Equality and Governmental Responsibility | Hacker News Reader

Equality and Governmental Responsibility

jangosteve.com

4 pointsJangoSteve10 comments

Counterpoints:

1. Redistribution of resources: Only so much of the wealth created by natural resources is reasonable to privatize

2. Redistribution of jobs: Some factory and service jobs are great and or pay well...but not many. Layoffs are sometimes a necessary step, but they are also a redistribution of wealth

3. Profiteering: Providing low value while acting as a gatekeeper is the source of much wealth. We generally must live with that disparity, but this is a well known redistribution and one that is recognized for it's negative effects on economies

4. Redistribution of power: We can argue all we want about whether Bush was a great president, or whether the American Senate is a beneficial institution, but like it or not they are both clearly getting that power from their hereditary wealth

5. Redistribution of equality: This follows on from power. Why is the Senate mostly men? Why are American presidents all men so far? Why are most senior business leaders men? White? Straight? Root causes please. It's called a patriarchy, and we must tax wealth to bring some balance and help fix some of the ills caused, as well as to reduce the ability to purchase too much inequality (I'm a white male).

We don't actually have a graduated income tax in this country -- even before you get into shenanigans like creative deductions and offshore accounting.

FICA taxes and medicare taxes, adding up to 15% or so, only apply to your first 100k or so of income. So if you're making 500k, you're probably paying less in taxes as a % of your income than your secretary.

Just wanted to point that out.

Not sure what you mean... the US very much does have a graduated, or progressive, income tax schedule.

...tainted a bit by tax cuts?

...absolutely.

Well, I guess I was silly in thinking that I was paying income taxes that far exceed FICA, etc.

Why do questions of how much ratio people are paying, or social engineer (i.e., giving incentives for certain behavior) always come up in tax debates?

I should have to pay for the services I get. If I have 2x as much property, then maybe I should pay twice as much in tax, since the government is protecting twice as much. But when people talk about the fact that the tax you pay amounts to X% of your income, well, so what? And even worse, when they talk about the need to tax, say, cigarettes in order to discourage smoking, well, the point of the government is not to tax first, and find places to spend it later...

Depends on how you count it. The Congressional Budget Office says that on the whole FICA is progressive because people who have earned lower wages over their life get more back as a percentage of their earnings.

http://www.cbpp.org/cms/?fa=view&id=531: For the first dollar of average lifetime income, you get a Social Security benefit of $0.90. At higher incomes, a $1 increase in average lifetime income adds only $0.15 to annual benefits.

> FICA taxes and medicare taxes, adding up to 15% or so, only apply to your first 100k or so of income. So if you're making 500k, you're probably paying less in taxes as a % of your income than your secretary.

Not even close. (And your numbers are wrong. FICA alone is about 15% and medicare is about 3%.)

You pay medicare on all earned income. (And, with Obamacare, you're going to be paying it on unearned income as well, if you're making $200k as a single or $250k total for married couples. Yup, married engineers are going to be hit by this.)

Back to the secretary. You paying the same rate on the same income. You stop paying FICA at $105k, but by then you're in a higher bracket for other taxes.

At $500k, your marginal rate and average rate are pretty close. Below $100k, they aren't.

No, you don't pay FICA above $105k, but you also don't get benefits from higher contributions.

Someone else pointed out how the benefits change as a function of contributions so I'll point out why SS advocates set up the system with a cap on both contributions and benefits.

If the system has uncapped contributions and benefits, it will end up paying Ross Perot $500k/year. I suspect that you're not willing to do that.

If the system has uncapped contributions and capped benefits, rich people will pay a lot more attention and work to reduce SS because that would be a huge hunk of money.

The other alternative, capped contributions and uncapped benefits is a non-starter.

That leaves us with the current system, capped contributions and benefits. SS advocates picked that because they thought that a SS system that rich people ignored was best.

Were they wrong? Do you really want rich people paying attention to SS? They will if it's taking 15% of their income.

As it was said already, higher does not mean higher productivity. In fact often lower productivity. Another point : inequality in any society is a bad thing. People live shorter lives, more crime e.tc., in short more misery. There is a new book, called "the spirit level" talking about the issue. So concentration of money in hands of not many creates unwanted side-effect: concentration of power. If you are a middle class person you should be really upset, when power to make decision, to influence future is being transferred from you to upper class.

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