Taxing Rich Wouldn't Close the Gap, but Would Shrink It

[snopes]

Hard numbers and recent history suggest two facts. One, the deficit is too wide to be closed exclusively by raising taxes on "the rich." Two, "the rich" do have a lot of money, even after the bust, and raising their taxes would raise significant sums without hampering the economy.

http://online.wsj.com/article/SB125193738505181691.html

[E. Q. Taft]

I'm just always amused at how many conservatives seem nostalgic for their idealized image of the 1950's -- that Father Knows Best America of prosperity and propriety. Of course, they forget that the tax rates on top earners back then were about double what even the most liberal serious politician would dare dream of proposing today....

[geminilee]

I do not understand quite why the "gap" matters, except maybe jealousy. I mean, yes it is important that those of us here on the bottom have enough, and we have more all the time. The fact that the poor are getting richer is to me the only real issue. What does the range betweenpoor and the small upper percentage matter?

(Serious, and totally non-snarky.)

[Errata]

Originally Posted by geminilee

I do not understand quite why the "gap" matters, except maybe jealousy. I mean, yes it is important that those of us here on the bottom have enough, and we have more all the time. The fact that the poor are getting richer is to me the only real issue. What does the range betweenpoor and the small upper percentage matter?

That's not what the "gap" means in this article. The "gap" is our massive budget deficit, the gap between revenue and spending. We need tax to start shrinking it, with the goal of closing it, and eventually reversing it. This article states that taxing the rich alone isn't sufficient, but it would be a good start. We're in a bad situation now, and the middle class will have to tighten their belts too, but tax increases on them don't have to be as significant.

The "conservative" approach is never to raise taxes, but to talk about cutting spending. Except they never actually do it. Reagan and the Bushes slashed taxes, but they actually increased spending at the same time, spiraling us into debt. Only Clinton had us on track for a balanced budget. The only way to get back on track is to start reversing some of those tax cuts.

Regardless of what you may have heard from Glenn Beck, I don't think any major US politicians would seriously consider closing the gap between rich and poor entirely a feasible goal. That's not how capitalism works, and the end of capitalism is not on the Democratic party agenda. There are reasons to be concerned about the growing disparity in wealth and income, but that's a different issue from what the article is talking about, and "close the gap" should have been a cue that that's not what they were talking about.

[geminilee]

Originally Posted by Errata

There are reasons to be concerned about the growing disparity in wealth and income, but that's a different issue from what the article is talking about, and "close the gap" should have been a cue that that's not what they were talking about.

I misread the article, and the thrust. I should stop posting while sleep deprived and medicated.

[Lainie]

Originally Posted by geminilee

I do not understand quite why the "gap" matters, except maybe jealousy. I mean, yes it is important that those of us here on the bottom have enough, and we have more all the time. The fact that the poor are getting richer is to me the only real issue. What does the range betweenpoor and the small upper percentage matter?

(Serious, and totally non-snarky.)

Although, as Errata points out, this article is about our budget gap, some people do express concern about large gaps between rich and poor, and the absence of a middle class -- I believe due to concerns about resulting social instability. Whether there's any validity to that concern, I don't know.

[E. Q. Taft]

I do think the growing rich/poor gap is a concern. Some concentration of wealth at the top is not a bad thing -- distribute things too equally, and there's no investment capital. But the degree of difference these days is disturbing. I need to dig out the figures, but I know I've seen things that show that, whereas in say, 1970, the average CEO of a company made maybe 50 times what a starting employee made, now it's more like 1,000 times as much. Meantime, real wages for the middle class have been falling for over 25 years. (No, I don't have cites -- I'm a couple of thousand miles from my library -- but I don't think there's any serious dispute over the basic ideas.) And good middle-class jobs seem ever harder to find, what with outsourcing and all, particularly for non-college-educated folks. Job security seems like a nearly obsolete term in most industries.

