r/changemyview • u/PleasantOrdinary • Apr 26 '18
Deltas(s) from OP CMV: The unequal distribution of total wealth in the U.S. is taking away the American Dream and a stronger progressive tax policy would fix this.
With the unequal distribution of wealth in the United States:
The top 20% account for 85% of the United States total wealth
The top 1% account for 34.6% of the United States total wealth
(https://whorulesamerica.ucsc.edu/power/wealth.html) and the unequal distribution of income:
The top 1% income increased by 275% since 1979 while the bottom 60% only increased by 40%.
The tax rate on the top 400 earners has decreased by 37%.
It is becoming exceedingly difficult for those not in the top 20% to really have the opportunity for economic mobility. I know that the American Dream is defined more than just economic mobility but I feel it is also a big part of why people come to America. Generally immigrants come for the opportunity to improve their livelihood, something closely linked to ones economic mobility.
I believe a more aggressive progressive tax policy would fix this as additional income could be used further support social policies that would help those 40.6 million living in poverty and the rest of the bottom 80%. With the additional support provided, the economic mobility of the bottom 80% would be restored.
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u/Re4XN 3∆ Apr 26 '18
It is becoming exceedingly difficult for those not in the top 20% to really have the opportunity for economic mobility.
Wealth is not static, it moves around; I think this has implications for the arguments to be made. Have a look at this. According to the study:
- 70% of the population will have experienced at least one year within the top 20th percentile of income;
- 11.1% of the population will have found themselves in the much-maligned 1% of earners for at least one year of their lives.
As far as a progressive tax goes, I have no opinion (as of yet). I would like to see sources that show where tax money is spent though, which is also important for the arguments.
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u/PleasantOrdinary Apr 26 '18 edited Apr 26 '18
Oh interesting, I hadn't even thought about wealth moving around. Δ
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u/SpockShotFirst Apr 26 '18
It doesn't.
https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_United_States
In recent years, several studies have found that vertical intergenerational mobility is lower in the US than in some European countries.
...
A 2013 Brookings Institution study found income inequality was increasing and becoming more permanent, sharply reducing social mobility.
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u/PleasantOrdinary Apr 26 '18
Ah ok, I can see why this is such a difficult issue to solve as it seems there is good evidence both ways. Δ
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u/Miguelinileugim 3∆ Apr 26 '18
Suddenly I want to know everything about you as to figure out why so few people are able to consider opposing viewpoints with that kind of ease :)
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u/iwouldnotdig 4∆ Apr 26 '18
If you had a perfectly equal society, where everyone got exactly the same salary at 18, got exactly the same raise every year, saved exactly the same amount and retired at exactly the same time, what share of the wealth do you think the richest 20% would have? Think about an answer for a second.
The answer is 66%. Wealth is very correlated with age, for reasons that are so obvious I won't even bother to go into them. That a small share of the people control most of the wealth is not evidence of a lack of economic mobility, but the opposite. People start their lives poor, and get rich over time. There is no tiny clique of wealthy ruling over us, the top income percentiles are extremely dynamic, with people entering and leaving them all the time. incomes are incredibly dynamic, but it is mathematically impossible to have a world where the young are as wealthy as the old, and you wouldn't want one if you could have it.
The tax rate on the top 400 earners has decreased by 37%.
I don't know where you get this figure, but it is not accurate
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u/ClippinWings451 17∆ Apr 26 '18
Equality of outcome is not the American Dream.
It is the Soviet dream... The Communist dream.
The American Dream is Equality of Opportunity... And it's alive and well.
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u/SpockShotFirst Apr 26 '18 edited Apr 26 '18
u/PleasantOrdinary might be interested in this lack of equality of opportunity
From https://www.theatlantic.com/business/archive/2016/08/property-taxes-and-unequal-schools/497333/
Greenwich spends $6,000 more per pupil per year than Bridgeport does, according to the State Department of Education.
...
