Posts: 13,934
Threads: 1,261
Joined: May 2025
If you accept that wealth and income are accumulating in fewer hands and much of that accumulation is not merited, then there is the issue of what to do about it. The primary way we have dealt with the regulated free marker system distributing too much wealth/income not based on merit has been by taxing the wealthiest/highest incomes at a greater rate and providing tax breaks and government assistance to lower income people. I don't think that model is sustainable as a higher proportion of people slip into needing that assistance. For people who are capable of working, they should be able to provide for the basic welfare of themselves and their families without government assistance. Having more and more people dependent on government aid rather than having their own labor provide for them is bad social policy.
The problem is (making the assumptions above), how do we "jigger" the regulated free market economic system so that people who are capable of work actually have jobs available and get paid a wage where they don't need government assistance instead of redistribution by taxation?
- - - - - - - - - - - - - -
Totally a side note: I have the outline of a bit of a strange argument for the premise that the regulated free market system does not distribute wealth/income sufficiently based on merit - and it starts with considering entropy. I could lay it out if someone wants to challenge the assumption that wealth/income are accumulating in fewer hands with much of it not being merited.
Posts: 57,778
Threads: 5,856
Joined: May 2025
Reputation:
2
The definition of 'merit' is quite fungible. I'll discuss wealth through inheritance only.
The whole concept of an inheritance tax (or 'death tax') was designed to avoid dynastic accumulations of wealth in single families over generations. However, the conceptual limits have not kept up with actual valuations, and trusts are most definitley the way to deal with that. My extended family has spent significant time and energy in avoiding the destruction of the family business through inheritance taxes when my uncles and aunts eventually pass away. Enormous insurance policies were taken out to pay the eventual taxes, etc...
I'd be interested in an analysis of the accumulation of wealth based on inheritance versus earning. Many of the top billionaires got that title by their own efforts. Some of course (Waltons) inherited from their parent, but again, through trusts and whatnot, or the US government would own half of Wal Mart by now.
http://www.forbes.com/billionaires/list/
Posts: 13,934
Threads: 1,261
Joined: May 2025
cbelt3 wrote:
The definition of 'merit' is quite fungible.
It is vague and yet it stands as THE principle justification for some people getting distributed much more wealth/income.
cbelt3 wrote:
I'd be interested in an analysis of the accumulation of wealth based on inheritance versus earning. Many of the top billionaires got that title by their own efforts. Some of course (Waltons) inherited from their parent, but again, through trusts and whatnot, or the US government would own half of Wal Mart by now.
In an earlier posting, I asked this question: Can you inherit merit? A problem I see is that what you asking for can only be approached from directions that rely on basic assumptions about the relation of income and wealth to merit. If you assume that the income of the person who first accumulates the vast amounts of it is merited, that can lead you to different conclusions than a person who assumes that much of the vast income was not merited.
Posts: 11,076
Threads: 820
Joined: Jul 2019
Reputation:
0
Ted King wrote:
In an earlier posting, I asked this question: Can you inherit merit? A problem I see is that what you asking for can only be approached from directions that rely on basic assumptions about the relation of income and wealth to merit. If you assume that the income of the person who first accumulates the vast amounts of it is merited, that can lead you to different conclusions than a person who assumes that much of the vast income was not merited.
If you look at cbelts case it may be a wrong assumption. The merited inheritance may be quite crucial for that business's survival, especially if it is a capital intensive business. Its destruction would lead to loss of jobs for many employes it may have. If the inheritors are running the business, not living high off the hog, that merit is inherited....
Posts: 23,742
Threads: 1,348
Joined: May 2025
Reputation:
0
we are moving toward the ancient Egyptian model.
which is just fine with the Pharaohs.
Posts: 57,778
Threads: 5,856
Joined: May 2025
Reputation:
2
I'll agree that there is a difference in perceived 'merit' between Trustafarians and a multi-generational family run business. But... who decides who is 'meritorious' ? The Waltons are the wealthiest 'dynasty' on the Forbes list. They don't run daddy's company any longer. But most of them have some philanthropic activity or another.
My grandfather used to say "It takes the first generation to make the fortune, the second generation to maintain it, and the third generation to piss it away."
