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Comment by _delirium | Hacker News Reader

I don't think I've ever met a person who made a lot of money who'd admit they were rich. The standard these days seems to be: you're rich if you could never work again for the rest of your life, and still live extremely lavishly, with the private jet and yachts and multiple houses. That sets the bar at maybe $100m net worth, which yes, very few people have.

Weirdly, I know people who make around $70k who claim that they're very well off, and seem to actually feel that way. But the people making $300k, $500k, $800k? Invariably they feel middle class, perhaps upper-middle-class, but not even that upper. My guess is that it has a lot to do with social circles and where you live. The guy making $70k who lives in a modest house and whose friends all work at coffee shops feels rich; the guy making $300k who lives on the upper east side of Manhattan and whose friends are all VPs doesn't.

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My parents (both physicians) both readily admit they are rich. They also believe the highest tax bracket (their tax bracket) should be raised considerably.

That's nice to hear. I'm nowhere near the upper tax brackets at the moment, but I like to think that I would be okay (and even encouraging) of the taxes I did face in such a situation.

I know many people who make lots of money and are bitter about paying so much tax on it, but very few people who realize that the taxes they pay make a real difference in everyone's lives (especially the lives of those who are less fortunate). Or that the taxes they pay make possible all of the benefits the Federal, State, and local governments offer.

Sure, the government may not be the most efficient of entities, but I think it's difficult to make a serious argument that we would be better off without most of the services provided by the various levels of governments, or that they could easily be replaced. And none of these would be possible without some form of taxation (though how the taxes should be structured is up for reasonable debate).

While I believe that people should be fairly compensated for their hard work, and that we shouldn't penalize people for working harder, I also believe that it would benefit most people to stop and think about how much their taxes help to make this/any country a great place.

*disclaimer: this is mostly about the US, as this is my main experience, but I'd guess most of it applies to (at least some) other nations as well.

I don't disagree in principle, but I think there is far more value provided by state and local governments than by the Federal government. Roads, hospitals, schools, etc. are all local and state funded.

The Federal budget is mostly military spending (the US has no significant military adversaries) and Medicare spending (physicians, pharma and other "caregivers" prey on the elderly and have managed to channel this spending into profits... see Bush's prescription drug benefit/handout to those firms).

After that, the remaining 10% of the Federal budget probably makes a lot of sense. Sadly, most of what comes out of everyone's paycheck goes to fund military and medicare overspending.

Out of local spending, almost 30% come from federal government grants. Only 45% of the federal tax base is income tax, and only 15% of the local tax comes from income taxes.

Out of federal expenditures, about 45% of them are covered by defense, healthcare and medicare spending.

On your first point, local spending is so small that the 30% coming from federal grants is insignificant.

On your last point, the following pie chart seems to disagree: http://bit.ly/aG9Oj5

On your second point:What year is that data for? It looks to me as roughly 50% is covered by "Pentagon" and "Health" spending, not a far cry difference from the 45% my (seemingly outdated) economics textbook seems to show.

See this chart:

http://en.wikipedia.org/wiki/File:2010_Receipts_%26_Expendit...

Roads, hospitals

http://en.wikipedia.org/wiki/Interstate_Highway_System#Finan...

Hospitals are indirectly funded by many different sources, both public and private.

Hospitals are to varying degrees Federally tax exempt, and they of course collect payment from Medicare/Medicaid, but many, many hospitals are primarily supported by local and state governments.

This isn't to say that Federal funding isn't sometimes useful. Federal central planning built the interstate highway system for military purposes, and this had the side effect of making suburban living desirable, draining the tax base from cities and destroying some urban environments, leading to urban crime, poverty, etc.

Nonetheless, the highways have probably been helpful to the economy as a whole even if they did destroy some cities along the way.

My point is mainly to highlight that the primary interface with government services should be the local and state level. That we get so disproportionally excited about Federal laws/elections/officials shows that politics is mostly for entertainment/signaling purposes and that the useful roles of government are unglamorous and are typically accomplished quite effectively by the local municipality.

Incidentally, today is garbage day. I derive tremendously more utility from garbage day than I do (or ever will) from the Iraq war, Afghanistan war or Social Security.

I very much doubt the IRS is going to mind if they send them bigger checks than they have to.

So why not do that, rather than demand that the tax level be increased?

Because their argument is not that they, specifically, should pay more in taxes. It is that the highest tax bracket should be taxed at a higher rate. To equate the two is a straw man argument.

Exactly. I was pointing out their hypocrisy.

I don't see how that's "hypocrisy". They're arguing that all people in a bracket, including themselves, should be taxed at a higher rate. Arguing that doesn't logically require also being willing to go it alone. Advocating raising taxes on the rich while hiding their own money in offshore bank accounts to avoid those taxes; that would be hypocrisy.

I've always asked that to anyone who advocates for higher taxes yet have never heard of anyone who actually does.

Around 400 taxpayers (out of 1.54 million) in Massachusetts opt in to a higher state income tax rate. (see http://dailybabenews.com/article.php?article_id=6842&typ... ).

That said, I think this a terrible argument. Changes to the tax code only have an effect if they take effect across the broad tax base. That said, maybe someone should start a "I'll pay higher income taxes if 1,000,000 people join me" petition on Pledgebank.

How's 80%?

I don't know, but that seems like the kind of snarky one-liner that doesn't add anything to the discussion. Because davidw said it so well, I'll just inline quote him here:

This is exactly the kind of comment that I feared we would see when articles like this start gaining traction. It's a cheese puff comment: it's got some taste, but it's empty. It has nothing to back it up, no content, no reasoning, no well crafted argument. It's just an empty "rah rah" type of slogan of the type that politicians regularly regurgitate. There is nothing new or clever about the comment, it's the sort of thing that's made the rounds elsewhere 100's of times. Being such a cheap, throwaway comment, it mostly/usually doesn't lead to particularly interesting discussions, as we can see here, despite a few good comments, but more zingers, one liners and similar "go home team!" cheering for one political side.