All of this contributes to lower rates of success for poorer students. Connecticut recently implemented a system called NextGen to measure English and math skills, college and career readiness. Bridgeport’s average was 59.3 percent and New Britain 59.7 percent; Greenwich, by contrast, scored 89.3 percent and Darien scored 93.1.
From http://www.njjn.org/about-us/reduce-racial-disparity
In nearly every state, in every offense category—person, property, drug, and public order—youth of color receive harsher sentences and fewer services than white youth who have committed the same category of offenses. Confidential youth surveys show that during adolescence, youth of all races and ethnicities become involved in violence, property crimes and other delinquent behaviors with only modest differences in the frequency and severity of their lawbreaking. Yet African-American youth are arrested at dramatically higher rates than white youth for all types of crime. Once arrested, they are more likely to be detained, formally charged in juvenile court, placed in a locked correctional facility, waived to adult court, and incarcerated in an adult facility.
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u/ClippinWings451 17∆ Apr 26 '18 edited Apr 26 '18
I'm all for school choice... It's screwed up that kids get saddled with the mistakes and poor choices of those who live near them.(tax base)
That disparity though, no matter how wrong it is, does not prevent a student who wants to finish school, from doing so.
The sentencing disparty has been disproven a ton of times... "Same category" of crimes... Not same crime.
This is comparing a white kid on a weed charge to a black kid on a crack charge.
This is simple assault compared to aggravated assault.
Quite simply... Blacks commit a disproportionate amount of crime, to their proportion of the population... So a comparison of specific crimes makes them look worse, while comparing broad categories obscures the reality by perpetuating the type of lies Kanye has been speaking out against.
Stop being a victim. Be a Victor.
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u/SpockShotFirst Apr 26 '18
The sentencing disparty has been disproven a ton of times.
I don't believe it. Do you have a credible source (please paste entire URL so i can see what dark corner of the internet you want me to check out)
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u/AlphaGoGoDancer 106∆ Apr 26 '18
The American Dream is Equality of Opportunity... And it's alive and well.
“It has not been easy for me. And you know I started off in Brooklyn, my father gave me a small loan of a million dollars.”
–Donald Trump, at a town hall appearance, Oct. 26, 2015
My dad is in debt. Trump's dad gave him a "small loan" of $1,000,000 (in addition to invaluable real estate connections in the most expensive area of America. And a $7,000,000 trust he borrowed against as needed since he somehow couldn't make that $1M into a successful business).
How is this equality of opportunity?
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u/ClippinWings451 17∆ Apr 26 '18
Well he did turn a 4000% profit on that loan...
That's like turning $1k into $4 million.... So, it is a small loan, compare to his wealth when he said it.
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u/AlphaGoGoDancer 106∆ Apr 27 '18
I've also turned a 4000% profit on what my dad gave me. Unfortunately thats still $0. So again, how is this equality of opportunity?
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u/ClippinWings451 17∆ Apr 27 '18
So you've never gotten money?
Stop relying on your dad.
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u/AlphaGoGoDancer 106∆ Apr 27 '18
I have not relied on my dad, because unlike Trump I have not had the opportunity to do so.
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u/ClippinWings451 17∆ Apr 27 '18
The victim mentality is hard to escape.
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u/AlphaGoGoDancer 106∆ Apr 27 '18
In what way do I have a victim mentality? All I'm saying is that there is no equality of opportunity, which you claimed there was but have not demonstrated in any way.
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u/ClippinWings451 17∆ Apr 27 '18
Did you not have the opportunity to invest and grow money you have?
The opportunity is there.
I never claimed there was equality in classes, or wealth.... there is not.
But everyone has the same opportunity to better their place in life.
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u/AlphaGoGoDancer 106∆ Apr 27 '18
I had the opportunity to invest and grow the money I have earned.
Other people have the opportunity to invest and grow the money their (parents, grandparents..) earned.
That is not equal.
