10/14/2011 7:17 PM ET|
Why US should spread the wealth
America sacrificed equity for the false promise of efficiency and growth, and society is now more unequal than at any time since the early part of the last century.
Many economists worry that making societies more equal through income redistribution or other means reduces economic growth.
This big trade-off between equality and efficiency, which is supported by comparisons of capitalist and socialist countries, implies that there's a limit to how much redistribution a society should pursue. At some point, the trade-off of more equality for less output -- which worsens as we push toward more and more equality -- becomes intolerable.
However, while the trade-off is quite unfavorable as we push to extremes, recent experience suggests there is a wide region where the trade-off is hard to detect. Thus, worries about this trade-off appear to be overblown.
For example, the Bush tax cuts were justified, in part, by the assertion that equity had overshadowed efficiency in tax policy. Taxes on the wealthy, and the inefficiencies that come with them, were much too high, it was argued, and lowering taxes would cause output to go up enough to lift all boats substantially.
Accordingly, the lower end of the income distribution would fare much better after income trickled down than it would under redistributive policy.
The economy did grow after the Bush tax cuts, but the rate of growth was unremarkable, especially for jobs, and there's little evidence that they caused large increases in output growth, as promised.
In fact, there's little evidence that the Bush tax cuts had any effect at all. The trade-off simply wasn't there.
And the tax cuts at the upper end of the income distribution did nothing to correct for the fact that although worker productivity was rising, wages remained flat -- a problem that began in the mid-1970s.
This was an indication that something was amiss in the mechanism that distributes income to different members of society. Workers were helping to increase the size of the pie, but income did not trickle down, and their share of the pie was no larger than before.
This is not the only way in which the distribution of income has become disconnected from productivity. While some argue that those at the top of the income distribution earn every cent they receive, and hence deserve to keep all of it, there is plenty of evidence that the compensation of financial executives, CEOs of major corporations and others at the top of the pyramid far exceeds the value of what they contribute to society.
That holds true even without the 2008-09 financial crisis, but how, exactly, can we justify the extraordinarily high income of this group when the result of their actions was to ruin the economy?
If those at the top of the income distribution receive far more than the value of what they create, and those at lower income levels receive less, then one way to correct this is to increase taxes at the upper end of the income distribution and use the proceeds to protect important social programs that benefit working-class households, programs that are currently threatened by budget deficits.
This would help to rectify the maldistribution of income that is preventing workers from realizing their share of the gains from economic growth.
And there is another reason why taxes on the wealthy should go up. Someone has to pay taxes, and the question is how to distribute the burden among taxpayers. Many believe, and I am one of them, that progressive taxes are the most equitable way to do this. In particular, the guiding principle is that the last dollar of taxes paid should cause the same amount of sacrifice for rich and poor alike.
There has been an attempt to make it appear that taxes are mostly paid by the wealthy; the deceptive claim that half of the people pay no taxes is part of this. But taxes are less progressive than before the Bush tax cuts, and when all taxes at all levels of government are taken into account, "the U.S. tax system just barely qualifies as progressive," according to a 2010 report from Citizens for Tax Justice.
We face a choice between cutting key benefits for the middle class and creating an ever more unequal society, or raising taxes on the wealthy to preserve the social programs that lower-income households rely upon.
We hear that raising taxes is unfair and that tax increases will harm economic growth. But there's nothing unfair about correcting the maldistribution of income that we've seen in recent decades, or about making sure the burden from paying taxes is more equitable than it is now.
And there's no reason to fear that economic growth will be lower if taxes are increased. Cutting taxes on the wealthy during the Bush years didn't stimulate growth, and raising taxes back to the levels we've had in the past -- when growth was quite robust -- won't have much of an effect either.
VIDEO ON MSN MONEY
The middle class is holding too much tax burden! Yes the rich should pay more taxes, and yes the poor should pay more taxes. There should be a minimum tax for everyone no matter what your income is or the means that you make your money. (Investing, Salary, Hourly, Child support, Profits, Welfare, Bonus, Other) Everyone should pay their share of taxes. We should keep social programs to help the people (mostly poor kids, poor students, and other disadvantaged people) to have a chance to have the opportunity to succeed. No poor should receive handouts without good reason, and no rich should be paying lower taxes on income and their assistants or service providers. Example, Warren Buffet would have a house keeper or architect that is paying a larger percentage of their income to taxes than he is. This is not fair and Warren himself would agree.
