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Progressive taxation to remove economic lag

ClassicRobert
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11/21/2013 8:20:32 PM
Posted: 3 years ago
Among many arguments for and against taxing the wealthy at a higher rate that lower income people are taxed at, I heard an argument that I found convincing the other day to support a progressive tax rate.

According to the law of diminishing marginal returns, it is easy to see that the marginal utility gained by each additional dollar earned for the wealthy is less than it would be for lower income people. If this is not self-evident, I propose a thought experiment: Imagine you are a millionaire. You would be significantly more likely to spend $100 dollars than you would be if you earn $20,000 dollars per year.

So it is clear that there is more benefit to having the poor have that extra dollar than there is to having the wealthy have that dollar, in terms of happiness provided to the owner.

Additionally, wealthy families spend a much smaller percentage of their income (http://www.npr.org...) as compared to lower income level families. As a result, you have money essentially being held outside of the economy, and as any economist will tell you, a healthier cash flow is necessary for positive economic growth with better employment options.

So it is for this reason that we can see that without more progressive tax rates, the wealthy are a *lag* on our economy.

Thoughts? Additional arguments?
Debate me: Economic decision theory should be adjusted to include higher-order preferences for non-normative purposes http://www.debate.org...

Do you really believe that? Or not? If you believe it, you should man up and defend it in a debate. -RoyLatham

My Pet Fish is such a Douche- NiamC

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brett.winstead
Posts: 34
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11/21/2013 8:51:47 PM
Posted: 3 years ago
Umm...no. Your argument is based on the idea that the money that belongs to the wealthy does not really belong to them but that the powers that be rightfully have a duty to take more of it for the benefit of "the economy." When wealthy or poor people make money, they can do with it what they want. They can spend none, a little or a lot but in a free economy, it is their choice and no government has a moral right to take more based on this idea that the economy "needs" it. Their money does not belong to the economy. Their money is their property and if they choose to never spend a dime of it, that is their right to do so. When government takes money from someone's property (the pay from labor), that in itself is theft regardless of what they do with it and advocating them to take more because the "economy" needs it is making it even more wrong. The rich do not have any obligations to the "economy" because they have already served their fellow man and quite well I might add. That is how they got rich.

At 11/21/2013 8:20:32 PM, ClassicRobert wrote:
Among many arguments for and against taxing the wealthy at a higher rate that lower income people are taxed at, I heard an argument that I found convincing the other day to support a progressive tax rate.

According to the law of diminishing marginal returns, it is easy to see that the marginal utility gained by each additional dollar earned for the wealthy is less than it would be for lower income people. If this is not self-evident, I propose a thought experiment: Imagine you are a millionaire. You would be significantly more likely to spend $100 dollars than you would be if you earn $20,000 dollars per year.

So it is clear that there is more benefit to having the poor have that extra dollar than there is to having the wealthy have that dollar, in terms of happiness provided to the owner.

Additionally, wealthy families spend a much smaller percentage of their income (http://www.npr.org...) as compared to lower income level families. As a result, you have money essentially being held outside of the economy, and as any economist will tell you, a healthier cash flow is necessary for positive economic growth with better employment options.

So it is for this reason that we can see that without more progressive tax rates, the wealthy are a *lag* on our economy.

Thoughts? Additional arguments?
ClassicRobert
Posts: 2,487
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11/21/2013 9:14:08 PM
Posted: 3 years ago
At 11/21/2013 8:51:47 PM, brett.winstead wrote:
Umm...no. Your argument is based on the idea that the money that belongs to the wealthy does not really belong to them but that the powers that be rightfully have a duty to take more of it for the benefit of "the economy." When wealthy or poor people make money, they can do with it what they want. They can spend none, a little or a lot but in a free economy, it is their choice and no government has a moral right to take more based on this idea that the economy "needs" it. Their money does not belong to the economy. Their money is their property and if they choose to never spend a dime of it, that is their right to do so. When government takes money from someone's property (the pay from labor), that in itself is theft regardless of what they do with it and advocating them to take more because the "economy" needs it is making it even more wrong. The rich do not have any obligations to the "economy" because they have already served their fellow man and quite well I might add. That is how they got rich.

Glad to see you back.

Anyway, in being a part of a society, one does owe part of one's benefits back to society. What they owe comes down to taxes. Other actions are just the externality of their self-interested drive to success. Your argument seems to disregard pragmatics in saying that the argument starts and stops at freedom, without justification as to why we should care about freedom in the face of real economic benefit.
Debate me: Economic decision theory should be adjusted to include higher-order preferences for non-normative purposes http://www.debate.org...

