When do you consider someone "wealthy" or "rich"?

Discussion in 'Business & Economics' started by Seattle, Aug 8, 2019.

  1. Seattle Valued Senior Member

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    That's my whole point. I'm not the one arguing that someone with a couple million dollars by the end of their life is rich. People with net assets of a couple of million aren't flying in private jets or owning golf courses.

    Some people here want to "tax the rich" but then define "rich" as anyone with a couple of million dollars in assets. That's just a small businessman who beat the odds and actually has a successful small business. That's the local pharmacist who owns the local pharmacy. Why tax that guy out of existence? That's what we could be encouraging.
     
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  3. Jeeves Valued Senior Member

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    Wouldn't that depend on the definition of assets? Too flexible for my taste.
    I'll stick with annual post-tax income in access of 20X the median.
    Not a million tied up in realty, machinery and obligation, but $1,000,000+ coming at you every single year, to spend on whatever you like.
     
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  5. billvon Valued Senior Member

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    Oh, OK. In that case you are dead wrong.
    So you think government involvement in some things is good? Great; I think so too. So what, exactly, are you disagreeing with?
     
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  7. billvon Valued Senior Member

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    You were arguing, actually, that someone with a net worth of $10 million isn't "really rich" - and that the typical small business owner ended up with that amount or more.

    If you are now saying that someone with a couple million dollars by the end of their life is a more common outcome for a small business owner - then that's a much more reasonable argument.
     
  8. parmalee peripatetic artisan Valued Senior Member

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    It's kind of sad when you have to repeatedly remind someone else of their own argument.
     
  9. iceaura Valued Senior Member

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    Oh nonsense.

    Reaganomics has seriously damaged the US economy, and impoverished the country - there are several ways to restore the US to prosperity and decent governance, but every one of them involves raising taxes on rich people. The US has to figure out some way of taxing rich people enough to pay for the governance of a free and democratic industrial nation (and cover the debts run up by Reaganomics), or give up on freedom and democracy as unworkable in a modern industrial society, and let the country fall apart.

    The bills will come due. Only the people with money can pay them. That isn't a point of view, it's an entry in a bookkeeper's ledger.
     
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  10. Seattle Valued Senior Member

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    What's missing is that eliminating the "rich" won't fix any problems either. Sure, you didn't say to "eliminate" the rich but taxing them to death is essentially the same thing.

    We do need a more responsible government for sure. Taxes on everyone do need to go up a bit. We also need to quit spending more than we take in (over the long-term). It's not a problem for "the rich" however. It's everyone's problem.

    For the literal out there, I'm not saying tax the poor, of course. You have to tax people with income. You don't need to focus on "the rich" however. You don't want to kill the goose who lays the golden egg. A smaller economy can't pay as much in taxes.

    People seem to focus on taxes only when it doesn't apply to them. That's not workable. It's also rare that the budget is ever close to being balanced and includes the magic post war years.
     
  11. Jeeves Valued Senior Member

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    What level of taxation kills a rich person? Is there not a minimum income that they could subsist on? Would that minimum be two hundred times what the average person has to live on? What if it were reduced to fifty times or twenty times or ten times what an average person has to live on? At what point does the high-income recipient die of taxation?
    Of course, we haven't even mentioned that the average person, to receive his or her $25-70,000 a year has to be working - whether manual, factory, service or office work, week in, week out, through the whole year, with maybe a week or two paid vacation time (but she has to pay for the vacation itself) and get to his work and home again, paying for his own transportation and accommodation. The CEO gets a company car, corporate hotel/spa/golf club memberships and various other perks to relieve some of the burden of showing up for meetings.
    That's just the salaried classes. Of course, the bosses' bosses, whose income is a multiple of the CEO's, don't work at anything at all; they just rake in the profits on investments. At what level of taxation do they start to die off? When their income is cut to $50,000,000 per annum? $20,000,000? At $14,000,000 they're almost down to CEO level - would that kill them?
    Seems like a worthwhile experiment to find out.
    No, you can keep hitting what's carelessly referred-to as the 'middle class' - that thick layer of productive people between the destitute and the sacrosanct.
    But apparently, you do. Because the wage-earning classes are the ones who provide those golden eggs for the rich to hide away in offshore accounts. What the rich are dropping on the rest of us is neither golden nor edible.
     
    Last edited: Aug 14, 2020
  12. billvon Valued Senior Member

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    No, it's really not. I am sure you would consider the 50's a time of reasonable growth, with rich people, poor people and a middle class. Tax rates were 92% on the rich. And still there were Rockefellers, Gettys, du Ponts and of course Howard Hughes.

    Agreed.

    You sorta do. Elon Musk can afford to lose 3/4 of his salary to taxes. The guy with a family of 5 who works in a machine shop can't.
    But that's the thing. The "goose" isn't Elon Musk, and you won't kill him by taxing him more anyway. The "goose" is Tesla, made up of people who are making middle incomes.
     
  13. Jeeves Valued Senior Member

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    You're right. It's no problem for the rich to spend less than they take in, since they take in far more than they ever have the time or imagination to spend. (You can only buy so many $30,000 bottles of wine or diamond-studded shoes or meals of critically endangered animals before it gets boring.) It is a problem for a working person who takes in just enough to cover her living expenses, but can't save up for dental work or a corporate merger that renders her job obsolete.
    Because the rich get richer on other people debt - Why, who'd you think it was owed to? - it's everyone else's problem.
     
  14. Seattle Valued Senior Member

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    The effective tax rate paid by the top 1% was very close to what is paid today.
    https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/



    No one is arguing that the guy with a family of 5 who works in a machine shop should pay 3/4 of his salary in taxes. No one should.

