A Modest Proposal: Limiting Maximum Income

Here's a modest proposal I thought of just 5 minutes ago. Note that I am not advocating we actually implement this idea or that this idea is a good one (its probably a bad one, and not well thought out). However, I am intrigue by what MAY happen if we did implement this in the current system.

So give your 2cents on this idea (not just if its bad/good, but also how it may affect society, etc.)

The Proposal:
What would happen if we limited personal gains per year to a maximum? By Personal Gains, I mean ALL realized wealth coming from salary, capital gains, gifts, etc. are limited to say $1 million dollars. The logic being that $1 million is enough for anyone to live. Any gain above the $1 million dollar mark is 100% confiscated by the government, or must be donated or gifted to another individual or non-profit organization.

In this case, stocks, property, etc. held by a person are not counted as "realized wealth". So any increases in stock value DO NOT count towards your gain limit. The minute they are transferred from one person to another (sold or gifted) is when they are marked "realized wealth" and contribute to a person's maximum gain limit (be it the seller or the buyer depending the item being sold or gifted). Typical rules will apply to prevent selling at under the market value (i.e. selling your house for $1).

The above does not apply to corporations, only to individuals. I still have not thought out what to do with hereditary wealth transfers (ie death of parents, transferring wealth to children). It may be a special case where wealth transfer due to a death will not count towards a child's maximum gain limit, but I am not sure (you can give your own suggestions).

My Take:
One group most affected by this would be, of course, people making above the maximum limit. These people would be forced to find some use for all income above the limit. I doubt any of them would want to hand over 100% of their income above the limit to the government. Most likely, the money will be gifted to trusted individuals (family members, etc). and perhaps self-founded charities. For CEOs, executives, most of the income will probably be held in stocks, etc. Of course, they won't be able to use more then $1 million dollars of it in a year due to the transfer rule.

Athletes are another group severly affected by this rule (and unfairly, imo)due to the fact that most athletes have a severly short (10 - 15 year) window where they make A LOT of money. After retirement, most are unable to get any other jobs (no college education, not trained in any other career). So limiting their income to $1 million a year may be unfair. On the other hand, making $1 million a year for 10 years nets you $10 million dollars. I'm sure some will make the case that $10 million is enough for one to retire on. An alternative, perhaps, is for athletes to sign contracts guaranteeing money for a much longer period of time, with each year under the maximum limit. Money can still be sent after retirement ensuring athletes don't starve to death.

Note: The $1 million dollar limit is just an arbitrary number I used. It can be modified up or down. Also note that the above proposal would be operated with a general progressive tax system. Income under the limit is still taxed normally.

 

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Problem is, people will say this "takes away the desire to push yourself or work for more"... I don't know about you though... but if I made 1 mil a year, I'd be damned sure I worked my tail off to keep it!

 

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Right. But if you had your company set up, making you $1 million a year, and no matter how much money you spent expanding it you could never make more money than that because the government would take it away - would you bother to expand it?

 

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To clarify, if you keep the money in your company asset, they would not be subject to the $1 million dollar limit. Only your personal salary, income. Also, increases in your company value (which you own) do not count towards the $1 million dollar limit).

Of course, you would have problems once you decide to sell the company. I could see a huge problem there since you are limited to $1 million annual gains. Yea that would be one big problem with the proposal.

 

Personally, I fucking love the idea.

 

No.
Imagine this instead: We had currency competition. So much so that $10 billion USD may not be worth so much in a different local currency. It may, but, it may not be. It seems to me that everyone is so enamored with that idea of using Federal Dollars that they've lost sight of what currency even is. Or what we mean by the words banking, value, money ... ...

It seems to me we're mostly a bunch of cattle in a pen trying to figure who gets to lick the debt-Farmers fingers. Don't worry about limiting the number of dollars a person has. Instead try and figure out how to efficiently value a person's contribution to society. If that means doing away with money as we know it, don't be afraid to at least think about the possibility of doing so.

When you say limiting money, you're talking about using State violence against other citizens. Of course you yourself wouldn't want to see blue uniformed monkey's knocking on your door, so don't send them out to do it to someone else. Would you feel comfortable taking a baseball bat over to your wealthy neighbors house and demanding their money? If not, then why are you morally OK with dressing your mate up in the cute-little' blue monkey suit and having him do so?

Anyhow, I think a better approach is taking away the power from the State and putting it into all of our hands in such a way as to decentralize power increasing all of our liberty and prosperity.
We just may have to: End the Fed

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As someone who is probably working in the world of academia you're used to thinking about limitless or infinite commodity - that being knowledge. You can give it away at whim to everyone and they can pass it on to others. That's not the case with other commodities - such as apples. These are finite and must be parceled out in a productive and efficient manner such that there's enough resources spent making apples as there is demand for apples. It's completely different.

