Brand New Chart Illustrates How The Rich Have Gamed The System

[ivwshane]

Ok - two completely honest questions. A large portion of the 'rich' don't actually have huge incomes, but mostly gain money through the increase of assets like stock and other investments. So let's say we go at this with a two pronged sword.

1. We increase the taxes on people making an actual income.
2. We increase the taxes on the incomes from stocks / interest / etc.

What is to stop people in the second group from removing their money from our markets entirely and investing in the Chinese, Japanese, or other markets? What would stop a huge flood of liquid capital from leaving the country? Isn't this the same problem as the cheap labor pool - if it's available elsewhere that's where they'll go?

There is nothing stopping them from doing that just as there is nothing now stopping them from doing that.

People seem to think that if you tax the wealthy money for investment will go away or there will be less of it, there simply is no data to support that. Even when the French raised taxes the rich didn't flee in any appreciable numbers.

Besides even if the wealthy stopped investing because of taxes (it sounds stupid just typing that), other people will happily step up and start investing. The only way that doesn't happen is if our economy (or dollar) becomes unstable or our workforce or government become unreliable (guess which party is closer to making that a reality).

 

[VirtualLarry]

Kings and peasants is where we are heading again. Full circle.

Jaron Lanier wrote an article about "Winner-take-all Capitalism", and its ills. How the corporations of yesterday (Polaroid, Kodak, etc.) have or are going away, that used to employ many, and these "new internet companies", like Instagram, with only a few scant employees have much bigger market caps.

 

[agent00f]

That doesn't explain the honest unemployment figures from the era. If labor were scarce unemployment would obviously have been lower.

Great job joining your friends in holocaust segregation denial, truly a trump level achievement.

It was to show what the adoption of tickle down economics has done to us. The intentional demise of unions is merely a part of that. We've had an increasing glut of labor since 1980 resulting in wage stagnation even as income for the investor class has soared. That will only intensify with greater technological advancements if Repubs have their way. It's pure class warfare.

Gee I wonder how a glut/surplus of labor leads to stagnating wages. If only dumbshit tier democrats weren't too stupid to ever find out.

 

[agent00f]

Disagree with that being seriously misleading. Entitlement growth for seniors is part and parcel of this wealth/savings issue. If people are saving less because they are relying on social security and medicare to provide for them in old age, this is very important. As far as relative size of the older population influencing things, sure I'll give you that. But if we're going from 2.5% GDP to 10% GDP, normalizing this graph would require a 4-fold increase in seniors as percent of population. In fact, such a normalization is more compelling than I initially thought (about double), but still not enough.

But it's OK. As I stated, I don't think that entitlement growth is responsible for this problem. I just presented the graph to demonstrate that it certainly hasn't fixed it.

Let's not pretend you're unaware of the additional boom in medical costs.

Speaking of irony, I wonder why particularly old conservatives vote all these liberal benefits for themselves and not anyone else. Dumbshit tier democrats are probably gullible enough to think they're genuine when ranting this and that about gubmint handouts.

 

[interchange]

Let's not pretend you're unaware of the additional boom in medical costs.

Speaking of irony, I wonder why particularly old conservatives vote all these liberal benefits for themselves and not anyone else. Dumbshit tier democrats are probably gullible enough to think they're genuine when ranting this and that about gubmint handouts.

Go ahead and take out medical costs and entitlements for seniors. I could argue then to add entitlements that are from the state and local levels.

But none of it matters unless you could possibly argue that, with all the normalization you could possibly apply, the reality is that entitlement spending is decreasing instead of increasing.

It's not. The magnitude isn't relevant to my point. Just the trend.

 

[Jhhnn]

You know -- I would honestly say that your typical Chinese herbalist is more dedicated to improving the health of lives of the people they treat than your typical doctor, and certainly stands to benefit less financially from their attempts to do so. And yet, if you have coronary artery disease, I think you're more likely (though certainly far from guaranteed) to be better off going to the doctor regardless. You may trust the herbalist more. They're probably more trustworthy. But you're also more likely to die.

But, again, I'm just using this as an illustration to say that I agree that Democrats are more sincere in trying to fix the problem and have solutions that look better on the paper and resemble things that have worked* before. That still doesn't mean today's solutions will work better or at all.