Do you really believe that? Or not? If you believe it, you should man up and defend it in a debate. -RoyLatham

My Pet Fish is such a Douche- NiamC

It's an app to meet friends and stuff, sort of like an adult club penguin- Thett3, describing Tinder
brett.winstead
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11/22/2013 12:58:48 AM
Posted: 3 years ago
Anyway, in being a part of a society, one does owe part of one's benefits back to society. What they owe comes down to taxes.

Robert, this is where you are mistaken so let me show by example. Bob sells lawn mowers. They are quality lawn mowers for a fair market price. People buy them by the millions and Bob gets mega rich. He pays the taxes in his tax bracket. He does not owe anyone else. He does not have to "give back." Do you know why? Because he has already given. He has traded the lawn mowers for money. IN the same way that the mower buyer does not have to mow anyone's grass for free, Bob does not have to give more than his fair share and I think you already know that the rich pay way more than their fair show. Every single statistic in taxation fact shows that.

The real issue is this: Let's say the rich do pay more. Does that benefit society? No, it benefits government who has shown the ability to find incredibly insane ways to spend any extra money they get. If I wasted all the money you gave me and actually had a debit to show for it, are you going to beat a path to my door to give me more? Why give more money to an irresponsible person or organization who cannot manage the money they have. If someone gave the government zillions of dollars, they would find a way to waste every penny of it.
bossyburrito
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11/22/2013 5:41:21 PM
Posted: 3 years ago
"Anyway, in being a part of a society, one does owe part of one's benefits back to society."

Justify this, please.
#UnbanTheMadman

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Ragnar_Rahl
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11/22/2013 5:47:22 PM
Posted: 3 years ago
Having one's existence result from a c***, one clearly owes part of one's benefits to that c***. So suck daddy and lick mommy, kids.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
Double_R
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11/23/2013 3:29:14 PM
Posted: 3 years ago
At 11/22/2013 12:58:48 AM, brett.winstead wrote:
Anyway, in being a part of a society, one does owe part of one's benefits back to society. What they owe comes down to taxes.

Robert, this is where you are mistaken so let me show by example. Bob sells lawn mowers. They are quality lawn mowers for a fair market price. People buy them by the millions and Bob gets mega rich. He pays the taxes in his tax bracket. He does not owe anyone else. He does not have to "give back." Do you know why? Because he has already given. He has traded the lawn mowers for money. IN the same way that the mower buyer does not have to mow anyone's grass for free, Bob does not have to give more than his fair share and I think you already know that the rich pay way more than their fair show. Every single statistic in taxation fact shows that.

Determining what is a fair share is highly subjective to the point which almost makes it worthless to debate. The OP was making a simple point which your argument did not refute. First of all no one is suggesting that Bob doesn't deserve to get rich. The topic is about progressive taxation.

In this example Bob did some great things for himself and deserves to keep a big hunk of it. But if Bob was able to sell his lawn mowers to millions then how did he accomplish such a feat? To do that he would have needed to mass produce them which requires an educated workforce, he would have needed to transport them which requires a stable infrastructure, he would have had to advertise them which requires a functioning system of information sharing, etc...

So yes Bob did great things, but he certainly did not do it by himself. He was able to achieve what he did by taking advantage of the benefits of an organized society. He would not have had opportunity to sell millions of lawn mowers if he lived in Ethiopia.

The real issue is this: Let's say the rich do pay more. Does that benefit society? No, it benefits government...

I never understood the idea that "the government" is some abstract boogieman entity apart from society. What exactly does "the government" spend it's money on that society sees no benefit from?
brett.winstead
Posts: 34
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11/23/2013 3:37:30 PM
Posted: 3 years ago
I never understood the idea that "the government" is some abstract boogieman entity apart from society. What exactly does "the government" spend it's money on that society sees no benefit from?

How long of a list would you like? This should get you started:

http://www.heritage.org...
GeoLaureate8
Posts: 12,252
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11/23/2013 4:37:26 PM
Posted: 3 years ago
Economics is not a zero sum game.
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
Double_R
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11/23/2013 5:21:33 PM
Posted: 3 years ago
At 11/23/2013 3:37:30 PM, brett.winstead wrote:
At 11/23/2013 3:29:14 PM, Double_R wrote:
At 11/22/2013 12:58:48 AM, brett.winstead wrote:
The real issue is this: Let's say the rich do pay more. Does that benefit society? No, it benefits government...