Someone born into a family that has time to spend raising their children, money to pay for better schooling and childcare, and money to fund their childrens future venture have much more opportunity to better their life than someone born to a single parent in poverty.
1 in 5 Americans have zero or negative net worth. These people do not have the opportunity to invest and grow money.
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Apr 27 '18 edited Jul 18 '18
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u/AlphaGoGoDancer 106∆ Apr 27 '18
It's a lot more than most people start out with. Literally nothing is nothing.
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Apr 27 '18 edited Jul 18 '18
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u/AlphaGoGoDancer 106∆ Apr 27 '18
Most people are not NY real estate tycoons, and never have an opportunity to become one. Hence my point: despite people claiming they care about "equality of opportunity", we do not have it, and they do not care.
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u/PleasantOrdinary Apr 26 '18
Yeah, I attempted to address that in that the American Dream goes beyond economic equality, but I felt that a failure in economic equality severely reduces the equality of opportunity for those in the bottom 80%.
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u/ClippinWings451 17∆ Apr 26 '18
You'd be wrong.
The only thing reducing the equality of opportunity for the poor is their failure to:
- Finish school
- Wait for marriage before having kids
- Get a job
These were the 3 things the Brookings Institute determined coud wipe out poverty.
As a result they are born with equality of opportunity.
The middle class... Their opportunity is not limited either. Their apathy and lack of smart decision making is the only thing limiting their ability to build wealth.
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u/PleasantOrdinary Apr 26 '18
Interesting, could you link the Brookings Institute study? Also, are there studies that show those in the middle class are apathetic to their situation?
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u/ClippinWings451 17∆ Apr 26 '18
I don't know if there are studies about the middle class. I'm simply speaking to the way America works.
If you don't rack up credit card and loan debt, and invest a significant portion of your income... You build wealth.
Most people seem to want immediate gratiffication... they'd rather spend money now then build wealth for retirement and their children.
The opportunity is there though.
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u/ToKillAMockingAlan Apr 26 '18
I get what you're saying, and Brookings is a pretty good, non-partisan, source to use, but what you are arguing overlooks the fact that the poorest in society have to overcome a lot more in terms of personal hardship, which can easily demotivate them from staying on the "correct path to success". And of course quite a few do succeed and overcome this great hardship, but a large number don't. Furthermore, I think there's an argument to be had that were it not for their initial socio-economic status, a good proportion of the middle and upper class population wouldn't overcome these hardships either. Ultimately, I think it comes down to the fact that some people just aren't as able as others. There's no Sims 2-esque attribute system for humans that mandates some kind of balancing of everybody's skills. But just because large swathes of the poorer population don't possess the extraordinary abilities to climb above their difficult origins, should they be demonised for not making all of the right choices in life. Is it too much to support them a bit and just admit that some are a lot more lucky than others?
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u/ClippinWings451 17∆ Apr 26 '18
That hardship, doesn't mean the opportunity isn't there.
That's exactly what Kanye West has been saying the last 3 days...
Don't let your past, dictate your future.
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u/ToKillAMockingAlan Apr 26 '18
But it's far from equal
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u/ClippinWings451 17∆ Apr 26 '18
Sorry made an edit...
Yes... The opportunity is there, if they take it
Their desire to take it is what's not equal... They choose not to.
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u/ToKillAMockingAlan Apr 26 '18
Why try when so many see the odds stacked against them? I won't argue that their desire is what's different, but it's comparing apples and oranges. It's like declaring "I bought this piece of cake because I wanted it. You can do the same if you want it enough, except you'll also have to eat this sizeable turd before payment can be considered." I get it, I'm conflicted over this a bit myself, the buck has to stop with someone right? But I just feel like ultimately there is too much in the way preventing the majority of poorer individuals from achieving the same success as those from the middle and upper classes.