But, the truth is, the patient isn't just having coronary artery disease. The patient is moments away from 100% blockage of the left main artery. The patient is seriously about to die, and even the exact right doctor intervening at the exact right time is probably going to fail. I don't know what America's widow will be like, but it probably won't be very pretty. The patient may never have a chance of being saved, but I think we ought to consider that if a solution exists it's probably going to have to come from someone other than the doctor or the herbalist.

More obfuscation. Repubs *obviously* intend to intensify inequality at the expense of everybody else. Their ideology is already a failure for working people.

 

[Jhhnn]

Go ahead and take out medical costs and entitlements for seniors. I could argue then to add entitlements that are from the state and local levels.

But none of it matters unless you could possibly argue that, with all the normalization you could possibly apply, the reality is that entitlement spending is decreasing instead of increasing.

It's not. The magnitude isn't relevant to my point. Just the trend.

It's not like entitlement spending has fully compensated for the loss of income share among the lower 50% of earners, is it?

 

[Jhhnn]

Ok - two completely honest questions. A large portion of the 'rich' don't actually have huge incomes, but mostly gain money through the increase of assets like stock and other investments. So let's say we go at this with a two pronged sword.

1. We increase the taxes on people making an actual income.
2. We increase the taxes on the incomes from stocks / interest / etc.

What is to stop people in the second group from removing their money from our markets entirely and investing in the Chinese, Japanese, or other markets? What would stop a huge flood of liquid capital from leaving the country? Isn't this the same problem as the cheap labor pool - if it's available elsewhere that's where they'll go?

American citizens pay federal taxes on all income, no matter where it's earned. Well, unless they hide it someplace like Bermuda or another tax haven. Reference Mitt.

 

[agent00f]

Go ahead and take out medical costs and entitlements for seniors. I could argue then to add entitlements that are from the state and local levels.

But none of it matters unless you could possibly argue that, with all the normalization you could possibly apply, the reality is that entitlement spending is decreasing instead of increasing.

It's not. The magnitude isn't relevant to my point. Just the trend.

It's hardly grown much without those increases if you could only read even heritage's own report, the vast majority of entitlement spending is medicare and ss.

The largest welfare program is food stamps. Literary feeding poor people in the richest and largest food producer on the planet to get some idea of where this country is.

 

[Darwin333]

Additionally, to my first point, being a 1%er really isn't that hard, it's impressive how wide the gap becomes thereafter.

TLDR: I may be a 1%er, but I'm on your side.

Well it appears to be hard enough that 99% of the people can't achieve it...

 

[TheVrolok]

Well it appears to be hard enough that 99% of the people can't achieve it...

:eyeroll:

 

[Darwin333]

:eyeroll:

You are the asshole that says that something that quite literally 99% of the population can't do, but would absolutely love to, "isn't that hard".

 

[ElFenix]

Here's an even more interesting chart in my opinion, showing the yearly growth in income by income percentile today vs 1980.

In 1980 the poor really were making up ground. Today? Uhmmm....

Id like to see a time series version of this chart from, say, 1960 to the present

 

[TheVrolok]

You are the asshole that says that something that quite literally 99% of the population can't do, but would absolutely love to, "isn't that hard".

You are absolutely missing the point. Of course it's hard to get to the 99%, but now really compare the percentiles. The difference between 1 and 99 isn't even close to the difference between 99 and 99.9. The point is that 99 is obtainable with luck and some hard work, but 99.9? Totally different ballgame. It's an example of now insanely stacked the deck is and now concentrated wealth is at the very top. Instead, let's argue about transgender bathrooms and abortion so that nothing is ever done to address these discrepancies. Wool. Eyes. That's my point. But hey, if you wanna get caught up in the semantics, that's totally fine.

 

[pmv]

You are absolutely missing the point. Of course it's hard to get to the 99%, but now really compare the percentiles. The difference between 1 and 99 isn't even close to the difference between 99 and 99.9. The point is that 99 is obtainable with luck and some hard work, but 99.9? Totally different ballgame. It's an example of now insanely stacked the deck is and now concentrated wealth is at the very top. Instead, let's argue about transgender bathrooms and abortion so that nothing is ever done to address these discrepancies. Wool. Eyes. That's my point. But hey, if you wanna get caught up in the semantics, that's totally fine.

