Why not increase the taxes of the super rich?

[Astaroth]

I realize that my title is fairly unoriginal. I am also well aware that increasing the taxes alone is not going to solve a country's problems. However, there is one thing I simply do not understand: What is wrong with taxing the rich (especially in the US) more heavily?

I've watched plenty of political TV in the US recently (all news channels ranging from msnbc on the left to fox on the right) and I have also read many articles and even posts here on TWC, yet I could not find a single proper argument against this. Here is what republicans generally said:

• Increasing taxes alone is not enough. True, I agree, we should also cut spending (such as ending the war on drugs, cutting military spending etc, though that's for a different debate). But having hundreds of billions more is certainly going to reduce the deficit.
• We do not want to hurt the economy by increasing the taxes of small business owners. Fair enough. But I'm not talking about small businesses with a few dozen employees whose owners make 200k a year. I mean the super rich, those people who actually make millions or even billions every year. Hedgefonds managers. CEOs of huge companies, etc. Increasing their taxes doesn't hurt the economy because those people do not create jobs.
• We don't want class warfare. Huh? That's not even an argument. Fact is, many rich people pay less taxes than those who are part of the middle-class.

So can anyone here explain to me what is wrong with closing tax loopholes and/or taxing the super rich more heavily? And mind, I am not talking about small business owners and I am not saying that we shouldn't cut spending as well.

[PointOfViewGun]

There is nothing wrong with taxing the rich. Reminds me of this:
Jon Stewart!

[Astaroth]

Yeah, I actually watched that! I love Jon Stewart, he's great.

[Roboute Guilliman]

The rich will leave and settle in other countries. Their money aswell.

[Justice and Mercy]

Because rich people are generally rich because they're good at directing resources into profitable fields. By taxing the rich in order to fund jobs for jobs schemes you effectively take money out of economically viable concerns and put them into economically unviable concerns.

Plus: It's immoral.

[Astaroth]

The rich will leave and settle in other countries. Their money aswell.

Do you have any evidence for that? In Germany, we have a much higher tax rate than in the US, yet plenty of millionaires still live here. Sure, some do move away, but the majority stay.

It's simply too inconvenient to leave. You can't be the CEO of a big US company and live in Switzerland. Not to mention that those people also care about their families, business connections and friends. America being the richest country in the world (in terms of GDP) means that you can't just run away and take your money with you. Also, if I earned 5 million dollars a year, would I really leave the country I'd lived in for the past 40 or 50 years simply because I "only" had 2.5 millions left after taxes?

Because rich people are generally rich because they're good at directing resources into profitable fields. By taxing the rich in order to fund jobs for jobs schemes you effectively take money out of economically viable concerns and put them into economically unviable concerns.

How so? What about lowering the taxes for small businesses and increasing them for the super rich? What could possibly be wrong with that?

Plus: It's immoral.

How so? How could it possibly be immoral to tax someone more heavily who will still earn more money than hundreds of people could even spend in their whole lifetime?

Also, do you realize that by not doing this, someone else has to pay? Someone else means poor people, middle-class people, small business owners. That means less money and less jobs for the vast majority of people.

[Roboute Guilliman]

Do you have any evidence for that? In Germany, we have a much higher tax rate than in the US, yet plenty of millionaires still live here. Sure, some do move away, but the majority stay.

You can live in Germany and have an account in Switzerland, Luxemburg, Monaco, etcetc

[Justice and Mercy]

How so? What about lowering the taxes for small businesses and increasing them for the super rich? What could possibly be wrong with that?

The same thing. You reduce the ability of the "super rich" (Christ) to direct resources, which they've largely proven themselves good at.

How so? How could it possibly be immoral to tax someone more heavily who will still earn more money than hundreds of people could even spend in their whole lifetime?

Because they earned it.

Also, do you realize that by not doing this, someone else has to pay?

Unless we start cutting the government down to size. Properly, people should all have to pay very very little.

You see, the issue here is precisely that it's better (for purposes of economic calculation) to leave money in the hands of the private citizens. ESPECIALLY the rich.

Someone else means poor people, middle-class people, small business owners. That means less money and less jobs for the vast majority of people.

Except it doesn't. Again, these people have proven themselves quite capable of placing capital into productive fields. That means more for everyone.

Now, if you want to know the real primary cause of our growing wealth disparity (which I'm not an enemy of as such): It's inflation. Inflation doesn't happen immediately nor does it apply itself equally to all aspects of the economy.