I should say I don't think this is something that can be entirely addressed by legislation. Some things might help: a higher minimum wage, "living wage" laws for jobs under government contracts, subsidized health care. But trying to get the absurd compensation top CEO's get under control is something I think that requires an ethical shift, not a legal one.

It just seems to me that anyone who works full-time ought to be able to afford food, medical care, a decent place to live, essential transportation, and provide the basics for at least one child, and have at least a little left over for entertainment or to save for vacations or retirement. And that's pretty hard to do at eight or nine bucks an hour.

Another fact which I found amusing at first was a survey that showed that something like 15% of Americans think they're among the top 1% of earners. When I mentioned this to a friend, he pointed out the obvious problem with that -- when you talk about raising taxes on the top 1% or 5% or 10%, a lot more people probably think they would be affected than actually would. This may be part of the reason it's so difficult to get support for "soaking the rich."
(That, and the fact that deep down, Americans don't generally resent the rich the way it happens in some cultures -- I suspect because of our cultural admiration of the self-made man, the rags to riches stories, etc., and the feeling that there's a genuine possibility that any one of us might end up amongst the rich with a little hard work and/or luck.)

[snopes]

Originally Posted by E. Q. Taft

I need to dig out the figures, but I know I've seen things that show that, whereas in say, 1970, the average CEO of a company made maybe 50 times what a starting employee made, now it's more like 1,000 times as much.

But do the salaries of CEOs really have much of anything to do with the rich/poor gap, or are they just a symbolic issue?

[geminilee]

Originally Posted by E. Q. Taft

It just seems to me that anyone who works full-time ought to be able to afford food, medical care, a decent place to live, essential transportation, and provide the basics for at least one child, and have at least a little left over for entertainment or to save for vacations or retirement. And that's pretty hard to do at eight or nine bucks an hour.

I agree with this. But if you can afford those things, does it matter if the richest man in the world has one billion dollars, or 10 billion?

[Ana Ng]

Bill Maher often talks about taxing the top 1%, and the growing gap between the very, very rich and the rest of us. While I think that it can lead to social instability, I think also it's just generally not good for society and there's no reason not to intervene. Over the Bush years, Maher cited how the extremely rich became a lot wealthier, but the middle class suffered tremendously.

I think the circumstances precipitating that should certainly be looked at and changed. Obviously things happened to change the way wealth was distributed, and the CEOs (using EQ's example) aren't working any harder. If these types of people aren't regulated (let's face it- there's no way someone works hard enough to merit $101K an hour, it's just not possible humanly and if it is, these guys aren't working that hard) the gap is just going to get worse. Something happened to allow this to happen (skyrocketing CEO salaries, as an example, while unemployment hovers near 20%, true unemployment) and we need to pinpoint it and try to even things out a little.

[Ana Ng]

Originally Posted by snopes

But do the salaries of CEOs really have much of anything to do with the rich/poor gap, or are they just a symbolic issue?

I think they're an obvious symptom. They're accessible and visible to us, but they are to a degree symbolic. However, I think behind that there are other issues that also are contributing. But money funneled upwards has to come from somewhere, and why has it been funneling upward?

Originally Posted by geminilee

I agree with this. But if you can afford those things, does it matter if the richest man in the world has one billion dollars, or 10 billion?

Can we talk about it when we can afford housing, vacation and healthcare? I and everyone I know has a problem with at least one.

[Singing in the Drizzle]

I'm for raising the taxes of the upper classes as long as there are big fat loop holes that encourage spending on US jobs and businesses. We very much need to cut the government's spending as well and that mean throwing the big spenders out of congress even if they are sending the money to your own state.

[snopes]

Originally Posted by Ana Ng

I think they're an obvious symptom. They're accessible and visible to us, but they are to a degree symbolic. However, I think behind that there are other issues that also are contributing.