I think when one lives in the world of infinite commodity it's hard to think about the world of finite commodities. It starts to seem like apples should be had by all - whether they really want to eat them or not.... (not to mention they're valued in USD...)

Something to think about :shrug:

 

We used to do this through the tax code. Just make the highest income tax bracket something like 70-90%.

 

But what if the invent a replicator that will make anything, anytime that you need it to eat?

 

I've been doing more research on 'artificial' flavorings of late, and I, for one, would not be interested in eating anything out of a replicator until it had 50 years of testing and monitoring behind it. Interesting potential solution though, I'll grant you that.

Have you been watching Star Trek lately?

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I'm thinking that limiting maximum income is a deterrent and a disincentive which would only result in an exodus of competitive and talented people to countries with no such restrictions.

It may be time to revisit our education delivery infrastructure and the punitive high costs associated with advanced education. I think that education should be free to those who want to learn the more advanced skills that benefit our society as a whole.

We learn best those things which we actually do and so more paid apprenticeship programs make sense to me as well.

Then there are those who neither wish to learn or work. The people who are clever enough to abuse any social program and frequently good at circumventing the law. I'm afraid that I do not know what to recommend as the solution here. :bugeye:

 

People with mortgages over 1 million per year are really screwed.

They can't make enough to pay them and no one can make enough to buy their house.

 

How about we, instead of confiscating all above a certain limit, we tax everything in a progressive manner. Eisenhower had a top rate of 90% and that was during one of the greatest growth rates of the economy in history. I say we tax the first million at 30%, the next million at 40%, the next at 50%, etc. until those making over 7 million pay 90% on all other earnings. Let people deduct charitable contributions at 100% excepting those given to churches(last survey I saw showed only 15% of those go to other than overhead and other non-charitable uses), for one house, education expenses and other things good for society. We would not have a deficit or any debt in just a few years.

 

Progressive tax rates seem to be a more balanced incentive/disincentive.

I prefer to DO MORE WITH LESS rather than EARN MORE and RECEIVE LESS in part because I am familiar with the wastefulness of government spending and the fact that private contractors to government charge higher rates than they would to the private sector.

What part of robbing the government is the same as robbing yourself do these people not understand?

 

I am in favor of a flat tax rate, with no deductions or incentives, that would bring an egalitarian solution and end the tax reform rebate.

In conjunction with this, I would like to see a system that responds to my wishes regarding where my money goes. Taxpayers should have the right to assign our tax dollars to specific programs. We should have an annual online voting opportunity, one person, one vote, except each voter gets to choose and spread the revenue among all programs and categories of funding. If the OP seems insanely fascist, this may appear insanely leftist as well. Roll with the punches, I say, at least it's democratic.

All lobbying should be outlawed, and all corporations should have to pay a flat tax, too. If you want to incentivize industries, just pay them in cash, at least it's more honest.

The economists keep blaming uncertainty. I think this would cure most of the current uncertainty and give a short term fix that would grow into a long term solution, once voters got a hang of the importance of voting, and once the markets learn to submit to the will of "We the People".

If not, try something else when the next issue crops up. But I think the flat tax will keep revenues strong and predictable, and everyone keeps the same incentive to make more money.

 

Provided there's a point where it kicks in (i.e. a poverty line) I'd agree. Otherwise it would do too much damage to our economy.

 

I think it's interesting everyone thinks about how to take someone elses money (ie: increasing tax) and not about the money itself. Tax 70%, tax 15%, I predict we'll see a slow descent into a Japanese style prolonged depression. Which didn't do them any favors. It's not a bad country in that it's nearly 100% Japanese. If we end up going down that route, we're f*cked. A talking head in England was saying something along the lines of: Lifes' not that bad in Japan, we should start thinking about it here. Haa! There is no bad part of any Japanese city. There's simply nearly no crime. You'd never feel unsafe downtown.

It's a completely different society. Our cities will erupt LA style. Then, we'll see. Farmer's do like their electric fences.

 

It isn't your money.

 

What isn't my money? The stuff in my wallet?
By the way, what IS money?

Suppose a very intelligent business person has some money. We'll say $1 billion dollars. Well, what does she do with her money? If she spends it on herself, the money goes into the productive part of society. If she delays gratification and puts it in the bank, the bank lends it out to someone who then does something useful with it. If she invests it, it's used to produce. If she is taxed so that (we'll just say 75%) of it goes into government coffers - why do you suppose someone in government is going to spend it more productivity into the economy than she (a successful intelligent entrepreneur) would have?

In order to create prosperity we need to use the money we have productively and efficiently. If the government, say, spends it on buying votes (directly handing out cash to voters), that reduces the productivity of society and reduces prosperity. Sure, it may make society more equitable - but, it will also be poorer. North Korea is, for most people, pretty equitable. Most people are equally poor and starve to death.

Why wouldn't you leave the money in the hands of this productive clever woman who could spend it productively?