I think you are mistaken, but not completely so. I get your point about ever-smaller percentiles, that is indeed the way things seem to be going. And also, considered globally, it's surprising how little wealth you need to make the top 5%, say.

Mainly it seems a semantic argument over the exact meaning of the word 'hard', and really not worth throwing insults about. However I do think you underplay the degree of 'luck' involved.

 

[TheVrolok]

I think you are mistaken, but not completely so. I get your point about ever-smaller percentiles, that is indeed the way things seem to be going. And also, considered globally, it's surprising how little wealth you need to make the top 5%, say.

Mainly it seems a semantic argument over the exact meaning of the word 'hard', and really not worth throwing insults about. However I do think you underplay the degree of 'luck' involved.

I agree with everything you have said to the letter. I think my biggest mistake was trying to initially articulate the point which tongue in cheek snark which obviously hit a nerve with some. I think I'm actually one who doesn't underplay the degree of "luck." I wish I could find the article, but I read a wonderful article (I honestly can't recall where) roughly 2 years ago which was based around a poll that asked folks which of "luck, work ethic, talent" was most important for success. Interestingly (or not, depending on where you fall I suppose), those who were objectively more successful tended to believe that work ethic/talent vastly outweighed luck and the converse was true for the other group. There were a lot of hurt feelings in the comments manifested as "I worked hard! I'm a hard worker! I deserve everything! etc. etc."

Of course it takes hard work to be successful, I don't think many people will argue that, but as you said, luck is huge. I just don't think many people appreciate what amounts to luck. With regard to my personal success, I was lucky in that I was born white, male, at this time in history, into a socioeconomically rising family (grandparents were blue collar, my parents were the transition to white) with a tight nuclear supportive group, that I graduated from my schooling at a time where I was protected from the financial crisis, that I had a job opportunity available to me that was well above my level experience due to a departing colleague, etc. etc. etc. That is NOT to say it's "unlucky" to be black, Hispanic, female, etc. but I certainly had an easier time of it, didn't I?

Take my wife; she's South American by birth, her parents (highly educated) decided to leave their country due to political strife and move to the states with their daughters when they were preteens. Showed up with nothing but suitcases of clothing, got jobs, worked their way into the upper middle class, provided for their daughters. My wife got into college, med school, etc. Now we're both physicians, but she certainly had to work a lot harder given the obstacles, no? And yet, when she walks into a patient's room, most people still think she's a nurse's aid (female, young, latin).

Just for some perspective.

 

[agent00f]

Take my wife; she's South American by birth, her parents (highly educated) decided to leave their country due to political strife and move to the states with their daughters when they were preteens. Showed up with nothing but suitcases of clothing, got jobs, worked their way into the upper middle class, provided for their daughters. My wife got into college, med school, etc. Now we're both physicians, but she certainly had to work a lot harder given the obstacles, no? And yet, when she walks into a patient's room, most people still think she's a nurse's aid (female, young, latin).

Just for some perspective.

She also had much better luck than most to be born to such parents, though I guess "looking like a nurse's aid" not so much.

 

[TheVrolok]

She also had much better luck than most to be born to such parents, though I guess "looking like a nurse's aid" not so much.

Yep, it's true.

 

[Exterous]

Ok - two completely honest questions. A large portion of the 'rich' don't actually have huge incomes, but mostly gain money through the increase of assets like stock and other investments. So let's say we go at this with a two pronged sword.

1. We increase the taxes on people making an actual income.
2. We increase the taxes on the incomes from stocks / interest / etc.

What is to stop people in the second group from removing their money from our markets entirely and investing in the Chinese, Japanese, or other markets? What would stop a huge flood of liquid capital from leaving the country? Isn't this the same problem as the cheap labor pool - if it's available elsewhere that's where they'll go?

They won't remove their money. They'll just move more of it into different structures.There is no political will within either party to actually change the rules they exploit. While it not surprising that many Republicans use companies and trusts to avoid taxes a large number of prominent Democrats do too. Thats why you never really see any tax proposals that deal with Trust law or other rules like the IRS 7520 rate. (Bernie might have but Hillary's plan kept her trusts safe from the increased taxes she proposed.) Any level of tax increase must take these into account because otherwise the wealthy will just restructure their income. Trust tax rates range from 2.4% on CLTs to 40% on many like Estate and GSTs. Increase taxes over 40% and leave trusts alone and everyone will just move to trusts. Its not like the wealthy don't have the money to hire experts on this.