I never understood the idea that "the government" is some abstract boogieman entity apart from society. What exactly does "the government" spend it's money on that society sees no benefit from?

How long of a list would you like? This should get you started:

You paid no attention to the question, and instead just saw an opportunity to spout your rhetoric.

You stated that taxing the rich doesn't benefit society but rather benefits the government. I was challenging you to defend your implicit assertion that the government is some abstract entity with desires of it's own that society must protect itself from. I asked you what government spending does society see no benefit from as a means of allowing you an opportunity to in part defend that assertion. Providing a list of spending you don't agree with doesn't accomplish that, either way it still goes right back into society.
GeoLaureate8
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11/23/2013 5:35:37 PM
Posted: 3 years ago
Flat tax already takes more from the rich than it does from the poor and middle class.

A millionaire will pay $100,000 and a middle class earner will pay $10,000 with a 10% flat tax. Even if we abolish the income tax, which we should, the rich would still pay more under a consumption tax because the rich will be buying more expensive goods with a higher sales tax attached.
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
Double_R
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11/25/2013 6:05:25 PM
Posted: 3 years ago
At 11/23/2013 5:35:37 PM, GeoLaureate8 wrote:
Flat tax already takes more from the rich than it does from the poor and middle class.

A millionaire will pay $100,000 and a middle class earner will pay $10,000 with a 10% flat tax. Even if we abolish the income tax, which we should, the rich would still pay more under a consumption tax because the rich will be buying more expensive goods with a higher sales tax attached.

Max earns $1 Million yr. Tom earns $100,000 yr. Max pays a 2% flat tax. Tom pays a 10% flat tax. Who is paying more?
GeoLaureate8
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11/25/2013 10:27:50 PM
Posted: 3 years ago
At 11/25/2013 6:05:25 PM, Double_R wrote:
At 11/23/2013 5:35:37 PM, GeoLaureate8 wrote:
Flat tax already takes more from the rich than it does from the poor and middle class.

A millionaire will pay $100,000 and a middle class earner will pay $10,000 with a 10% flat tax. Even if we abolish the income tax, which we should, the rich would still pay more under a consumption tax because the rich will be buying more expensive goods with a higher sales tax attached.

Max earns $1 Million yr. Tom earns $100,000 yr. Max pays a 2% flat tax. Tom pays a 10% flat tax. Who is paying more?

That's proving my point even more. You could decrease taxes on the rich to levels lower than the middle class rate and the rich would still be paying more in taxes.

Also, that's not a flat tax. That's a regressive tax.
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
Double_R
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11/26/2013 12:56:22 AM
Posted: 3 years ago
At 11/25/2013 10:27:50 PM, GeoLaureate8 wrote:
At 11/25/2013 6:05:25 PM, Double_R wrote:
At 11/23/2013 5:35:37 PM, GeoLaureate8 wrote:
Flat tax already takes more from the rich than it does from the poor and middle class.

A millionaire will pay $100,000 and a middle class earner will pay $10,000 with a 10% flat tax. Even if we abolish the income tax, which we should, the rich would still pay more under a consumption tax because the rich will be buying more expensive goods with a higher sales tax attached.

Max earns $1 Million yr. Tom earns $100,000 yr. Max pays a 2% flat tax. Tom pays a 10% flat tax. Who is paying more?

That's proving my point even more. You could decrease taxes on the rich to levels lower than the middle class rate and the rich would still be paying more in taxes.

No. It's proving your point meaningless.

To say that a flat tax "already takes more" from the rich implies that increasing the amount taken from the rich any further is unjustified. That's fine, but the next step is to make an argument that actually supports your assertion. Your attempt to do so was to define "taking more" as merely "taking a total sum that is higher". By that definition, taking $0.01 more from Bill Gates then is taken from my 15 year old niece who works at McDonald's qualifies as "already taking more".

If you're going to define a phrase in a meaningless way, you can't turn around and use it as a meaningful argument.
FREEDO
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11/26/2013 1:04:41 AM
Posted: 3 years ago
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.
GRAND POOBAH OF DDO

fnord
GeoLaureate8
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11/26/2013 1:14:26 AM
Posted: 3 years ago
At 11/26/2013 12:56:22 AM, Double_R wrote:
At 11/25/2013 10:27:50 PM, GeoLaureate8 wrote:
That's proving my point even more. You could decrease taxes on the rich to levels lower than the middle class rate and the rich would still be paying more in taxes.

No. It's proving your point meaningless.

