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Chaz
Trad climber
greater Boss Angeles area
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Mar 13, 2013 - 02:30am PT
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Ken M writes:
"......the rich have their investments sheltered"
Explain please. How do "the rich" make that happen? And what prevents anybody else from doing the exact same thing, and sheltering their investments, too?
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Peter Haan
Trad climber
Santa Cruz, CA
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Mar 13, 2013 - 02:33am PT
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I think in this country and perhaps some others, we still hold on to the belief that money is God's report card. Perhaps even one's manifest destiny.
And yet statistics have shown us that wealth is actually simply distributed randomly, hardly by merit. (Many are wealthy by luck, many are dirt poor by luck, as noted just above in Slayton's post). We believe that aptitude and being "chosen" is why someone has billions.
The concept of pooling our resources more effectively than by luck or random is anathema to those who imagine they have been blessed, but a terrific bright dream to those who go scratching the dirt tonight. There are other ways of holding capital than to allow it to attach in this crazy manner. One need only look at a myriad of anthropological studies to see how this could be done and how goods are brought into the circle elsewhere.
With our original Puritan and Deist roots, our predilection still is to "award" rather than to bring to and share at the fire. It is a daunting sociology to overcome and has many adherents who would defend their gains for themselves to the death.
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John M
climber
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Mar 13, 2013 - 02:44am PT
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How do "the rich" make that happen? And what prevents anybody else from doing the exact same thing, and sheltering their investments, too?
Its simple. The rich can make their money through investments, thus taking advantage of the lower capital gains tax.
The poor do not have enough money to be able to live off of their investments. Their primary income comes from earned income, which is taxed at a much higher rate.
They say.."everyone can do it", but reality says you can't. Sure you have access, but access doesn't matter if you don't have enough funds to make it work.
Thus, the wealthy have gamed the system and they manage to keep it in play by using the middleclass who have just enough extra income to allow them to take advantage of that tax break on some of their earnings.
...
Thanks Slayton, ken and Peter for great posts.
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Chaz
Trad climber
greater Boss Angeles area
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Mar 13, 2013 - 02:47am PT
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You could take all the money in America, divide it up evenly so that every person has the exact same ammount, and within a year or two, the same people who were poor before would be poor again, and the same people who were wealthy before would be wealthy again.
I don't know who first discovered that truth, but my Mom used to remind me of it back when I was a young, long-haired liberal shithead.
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John M
climber
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Mar 13, 2013 - 02:51am PT
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Thats not the point Chaz. The point is the system is now gamed to favor the wealthy. America use to support a strong middle class with laws and rules and incentives that helped people better themselves. Over the last 40 years or so those things have been eroded.
Prop 13 is one of those ways. It was sold to the public as a way to help people on fixed incomes. The true outcome is that new businesses find it harder to compete because they pay a higher property tax.
There are other examples.. such as what Ken posted.
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rick sumner
Trad climber
reno, nevada/ wasilla alaska
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Mar 13, 2013 - 02:54am PT
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Well Mr. Hahn i suppose you have shared and equally redistributed the fruits of your labor and good luck and as a result are contented to be in the median, neither holding more than your neighbors nor wanting what they hold? So, if this ideal is followed to its logical conclusion where is the incentive to create, to excel,to achieve a dream?
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John M
climber
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Mar 13, 2013 - 03:04am PT
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Well Mr. Hahn i suppose you have shared and equally redistributed the fruits of your labor and good luck and as a result are contented to be in the median, neither holding more than your neighbors nor wanting what they hold?
Some people are stuck on the notion that all people want is to take from someone else.
I'm sure some people do, but that isn't the point of this conversation, at least as far as I can see anyone on this thread talking about. Except those like Rick who want to make the conversation about that.
Too bad.
If you believe the wealthy haven't gamed the system and if you believe that the poor have as much chance today as they did 40 years ago, then you are a blind.
We use to have the number one education system in the world. We don't anymore. At least not on the lower grades. We have fallen behind. We also use to support the middle class. We are doing that less and less as we move closer and closer to a flat tax and as we create laws such as prop 13, which make it more difficult for small businesses to compete.
But if you just want to gripe that people just want hand outs. Well... go ahead. But you miss the point entirely.
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slayton
Trad climber
Here and There
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Mar 13, 2013 - 03:35am PT
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Chaz: Quote You could take all the money in America, divide it up evenly so that every person has the exact same ammount, and within a year or two, the same people who were poor before would be poor again, and the same people who were wealthy before would be wealthy again.
