I think 1 & 2 might be the motivating problem for my whole worldview right now --- just the notion that the system is in fact rigged, but not for who we want to say it's rigged for, but rather for the college-educated middle/upper-middle class. We're all on board for for social justice (I certainly am too), but only to the extent that it doesn't impact the square footage we can get a mortgage on in a choice "public" school district.
This isn't an especially productive comment and I should probably delete it before I hit the reply button.
You'd think that, until you have a conversation with someone who does accounting for the ultra rich and discover that the mortgage interest deduction is a joke compared to the loopholes those people are able to take advantage of.
The key-word here is ultra-rich. See: https://www.irs.gov/pub/irs-soi/soi-a-ints-id1801.pdf. Average tax rate goes up with income up to the top 0.1% ($2.4 million+). It starts dropping at the top 0.01% ($11 million+). But at that point you're talking about just 5% of total income. Tax those people an extra 10 points more, and you get maybe another $50 billion. But if you taxed the top 50% an average rate of 21% (the same as the top 10%), you'd raise $500 billion more.
We love to complain about billionaires and hedge fund managers, but 80% of the income in this country accrues to a group of people that has entry-level college graduates at one end and top Google engineers at the other end.
To be a little more specific, the federal tax system relies on people who make very roughly around $200-$500K/year, because those making less have their numbers outweighed by their lack of income, and those making more have their income outweighed by their lack of numbers.
...is that whatever people in that income range are really like, and however little sympathy they deserve, they are the golden goose that provides the lion's share of revenue for the government, so politically, there always has to be a game of chicken when tax increases are discussed. That's where the money is, so how much can be taken without harm to the economy?
I would bet that expropriating billionaires would have surprisingly little effect, but most of the people who would like to do it think six figures is rich too.
You don't need to "expropriate" anyone, and I'd rather not experiment on the folks running the companies (Google, Microsoft, Apple, etc.) that make America the envy of the world.
Folks at the top 30% mark still benefit from income inequality. (That is to say, they earn a larger share of national income than their share of the population.) If you tax the entire top 30% an average of 25% you could increase revenues by double what Warren's proposed wealth tax would bring in. (And you wouldn't risk driving businesses and jobs to Canada.)
But folks (Sundar Pichai, Satya Nadella) running large companies are not usually billionaires. Bill Gates isn't running Microsoft any more, you know. And if he was, what difference does it make to anyone exactly how many billions in stock he has? The difference is the delta between the benefit of his charitable efforts and what anyone else would do with the money, and the parsimonious assumption is that it's about zero. Since, you know, he didn't get rich by solving the problems he's trying to solve now.
The difference is that soon as he gets successful, he reincorporates Microsoft in Vancouver BC. Or people like Musk, who continue to use their personal wealth to bankroll new companies, move to Toronto.
I have no idea who benefits from corporations being incorporated in Delaware, but I (and the vast majority of Americans) don't live there and I don't care. The ___location of incorporation is not the headquarters or where the workers are.
This "Atlas will shrug" thing is trite posturing, not to say that there cannot be other drawbacks to populist revolutions.
From Matt Levine's column describing people threatening that Argentina will become "uninvestable" if it doesn't do what bondholders want:
"[Argentina] defaulted in 2001, imposed 70% haircuts in 2005 and 2010 restructurings, was in default on interest payments on the new restructured bonds from 2014 until 2016 due to legal disputes, finally cleaned up its act and returned to the international bond markets in 2016, and then in 2017 issued a hundred-year bond that international investors lined up to buy. Now those bonds trade at about 40 cents on the dollar, and international bond investors have the gall to be like “well if you default nine times we won’t lend to you a tenth time,” come on. They bought 100-year bonds one year after the last default ended! “There is a limit to what they will endure,” sure, but after two centuries of diligent searching Argentina hasn’t found it. "
It’s not an “Atlas Shrugged” point. What’s the difference between Bangladesh and America? It’s not that we have more people with bachelors degrees in psychology. It’s not that we’re smarter. Or nicer. It’s partly our civil society and lack of corruption, but a big part of it is access to capital. We have Silicon Valley. Bangladesh does not. My family left Bangladesh for the US 30 years ago because America offered more opportunities. What does that mean? It means there was capital available to do things and build things. Interestingly, some of the latest generation of my family aren’t leaving. Amazingly, over the last 20 years major increases in foreign direct investment have resulted in opportunities in Bangladesh. Not for John Galt. But for young programmers looking to join a tech startup: https://www.forbes.com/sites/theyec/2018/08/02/why-banglades....
Taxing away your capital is like selling your furniture for quick cash. You’re not skimming the fat, you’re cutting into muscle and bone.
As to Argentina, it had to offer a 7.9% interest rate to move those bonds in 2017. If we refinanced our national debt at those rates, we’d be paying $1.5 trillion a year on debt service, about what we spend on Medicare/Medicaid and defense out together.
If it was generally understood why America is different from Bangladesh, every country would be like the US.
It sounds like you're implying the secret is being nice to the big capitalists so they keep their capital in your country. But I don't think that's the way the world works, and it's precisely because most people think that's the way it works that most of the world cannot catch up.
Big companies in the US are largely owned by Vanguard and Blackrock and so on. They're already collectively owned by the people, despite all the talk about inequality. Prosperity depends on this system, not billionaires.
It's not that the US couldn't wreck things by acting like Argentina, but that people shouldn't pay attention to the super wealthy posturing. And the more they talk nonsense, the more they encourage radical actions, because true things can't be believed.
That's not the only single factor for them to consider though. I doubt Musk would move to Toronto, or that he would ultimately benefit from moving to Toronto in the long run were these taxes to go in effect. Of the sea of other things to consider, including the pool of candidates, the business culture, the social culture, the infrastructure already in place, types of grants available, the federal funding available (which can come with strings attached, like: "you gotta stay incorporated in the States"), etc. it makes sense for them to stay in America more than any other place. Not to mention, the safety that is here for these people and their children, the great schools, the best medical care, their ties, and so on.
This isn't an especially productive comment and I should probably delete it before I hit the reply button.