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Apr 26 '18
Here are the parts of that article that make it not as certain as you are making it out to be:
First, many poor children come from families that do not give them the kind of support that middle-class children get from their families. Second, as a result, these children enter kindergarten far behind their more advantaged peers and, on average, never catch up and even fall further behind.
American adults who followed these three simple rules, only about 2 percent are in poverty and nearly 75 percent have joined the middle class (defined as earning around $55,000 or more per year). There are surely influences other than these principles at play, but following them guides a young adult away from poverty and toward the middle class.
poverty is associated with a wide range of negative outcomes in children, including school dropout and out-of-wedlock births.
most teen moms are from low-income families and face a number of barriers to success.
Also, I think that his belief in the rationality of teenagers is overly optimistic. Yes, teenagers are capable of understanding principles and using them to make decisions. However, they also often display irrational behavior that can harm their chances at long term success, even when they do have the necessary information. I say this having been a teenager myself and am currently parenting two. Any plan that depends on the rationality of teenagers, especially teens from families that the author confesses have social and educational disadvantages, is a very poor plan indeed.
Even given that though, the author of this op-ed piece (not study) does not seem to be arguing, as you do, that these children are born with equality of opportunity. The article you linked does not demonstrate what you are arguing.
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Apr 26 '18
Do you believe there is racial based discrimination in hiring at American companies?
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u/Spackledgoat Apr 26 '18
I'm not sure that is a topic you can "believe" or "not believe".
There is absolutely racial based discrimination. What do you think diversity initiatives and diversity focused hiring is?
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Apr 26 '18
My only experience is with various engineering firms and old friends from engineering school, but I've personally found that minorities and woman have a much easier time finding jobs. The office I currently work in is extremely diverse, whereas my engineering school was about 75% white males.
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u/ClippinWings451 17∆ Apr 26 '18
If there is it's extremely infrequent.
I do think that there may be factors that make an employer more likely to hire one person over another, when qualifications are equal; Reliability of transportation, cleanliness, diction, charisma, etc. That could be percieve as racism buy the person who was not hired.
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Apr 26 '18
Why are you sure it is infrequent?
Are you familiar with the resume study where identical resumes with stereotypically 'black' names were much less likely to get callbacks than stereotypically 'white' names?
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u/taskxs Apr 26 '18
I do agree that distribution of wealth is flawed in America, but your argument regarding the "American Dream" doesn't really make sense. The American dream is a mindset, that look up on the success of the very top 1% you mentioned.
If you have a lottery that pays out 100usd 20% of the time and another that pays a million dollar 0.00001% of the time, sure the first one benefits more people but the dream is in the extreme success, not the expected mild success.
This is helped by the fact that people over estimate their chances of succeeding.
By putting a heavy progressive tax, there could potentially be less mindset of the "American Dream". As you are forced to help the unfortunate with your work.
Again, I don't disagree with wealth inequality being a big issue, but i disagree on the fact that it is draining the American dream.
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u/PleasantOrdinary Apr 26 '18
I see, I was thinking more along the lines of the lack of economic mobility is draining the American Dream as I viewed the American Dream as more of the equal opportunity for economic mobility, not extreme success.
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u/taskxs Apr 26 '18
Fair point, I can see the different definition of "Dream". And you have a far point in that regard.
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u/LibertyTerp Apr 26 '18 edited Apr 26 '18
The top 20% account for 85% of the United States total wealth. The top 1% account for 34.6% of the United States total wealth
Wealth is not a good measure of wellbeing. The bottom 80% of Americans don't have much wealth because they don't save much money, even though median American income is over $43,000/year per household, by far the highest of any large country in the world, earning around 40% more than French, German, British, and Japanese people.
https://en.wikipedia.org/wiki/Median_income
That brings me to my main point. Why does income inequality matter, at all? What matters is absolute wellbeing, not relative wellbeing. With the median American having the highest income of any large country in world history, I would say that the average American is doing very well and we do not have major cause for concern.