I don't know who first discovered that truth, but my Mom used to remind me of it back when I was a young, long-haired liberal shithead.Here
Please Chaz, define truth. And then please define how this ancecdotal example actually relates to reality. Any examples?
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slayton
Trad climber
Here and There
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Mar 13, 2013 - 04:04am PT
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Again, I ask, why the discrepancy in the past forty years where the wealthiest have gained so much more wealth, the middle class have lost ground and the poor just keep getting poorer? Why is this seemingly a new thing in the US? What does this speak about our past and what does it portend for our future? The demise of the middle class has never been a good portent of any civilization. Ours is dying. Quickly.
Or do you disagree?
I specifically ask those that seem ok with the status quo. TGT? JEleazarion? Chaz? Others?
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sempervirens
climber
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Mar 13, 2013 - 11:09am PT
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Did any of you lose some wealth in the economic disaster of 2008? I did, and I work, pay taxes, pay my mortgage, I'm not on unemployment. Hasn't your equity dropped? Is selling your home more difficult? If so, doesn't that limit your opportunities for career growth and gain in wealth? Didn't many middle class HARD-WORKING Americans lose their retirement wealth? Do you think it was the socialist policies that caused that disaster? Was it the poor slackers who caused it by sucking up other's hard earned income?
Who gained in that debacle?
That ain't no equitable redistribution of wealth.
And you offer heart warming stories about working your way up. Obfuscation. Gullible. Those of us working our way up are the ones being cheated. We don't want a handout but we're being forced (or in the case of you neo-con spouting foxx news shills, FOOLED into) to support Steve Shwartzman, the Koch brothers,Tim Geitner, Dick Chaney. They are making the policy and they don't have your apple-pie-Mom's-wise-advice-hard-working ideals in mind when their lobbying lawyers write laws like Obama Care.
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Ken M
Mountain climber
Los Angeles, Ca
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Mar 13, 2013 - 12:37pm PT
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Explain please. How do "the rich" make that happen? And what prevents anybody else from doing the exact same thing, and sheltering their investments, too?
The rich have the ability to make large political contributions.....millions. This allows them to influence/buy votes on things they want.
Yes, it is true that the poor can save a few pennies, and the middle class can save a few dollars, but they also don't have the lobbyists that keep them informed, on a daily basis, of anything that threatens their hegemony on income and wealth.
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Ken M
Mountain climber
Los Angeles, Ca
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Mar 13, 2013 - 12:41pm PT
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You could take all the money in America, divide it up evenly so that every person has the exact same ammount, and within a year or two, the same people who were poor before would be poor again, and the same people who were wealthy before would be wealthy again.
I don't know who first discovered that truth, but my Mom used to remind me of it back when I was a young, long-haired liberal shithead.
The problem is, it is NOT truth, it is a highly speculative OPINION. Of course, you can cite the specific examples of where it has happened, verifying those truths. I would suggest looking at Russia, or China. Perhaps Cuba?
Or perhaps you can't, demonstrating that in the exchange with your Mom, you weren't the LHLS.
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Ken M
Mountain climber
Los Angeles, Ca
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Mar 13, 2013 - 12:47pm PT
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Well Mr. Hahn i suppose you have shared and equally redistributed the fruits of your labor and good luck and as a result are contented to be in the median, neither holding more than your neighbors nor wanting what they hold? So, if this ideal is followed to its logical conclusion where is the incentive to create, to excel,to achieve a dream?
Obviously, there was no such incentive back in the time of Saint Ronald Reagan, when tax rates for the wealthiest paid 70%....and managed just fine. They still bought their yachts, drove their 50 cars, flew around in their private planes, sat court side at the Lakers.
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Rick Krause
Trad climber
Madras, Or
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Mar 13, 2013 - 01:13pm PT
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If you want to see how wealth distribution really works you need to go visit Cuba. Everyone is equally poor.
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rick sumner
Trad climber
reno, nevada/ wasilla alaska
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Mar 13, 2013 - 01:24pm PT
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Exactly Mr. Krause-equality of misery-the final common denominator of communism, unless of course your favored by the poliboro or its equivalent. Ken i wasn't complaining so much about higher taxes as outright seizure and redistribution of wealth as some on this thread are trending to. Mr. Hahn seemed to advocate voluntary sharing to the point of homogeneity, i wondered if he practiced it in his own life.