People seem to think that if you tax the wealthy money for investment will go away or there will be less of it, there simply is no data to support that. Even when the French raised taxes the rich didn't flee in any appreciable numbers.

France also reversed its taxes because it really didn't help them at all in their current situation

You are absolutely missing the point. Of course it's hard to get to the 99%, but now really compare the percentiles. The difference between 1 and 99 isn't even close to the difference between 99 and 99.9. The point is that 99 is obtainable with luck and some hard work, but 99.9? Totally different ballgame. It's an example of now insanely stacked the deck is and now concentrated wealth is at the very top. Instead, let's argue about transgender bathrooms and abortion so that nothing is ever done to address these discrepancies. Wool. Eyes. That's my point. But hey, if you wanna get caught up in the semantics, that's totally fine.

I mostly agree. If you remove the top 0.1% from the 1% then the remainder (ie the majority of the 99%) aren't really pulling away from everyone else that quickly - certainly no where near the rate most graphs show. Of course the top 0.1% are fine with the portrayal of the 1% as there are quite a few more voices in the 1% to work against changes that might affect them.

https://www.theatlantic.com/busines...ryone-got-the-top-1-percent-all-wrong/359862/

 

[Jhhnn]

They won't remove their money. They'll just move more of it into different structures.There is no political will within either party to actually change the rules they exploit. While it not surprising that many Republicans use companies and trusts to avoid taxes a large number of prominent Democrats do too. Thats why you never really see any tax proposals that deal with Trust law or other rules like the IRS 7520 rate. (Bernie might have but Hillary's plan kept her trusts safe from the increased taxes she proposed.) Any level of tax increase must take these into account because otherwise the wealthy will just restructure their income. Trust tax rates range from 2.4% on CLTs to 40% on many like Estate and GSTs. Increase taxes over 40% and leave trusts alone and everyone will just move to trusts. Its not like the wealthy don't have the money to hire experts on this.



France also reversed its taxes because it really didn't help them at all in their current situation



I mostly agree. If you remove the top 0.1% from the 1% then the remainder (ie the majority of the 99%) aren't really pulling away from everyone else that quickly - certainly no where near the rate most graphs show. Of course the top 0.1% are fine with the portrayal of the 1% as there are quite a few more voices in the 1% to work against changes that might affect them.

https://www.theatlantic.com/busines...ryone-got-the-top-1-percent-all-wrong/359862/

Meh. I figure that if wealthy Dems weren't willing to raise their own taxes that they'd be Republicans. Hillary promised to do just that & they gave her a lot of money to help make it happen. That's the direction Dems would take, obviously, while it's just as obvious Repubs intend to go the other way if possible.

 

[dank69]

Ok - two completely honest questions. A large portion of the 'rich' don't actually have huge incomes, but mostly gain money through the increase of assets like stock and other investments. So let's say we go at this with a two pronged sword.

1. We increase the taxes on people making an actual income.
2. We increase the taxes on the incomes from stocks / interest / etc.

What is to stop people in the second group from removing their money from our markets entirely and investing in the Chinese, Japanese, or other markets? What would stop a huge flood of liquid capital from leaving the country? Isn't this the same problem as the cheap labor pool - if it's available elsewhere that's where they'll go?

It's a common question that I rarely see answered honestly and simply. We tax profit. Regardless if we tax investment at 10% or 90%, people will still invest because the alternative is whatever the interest rate is. You will hear the argument that fewer people will invest if we tax their gains at 90% because the risk is no longer worth it. This argument is forgetting that when we reach the tax stage, the risk has already been overcome.

 

[MaxDepth]

Correct. The ultra rich have found an exploit in the game that no one is willing to patch. In fact the people of I'd say. 5% and higher, want to get to that point where they can run the exploit too. In fact, the current business and government systems are trying to fix the game further to allow those below to try to become permanent wealthy, regardless of the markets. The failure here is to recognize there is really a monetary ceiling where it becomes harder and harder to create new capital (wealth).