Inflation happens by a very specific process, and the fall in money's value is NOT equal to nor concurrent with it's rise in quantity. From the very beginning the new money has NO effect on prices, so the first people to get it get the most value out of it.

Who gets it first? Banks, then businessmen, then workers.

[Astaroth]

Most rich people have this nasty habit of preferring to make more money whenever possible. So when they are given the choice, to live in country A and pay more taxes or live in country B and pay less, they'll always opt for B.

Countries simply prefer to tax relatively low percentage than to tax nothing at all.

Could you please read what I have posted above? See here:

It's simply too inconvenient to leave. You can't be the CEO of a big US company and live in Switzerland. Not to mention that those people also care about their families, business connections and friends. America being the richest country in the world (in terms of GDP) means that you can't just run away and take your money with you. Also, if I earned 5 million dollars a year, would I really leave the country I'd lived in for the past 40 or 50 years simply because I "only" had 2.5 millions left after taxes?

You can live in Germany and have an account in Switzerland, Luxemburg, Monaco, etcetc

Which is exactly what the German government has started to prevent in recent years. Successfully, I might add.

Furthermore why the hell should the state punish people that have worked hard with extra taxes? I think that is the definition of injustice.

It's not about punishing people. Fact is, basic things are necessary. That means -- infrastructure, schools, hospitals etc. The less money the state has, the less infrastructure and such it can build and maintain. What does that mean?

If you have a tiny government and state, all schools and hospitals will eventually become private. So if you are poor, your children will go to bad schools. Of course they might get a scholarship, but it is so much harder coming from a broken home. So it is a fact that a certain amount of money is necessary. To build new schools. To hire teachers. To build roads. To lock up criminals. To help people after hurricanes and earthquakes. Now, where do we get that money from? From everyone? The problem is, some people have more money than others for a variety of reasons. If you take away from everyone equally, the poor will become even poorer the more time passes.

That is the definition of injustice.

Because they earned it.

Oh please, let's not go there. Plenty of people have merely inherited their wealth and so on and so forth.

Unless we start cutting the government down to size. Properly, people should all have to pay very very little.

You do realize what this means, right? Poor people starving. Poor people having no access to proper schooling. Heck, in Texas, many schools are completely out of money because Gov. Rick Perry decided to cut their budget - despite earlier campaign promises to support schools. Poor people unable to afford hospitals.

Of course spending has to be cut, but removing all sorts of social programs is ridiculous.

Except it doesn't. Again, these people have proven themselves quite capable of placing capital into productive fields. That means more for everyone.

That's not really the case. The reason for the massive wealth disparity is that being rich is a self-enhancing mechanism. If you have millions of dollars, getting high interest rates is a piece of cake. If you have a measly 10,000$, nobody is going to pay you 5% interest rates. Money makes more money, and lots of it. Once you have reached a certain point and don't just waste your money, it will increase tremendously without you even having to do much.

You see, the issue here is precisely that it's better (for purposes of economic calculation) to leave money in the hands of the private citizens. ESPECIALLY the rich.

The problem is - money is invested globally.

In the end, it boils down to this: taxes are not a punishment. It is not about being "mean" to the rich. The problem lies elsewhere. The problem is that a state needs money to function. A state needs money to help the ill, the poor, the old, a state needs money to provide infrastructure, help and security for its citizens.

Of course the US spend too much money, and spending should be cut. But that's not sufficient, because if you merely cut spending, that simply means less schools, less teachers, less hospitals etc.

[Justice and Mercy]

Oh please, let's not go there.

Uh, you asked...

Plenty of people have merely inherited their wealth and so on and so forth.

Which means it was a gift from someone else.

A gift is still yours.

You do realize what this means, right? Poor people starving.

Poor people having no access to proper schooling. Heck, in Texas, many schools are completely out of money because Gov. Rick Perry decided to cut their budget - despite earlier campaign promises to support schools. Poor people unable to afford hospitals.

Sounds like all the more reason to support the free market.

Of course spending has to be cut, but removing all sorts of social programs is ridiculous.

No, leaving them alive is ridiculous.

The problem is - money is invested globally.

That's not a "problem" at all.

In the end, it boils down to this: taxes are not a punishment.

I'm not here to judge the psychological motivations of the politicians or bureaucrats.

