10 thoughts on “Go Bruce!

  1. “We granted tax cuts to the richest 1 percent (corporate bigwigs, well-to-do guitar players), increasing the division of wealth that threatens to destroy our social contract with one another and render mute the promise of “one nation indivisible.””

    Division of wealth should not be the concern of a capitalist government. Taxation should not be a method of wealth redistribution.

    1. Division of wealth should not be the concern of a capitalist government. Taxation should not be a method of wealth redistribution.

      Sure, in theory. Capitalism, like Communism, looks good on paper. They’re both simple, appealing little ideas that too many people hold up as some sort of holy grail. The folks who think of Capitalism as some pure ideal to be upheld are at heart greedy, solipsists who read to much Ayn Rand; Communists are eternal optimists who are under the fatal misconception that human nature is essentially hard-working and selfless.

      The gap between rich and poor must be closed if we wish to preserve the level of consumption that maintains our nation’s economy. Arthur M. Schlesinger’s The Cycles of American History speaks to this to some degree, but the following argument is my own.

      The Revenue Act of 1926 contributed to the widening gap between rich and poor in the “Roaring 20’s” by cutting taxes of those earning $1M or more by two-thirds. During the ensuing Great Depression, top tax rates were raised from 25% to 63%, and the richest americans were eventually paying 75% of their income in taxes in 1935. Not only did they remain the richest americans, they got richer; the people their taxes was directed towards helping were destitute, and in dire need of all manner of consumer goods. To play devil’s advocate, the lesson of history seems to be, do a little “wealth redistribution” now, or a lot later. Instead of “trickling on” our poorest citizens, why not take some of the money which our richest citizens would otherwise be taking out of circulation, and put it somewhere it can fuel our economy?

      1. Well I think Capitalism has transcended “good idea on paper” to good idea in practice as well; the same can not really be said for Communism. For an example observe the Chinese using Capitalism to prolong Communism. For the record the poorest Americans don’t pay income tax at all. They pay payroll tax which if for their social security and Medicare and that is it from the Feds. So just by having a federal government with a military, treasury ………. and I could go on forever they are getting a great deal as they should. I have no problem with that. Why do liberals think that rich people take their money and stick it under the mattress? They use their capitol in many ways investment (venture capitol, stocks, bonds …) this money is what fuels company capitol for material and labor investment in the first place. In fact rich people buy food too, they by expensive food and go out to restaurants a lot employing chefs like my next door neighbor. Secondly, rich people buy expensive stuff with high margins allowing for great employment opportunities. Yachts, planes, boats, car, expensive cloths…. and again the list could go on. These products and services require a high level of labor and materials. Additionally, because the US tax system is screwed beyond belief thousands of small businesses file taxes as private citizens and inflate the number of income earners above the magic 150K mark. The result of the owner of a small business getting a higher tax burden is to pass those losses on down the employee chain and keep his/her real income unchanged. This is a standard capitalistic response to the downward pressure on income. Lastly, I do suggest you look at some other countries that have cradle to grave entitlement programs and socialistic labor protections. Take one example, Germany, has a stagnate economy that is many times worse than this one the Democrat’s harp about. And the time span of stagnate growth is much bigger as well as unemployment is much bigger that anyone would put up with here. By the way the high unemployment by American standards existed even before the reunification of East Germany. And if you think this is an aberration look at any other similar economy for example of most of Western Europe. Of course I believe that government regulation needs to exists and should but to think one could pull off a wealth redistribution scheme and out smart the free market economy, I don’t buy it. I also don’t believe that a handful of people could legislatively out wit the free market economy of the United States no matter what their ideology.

        1. My point was pure Capitalism, that is, the belief that the free market cures all and all business should be unrestricted, is an idea that only works on paper, much like socialist practices. We’ve got a little of both schools of thought in our economy. Like the structure of our government, our economy is far from perfect, but compared to other countries its works pretty darn well.

          While many rich US citizens do put a good deal of their money back into the economy, our poorest citizens must spend nearly all of their income, and what they do save goes to larger purchases that improve their standard of living markedly (property, housing, etc). Furthermore, I contend that the very richest americans (say, $50m and up) spend (or actively re-invest) a relatively small percentage of their wealth, with the rest slowly gaining interest in banks. The tax policy of the Bush administration has eliminated some of the higher tax brackets, and exacerbates the already too-large gap between the poor and the well-to-do.

          To ensure a robust economy for the years to come, we must reduce the wealth gap, and I feel that the way to do that is increase taxes on the very richest americans and use it to “prime the pump”. Money travels up the financial strata much more easily than it trickles down. If the gap between the rich and poor continues to grow unchecked, our economy will suffer as there will be a sharp falloff in consumption. Our richest citizens will not be dissuaded from investment by higher tax rates; the consumer spending it encourages will fuel businesses, and if they have invested wisely they will ultimately prosper, just as they did in the 30s.

          I think its cool when mind-numbingly rich people advocate higher tax rates for themselves (Springsteen and Edwards are topical examples). These people know they could not have achieved similar success if they were not United States citizens, but they also appreciate that the American Dream is not as attainable as it ought to be, and are willing to give of themselves to help others.

          1. “Furthermore, I contend that the very richest americans (say, $50m and up) spend (or actively re-invest) a relatively small percentage of their wealth, with the rest slowly gaining interest in banks.”

            I think you are shooting from the hip on this one based on preconceived notions about rich people. I would contend that if you were some rich guy’s financial advisor and suggested he put most of his money in scores of FDIC insured low yield savings accounts you would be fired very quickly. Even if you are right that is still investment. The reason it is earning interest is because the bank is using that money to float loans to other people, like mom and pop businesses and mortgages.