To say that a flat tax "already takes more" from the rich implies that increasing the amount taken from the rich any further is unjustified. That's fine, but the next step is to make an argument that actually supports your assertion. Your attempt to do so was to define "taking more" as merely "taking a total sum that is higher".

Umm, yeaaa.... that was kind of the point. I pointed out that "taking more" involves "taking a total sum that is higher."

Granted, it is not undue to call for further elaboration and justification. The answer is, as opposed to your counter-example, my proposition involves not only the mere act of taking a total sum that is higher, but the tax proposition is also proportional.

Your example was a minuscule progressive tax (not in the context of incremental percentage-based marginal tax rates, but the idea of 'you make more you pay more') that was so extreme that even a flat tax would result in Bill Gates paying more money than he would under your progressive tax example.

Just goes to show that the rich still pay significantly more, while maintaining the fairness of the tax and keeping with the integrity of the "equal protection clause" of the Constitution.

By that definition, taking $0.01 more from Bill Gates then is taken from my 15 year old niece who works at McDonald's qualifies as "already taking more".

If you're going to define a phrase in a meaningless way, you can't turn around and use it as a meaningful argument.

I think my argument was safe in it's presumption that more = more.
"We must raise the standard of the Old, free, decentralized, and strictly limited Republic."
-- Murray Rothbard

"The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended."
-- Frederic Bastiat
Double_R
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11/26/2013 1:50:26 AM
Posted: 3 years ago
At 11/26/2013 1:14:26 AM, GeoLaureate8 wrote:
At 11/26/2013 12:56:22 AM, Double_R wrote:
At 11/25/2013 10:27:50 PM, GeoLaureate8 wrote:
That's proving my point even more. You could decrease taxes on the rich to levels lower than the middle class rate and the rich would still be paying more in taxes.

No. It's proving your point meaningless.

To say that a flat tax "already takes more" from the rich implies that increasing the amount taken from the rich any further is unjustified. That's fine, but the next step is to make an argument that actually supports your assertion. Your attempt to do so was to define "taking more" as merely "taking a total sum that is higher".

Umm, yeaaa.... that was kind of the point. I pointed out that "taking more" involves "taking a total sum that is higher."

Granted, it is not undue to call for further elaboration and justification. The answer is, as opposed to your counter-example, my proposition involves not only the mere act of taking a total sum that is higher, but the tax proposition is also proportional.

Your example was a minuscule progressive tax (not in the context of incremental percentage-based marginal tax rates, but the idea of 'you make more you pay more') that was so extreme that even a flat tax would result in Bill Gates paying more money than he would under your progressive tax example.

Just goes to show that the rich still pay significantly more, while maintaining the fairness of the tax and keeping with the integrity of the "equal protection clause" of the Constitution.

The reason why I needed to further elaborate with my extreme example was to point out the fact that the flaw in your argument is in how you define "more".

Paying more in terms of proportion is one thing, but flat tax, progressive tax, and even most regressive tax policies already accept that the rich should pay more in terms of dollar amount, so unless you are arguing that a regressive tax policy is bad because the rich are still paying too much, you haven't done anything to explain what is wrong with a progressive tax system.

Make whatever arguments you wish, all I am saying is that your current one is meaningless.
wrichcirw
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11/26/2013 4:24:59 AM
Posted: 3 years ago
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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11/26/2013 4:26:07 AM
Posted: 3 years ago
At 11/21/2013 8:20:32 PM, ClassicRobert wrote:
Among many arguments for and against taxing the wealthy at a higher rate that lower income people are taxed at, I heard an argument that I found convincing the other day to support a progressive tax rate.

According to the law of diminishing marginal returns, it is easy to see that the marginal utility gained by each additional dollar earned for the wealthy is less than it would be for lower income people. If this is not self-evident, I propose a thought experiment: Imagine you are a millionaire. You would be significantly more likely to spend $100 dollars than you would be if you earn $20,000 dollars per year.

So it is clear that there is more benefit to having the poor have that extra dollar than there is to having the wealthy have that dollar, in terms of happiness provided to the owner.

Additionally, wealthy families spend a much smaller percentage of their income (http://www.npr.org...) as compared to lower income level families. As a result, you have money essentially being held outside of the economy, and as any economist will tell you, a healthier cash flow is necessary for positive economic growth with better employment options.

So it is for this reason that we can see that without more progressive tax rates, the wealthy are a *lag* on our economy.

Thoughts? Additional arguments?

