Wealth Distribution in the US: Challenges and Solutions

[WhoWee]

I'm employed as a field engineer. Graduated from Pittsburg State U in 1980. Looks like a real thought provoking forum. Thank you for the kind welcome.

I am a technical representative for quartz crystal timing devices.

The PF can be very thought provoking and lively.

As for the single payer post, BoomBoom is concerned the cost of health care is passed on to consumers.

Accordingly, I'd like his opinion on mandated health insurance coverage. The specifics of single payer/universal/employer based group/individual/co-op exchange really wasn't important.

The expansion of insurance coverage for up to 46 million people will have a cost. I want to know who he thinks will pay for it - given his comments.

 

[drankin]

You think there is a significant amount of people who would just live the rest of their life like this and never desire to produce anything?

Yes, I've worked with many of them! I have worked at many low paying jobs where my working peers worked harder at NOT working than if they just did what they were payed to do. Why? They make just enough to get them by at a job they hate. And many of them have made it their career to do as little as possible and still maintain their position. If we were to guarantee a living minimum wage, we would foster this lifestyle to the detriment of our productivity as a nation.

It's un-American to pay people to NOT progress. Un-American in a historical sense that we've never paid people to not perform competively in the market as a policy.

 

[n9xr]

If we look at those who are uninsured right now, a large percentage of that group are young and single not really running up a large medical bill. These persons will be a large portion of those picking up the tab. As it is, these folks can get sick and go bankrupt for not having coverage. But as it is, I pay for the healthcare costs for me, my family, those who are uninsured, politicians, military personnel, and old folks.

Time for someone else to pick up the tab for a change.

 

[bleedblue1234]

The only good solution to healthcare IMO is to go all out single payer or to completely take government out of the picture...

 

[n9xr]

The only good solution to healthcare IMO is to go all out single payer or to completely take government out of the picture...

I wish. A no nonsense - no excuses solution.

But unfortunately, not an option. Too many people don't like optimal solutions.

 

[WhoWee]

You don't truly believe that a business that provides healthcare to its employees does so out of the kindness in their hearts do you? The costs are passed on to the consumer (many of which have no healthcare themselves because they can't afford it).

Many businesses provide health care benefits to retain good employees.

Some small businesses take advantage of group rates by including full time employees. Some employers join the NASE or other associations to gain discount benefits. Other small employers establish Section 125's to reduce tax liabilities and workers comp claims and offer accident or cancer policies (Aflac) to employees.

Most often business owners make (business) decisions based on profit and loss, not emotions.

 

[TheStatutoryApe]

That has not been my experience at all, in fact, I believe that in many cases, the lower the income, the harder the work. I think the exact opposite may be true in many cases, that the more cushy the job, the lazier the worker...unless, of course, you think that a business meeting at a fancy restaurant, golf course, or strip club is really hard work?

There are some industries where workers do hard work for little pay but any more that would probably mostly be crop harvesters. Most hard working jobs that I know of are unionized skilled labour that tend to make some decent money for only having a high school education.
Most of the low income work where I live would be things like working at a video store or a department store.
At my current job most of our employees get fired for sleeping on the job (from the time they got there to the time they left in some cases) or not even being there when they say they are. Among other reasons for letting people go have been getting drunk on the job, getting stoned on the job, getting drunk or stoned with residents while on the job, picking up on underage girls in front of their parents, cussing people out, getting in fist fights, doing donuts in the parking lot, and one guy even got fired after being arrested for breaking into and stealing money from vending machines on site while working (though perhaps you could call that industrious). And that's just people at this one job and who were actually fired. We have a rather prodigious turn over rate.
I have known people who had nice jobs of the sort where they go to expensive restaurants and such. All of them were constantly stressed about their jobs and a few of them quit and took less stressful ones making far less money. While I have heard them complain about people that were just unable to do their jobs properly or get anything done on time I have heard very few stories of co-workers who did nothing but sleep in their office. And yeah, compared to some of the co-workers I have had, I'm sure these people at high end jobs were putting more effort in while at strip clubs and playing golf.

As for lower-income jobs, I've had mixed experiences. I put myself through college working in a warehouse; everyone there worked very hard (and for fairly long hours -- I only put in 44-48 per week, but most did 50+). They had no "lazy and unmotivated" workers (as TheStatutoryApe put it) except possibly some temps, but those would quit fairly quickly.

At the warehouses I have worked at the only non-management employees that I saw working hard were the forklift drivers. Everyone else were temps and they tended to either socialize, flirt, or wander off to find things to steal (which is the reason I was there [working security]). Management had to bring in probably twice as many as strictly necessary just to make sure that enough work got done.

 

[TheStatutoryApe]

Let's just assume that everyone were guaranteed a basic "comfortable" living. 3 hots, a cot and basic medicine.

You think there is a significant amount of people who would just live the rest of their life like this and never desire to produce anything?

Even people who are independently wealthy seem to have a desire to work.