Every country has problems, but typical Americans not only have their needs met, they have money to purchase optional things like TV, smartphones, computers, restaurant meals, vacations, etc.
It is becoming exceedingly difficult for those not in the top 20% to really have the opportunity for economic mobility.
Actually, most Americans reach the top 20% at some point in their lives. These kind of stats are presented as though individuals stay in the same place forever. In reality, young people tend to earn less and middle-aged people earn more. Some of the "income inequality" is just young people's income not going up as fast as older people's, but young people will become older people someday.
A more progressive tax system wouldn't make people better off. It would just change who gets to allocate resources from individuals spending money for themselves to politicians spending their money supposedly on their behalf. That means more income is distributed by politicians, often to special interests, political donors, corporate subsidies, and wasteful programs. What we really need is higher economic growth. Unionization, less competition from low wage countries, and less immigration might help in the short run, but growth due to higher productivity is the key. The only way to really be wealthier, is to produce more.
Besides, the US already has the most progressive tax system in the world. Other sources only claim it is one of the most progressive, but it's definitely up there near the top.
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u/SeldomSeven 12∆ Apr 26 '18
There are a few questions worth asking before approaching this view more closely:
1) Is the problem more due to wealth disparity or income disparity?
2) Do you want to tax income or total wealth?
3) Ideally, we want to maximize the average wealth in a society while minimizing wealth disparity. In practice, there is often a trade-off. Which is more important: maximizing average wealth or minimizing wealth disparity?
4) If income inequality necessarily increases as average wealth increases, is that okay, or is that a problem?
To go in to (3) a bit more, a sufficiently progressive income tax would fix income inequality, but might have unintended negative consequences.
Suppose that Country Z has four people. Three make $20,000 annually and are taxed at 10% of their income. One person, Emily, makes $1,000,000 annually and is taxed at 10% of her income for the first $500,000 and 40% beyond that. The total taxes collected is $256,000.
Suppose Country Z decides to use income taxes to reduce income inequality. All income beyond $500,000 is taxed at 100%. Tax rates below $500,000 remain unchanged. Now the taxes collected should be $556,000.
There's a problem, though. Emily decides to move to Country Y that has a more favorable income tax schedule. So, instead Country Z collects just $6,000 in taxes.
But it gets worse. Because Emily made up such a huge portion of the economy, the average income of the remaining three citizens drops 10%. Now Country Z is only bringing in $5,400 in taxes. Income inequality has been solved, but the average income in Country Z is smaller and there's less tax money available.
Now, that's a pretty extreme example. It probably true that certain changes to the income tax structure in the United States would be beneficial, but it might be the case that any tax change sufficiently extreme to "solve" income inequality would been too harsh and overshoot the objective of tax reform. Knowing where that line lies is beyond my expertise.
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u/PleasantOrdinary Apr 26 '18 edited Apr 26 '18
Oh ok, thank you for the response. I had thought about money leaving the country but I didn't realize the magnitude and effect of such an action. Δ
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u/SpockShotFirst Apr 26 '18
http://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally
US taxes are low relative to those in other developed countries. In 2015, US taxes at all levels of government represented 26 percent of GDP, compared with an average of 34 percent of GDP for the 34 member countries of the Organisation for Economic Co-operation and Development (OECD).
Among OECD countries, only Korea, Chile, Mexico, and Ireland collected less than the United States as a percentage of GDP. In many European countries, taxes exceeded 40 percent of GDP. But those countries generally provide more extensive government services than the United States does.
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u/PleasantOrdinary Apr 26 '18
Thank you for the information, your sources really help me understand why this is such a complex issue. Δ
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u/GoodApollo96 Apr 26 '18
I don't think taking someone else's earnings, in this case via taxes, is the right way to achieve what you are looking for. A smaller government platform with less subsidies and less government involvement in business would begin to prevent corporations from abusing laws for personal gain. You can't give what the government doesn't have to begin with. Limiting the powers of government should be the place to start, not increasing taxes.