The problem is that a state needs money to function. A state needs money to help the ill, the poor, the old, a state needs money to provide infrastructure, help and security for its citizens.

That's precisely the kind of thinking that destroys the economy.

Of course the US spend too much money, and spending should be cut. But that's not sufficient, because if you merely cut spending, that simply means less schools, less teachers, less hospitals etc.

No it doesn't. It means less public money spent on schools, teachers, and hospitals.

[Alkaline Earth]

Well let's do the math here.

Citezen A- make's $6,500 anually, he's taxed 5% so his input into taxes is $325, remaining: $6,175.

Citezen B- make's $65,000 anually, he's taxed 10% so his input into taxes is $6,500, remaining: $58,500.

Citezen C- make's $650,000 anually, he's taxed 20% so his input into taxes is $130,000, remaining: $520,000.

Citizen D- make's $6,500,000 anually, he's taxed 30% so his input into taxes is $1,950,000, remaining: $4,550,000.

Citizen E- make's $65,000,000 anually, he's taxed 40% so his input into taxes is $26,000,000, remaining: $39,000,000.

Citizen F- make's $650,000,000 anually, he's taxed 50% so his input into taxes is $325,000,000, remaining: $325,000,000.

Citizen G- make's $6,500,000,000 anually, he's taxed 60% so his input into taxes is $3,900,000,000, remaining: $2,600,000,000.

Citizen H- make's $65,000,000,000 anually, he's taxed 70% so his input into taxes is $45,500,000,000, remaining: $19,500,000,000.

Now you may be wondering, why did I use 65 and keep mulitplying it by 10? Because I thought that number was the most interesting.


If you look at my representation you'll see taxing as income goes up DOES work and is fair ( up until you hit 100% ).

~ Thomas

[Thorn777]

Because rich people are generally rich because they're good at directing resources into profitable fields.

Like derivatives and treasury-bonds. lol this is so stupid by now...

As for the blackmailing argument. Let them try and do that for as long as there is still is a most significant consumer base in the west. Blackmail the blackmailer, like that they cant sell their products here any longer. You can also use some gunboat diplomacy with countries like Switzerland or Singapore and tell them that they cant do business with you if they don't sign tax-agreements, like there are already all over the place to collect taxes from foreigners living in tax-havens. That can be expanded greatly as well.

Its this one way "free-trade" that is politically created and can be politically rolled back. Nothing fancy about any of this argument. Pure and simple necessity.

[PointOfViewGun]

If it's adjusted nicely it will not scare them away and still provide a considerable amount of income.

[molonthegreat]

Since they will just move away their money, leading to less capital available in the country. Just as they did here in Sweden when we had a special millionaire tax, it led to an estimate of 50 billion(population 9 million) in capital disappearing from Sweden. Furthermore why the hell should the state punish people that have worked hard with extra taxes? I think that is the definition of injustice.

[SPECTREtm]

Since they will just move away their money, leading to less capital available in the country. Just as they did here in Sweden when we had a special millionaire tax, it led to an estimate of 50 billion(population 9 million) in capital disappearing from Sweden. Furthermore why the hell should the state punish people that have worked hard with extra taxes? I think that is the definition of injustice.

It's called Social Democrats...

[Rome101]

Most rich people have this nasty habit of preferring to make more money whenever possible. So when they are given the choice, to live in country A and pay more taxes or live in country B and pay less, they'll always opt for B.

Countries simply prefer to tax relatively low percentage than to tax nothing at all.

[Mr. Scott]

It seems that most of the economists on this forum (Justice and Mercy, etc...) feel that the free market is the best.
I'm definitely no economist but it does make a lot more sense than the opposing viewpoint.

Also, I go to a public High School in the US and there's plenty of money. Its just wasted on crappy teachers.
People complain about class sizes, but, tbh, even though my class sizes have progressively gotten larger throughout my education (20 K-6, 30 7th-8th, 40 9th-12th) I have not noticed it at all.
I still am able to get a fine education even with some sub-par teachers and large classrooms.

And no this is not sarcasm, I'm serious. Funding in education is overrated. Take it from a current public student.
The only thing I think needs to be improved is the Guidance councilors. They're lazy... -_-

The free market means private schools, schools people can't afford. Do you think they want to send their children to public schools that are falling apart, schools with barely enough teachers to cover all classes?

Sounds like all the more reason to oppose spending cuts for public schools.