I fully agree with the logic. I would add that I would be very much for dramatically decreasing corporate taxes while keeping the progressive tax as is if not more progressive.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
FREEDO
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11/26/2013 4:56:42 AM
Posted: 3 years ago
At 11/26/2013 4:24:59 AM, wrichcirw wrote:
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.

So, in other words, poorer countries should have more crime, yes?

And the only reason a rich country would have poverty would be.....?
GRAND POOBAH OF DDO

fnord
wrichcirw
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11/26/2013 4:58:12 AM
Posted: 3 years ago
At 11/26/2013 4:56:42 AM, FREEDO wrote:
At 11/26/2013 4:24:59 AM, wrichcirw wrote:
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.

So, in other words, poorer countries should have more crime, yes?

Yes.

And the only reason a rich country would have poverty would be.....?

...lack of a system to eradicate it. That does NOT justify wealth equality though, it only justifies a floor for a certain level of wealth/well-being.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
FREEDO
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11/26/2013 5:00:18 AM
Posted: 3 years ago
At 11/26/2013 4:58:12 AM, wrichcirw wrote:
At 11/26/2013 4:56:42 AM, FREEDO wrote:
At 11/26/2013 4:24:59 AM, wrichcirw wrote:
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.

So, in other words, poorer countries should have more crime, yes?

Yes.

And the only reason a rich country would have poverty would be.....?

...lack of a system to eradicate it. That does NOT justify wealth equality though, it only justifies a floor for a certain level of wealth/well-being.

I don't think you're getting it. If poverty exists in a rich society, what is that called?
GRAND POOBAH OF DDO

fnord
wrichcirw
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11/26/2013 5:04:57 AM
Posted: 3 years ago
At 11/26/2013 5:00:18 AM, FREEDO wrote:
At 11/26/2013 4:58:12 AM, wrichcirw wrote:
At 11/26/2013 4:56:42 AM, FREEDO wrote:
At 11/26/2013 4:24:59 AM, wrichcirw wrote:
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.

So, in other words, poorer countries should have more crime, yes?

Yes.

And the only reason a rich country would have poverty would be.....?

...lack of a system to eradicate it. That does NOT justify wealth equality though, it only justifies a floor for a certain level of wealth/well-being.

I don't think you're getting it. If poverty exists in a rich society, what is that called?

That's called poverty in a rich society.

You can have a rich society with extreme levels of wealth inequality that has no poverty. It hasn't happened yet because no society is rich enough to have that robust a poverty alleviation system, but we're getting pretty damned close.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
ClassicRobert
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11/26/2013 7:32:49 AM
Posted: 3 years ago
At 11/25/2013 10:27:50 PM, GeoLaureate8 wrote:
You could decrease taxes on the rich to levels lower than the middle class rate and the rich would still be paying more in taxes.

They would be paying more nominally, but in terms of utility derived, they are paying far less then the middle class or the lower class is.
Debate me: Economic decision theory should be adjusted to include higher-order preferences for non-normative purposes http://www.debate.org...

Do you really believe that? Or not? If you believe it, you should man up and defend it in a debate. -RoyLatham

My Pet Fish is such a Douche- NiamC

It's an app to meet friends and stuff, sort of like an adult club penguin- Thett3, describing Tinder
Stephen_Hawkins
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11/26/2013 8:50:34 AM
Posted: 3 years ago
At 11/26/2013 4:24:59 AM, wrichcirw wrote:
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.

Poverty is relative. No-one lives in absolute poverty in the Western world (or next-to-none), yet the wealth inequality statistics are still proving that wealth inequality causes negative externalities. While I acknowledge that your point behind this is that some wealth inequality will not cause crime - and I think we all agree here - a large enough disparity causes displeasure among the worse off in society and crime as a result.
Give a man a fish, he'll eat for a day. Teach him how to be Gay, he'll positively influence the GDP.

Social Contract Theory debate: http://www.debate.org...
Cermank
Posts: 3,773
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11/26/2013 9:10:21 AM
Posted: 3 years ago
At 11/21/2013 8:20:32 PM, ClassicRobert wrote:
Among many arguments for and against taxing the wealthy at a higher rate that lower income people are taxed at, I heard an argument that I found convincing the other day to support a progressive tax rate.

According to the law of diminishing marginal returns, it is easy to see that the marginal utility gained by each additional dollar earned for the wealthy is less than it would be for lower income people. If this is not self-evident, I propose a thought experiment: Imagine you are a millionaire. You would be significantly more likely to spend $100 dollars than you would be if you earn $20,000 dollars per year.