So those in the groups of the 5 percent and slightly higher are trying to sell the other 95% that you too can be become wealthy if you just let us have these rules to aid ourselves. Pluck and luck!

The Atlantic article has two quotes that should be shouted out to everyone. First: "Long-story-short is that this group, comprised mostly of bankers and CEOs, is riding the stock market to pick up extraordinary investment income. And it's this investment income, rather than ordinary earned income, that's creating this extraordinary wealth gap."

And second: "The 0.1 percent isn't the same group of people every year. There's considerable churn at the tippy-top. For example, consider the "Fortunate 400," the IRS's annual list of the 400 richest tax returns in the country. Between 1992 and 2008, 3,672 different taxpayers appeared on the Fortunate 400 list. Just one percent of the Fortunate 400—four households—appeared on the list all 17 years."

Your takeaways:
1. Investment income. The rich try to confuse the poor on how a flat tax or lower taxes will aid everyone. No, they don't care about earned income - which is what most of you get taxed on and they try to tell you it's their tax too. The rules need to change about investment income. First, risk is 100% on their side from now on. No more bailouts. Second, step ladder tax on investment income. Third, you call yourself an American company then no more storing income on foreign shores. Fourth, if you are not an American company then don't employ the majority of workers or executive in America. We need to shut down inversions.

2. The last quote from The Atlantic is what I said before, the wealthy want to ensure/enshrine their wealth, regardless of current political or economic situations. It is the same about dictators, they never want to be without.

They won't remove their money. They'll just move more of it into different structures.

 

[Jhhnn]

First, risk is 100% on their side from now on. No more bailouts.

As we saw in 2008, that entails the systemic risk of collapsing credit markets entirely, invoking a deflationary spiral we narrowly avoided. You know, like the Great Depression. Deflation is death on investment because money gains value risk free simply by being hoarded. Only potentially high return opportunities will attract investment under such circumstances.

Yeh, sure, proper regulation can reduce but not eliminate the risk of that & the party currently in power is all about deregulating & risk taking. If we think about it at all, it's easy for the .01% to take the attitude that the best time to be rich is when everybody else is broke, busted & begging. Making it that way would be the ultimate expression of FYGM, make no mistake about it.

 

[MaxDepth]

Actually the removal of risk is what led to the collapsing credit market. On the trader or instrument creator side, there was no risk for them. The buyers assumed the risk with seller collecting fees on both sides. We could (and really should) say caveat emptor for the buyer but the seller misrepresented the risk and the grading agencies fell asleep here too. So while you should really do your homework on making such purchases, it's is that much harder to make an informed decision when the seller is misrepresenting and the oversight agency is grading it top-notch.

What I am saying is that there should not have been a bailout and there should have been more arrests, jail time. Would the US and world depression have been longer, it might. But I propose that this would have reset expectations on ROI. People were getting used to double digit returns on investments before the crash and now they're ramping up again. I am benefiting from it in the last three years with double digit returns and this year is scary high. But again, I'm trying to base my investments on either real products or people's perception of economic factors. But when that steam starts to run out across the board, people will go back to illegal or esoteric ways to maintain that juice. So to me, if the grading is right and the abstract is not filled with horseshit then yeah, you take your chances and hope it comes out a winner. Because you took a high risk and the gamble paid. If you lost, well, I hoped you saved enough to bet again.

As for taxing investment income, yeah, I recognize the uphill climb. It's hard to talk about that kind of reform when the senators and many of the House are in the 5% club.

 

[Jhhnn]

What I am saying is that there should not have been a bailout and there should have been more arrests, jail time.

I already called bullshit on that & explained why action by the FRB & the Treasury was absolutely vital at the time.

America lives on the installment plan. If we allow the infrastructure behind that, the banks, to collapse that will collapse as well. Most Americans are net debtors & deflation is very, very hard on debtors, further exacerbating the situation. That's the story of every financial crisis in history, up 'til 2008. Once it starts it cascades downward into financial gridlock & deflation, particularly when wealth & income are hyper concentrated. When you're stupendously rich, it won't damage your lifestyle in the slightest. The holders of great wealth aren't just market insiders but rather market makers who profit from both rising & falling markets along with bargains galore when it all goes to hell in a handbasket. They make the roller coaster & ride it in ways the rest of us simply can't.