[extropy-chat] Tax Burden Gap
J. Andrew Rogers
andrew at ceruleansystems.com
Fri Aug 20 07:28:53 UTC 2004
On Aug 19, 2004, at 11:02 PM, Matthew Gingell wrote:
>> If you have nothing but a middle class, who provides the capital
>> required to have a strong economy?
> The market provides the capital. In any economy wealth is going to
> seek a return, and the banking system and financial markets will find
> ways to offer it. That's true whether "wealth" is million checking
> accounts or a single trust fund.
I would define any person who can command vast quantities of capital,
whether from a few wealthy sources or millions of middle-class folks,
as "wealthy". This was the basic scheme of the old communist bloc,
where no one had much in the way of income, but a few folks near the
top of the political food chain controlled millions or billions of
dollars. Wealth mostly has to do with the amount of capital you
control, whether millions of peasants gave it to you or a trust fund
My original point was more that you can't have vast quantities of
capital under the control of a small number of people without also
having a de facto "wealthy" class. There are a dozen different
creative ways to dress it up, but the result is roughly equivalent.
All that happens when everyone is nominally in the middle-class is that
the pool of the wealthy (no matter what its guise) becomes very, very
small which is not a fertile economic ecology.
And yes, progressive income taxes destroy class mobility by making it
difficult to escape the middle class. There were a few economics
papers published several years ago that showed a lovely mathematical
correlation between effective income tax rates as a function of income
and the distribution of wealth in a population. Steeply progressive
rates concentrate control of capital in the hands of a few. How making
it progressively difficult to convert income into wealth is supposed to
help class mobility is beyond me. If the tax structure aggressively
limits the conversion of income into wealth, exactly how is that
supposed to help people in the lower economic strata that have income
but little or no wealth?
j. andrew rogers
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