FWIW, ours is a Manhattan "B" commercial building my great grandmother built in the early 1900's. She managed it, then her son managed it, then his son managed it, and now his daughter manages it. We maintain it, employ a building staff, and the income from the building (S corp) is used by our half of the family to educate our children (and yes, buy 'em Macbooks when they get to college). The other half of the family (Great Aunt's only daughter) uses it to support a lavish lifestyle and is a general pain in the tush.
Heck, we just finished upgrading the entire building heating and lighting system to meet NYC code, and cut our effective income in half for two years. We've always kept it well maintained and safe, and treat our lessees professionally.
Posts: 13,934
Threads: 1,261
Joined: May 2025
max wrote:
[quote=Ted King]
In an earlier posting, I asked this question: Can you inherit merit? A problem I see is that what you asking for can only be approached from directions that rely on basic assumptions about the relation of income and wealth to merit. If you assume that the income of the person who first accumulates the vast amounts of it is merited, that can lead you to different conclusions than a person who assumes that much of the vast income was not merited.
If you look at cbelts case it may be a wrong assumption. The merited inheritance may be quite crucial for that business's survival, especially if it is a capital intensive business. Its destruction would lead to loss of jobs for many employes it may have. If the inheritors are running the business, not living high off the hog, that merit is inherited....
I'm sorry, I'm not able to follow your line of thinking.
Posts: 26,412
Threads: 741
Joined: May 2025
Reputation:
0
Ted King wrote:
The primary way we have dealt with the regulated free marker system distributing too much wealth/income not based on merit has been by taxing the wealthiest/highest incomes at a greater rate and providing tax breaks and government assistance to lower income people.
If only that were true. Arguably, those at the top are now taxed at a far lower rate than those in the middle. Wage earners have the highest tax rates, while those who kick back and let their investments provide their money enjoy reduced dividend rates, no payroll taxes, and tax shelters up the wazoo that the middle class can only dream about. Look at good ol' Mitt for an example. He paid only 14% of his income in federal tax in the only year that he would agree to release. It's been rumored, with some fairly substantial backup, that he probably didn't pay near this much in prior years. Heck, my effective federal income tax rate is more than twice Mitt's rate.
Also, government assistance to lower income people has been cut more and more ever since Ronald Reagan got in.
The top earners in this country have managed to reverse the progress to improve the lot of the majority of the citizenry that was made in the 1940s through early 1970s by manipulating the government into giving themselves ever increasing monetary benefits. We are now headed back to a landed gentry and aristocracy.
Posts: 13,934
Threads: 1,261
Joined: May 2025
cbelt3 wrote:
I'll agree that there is a difference in perceived 'merit' between Trustafarians and a multi-generational family run business. But... who decides who is 'meritorious' ? The Waltons are the wealthiest 'dynasty' on the Forbes list. They don't run daddy's company any longer. But most of them have some philanthropic activity or another.
If you can't decide on who merits having inherited income/wealth, then what's the basis for saying it's wrong to tax big chunks of the wealth away after a person's death? Are you suggesting that a person merits getting inherited wealth if they use some part of the inherited wealth for philanthropy?
Posts: 13,934
Threads: 1,261
Joined: May 2025
davester wrote:
If only that were true. Arguably, those at the top are now taxed at a far lower rate than those in the middle. Wage earners have the highest tax rates, while those who kick back and let their investments provide their money enjoy reduced dividend rates, no payroll taxes, and tax shelters up the wazoo that the middle class can only dream about. Look at good ol' Mitt for an example. He paid only 14% of his income in federal tax in the only year that he would agree to release. It's been rumored, with some fairly substantial backup, that he probably didn't pay near this much in prior years. Heck, my effective federal income tax rate is more than twice Mitt's rate.
Also, government assistance to lower income people has been cut more and more ever since Ronald Reagan got in.
The top earners in this country have managed to reverse the progress to improve the lot of the majority of the citizenry that was made in the 1940s through early 1970s by manipulating the government into giving themselves ever increasing monetary benefits. We are now headed back to a landed gentry and aristocracy.
I don't doubt the facts that you cite, but I think if you look at total household federal taxes paid (income tax, FICA, etc) rather than rates, you see that the highest income Americans are paying much more into total government revenues than people who do not have high incomes:
It makes sense - the highest income Americans are earning such a huge chunk of the total income that even with fairly low effective rates, they still are paying in a pretty big chunk of all household taxes. To me, that is a sign of how out of whack the income distribution has become in this country.
|