Please do elaborate, I'd love to know why it would be good for a modern, civilized nation to deny its citizens healthcare and help.

I used the word punishment in response to others who brought it up earlier.

Which means: less and worse public schools and public hospitals. If you are poor, you are unable to afford proper schooling or healthcare. Sounds great, doesn't it?

Look up the Charter school system.
Also, we do need to cut spending in public schools. There's a ridiculous level of waste. Several of my teachers last year make 6 figures. As a high school teacher, I don't care how good you are, you shouldn't make 6 figs. That's upper class income. Not to mention that the job is not demanding and the benefits are enormous.

IMO, I wouldn't mind seeing a contractual style education. In this, schools would remain affordable, but would have motivation to compete with one another for more funding.

[Astaroth]

Also, I go to a public High School in the US and there's plenty of money. Its just wasted on crappy teachers.
People complain about class sizes, but, tbh, even though my class sizes have progressively gotten larger throughout my education (20 K-6, 30 7th-8th, 40 9th-12th) I have not noticed it at all.
I still am able to get a fine education even with some sub-par teachers and large classrooms.

And no this is not sarcasm, I'm serious. Funding in education is overrated. Take it from a current public student.
The only thing I think needs to be improved is the Guidance councilors. They're lazy... -_-

Sorry, but just because one person doesn't believe that there is anything wrong with the current system, despite the teachers being "crappy", doesn't mean it's working well. Just look at the international comparison - America's public school system is doing really badly. And you might not have noticed a 50% increase in class size every 2 years or so, but others might have... I for my part really loved small classes (I had a couple ones in my last years of highschool with only like 10 people whereas others had 25) -- not that a single example proves anything.

Look up the Charter school system.
Also, we do need to cut spending in public schools. There's a ridiculous level of waste. Several of my teachers last year make 6 figures. As a high school teacher, I don't care how good you are, you shouldn't make 6 figs. That's upper class income. Not to mention that the job is not demanding and the benefits are enormous.

IMO, I wouldn't mind seeing a contractual style education. In this, schools would remain affordable, but would have motivation to compete with one another for more funding.

Wait, so because some teachers are supposedly overpaid we have to cut spending?! Perhaps a more adequate solution would be to look at the spending and redistribute it accordingly.

[Justice and Mercy]

Just look at the international comparison - America's public school system is doing really badly.

Sure is, which is particularly striking considering what kind of money we spend on our schools.

[Astaroth]

...currently.

Because, currently, there is no market for cheap private schools. There are free (for the parent in the immediate context) public schools.

Now, one could argue: "But before public schools cheap private schools weren't extensive!"

Well, for two reasons. One: Back then education wasn't as necessary, there wasn't so definite a division of labor. Second: Back then the salary of a worker could only buy so much.

So the cost-benefit wasn't nearly the same as it is now.

The problem is this - there is a basic cost to running a school. Teachers, buildings, facilities, equipment etc. And some people simply do not have money to afford any of that for their children. They are the same people who pay no or barely any taxes right now. Those people would simply not be able to afford private schools of any kind. Many people would simply fall through the cracks.

No, and I also think that they'd like to all live in mansions as well.

Oh come on, having a decent public school system isn't that hard. Just look at the Scandinavian countries or even Germany. Sure, our system isn't perfect either in the international comparison, but everyone can go to school for free. And uni for basically no money. It works.

Not at all. The amount of money spent on schools has little to do with how good they are. The surrounding cultural atmosphere is MUCH more important.

True to a certain degree, but it does play a considerable role. Sure, money is not always spent well, but cutting spending surely does nothing to improve public schools in our current system. It does just the opposite.

That's not what I said. It'd be great for everyone to get excellent healthcare. Why do you think I'm such a strong advocate of freedom?

If someone has barely any money and can just about afford to feed his family and buy some clothes (or not even that), then that person will never get excellent private healthcare. That's just not happening. And this is not merely about the very poor, either. If you are part of the middle-class, chances are that you will not be able to afford an expensive surgery.

Go on and define "work" and "fair" for us, and then tell me what you think about the fact that money does more good for everyone in the hands of the rich than in the hands of the government.

You keep making that claim, please do show me some proof. I think the vast majority of people would benefit immensely from the super rich paying, say an income tax of 40-50% and that money getting spent on improving the country's infrastructure, schools, small businesses and hospitals.

And the thing is this -- those people would still be super rich. I'm not a communist.