I don't see anybody complaining that, say, George Lucas, Steven Spielberg, and Oprah Winfrey (all of whom are among the upper echelon of richest Americans) don't merit the amounts of money they earn and need to be 'regulated.'

[Mickey Blue]

Originally Posted by snopes

I don't see anybody complaining that, say, George Lucas, Steven Spielberg, and Oprah Winfrey (all of whom are among the upper echelon of richest Americans) don't merit the amounts of money they earn and need to be 'regulated.'

I cannot speak for Oprah as she has a show but the other two I imagine make most of their money from movies and possibly the marketing of merchandise from said movies, I imagine its a bit harder to recognize and regulate that then somebody who is getting a direct salary. However I have seen people criticize sports stars for getting huge salaries for a while now, perhaps not to the level CEOs are (though I think thats clear why, people generally either like or don't care about sports, but people frequently don't like their jobs and probably form resentment to 'the boss') but it comes up. That is a slightly closer comparison since its a salary and not a direct reward for production.

-MB

[James G]

In terms of the issue of narrowing the rich poor gap there is the obvious issue of the need to remove those at the bottom from the poverty bracket. However, even outside of this there is evidence that a more equal society is benificial to all those involved, not just those at the bottom.

http://bit.ly/3o9mc

While I've not read the book itself, I have seen a couple of newspaper articles written by the authors, and they seemed quite interesting. However I only saw a general overview, and the lack of detail, and enormous levels of Confirmation bias on my part probably stop me from forming a fair judgement. (Although interestingly I do recall that one of the findings of the authors was that the was that this equality was obtained didn't matter so much, and similar benifits were seen in Sweeden and Japan, despite quite differing political systems.)

[rujasu]

Originally Posted by snopes

I don't see anybody complaining that, say, George Lucas, Steven Spielberg, and Oprah Winfrey (all of whom are among the upper echelon of richest Americans) don't merit the amounts of money they earn and need to be 'regulated.'

Exactly what are you basing this on? I absolutely don't believe they merit the absurd amounts of money they're making. Not to say they don't deserve to be wealthy -- I simply don't believe any individual merits that amount of money. And I'm certainly not aware of a large contingent of the "tax the wealthy" crowd deeming Lucas, Spielberg, or Winfrey as exempt from criticism.

[Beachlife!]

Originally Posted by Ana Ng

...Can we talk about it when we can afford housing, vacation and healthcare? I and everyone I know has a problem with at least one.

It seems like there's and item in that list that doesn't fit with the other two. Vacation? It hardly seems that it's at the same level of need as the other two. Housing and Healthcare are part of the foundation according to Maslow, but I'm not sure Vacation fits anywhere in the 'need' category.

I suppose the definition of vacation plays into it as well, but even at it's most basic level, I just don't see it as a 'need'. Sure it's great, and it can make one feel much better, but I don't see it as something to trade house or healthcare for.

[Errata]

Originally Posted by Beachlife!

It seems like there's and item in that list that doesn't fit with the other two. Vacation? It hardly seems that it's at the same level of need as the other two. Housing and Healthcare are part of the foundation according to Maslow, but I'm not sure Vacation fits anywhere in the 'need' category.

I think "vacation" in the sense of having some paid weeks of non-work during the year is very important. "Vacation" in the sense of spending those weeks off in Tahiti is a luxury.

[Barbara]

Originally Posted by Errata

I think "vacation" in the sense of having some paid weeks of non-work during the year is very important.

I realize I'll be going against the crowd here, but no, it's not "very important." Certainly not when stacked up against things like food, shelter, and medical care.

[Mickey Blue]

Originally Posted by Barbara

I realize I'll be going against the crowd here, but no, it's not "very important." Certainly not when stacked up against things like food, shelter, and medical care.

I don't think its nearly as important as those things either however in the context it was given in (things people should be able to afford to live a comfortable, healthy life) I think it is important. People need some time off, maybe not to jet off to Europe for a month but at least to relax.

-MB