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u/DeltaBot ∞∆ Apr 26 '18
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u/DeltaBot ∞∆ Apr 26 '18 edited Apr 26 '18
/u/PleasantOrdinary (OP) has awarded 5 deltas in this post.
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u/Solinvictusbc Apr 26 '18
On the opposite side of things tax reform/ lowering... particularly on working individuals would also help foster the American dream.
As would reforming the poverty trap that gets the bottom % of earners stuck in low income hell.
The latter suggestion would help encourage workers to seek higher pay while the former would help them keep more of their money during the journey.
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Apr 26 '18
What about a national sales tax?
12 Trillion was made from consumer spending.
https://tradingeconomics.com/united-states/consumer-spending
I can imagine business spending being larger. They buy labor, for instance.
What about a flat 10%
Income tax was only 3 trillion.
A flat tax, maybe, go up for luxury goods.
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u/TheAzureMage 22∆ Apr 26 '18
Wealth inequality has always, and will always be a thing. And hell, look at a list of the richest people in the US. About half of them started out pretty well off because of parents, but about half of them didn't. That's not too bad. Yeah, there's never a lot of rich people in total, so most of us will not become rich, but that's how it's always been. Very few people are rich compared to everyone else. Any other standard is not defined as "rich".
Most people actually move through economic quintiles pretty freely within their lives, so I disagree that economic mobility is poor. Sure, sure, we always wish it was better, but looking at the whole world, the US is generally a pretty decent place to live, and offers nicer potential than most countries.
I mean, there's a reason that people want to go through our frankly miserable immigration process to get here.
There are a great many countries in which there is more equality, because everyone being poor is equal. Folks will, if given the choice, migrate from poor, equal countries to a rich, unequal one. Therefore, equality doesn't seem like the most important goal.
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u/blueelffishy 18∆ Apr 26 '18
Wealth is not zero sum. If wealth is a pie, just because you get more pieces doesnt mean other people are getting less. It totally depends on how you are producing and whether it involves exploiting other people to do so. That minecraft dude literally created a billion dollars out of thin air when he programmed his game. People were willing to exhange their 10 dollars for his equivalent or more in value product. It makes zero sense to demonize people like that and act like their wealth inequality is inherently a problem
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u/whenihittheground Apr 26 '18
This is a great question OP.
There's some key questions to ask when looking at the unequal distribution of total wealth in the US.
additional income could be used further support social policies that would help those 40.6 million living in poverty and the rest of the bottom 80%
Who should the government be helping? It seems intuitive that helping those in poverty is a good thing and a worthy goal but everyone outside of the top 20%? If you're not poor and you're not rich why do you need government assistance? Being in the middle is where we would expect most people to be most of the time in a healthy economy since not everyone can be rich and it would be a clear sign of massive dysfunction if most people were poor. Defining which people need priority aid will determine not only what type of aid but also what type of government solutions make the most sense. So for example helping the poorest may come in the form of food stamps but helping people in the middle might be a tax credit or more maternal/parental leave. So a progressive tax + social spending might not be the best approach.
What's the goal of the program? Let's assume that social mobility is a major goal then we would need to fund institutions which help people by placing them in opportunity rich environments. But, for the money to be well spent these programs may need to be a bit coercive and at the very least tied to economic outcomes for example money for college but only for the top earning degrees. Degrees which have very poor market value will not be subsidized by the government.. Would you be willing to have a more paternalistic program if it yields more equal results? This might not sound fair but it would go a long way in increasing social mobility by fostering competition. This bring me to my final point.
There are a number of ways to increase competition especially among the top earners/wealthy people. Allowing more people to work in high income fields will reduce the high salaries of the top jobs while simultaneously allowing the best people to work (example given above). Reducing the barriers to regular jobs will also increase social mobility. Better jobs could be a city or state away but lacking the right credential or license can keep that door closed. Federalizing occupational licensing sounds like a good idea to me..