    The "goose" is Tesla and without Elon Musk there is no "goose". You don't see many "geese" coming out of countries taxing at 92%.

    After the fact you can say take much of anyone's income but when that is the playing field from the beginning you don't see a lot of innovation.

    I won't even address Jeeves silly post about now much a rich person needs to live on. That's obviously not the point.
     
  15. billvon Valued Senior Member

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    Great! So raise the top marginal rate to 92% again, and everyone will be OK - and we will get more money into the government.
    So you would not consider Howard Hughes, Paul Getty, Stephen Bechtel and John Rockefeller "geese?"
    The idea that if you tax rich people more they won't innovate is ridiculous. Billionaires don't decide to invent because they have a lot of money - inventors invent and then become rich.
     
  16. Seattle Valued Senior Member

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    You didn't read the article. The effective rate then and now is 42%.

    People take the risk to start companies because they can become wealthy. If you tax all of their wealth away, they don't take those risks. Look at highly taxed countries and there are few positive example of great innovation.
     
  17. parmalee peripatetic artisan Valued Senior Member

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    People take the risk to start companies because they can make a decent living--and, as concerns the ones who are actually worthwhile, because their company is related to something which they are passionate about.

    There are certainly those who start companies to become rich, but you're generally not seeing a whole lot of innovation out of them if the "being passionate about something" aspect is absent.
     
  18. Seattle Valued Senior Member

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    If doesn't really matter whether they are doing it to become wealthy or not. They usually are passionate about what they are doing. They just generally don't take the risks if the rewards aren't there.

    Again, look at highly taxed countries and you don't see the same risk taking and innovation.
     
  19. parmalee peripatetic artisan Valued Senior Member

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    For most people I know "wealth" isn't really much of a "reward."

    Also, you seem to be overlooking the fact that there are countless occupations at which a person is extremely unlikely to become wealthy--you can become wealthy, perhaps, but it's highly improbable. And yet people do it anyways.

    I have several thousand albums. I would venture that perhaps 98 or 99 percent of my music collection was made by people who aren't/weren't rich. John Fahey was living in a dive hotel when he died and Julius Eastman was homeless. Few people would say that they weren't exceptional at what they did.
     
  20. Seattle Valued Senior Member

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    I have no disagreement with what you are saying. Artists will be artists in any environment.

    You don't see a lot of risk taking however in an environment where that isn't rewarded. For instance (only anecdotally), Norway is a very nice country. Many people would love to live there. It works partially (with high taxes) because of the national oil wealth that is held for the people.

    Still, I have a friend whose father is a doctor. He had a nice life in Norway but there was no reward for him to see more and more patients as he made the same at a certain point.

    He moved to Chicago and now he is rewarded for additional effort. It's not that he isn't a caring doctor and he isn't excessively motivated by money but he can do more in Chicago and he is better rewarded.

    There are no Amazon's, Microsofts, Apple's in Norway and Norway is probably the best example of a high taxation state.
     
  21. Jeeves Valued Senior Member

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    Is there not something wrong - on a profound psycho-sociological level - with a culture in which people are motivated to embark on enterprise only by the prospect of becoming rich? Does that truly result in "great innovation" ... or obsolescent products, dishonest advertising and corner-cutting?
    Nations with income tax as high as 60% do have some quite successful enterprises - Lego, Ikea, BMW, Chanel... little bit of innovation there. Some new ones, too, apparently.
    Here is a wonderfully skewed take on European taxation by an American concern:
    Europeans Work 2 Months Longer Than Americans Do to Pay Their Tax Bill
    Quite pointedly ignoring that those same poor Europeans have a two-hour lunch break, 28 days paid vacation, 16 weeks maternity leave, up to half a year of sick leave, disability benefits, pension plan, full medical insurance coverage , usually including dental and eye-care; child-care is free or subsidized; children get wholesome meals at school, as well as eye, hearing, cognitive and dental checkups and vaccinations. How many months would an American need to work to pay for all that?
     
    Last edited: Aug 14, 2020
  22. parmalee peripatetic artisan Valued Senior Member

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    I don't know about Bezos, but I strongly suspect that Gates, Jobs, et al would have been every bit as satisfied with what they were doing even if they wound up with only a couple million. (Actually, I very briefly--as in, three or four weeks--worked at Amazon at the very beginning. Bezos was kind of a dick, but he did let people bring their dogs to work, so...)

    I know a guy who found himself in the rarified European free music scene in the 90's. You'd play a show for no more than 20 or 30 people, often in someone's mansion or castle, and get paid an obscene amount of money. He stopped doing it after a while because it just seemed so elitist, or exclusionary, or something. I also know people who still do it, but they have to do a number of normal shows, as well, just to decompress.

    It's all relative, but still... There's getting paid well, then there's getting paid a preposterous sum that could only be blood money. Salvador Dali wanted several million dollars just to appear on Alejandro Jodorowsky's Dune (which never got made) for like five seconds. I just don't get that.
     
  23. Seattle Valued Senior Member

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    The system mirrors human nature. Humans do things for rewards. It's not necessarily about becoming wealthy but it's being allowed to retain wealth if they are able to generate it.

    The alternative (which is also a viable choice) is for higher taxation to result in more services in exchange for those higher taxes.

    In the U.S. higher taxes don't tend to come back in the form of services to those who are taxed.

    In Sweden the middle class are highly taxed. They also receive a lot of services. They have a wealthy class but that class isn't as highly taxed. Wealth was leaving and they did something about it.
     

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