[extropy-chat] Tax Burden Gap
megaquark at hotmail.com
Fri Aug 20 15:34:16 UTC 2004
I have personally moved approximately $14.5 million this year. I really wish
it were my money! :-)
----- Original Message -----
From: "Matthew Gingell" <gingell at gnat.com>
To: "ExI chat list" <extropy-chat at lists.extropy.org>
Sent: Friday, August 20, 2004 5:35 AM
Subject: Re: [extropy-chat] Tax Burden Gap
> J. Andrew Rogers writes:
> > 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 definition does not match what is is normally meant by "wealthy"
> in a market economy. A bank loan officer might control millions of
> dollars of capital but he isn't necessarily a wealthy person, any
> more than the navigator of a hundred million dollar cruise ship is
> necessarily a wealthy person.
> Think of venture capital and mutual fund managers, arbitrage brokers,
> currency traders, executives of corporations or pension funds, and so
> on. They all control big pools of other peoples money and they all
> try to make the pool bigger by finding interesting things to do with
> it, and none of them are necessarily super-rich people.
> > 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.
> One of the miracles of capitalism is that this isn't true. Billion
> dollar decisions can be made without anyone actually having to
> possess a billion dollars.
> Your 401K, my savings account, somebody else's stock portfolio, and
> millions of other independent economically rational investments can
> be pooled together to accomplish things none of us could accomplish
> It isn't dressing anything up to distinguish the magnificently
> egalitarian possibilities of markets from Soviet central planning or
> from a world in which nothing happens unless some preposterously
> wealthy aristocrat wants it to, and I don't think it's sophistry to
> point out one of modern capitalism's greatest strengths.
> > 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.
> It seems, and perhaps I am misreading you, that you are advocating an
> essentially command economy as an ideal growth environment: You seem
> to envision a system where a small elite controls vast portions of a
> nations capital, where growth is achieved by their centralized
> stewardship of the nation's wealth. Your arguement seems to be that
> it is only by the wise and judicious calculations of a tiny monied
> class, by their analysis of what ventures are to be pursued, that
> growth is possible.
> > 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?
> Any tax, progressive or otherwise, looks like a bad thing when the
> consequences of its cost are analysied in isolation from the benefits
> of the spending it funds. In reality, progressive taxation pays for
> wealth transfer programs and - whether you or I believe it is a good
> thing - transferring money from the wealthy to the poor manifestly
> increases their social mobility.
> For instance public funding of education, public sector careers in
> the military, subsidized small business loans, employment and
> relocation assistance, a public safety net which socializes some of
> the downside of necessary risk taking, all increase mobility. That
> the people who (in an well implemented system) benefit from such
> programs are not those who pay for them makes the net effect a
> clearly upward contribution to their mobility, and this is true
> regardless of whether it's the way you or I think a country ought to
> be run.
> This is not to mention an entire range of other legitimate state
> functions that have to be funded somehow - national defense, law
> enforcement and the courts, whatever else you might agree is in the
> domain of appropriate public expenditures - the burden of which must
> be distributed on the shoulders of people who have already made it
> and people who are still trying to. It seems obvious to me which way
> you weight it if your goal is to make it easier for more people to
> escape poverty and enter the middle class.
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