"Why should the rich pay more taxes when 47% of the people don't pay any ? ANYONE who lives here and takes advantage of the freedom provided by our military and drives on our roads and uses our education system should pay taxes. I honestly believe that the top 5% should pay more, but hey, I also believe everyone should pay something and at the very least, not get back more (in refunds) than you put in. "
Raise their salary to a tax bracket that pays taxes, and they will. As it stands what they do earn is 100% used just to live. You tax them, they are now homeless. Thats how revolutions happen. Dope.
A stupifying essay that completely gets it wrong.
The average entrepenuer "at the top" works 65 hours+ a week compared to middle class 40. If you as a middle class person had to work that many hours every week would you want the government to say you have to pay a higher percentage of your wages to cover for those that work fewer hours? Of course not.
Essays like this are written by the increasing number of people who have fallen into the entitlement mindset that has become so prevalent. This is no longer simple envy of what others have earned but active belief that they are entitled to take from others for their own benefit. If the government wasn't the one doing it through taxes, that would legally be defined as theft.
Not to be blunt but Robin Hood was a thief. Sure he gave money to the poor, but he was still a thief and a criminal despite his altruism. So when someone says they need to take someone else's earnings to give it to someone else, don't fool yourself... they are a thief hiding behind a word called "taxes."
Why should the rich pay more taxes when 47% of the people don't pay any ? ANYONE who lives here and takes advantage of the freedom provided by our military and drives on our roads and uses our education system should pay taxes. I honestly believe that the top 5% should pay more, but hey, I also believe everyone should pay something and at the very least, not get back more (in refunds) than you put in.
The current system is NOT capitalism. Therefore anyone protesting against the current system is not protesting against capitalism. .
The shibboleth of our time to describe the current system is "Crony Capitalism". It is a system that forces the average Joe Taxpayer (and incidentally his progeny for as far as the eye can see) at gunpoint if necessary to pay large amounts in taxes. The government takes these funds and backs those companies that have found favor with the government. We thus have combined the power of government and industry.
In another time and place, 1930's Italy. The founder of Fascism, Benito Mussolini said, "Fascism is the combining of the power of government with the power of industry.".
Am I the only one that sees a similarity here?
Right back atcha!
Socialism at its worst coming to our country with the help of msn. And its radical liberal youths whom they allow to write this rot.
We have a great country stop messing with us.
You can play the blame game as much as you want but... the truth is, the person responsible for the current situation is looking at you in the mirror! This country needs a major political, legislative and economical overhaul. No country, not even the mighty USA, can go on forever, piling deficit over deficit and building a humongous debt without suffering severe consequences.
Congress MUST find a way to balance the budget. If this means taxing the rich and the corporations, if this means cutting back on Defense, if this means cutting on entitlement programs, SO BE IT! The problem affects everyone, therefore the solution should be comprehensive and global. And make no mistake, it will be painful. Now's the time to ask what you can do for your country...
It's later than most people believe. Printing money out of thin air, keeping interest rates to the floor only creates bubbles, sky high deficits and will lead to the crash of the US dollar. Then all will be poor and the republic's very existence will be threatened. Occupy Wall Street is only the first salvo, it should be understood as a serious, serious warning. Get your act together and clean up the mess before the crisis gets out of hand.
Call it whatever you want,but clearly the current form of capitalism enriches the top 1% at the expense of everyone and everything else.That is what the Occupy Wall Street movement is about.How much paper money can be created out of thin air?How many bailout of banks can be tolerated?How long can the Fed manipulate interest rates?Manipulate bonds?Hold onto worthless derivatives?The derviatives market is now $1.5 quadrillion!This is 20X the yearly global GDP.I suppose this is a necessary element of ypur mixed economy.This is fraud and treason,and needs to be killed.As I stated before,without fraud in the system,there is no economy!
This mixed economy does not include the division of labor any longer.Actual good paying jobs for the middle class have been replaced with an endless revenue stream which is based on the promise of paying back debt on the fictitious revenue of financial instruments that require the theft of real wealth from future generations.Actual GDP growth is not required in a system now totally dependant on Central Bank participation.
