- #71
Oltz
NeoDevin said:I think both sides of this discussion are coming at it backwards. On the right, we have Russ arguing "everyone gets what they deserve", on the left, we have Ryan arguing "there's no way anyone deserves to make that much money" (I'm paraphrasing and exaggerating here, as the specifics aren't very relevant to my point, so don't get bent out of shape if you feel I've slightly misrepresented one side or the other).
In my opinion, it is better to start from the question: "What is the minimum standard of living our society should accept for it's members?" I think we can all agree (maybe not?) that basic police protection, rule of law, emergency medical services, etc. are a minimum standard, but disagree on other things (other health care services, minimum housing standards, fire protection, etc.). Once a society decides on some minimum threshold below which we consider living to be "inhumane" (and different societies could well decide on different standards), then we can figure out how much it will cost. Add in the cost of things that the society considers valuable, but that the market is less well suited to provide (anyone here in favor of fundamental physics research at the LHC?), and then we can start talking about what a reasonable tax rate is.
If we start with the question of: "What is the purpose of the taxes in the first place?" We can come up with a tax rate designed to address that.
Additionally: To address the argument that high tax rates discourage: innovation, individual productivity, etc.; when applied to the super-wealthy (we can argue about where to draw the line of super-wealthy later, if you insist), this argument is absurd. After some point1 people stop deriving any additional satisfaction from increased income anyway. Beyond this point people are working strictly because they want to work, not because additional income helps them out. Think of it this way, is Bill Gates really motivated to work by the thought of being worth $62 billion, rather than his current $61 billion? Would he be discouraged from doing anything if his next billion was taxed at 99%? Alternatively, would he be motivated to do anything if his next billion was completely tax free? I think the answer to all three of these questions is a clear "no". Bill Gates will continue to do whatever the heck Bill Gates feels like doing. To sum: Anyone making more than, say, $1 million/year is not motivated by the next million, rather they are motivated by what they are accomplishing. Thus, taking away some large portion of that next million will not have a significant impact on their desire to continue producing.
1 Link "Emotional well-being" plateaus at ~75,000 USD, while "life evaluation" rises with the log of income (which means diminishing returns).
I see what you are trying to say (I think) but you have a major flaw in your example. Income is not wealth Bill Gates does not make 61 Billion a year in fact is just under 1 million dollars according to what I can google with bonus's. He would not even be affected by this Tax.
Second when somebody earns a salary the point is it gets spent. Either they directly use it for good/services or they invest it or they put it in a bank who then buy bonds or loans it out to another party.
Third CEO's tend to get the compensation they get for several reasons 1 few people can handle the job that needs to be done and do it well 2 most do not last long and it is highly unlikely to ever get a position like that again once released by a company Average tenure is 6.6 years down form 8 in the 90's and is only 4 years for outside company highers.
http://www.businessinsider.com/shortest-tenure-ceo-2011-5
Would you take a job knowing that it will likely only last for a few years and that you would never be able to get a job after it regardless of your performance for less then a butt ton of money and a nice severance package? I would negotiate the best possible compensation wouldn't you ?
You get what you pay for... when you have somebody making billion dollar choices you need to trust them with every ones money and jobs on the line.
Most people making over a million dollars a year have a short earning window and no guarantee of returning to that level (athletes, executives,actors,musicians). Some consultants, lawyers and doctors can reach this level of income and thse are the ones who will simply choose to stop taking projects and only work part of the year if they are taxed to heavily.
If offered a 1 million dollar 3 month consulting job or court case after just completing one knowing you would only make 25% of that would you bother or would you take the rest of the year off?
How about the third quarter? or the 4th?
If you could work half a year and take home 1 million (~25% effective rate on the first million) would you work the second half of the year for another $500,000 or would you stay home with your family?