So it is clear that there is more benefit to having the poor have that extra dollar than there is to having the wealthy have that dollar, in terms of happiness provided to the owner.

Additionally, wealthy families spend a much smaller percentage of their income (http://www.npr.org...) as compared to lower income level families. As a result, you have money essentially being held outside of the economy, and as any economist will tell you, a healthier cash flow is necessary for positive economic growth with better employment options.

So it is for this reason that we can see that without more progressive tax rates, the wealthy are a *lag* on our economy.

Thoughts? Additional arguments?

Basically, there is a trade off between the lag on the economy posed by the rich and the potential loss once the progressive taxation is imposed. The concentration of wealth and assets with the rich have had a substantial level effect (negative) with the advent of progressive taxation system. This leads to less incentive for them to increase the social utility by their entrepreneural projects and stuff, so that might have a negative impact on the social utility.

Personally, I feel its more about the form of taxation rather than the rate of taxation. The fair tax, as far as I've gone through the text, seems a good proposal in that sense.
Cermank
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11/26/2013 9:15:11 AM
Posted: 3 years ago
Hell, forgive the nerdy terminology. Basically, its barrage on trickle down effect in action. Progressive taxation constricts the incentive structure of the rich. So has a negative impact on social welfare ( since they have a higher contribution to social utility)
wrichcirw
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11/26/2013 9:35:00 AM
Posted: 3 years ago
At 11/26/2013 8:50:34 AM, Stephen_Hawkins wrote:
At 11/26/2013 4:24:59 AM, wrichcirw wrote:
At 11/26/2013 1:04:41 AM, FREEDO wrote:
It's accepted by most economists that wealth inequality is bad for the economy, even if they don't like taxation either. It also harms society in other ways, such as increasing crime. However, we should be more concerned with stopping it to begin with.

Fully disagree. I don't think wealth inequality increases crime, only poverty increases crime. If we can fully alleviate poverty, wealth inequality shouldn't matter, IMHO.

Poverty is relative. No-one lives in absolute poverty in the Western world (or next-to-none), yet the wealth inequality statistics are still proving that wealth inequality causes negative externalities. While I acknowledge that your point behind this is that some wealth inequality will not cause crime - and I think we all agree here - a large enough disparity causes displeasure among the worse off in society and crime as a result.

I agree in the West the problem is barely noticeable, but it is still substantial, especially in the US:

The problems are reflected across America, says the nationwide charity Feeding America, which operates 200 food banks and feeds 37 million people each year, including 14 million children.

It says that, in total, nearly 17 million US children live in homes where getting enough healthy food is not something they can count on.

http://www.bbc.co.uk...

When I was in Cal Berkeley, the emphasis in most of my economics classes was income equality, and how income equality would alleviate many of the country's social problems. However, with large swaths of the population still insecure over basic goods like food, I would still conclude that the US has a significant poverty problem, and that developing a cohesive policy that would address this specific problem would do more than income equality to reduce crime. Whatever we currently have is not working.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
dylancatlow
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11/26/2013 10:48:33 AM
Posted: 3 years ago
At 11/21/2013 9:14:08 PM, ClassicRobert wrote:
At 11/21/2013 8:51:47 PM, brett.winstead wrote:
Umm...no. Your argument is based on the idea that the money that belongs to the wealthy does not really belong to them but that the powers that be rightfully have a duty to take more of it for the benefit of "the economy." When wealthy or poor people make money, they can do with it what they want. They can spend none, a little or a lot but in a free economy, it is their choice and no government has a moral right to take more based on this idea that the economy "needs" it. Their money does not belong to the economy. Their money is their property and if they choose to never spend a dime of it, that is their right to do so. When government takes money from someone's property (the pay from labor), that in itself is theft regardless of what they do with it and advocating them to take more because the "economy" needs it is making it even more wrong. The rich do not have any obligations to the "economy" because they have already served their fellow man and quite well I might add. That is how they got rich.

Glad to see you back.

Anyway, in being a part of a society, one does owe part of one's benefits back to society. What they owe comes down to taxes.

Society provides its members with two benefits: knowledge and trade. This arrangement enables people to achieve inconceivably more than they would otherwise, but the advantage is mutually constructive, and need not be artificially compensated for. Insofar as one benefits from "society", one's gain is "repaid for" with their contribution to the very system from which they benefited. Society is only a number of individuals: by benefiting from it, one takes on its role, and provides its advantages to others, who in turn, pass it on further.