And oh yeah, Don't Tax You, and Don't Tax Me, Tax that fella Hidin Behind that Tree!!
A Short History on Inflation - Why Component Costs and No Costs Are Going Down Soon
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4thefunofit
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Agreed. But seems to me that's pretty much how the system works already.
This is the problem:
In 1787, while our first 13 states adopted their new constitution, Alexander Tyler who was a Scottish History Professor at the University of Edinburgh, said this about the fall of the Athenian Republic some 2000 years earlier:
Our nation will fail as did Ancient Greece, Rome and all the others for the same reason: lazy greed... A normal human trait.
In 1787, while our first 13 states adopted their new constitution, Alexander Tyler who was a Scottish History Professor at the University of Edinburgh, said this about the fall of the Athenian Republic some 2000 years earlier:
Our nation will fail as did Ancient Greece, Rome and all the others for the same reason: lazy greed... A normal human trait.
A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury.
I believe you are right. I always thought that quote was from Alexis de Tocqueville - from his book, Democracy in America,
but I think perhaps it has been misquoted since 1951, and that Alexander Tyler is really the one who said it.
Buxndiverdux
Well-Known Member
Gross wealth inequality.... that is an interesting terminology. There are two main ways to build wealth, assuming you aren't a politician. Build wealth through hard work, or inherit wealth. (I'll ignore the disaster of inheritance taxes to keep it simple)
There are 7 tax brackets in the USA. The tax rates for 2021 are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The highest income earners(1 % er's) pay 37% tax rate. For every hundred dollars they make, they give $37 to the .gov and keep the $63 to continue to build wealth.
The bottom tax bracket pays 10% tax rate. For every hundred dollars they make, they give $10 to the .gov and keep the $90 to continue to build wealth.
I see some serious advantages here for the bottom and middle income Americans. They get to keep significantly more of their income for wealth building.
The key to building wealth is understanding how it's done. Being frugal, working hard, and living within your means with gradual wealth building. If ones family has 2 or 3 generations of these types of workers, eventually these families become very wealthy.
It's more complex when these individuals start investing in other revenue streams, which can build even more wealth at a much faster rate, but with risks.
Gross wealth inequality to me is nothing more than and effort versus no effort and a risk versus no risk equation. Everyone that draws a breath, legal or illegal, has a right to an education that will teach them how to build wealth for FREE. As the old saying goes... You can lead a horse to water, but you can't make him drink.
People that make bad wealth choices suffer their own consequences. Nobody owes them a **** thing. Earn your way, or wallow in crap at the bottom. Once the voting booth neuters the ability to build wealth in this country, the wealthy will leave. Need a recent example? Tax rates in New York and California and the mass exodus of people fleeing the income tax and property taxes. Will these people be smart enough to understand their voting habits created the steaming pile of dung they left? I hope so.
4thefunofit
Well-Known Member
A brief survey of information available on the internet (Google) seems to contradict Tyler's prediction, or at least provide additional explanations for how democracies fail. Several of the most important historically appear to be partisan division, corruption, and power seeking demagogues who exploit weaknesses in the system. I suspect Tyler was attempting to ingratiate himself to locally powerful interests.
When you get to Heaven, you and Tyler should discuss... He did not have Google but I suspect he had a fine library.
4thefunofit
Well-Known Member
Interesting diatribe, but the reality is that societies are as responsible to their individual members as they are responsible to society. It's a two way street. and attempts to cast sole responsibility for the trajectory of a person's life upon the individual are, to say the least, uncompassionate and lacking of empathy. It's called mutual reciprocity, or adaptive reciprocity, and it's pretty much how the world works.
QuietTexan
Well-Known Member
The theoretical logic underpinning graduated tax brackets is "diminishing marginal utility of income". It's in effect a weighting that states those with less income spend a higher percentage of their income on necessary expenses, and therefor have smaller amount of disposable income. Disposable income is not truly necessary, so a higher percent lost in taxes doesn't alter an individual's net buying power.