            “I think its cool when mind-numbingly rich people advocate higher tax rates for themselves”

            I think you would be surprised on how few of the 50M and up crowd their is compared to the entirety of the US tax base. There simply isn’t enough mind numbingly rich people, even at 90% tax rate, to make a very large impact on overall revenue the Feds bring in from the millions of people in the 50K – low millions crowd. This is more of a feel good thing for liberals than anything else. I suggest these people who do want to offload some cash start a charity or contribute to one.

            “If the gap between the rich and poor continues to grow unchecked, our economy will suffer as there will be a sharp falloff in consumption”

            I would like some data to backup this claim since everything from consumer spending to home ownership is at record levels right now. These numbers are high, from a historical prospective, for every strata of the economy today. Show me one shred of data that the middle class in the United States has shrunk over any length of time.

            Personally, if you are a millionaire I don’t think the government has the right to say you have too much money and your lifestyle is too excessive so we are going to redistribute your income how we see fit. I have a major problem with that; it isn’t our money or the feds money to decide. Even millionaires can have lots of expenses and we shouldn’t be in the business of having a government judge which are worthy and which are not. This leaves the super rich which could not possibly spend all their money. Like I said earlier these people are few and far between and really don’t make a large impact on the overall tax base either way because the quantity number goes so low.

            1. I would like some data to backup this claim since everything from consumer spending to home ownership is at record levels right now. These numbers are high, from a historical prospective, for every strata of the economy today. Show me one shred of data that the middle class in the United States has shrunk over any length of time.

              % of US Population                  % of Wealth Owned
              =====================================================
              Top 1%                                          38.1%
              Top 96-99%                                      21.3%
              Top 90-95%                                      11.5%
              Top 80-89%                                      12.5%
              Top 60-79%                                      11.9%
              General 40-59%                                   4.5%
              Bottom 40%                                       0.2%
              

              You can find this illustrated in a graph at United for a Fair Economy (UFE):
              http://www.ufenet.org/research/wealth_charts.html

              To recap, it shows that the top 10% of americans hold over 70% of our nations wealth, with nearly 40% owned by the top 1%. In 1989, the top 10% held 67.1% of the wealth, with 30.3% in the top 1%. So the super rich have gained in terms of their relative wealth, and the super-duper rich have really prospered. Its unfortunate that I don’t have data more recent than 2001: while the numbers for the 90’s show the effect of the “tech bubble”, our current tax policies are more friendly to the richest among us, and should only accelerate this trend. you’re right to say that consumer spending is high, but the economy was churning along in the 20’s as well. I don’t think we’re headed for another great depression style crash in the next decade, but we could see one in our lifetime if steps aren’t taken to close the gap between rich and poor that the US Census Bureau agrees is widening.

              I know, there are lies, damned lies, and statistics. I was saved the trouble of doing the research myself by google answers. Feel free to look for stats that back up your point of view – I may be a skeptic and a liberal, but I could use some good news.

              Note: I used wealth rather than income as metric for wealth distribution, as it is a better indicator of a person’s financial situation than income alone.

              1. Very interesting statistics and one that is often used to defend this position. Rather than whipping out more statistics lets work with the ones you’ve provided.

                Top 1% of American holds 38.1% of the total wealth ($42,389,200,000,000) as per the link. So if I take 1% of the US population(300M) and divide up the 38.1% share of the pie I get $538,342,840. So this is the average wealth someone could expect to have in the top 1%. The handful of billionaires really pulls the average up on this one. None the less these people are rich.

                Lets look at the next 9%…

                ( $42,389,200,000,000 x 32.8% ) / 27,000,000 people = $ 514,950

                Well 500K is not a hard level of wealth to obtain, hell you can’t buy a house on Long Island for less than 400K. All you have to do it sit back and wait for the mortgage to get paid off in 30 years. These people have money are not poor but some just have mature investments others are millionaires. Furthermore I would say anything from this point down is not really rich just middle or high middle class.

                What is my point with all this arithmetic? These wealth based statistics are biased toward home/land owners. Take a guy who works in NYC and lives in NYC. He likes Manhattan and makes a decent wage. Well he decides to spend 30 years there. That is 30 years of paying rent which doesn’t get classified as wealth as appose to a person in a similar job out in the suburbs paying the same amount or less into a mortgage. In fact it is a double whammy because not only is the first guys not getting any wealth credit he is directly increasing the wealth of someone else who does own property. Furthermore, these stats take the whole population in to account. Many of the near zero wealth owners live off of someone else’s wealth via a spouse or parents or sugar daddies for that matter. Remember there are about 160M workers in the US and 5.5% unemployment rate. This means the rest of them don’t want/need jobs. Lastly, the accumulation of wealth takes time. Mortgages are 20-30 year investments, IRAs, 401Ks, Profit Sharing plans all take years if not decades to mature into real wealth. So counting people under the age of 35 in these wealth statistics is almost a waste of time, except the obvious young star, athlete or lucky inheritance.

                1. “Well 500K is not a hard level of wealth to obtain…”

                  It seems more than half of your fellow citizens would disagree. When I do the math, I get the 9th thru 2nd percentile group having an average wealth of $525,576; and the bottom 59% having a mean wealth of $11,488. This discrepancy cannot be explained away by saying that young people haven’t had their investments mature. If you really want to make the point that the prosperity gap isn’t so bad, try to find figures based on income rather than wealth – this will take care of most of your objections to the data I cited.

                  The fact remains, there is a sizeable gap between the rich and poor in our nation, and it is growing. Whether or not you agree with me on how to fix it, it is still a serious problem.

        2. > They use their capitol in many ways investment (venture capitol, stocks, bonds …)

          And more importantly, they (as a whole) invest it more wisely than the government does, since they care more about investing in a profitable company than in appeasing the right interests.

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