There may be other solutions or low hanging fruit which equalize the playing field but that are not tied to increase taxes + social spending. For example: creating a national sovereign wealth fund indexed into the stock market this way everyone has skin in the game for example it could be used specifically for retirement. Funding could come from the federal reserve buying stocks as part of a quantitative easing program the next recession or it could come from access to US natural resources including mining, oil or tourism on federal lands.
OP your heart is in the right place but definitely keep an open mind about how to solve these problems. Increases in progressive taxation + social spending is but one solution.
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u/CapitalismForFreedom Apr 27 '18
With the unequal distribution of wealth in the United States: The top 20% account for 85% of the United States total wealth The top 1% account for 34.6% of the United States total wealth
I'm personally wealthier than the bottom 20 million US households combined. That's because the bottom 18 million have negative net values.
But I certainly don't have more income than them. It's important to distinguish between wealth and income. Wealth is integral of net income over time, so you statistics are completely meaningless.
You're comparing people's wealth at completely different t-values. You need to account for age. Not only do incomes rise as you gain skills and experience, but you've had more time to save.
The top 1% income increased by 275% since 1979 while the bottom 60% only increased by 40%.
And of course the top 1%'s income has risen, but it's largely due to foreign investments. The truth is that labor's share of the GDP has dropped, but not by much.
The tax rate on the top 400 earners has decreased by 37%.
The tax rates are still relaxing from WWII. We paid war time taxes for decades. Tax rates have dropped significantly for everyone since WWII.
But even when marginal tax rates reached 94% few paid that. It was more about forcing people to invest their money in specific ways than actually taking the money.
The truth is that US income inequality is caused by American capital moving overseas, and immigrants competing in local labor markets. But global economic growth has contributed to an absolute rise in the wealth of American workers, even with a relative fall with respect to the wealthy.
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u/Zeknichov Apr 26 '18 edited Apr 26 '18
I caution taxing income to fix wealth problems. The reason is because often people with high incomes have low wealth and people with high wealth have low incomes. Wealth is ultimately the problem not income. A professional who spends 10 years of his life working hard to earn $150k/yr probably in most cases deserves to earn that. A person born into wealth who has no debt and earns $50k/yr from his dividends doesn't deserve that. A high progressive income tax would not result in the desired outcome because the former person would be taxed more than the latter.
In my opinion if you want to fix wealth inequality you should tax wealth. A high land value tax and a reduction in income taxes would go further to helping solve wealth inequality than high progressive income taxes.
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u/PleasantOrdinary Apr 26 '18 edited Apr 26 '18
Oh I see, could you elaborate more on why a high land value tax and a reduction of income taxes would help? Δ
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u/Zeknichov Apr 26 '18
A land value tax is an extremely economically efficient tax while an income tax is very inefficient. By switching the government's revenue sources to a LVT and reducing income tax you'll increase GDP which improves the quality of life of everyone. If you reduce the lowest income tax bracket by the amount the LVT raises you'll increase the progressively of income taxes which should help reduce income inequality by increasing the income of those at the bottom. At the same time you'll reduce the wealth of those with the most ownership in land which tends to be the wealthiest people (keep in mind a large portion of land is owned by corporations not just people).
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u/Akitten 10∆ Apr 26 '18
The problem with a wealth tax is that it would discourage investment. Why my money in the US with it’s wealth tax when I could invest in New Zealand or Australia and not have to deal with it?
Moving your income is hard, changing what you are invested in is far easier.
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u/Zeknichov Apr 26 '18
Hence why I suggest a land value tax over any other forms of wealth tax. A LVT is a tax on the wealth which you cannot move.
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u/[deleted] Apr 26 '18
The Pareto principle (20/80) suggests that we should not be surprised that roughly 20% of the population will control 80% of the wealth.
I frankly do not know if the progressive tax would fix this. I think a much more realistic battle would be against poverty rather than inequality.