, how many financial institutions go belly-up, how many properties and vehicles* will have to re-purposed.

This is not a predictable situation; nothing is going back to the same cycle of normal that we're used to. If we're sensible, and have sensible governance, we'll figure out how to move on, without charging off into destruction.
(I have some excellent suggestions for all those fat passenger planes and ocean-going high-rise hotels.)

Last edited: Aug 2, 2020 at 1:52 AM
21. billvonValued Senior Member

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18,310
Yeah. So? So is sales tax. So is property tax. So is interest. You can always make an argument that something is double taxed; it's something of a meaningless argument.
I think you meant to say "having it discourages investment."
Well, the government has also historically raised more revenue when democrats have been in office. There may not be a direct cause/effect relationship for either one.

22. SeattleValued Senior Member

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6,028
You think wrong. Not having discounted capital gains taxes (as opposed to taxing it at regular income levels) discourages investment.

Democrats historically raising more revenue is through higher tax rates. The point is, having the highest taxes isn't the same as raising the most revenue.

23. exchemistValued Senior Member

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9,643
I must say I think the boat sailed on the one about discouraging investment. The problem we face in western economies is perpétuation of wealth gaps from generation to generation. Taxing the profit from investments makes sense from this point of view and I see no evidence that investment is hampered to a detrimental extent by the existence of CGT.

It is also easy to determine and collect CGT compared to, for instance, a wealth tax, since day to day values of assets vary so much and it would be open to all sorts of games, especially by the very wealthy, of course.

I say this having reached the conclusion that taxation should not only aim to maximise revenue, but also to prevent endemic severe disparities in wealth across society. Since the 1980s this gap has grown enormously, largely because the rémunération of top business people - often in the form of stock - has ballooned out of control, whereas wages paid to most employees have almost stagnated in real terms.

It is socially disruptive to have to endure such disparities, especially when they are handed on from father to son, which is what the current system facilitates.

But then we Europeans are all communists, I realise

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