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Toker Villain
Big Wall climber
Toquerville, Utah
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Mar 13, 2013 - 01:26pm PT
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Learned some basics in my teens, dollar cost averaging, diversification, dividends yield.
At 21 I added a digit to my net worth, and even though I spent half my twenties living out of a Ford Pinto my wealth grew ever so slowly.
At 42, another digit added, and if things go as they are seeming to, at 63 I might have one more.
Wealth is easy (although execution can be hard)
1) live well within your means. Pay cash or DO WITHOUT! (the key to happiness actually).
2) a part of everything you earn is yours to keep
Currently my portfolio is peaking and my gun collection doing even better.
You can whine or you can make it happen.
The US is still the land of opportunity and might remain so for another decade or two, but others are passing us by.
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rick sumner
Trad climber
reno, nevada/ wasilla alaska
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Mar 13, 2013 - 01:37pm PT
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I couln't agree more Toker. Living within your means and a little sacrifice builds character and with it happiness with lifes simple pleasures. Now on the other hand, if one thinks they are owed a certain standard of living and entitlements it leads to a laziness of spirit and dissatisfaction with life and such people will always envy those with more accumulation.
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couchmaster
climber
pdx
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Mar 13, 2013 - 01:45pm PT
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RJ said: "Real esate...? Now there's a noble pursuit....Skimming the cream off the top and speculating to the high heavens."
One thing I found interesting is that in the early years, my tenants ALL had so much more money than me. I could tell by the deposits they gave me or all the made in China sh#t they bought and left like so much detritus in the yard when they moved out. Or the many trips they would take to places like Disneyland. Over and over and over they bought things and did things which I felt I could not afford. So I saved and invested. I never heard of any of them having eaten potatoes for dinner one day and then pulling the peelings out of the garbage for the next 2 days meals like I did. Or riding my bike the 12 miles to work for over a year, they all could afford cars. Eventually, 20 years later, I could a garbage disposal for myself. Later we even got a dishwasher.
Yet none of them wanted to take the time to buy a dilapidated house, where all the copper pipes had been hacksawed off, the last tenants had smashed the tiles by the fireplace by splitting wood in their f***ing living room, the doors kicked in, needles strewn throughout, the solar system busted up by kids throwing rocks, trash everywhere....and spend the hours and days over there fixing it up so that instead of a useless hulk, someone had a decent place to live. You ever stick a needle over a 1/2" into your middle finger scooping up some piece of shits' leftover garbage? I have. Noble indeed. Perhaps someday I will be lucky enough to find a "noble pursuit" just like you evidently have.
Mostly it's about choices.
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JEleazarian
Trad climber
Fresno CA
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Mar 13, 2013 - 02:07pm PT
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You might consider the case of capital gains. Hugely biased towards the rich.
To save taxes on a million dollar property:
1. Buy a million dollar property.
2. When you sell, only be taxed on the profit at a very low rate.
There are those who say, well, it is passive income, based on investing the money.
HOWEVER, the same is EXACTLY true for interest income, which is taxed at FULL RATES.
Guess where the poor and middle class tend to make most of their passive income, and guess where the rich make most of theirs......the rich have their investments sheltered, the middle class and lower class do not.
THAT is what I'm talking about, in terms of stacking the deck.
Ken, I don't know where "the poor" make most of their passive income, but I'm willing to bet that the "middle class" make most of their passive income on their house, where they can shelter the first $500,000 of capital gain from recognition as income.
As discussed many months ago on the "Republicans" thread, there's a unique problem in dealing with capital gains in a progressive income tax system. We only recognize the gain when we sell the asset. We don't recognize the change in asset values as income or loss year-by-year. This can lead to massive distortions in tax rates.
As a personal example, my father-in-law started a business making wooden boxes for local fruit packers when he was discharged from the Army Air Force in 1945. He operated it with his younger brother, and his wife's (my mother-in-law's) brother-in-law. He lived relatively frugally for the first 15 years or so, until he bought a 1900 square foot house in 1960. While he and his family enjoyed a middle class lifestyle from then forward, he never had close to a six figure income, or put money into a retirement plan. He put his money into his business instead.
When corrugated paper boxes started to supplant wooden boxes, they converted the business to a packing house. That meant they had to go deeper in debt, and limit their spending. They retired (or thought they did) in 1983, and sold the business for enough cash to pay his debts, and share in a note secured by the business assets. The buyer turned out to be inept, and -- after a few years of payments and years of litigation -- my father-in-law and his partners got the business assets back.