I think you misinterpreted my comment. It was intended to be pithy, not snarky. So your parents think that their current tax rate is too low, so I named a higher rate. Why is 80% outlandish?

My point was simply that it's a bit silly to bemoan the low rate of taxes today unless you name a rate that you think is reasonable. Clearly you think 80% is unreasonable. If one only thinks a 1-2% increase is reasonable, then stipulate that, rather than making the grandiose claim that taxes should raised considerably. Isn't an 80% rate a considerable increase?

The fact is, most people think that 80% is grossly unreasonable. Why? At least there should be a principled argument, not just a rich person bragging (via a complaint) that he/she could afford higher taxes.

Clearly you think 80% is unreasonable

I never said that. I said that, as given, your comment had no argument or reasoning. This is the comment you should have originally posted, not your two word question which vaguely implied your real argument.

That aside, do you have a response? How about 90%?

90% superficially sounds unreasonable, because we have a tendency to think that wealth is distributed on a bell curve. But wealth is not distributed that way, it is distributed according to a power law, which means that a significant number of people make in excess of $100M per year while others make less than $1000. If wealth were distributed according to skill and ability, the ratio between the highest and lowest would be much lower and billionaires would be as rare as 100 ft tall people.

The idea that a person could personally contribute the equivalent of $100M of value in a year per their efforts and skills (which ARE distributed on a bell curve) is absurd. It is this mismatch between the distribution of ability and the distribution of wealth that the rich exploit. So for someone making $100M/year, a 90% tax rate is not unreasonable at all.

Great point, but you should have stated that in your original comment.

I assumed the intent would be obvious... alas I hope the comment triggers further discussion at this point.

See, here's the issue isn't it? How much is enough? I do think the tea-partiers have a point. There most definitely is a level of taxation that greatly reduces people willingness to take risks in the hopes of future wealth. Is it 40%? 50%? 90%?

I don't know. I'm just pretty damn sure it's not what we're taxing the wealthy at now.

Disclaimer: I would be affected by these tax hikes.

How's 110%? They should give their best effort, yeah?

Nassim Taleb makes exactly that point in Fooled by Randomness, which is a terrific read incidentally.

I loved the book, but don't remember that being one of the points.

I don't think it's social circles (although, that might be a by-product), rather parkinson's law kicking in at all levels.

The people I know making $70k don't feel rich–but that might be because they are married with kids. If the people you know are single, I could see how that would be different.

It's weird–I'm half-way between 70k and 300k now and I feel above middle-class but definitely not rich. We live modestly but have 4 kids and travel a lot.

Just to point out: by the definition of a lot of Americans, "travel a lot" is part of the definition of "rich". And it's a big part: most people can't really afford to travel at all. And for some people, "4 kids" is also part of that definition--especially if you treat them right. If you send them to private school, that's certainly the case.

(Personal anecdote which is not data: a lot of my family are autoworkers, and if you asked them they'd say they're doing pretty good, definitely middle class. One of my aunts on that side just got on an airplane for the first time in her life last year, because it was the first time she could afford the price of the ticket.)

This post is not meant to be snarky or insulting at all. But you are in the top few percent of the income distribution, and you don't feel rich because the things you spend the money on are things you think you should have. And you might be right! Because I think a life which involves family and travel would be a good thing, and that everyone should have that. But that doesn't mean most people can have it, or that those who can afford these things aren't rich.

"This post is not meant to be snarky or insulting at all. But you are in the top few percent of the income distribution, and you don't feel rich because the things you spend the money on are things you think you should have. And you might be right! "

Don't worry, I'm not insulted/offended at all. I'm fully aware that I'm in the top few percent of incomes.

And I should have qualified that–while I don't feel rich, I do consider myself extremely blessed (fortunate if you will). I should also add that I currently have no desire to become more rich (not that I don't want to succeed in business). I'm terrible at managing our money/budget at this level, so I see know need to add to it.

Yeah, I do know mostly single people making $70k. Some have families, but I can mostly think of reasons why it makes sense to me that they'd still feel well-off. A few live in generally poorer areas; e.g. someone making $70k in Fresno or Fort Wayne is doing well by local standards, and even though they have families to support, they're surrounded by other people who also have families to support who make closer to $50k. A bunch of the rest are immigrants, whose norms are calibrated by a lingering sense that the U.S. is absurdly rich any way you slice it, and that their lifestyle is quite nice compared to family back home.

An interesting case are the locals here in Santa Cruz who don't work over the hill in Silicon Valley. There aren't that many good local jobs, and my sense is that the people who make $70k whose social circle is mostly other non-commuting locals feel well off, despite the fact that it's a pretty high-cost-of-living area--- because they know lots of surf bums, coffee shop employees, and people who have to commute from Watsonville because they can't afford to live in Santa Cruz or Capitola.

Just curious: Define "modestly". Do you own your house? Is it a big house? Is it a nice area?

I'm always fascinated by the varying definitions of living modestly. I don't mean that as an attack on you in any way. I find that people definitions really do differ quite a bit. What's yours?

No. No. Sorta. (crappy neighborhood in a nice general region (CA central coast))

Then again, we're only staying here for 6 months. Wife and I both have used cars ('o6 & '04) that we bought cash. Home furnishings are all used/cheap as we've learned our children tend to destroy things. We don't buy many "nice/expensive" things other than my camera gear and my wife's shoes/clothes.

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