And until the current free-floating exchange rate based fiat money dollar currency system backed by nothing is destroyed and replaced with a monetary system that makes sense,the continuing global economic inequality will eventually result in a systemic collapse of all paper money.It is a mathematical certainty.The free market wil determine yet again what is and isn't money.One thing is for sure,the nefarious schemes of Goldman,JPMorgan et al has destroyed any viable system of commerce and industry.2008 was the just the beginning,not the end.August 15,1971 was indeed a dark day for humanity.
I do believe the Bush tax cuts should just be allowed to expire, but hopefully as a package including spending cuts so as to reduce the deficit. We can't continue like this without crashing the currency. (If you think this wouldn't harm you, you are an idiot.)
However, the idea of "soak the rich" won't work in the modern world. All that will accomplish is to cause capital flight (Bermuda is a close destination), and that won't help the jobs situation at all.
This is just typical looter philosophy anyway. There's a story about a visitor to Andrew Carnegie who said he should spread his great wealth around to everyone. He figured a little, then gave the guy a nickel, saying "OK, here's your share, considering the population of the whole country. Now get out."
THE PLAIN FACT IS THAT WE HAVE A GOVERNING CLASS WHOSE PERSONAL INTERESTS ARE VERY DIFFERENT FROM THE INTERESTS OF ALL THE REST OF US.
WALL STREET PROTESTERS ARE EXPRESSING A REAL INEQUITY BUT TELL US WHO MADE THE LAWS FOR WALL STREET? WHERE DO YOU SUPPOSE YOU SHOULD BE PROTESTING?
UNEMPLOYED? WHO STOPS PIPELINES FROM BEING BUILT, WELLS FROM BEING SAFELY DRILLED, WHO FAILS TO ARRANGE FOR GAS UTILITIES TO REPLACE OLD GAS PIPELINES SO THEY WON'T BLOW UP OUR ENTIRE NEIGHBORHOOD AND KILL PEOPLE LIKE HAPPENED IN SF RECENTLY?
wHO CALLS LOUDLY FOR JOBS AGAIN AND AGAIN AS A CAMPAIGN SLOGAN BUT STANDS IN THE WAY AND PREVENTS THE OBVIOUS, OBVIOUS THINGS THAT NEED DOING AND WOULD RESULT IN MANY HUNDREDS OF THOUSANDS OF WELL PAID JOBS?
WHO TALKS ABOUT 'SHOVEL READY' JOBS AND HARDLY KNOWS WHAT A SHOVEL IS?
You have never studied economics, have you? You realize that we haven't been a capitalist (free market) economy for a long, long time don't you? In fact, we've been what is known as a mixed economy for the entirety of your life. There isn't one "free market" economy among the world's major economies.
Open a book from time to time...
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety of government-sponsored aspects
I continually hear that people want to make a fair wage but I am not sure what that really means. If you are a maid in a hotel with limited skills you should make less than 30k a year while the person who owns a maid service that supplies maids to businesses or households deserves to make over a 100k because of the skills and risk involved. You can put this scenario on many jobs (Mechanics, landscapers, non-skilled labor unions, office manager, accountant ect). Of course the scale of what is a fair wage moves with the skills needed to do the job and the supply vrs demand for workers with specific skill sets but the worker vrs the leader pay difference IS FAIR. I do agree that CEO pay is out of hand but when you get to know most of these weasels you realize that many of us would not want to be as cut throat and non-caring as many of them regardless of how much many we made doing a job that eliminates a normal family life.
So many people cause many of their own issues by prioritizing everything but improving their skills and education while others just have bad life situations but in either case the wages they make are most likely equal to their skill set. Sorry that seems unfair to most people but look in the mirror and really ask yourself what your true skills are worth if you were the employer. If you do not like your answer change your skill sets and stop looking for someone else to give you something you do not deserve.
Let the liberal rant begin in response but basically this is real life and I am a moderate/independent voter that dislikes both major parties.
This article is a bunch of C R A P.
Who determined that the government was supposed to be a re-distribution center for our tax money? Nobody. not in the constitution, no where.....
The taxes should pay for the government and defense only....
If we are to have SS and Medicare and Medicaid, then the funds collected for them should be totally separate, and un-reachable by anybody except what they were collected for.
get rid of all the support programs, this is getting ridiculous. Just as ridiculous as Mark Thomas is for writing this C R A P.
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