They couldn't just return to the packing house business, though, because all of their growers had gone elsewhere, so instead of trying to resurrect that business, they sold off the packing equipment, and converted the real estate into a flea market. They were in their mid-to-late seventies at the time, and returned to full-time work to make it happen.
Eventually, my father-in-law sold his share of the business to his brother for $400,000 cash. Without special capital gains treatment, he would have paid an enormous tax on that sale, even though he accumulated it over sixty years and, if the income had been averaged and taxed at the applicable rates, he would have paid perhaps a quarter or less of what his full rate would have been. We no longer have income averaging, and even when we did, it would not have accounted for my father-in-law's situation.
In the way people fail to differentiate between income and wealth, many on the left would call him part of "the rich" (in fact, pretty close to the 1%) the year he sold his share of the business. The fact that he was ensconced squarely in the middle class (and not even that high in the middle class) for most of his life would be completely lost. All they could know from available data was that one "rich" person "sheltered" most of his "millionaire's" [to use Obamaese] income because of the special treatment of capital gains.
Now Peter Haan, on the other hand, hits on something that I think is very real, and very wrong both morally and theologically. Our wealth is not "God's Scorecard." As the Bible states, God makes his rain fall on the just and the unjust. When I'm blessed materially, I need to share it. I'm not opposed to that (of course, since my debilitating depression caused me to lose everything but my family and start all over again six years ago, I don't have nearly as much to share).
I am opposed, however, to the idea, expressed by some, above, that those who won the "vaginal [really uterine?] lottery" somehow don't deserve, and therefor should lose, most of their wealth. If we take the lottery analogy to its Rawlsian conclusion, the only differences in income and wealth are due to winning or losing that lottery. After all, if you're smart, it's because you inherited intelligence. If you have the capacity to work hard or to defer gratification, it's because you inherited that capacity.
I don't buy that. While no one can seriously dispute that differences in birth and family upbringing, etc. affect how we end up, I think we turn ourselves into automatons if we accept that premise, and humans are not automatons. We make decisions, and those decisions affect how we end up. those who pursue dirtbagging for years, decades or a lifetime will have many more mountain experiences and, generally, much less income, than those who choose to spend more of their time on activities for which others are willing and able to pay more, to give just one example.
My (very long in arriving) bottom line: I'm not nearly as disturbed by the alleged increasing concentration of wealth as I am by the idea that only the rich can accumulate wealth. We're seeing this on a national level, where we say the government can't cut expenses, and on the personal level when we say even the middle class can't spend less than they make. This becomes self-defeating.
John
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BASE104
Social climber
An Oil Field
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Mar 13, 2013 - 02:19pm PT
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Get rid of capital gains and its 15% tax rate, and you will see Warren Buffett paying at least as much as his secretary.
Seriously. Our tax code is horribly skewed against wages and withholdings.
When you go over 107K you get to stop paying Social Security. That is 12% right there if you own your own business and pay yourself.
The entire way of not paying taxes is to avoid paying yourself in wages, because wages are taxed at the various rates.
A person who makes a billion dollars does not pay wage tax rates on that income because it will be structured as capital gains or through clever accounting somehow not be put on the books as income at all.
The biggest vaginal lottery winner that I have ever met is like this: He spends a whole day memorizing details about everyone near him on the seating chart at his next social function. He has a tax attorney and a hot CPA and pretty much does little more than cash checks.
He's a Republican who thinks Obama is going to come and take his money away. No sh#t.
I was going to a lease auction with him, the attorney, and a couple of bankers. We stopped for lunch and at the table one of the bankers started bragging about this big 5000 acre farm he just bought. The CRP payments covered the loan payments. CRP is a farm subsidy where you get an actual check for not farming on land.
Farmers are the biggest titty suckers in the country, and if you look at the plains states, where farming is big in the economy, they take actual checks from the U.S. treasury. It isn't a tax break. It is actual checks.
They all drive around in their hundred grand air conditioned tractors listening to Rush Limbaugh. At the least, I have never met one who is a democrat.
If all income were taxed as regular income, then taxes would be fair. The problem is that both parties are constantly tweaking the tax laws to provide breaks for certain industries or behaviour. It should all be on a level playing field. The person behind the counter at the convenience store is doing honest work, yet pays a higher overall rate than a billionaire.
I'm not talking about raising taxes on the rich, I'm talking about a fair tax code that will be simple and put all of the tax attorneys out of work.
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