What Is the Marginal Utility of Income?
The marginal utility of income is the change in human satisfaction resulting from an increase or decrease in an individual's income.
The proof of validity for the underlying logic lies in that this is a concept implemented by both political parties in the US. Liberal states tend to have highly progressive tax income brackets that charge high income earners more (CA is a prime example). Conservative states also build this into their non-income tax systems - Texas exempts certain types of grocery items from sales tax, de facto creating a two-bracket sales tax system of 0% and 6.25% rates depending on the items being sold. Texas is implying that some grocery items are more necessary than others, and they don't tax them - the effect is either the item is relatively cheaper than the taxed alternative, or the item is subsidized by the state through a discount equal to the foregone sales tax, depending which perspective you want to take on it.
Food for thought - the "Warren Buffet" problem of him paying the preferential long-term capital gains and qualified dividend rate (maximum of 20% plus investment surtax of 3.8%) does violate the diminishing marginal utility concept, but does so intentionally because the government is both rewarding investment when you place funds under the control of another party, and buying liquidity through foregone tax revenue.
The Great Depression banking crisis that took hold in 1932 was significantly worse than the 1929 stock market crash in terms of economic damage. We haven't had a second GD because liquidity hasn't been crunched that bad again, the S&L crisis brought on partially by Johnson and partially by Volcker in the late 1980s was probably the second closest we've come, and TARP in 2008 was built to prevent it happening a third time. The capital gains rate exists to forestall liquidity problems caused by people sitting on hard currency during volatile periods by increasing the rate of return on investments that qualify relative to other options. This ultimately rewards the "haves" by letting them make more faster than the "have nots" that are working for income, but the workers who are paying for this largess notionally benefit from the much better market stability we have now compared to the 19th century.
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Buxndiverdux
Well-Known Member
Diatribe? Your exactly correct. I hate paying taxes. The return on the investment is pure garbage. You are basically saying self accountability and self responsibility, aren't the faults of the individual. They deserve being coddled even though they are completely capable of contributing in a meaningful way, yet they won't because compassionate people will vote the income of others to support the dirtbags.
I do believe that there are people in the world incapable of taking care of themselves. I do believe that as a society, these people should be cared for with a reasonable amount of care. But I am completely uncompassionate when it comes to able bodied people living off the labor of others. That is complete crap.
4thefunofit
Well-Known Member
I wholeheartedly agree that capable people should not live off the labors of others, but I also understand the opportunities for people to move beyond their socioeconomic circumstances have diminished to the point where for some it's virtually an impossibility. Like the man said, let's get back to guns and hunting.
Okay I don't want to rain on anybody's soup sandwich as they lament their lives and the society they are a part of, but the real question is what are the investment opportunities in the current situation and the worst case scenarios we are looking at?
For every economic situation there is an investment strategy. I barely remember the 70s. Some time in the 80s I vaguely remember CDs (through banks) had interest rates competing with inflation. I don't remember the bond market. Even though I started getting mutual funds in the 80s I don't remember if that was timely or not. So with all you economic whizz kids commenting on failures, let's here some strategies for success as the next generation closes in on their early retirement. Unlike some people here, I don't want to work the rest of my life and I'll spare you the stories of what it's like picking beans, corn, and tobacco as a kid not old enough to get a real job.
For every economic situation there is an investment strategy. I barely remember the 70s. Some time in the 80s I vaguely remember CDs (through banks) had interest rates competing with inflation. I don't remember the bond market. Even though I started getting mutual funds in the 80s I don't remember if that was timely or not. So with all you economic whizz kids commenting on failures, let's here some strategies for success as the next generation closes in on their early retirement. Unlike some people here, I don't want to work the rest of my life and I'll spare you the stories of what it's like picking beans, corn, and tobacco as a kid not old enough to get a real job.
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