I recently had a roommate (a relatively intelligent guy even) who after losing his job seemed quit happy to mooch off of me for most of a year before I moved out. He didn't even have basic medicine or three square meals a day.

 

[Alfi]

It's un-American to pay people to NOT progress. Un-American in a historical sense that we've never paid people to not perform competively in the market as a policy.

Does this statement of fact include all the farmers who have been paid to not plant crops?

http://www.washingtonpost.com/wp-dyn/content/article/2006/07/01/AR2006070100962.html

 

[BoomBoom]

If you saved $1,000 in cash working at a part time job.

Would you

1.) put it in the bank to draw interest at 4%
2.) invest it in the stock market with a potential 15% return
3.) lend it to a friend (who may or may not re-pay it)
4.) lend it to a stranger who promises to repay with 20% interest
5.) invest it in something you can re-sell to triple your investment
6.) invest it in a small family business that promises to pay you $200 per year for the rest of your life (and you own stock in the business)
7.) donate 35% to a homeless person and spend the rest on recreation
8.) invest in a variable annuity

and why?

Unfortunatley, my history seems to lean towards option #3.

Accordingly, I'd like his opinion on mandated health insurance coverage.

As it stands now, I am a fan of the public option.

Many businesses provide health care benefits to retain good employees.

...at a very high cost that comes from lower employee wages and higher product prices.

 

[drankin]

Does this statement of fact include all the farmers who have been paid to not plant crops?

http://www.washingtonpost.com/wp-dyn/content/article/2006/07/01/AR2006070100962.html

Ah, no I wasn't including farmers. But, this is the kind of thing we will be doing if we make all jobs pay a living wage. A job should pay what it's worth. If the wages are too low, then people won't take the job and the employer will have to increase the wage or remove the position from the business.

 

[ray b]

They say ignorance is bliss ray b - but there are limits.

Have you ever heard of the SEC - they don't allow ("large amounts of stock are seldom bought they are mostly created out of thin air by guys like buffet or bill gates steve jobs ect") the activity you describe.

Are you familiar with personal property taxes?
http://dor.wa.gov/docs/Pubs/Prop_Tax/PersProp.pdf

How about luxury taxes?
http://www.nytimes.com/1992/06/17/business/senate-unit-kills-luxury-tax-on-items.html

I'll also assume the concept of estate taxes have not been a priority on your research list.
http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States

As for Bill Gates GIVING himself stock - are you talking about his original founder's shares that were issued when he invested in the company or stock options or perhaps stock in lieu of cash? Please describe the stock he "gave" himself.

If you'd like to learn about stock options
http://www.salary.com/advice/layouthtmls/advl_display_nocat_Ser56_Par125.html

In the mean time - please support your post or retract the nonsense.

as far as I can tell all stock is created out of thin air at it's begining
people like bill gates start a CORP
build it to a point and go public by selling stock
BUT retain far more stock themself then the amounts sold
that stock is not subject to any tax ever unless sold

the SEC is a bad joke as far as regulations
AND THEY SURE DO ALLOW STOCK TO BE CREATED and SOLD
a CORP needs to meet certain conditions to sell stock but the stock is created
yes they do have some rules on some trades but NONE ON OTHERS

lets not mix up STATE and FED taxes you can move to a better taxed state
even if you move out of the USA FEds tax laws still apply if you remain a citizen personal property is a state tax in some states NOT A FED TAX

luxury taxes is a very limited list of things taxed and mostly dead now
bringing it back is not a bad idea

estate taxes is something I am very well aware of having been involved with two large estates both people had receved huge estates [that they didnot earn and lived off the earnings without working] three other estates I was part of paid NO TAX as the limits are set quite high 3.5 million currently
BTW estate tax is eazy to dodge with a little planning [generation skipping trusts] and other gimics
or like our example bill gates and his untaxed EVER BILLIONS by creation of charity foundations
so for many estate taxes are NOT A DOUBLE TAX and maybe the ONLY tax on WEALTH

there is no nonsense in my post but a lot in yours
and a whole load of neo-conned spin and BIG LIES too

 

[CRGreathouse]

At the warehouses I have worked at the only non-management employees that I saw working hard were the forklift drivers. Everyone else were temps and they tended to either socialize, flirt, or wander off to find things to steal (which is the reason I was there [working security]). Management had to bring in probably twice as many as strictly necessary just to make sure that enough work got done.

Our experiences differ rather dramatically, then. Work was constant throughout the 11 to 14 hours per night, aside from the 30-minute lunch and lulls of up to 20 seconds (maybe one per hour).

I can't comment properly on your 'twice as many' because of the difference between the workplace cultures. 'My' company would have preferred to bring on additional workers to reduce the amount payed out in overtime.

I'm curious. How much (in, say, 2009 dollars) did people make at that job? I wonder if this is an example of 'wages of efficiency' as pioneered by Ford.

 

[CRGreathouse]

as far as I can tell all stock is created out of thin air at it's begining
people like bill gates start a CORP
build it to a point and go public by selling stock
BUT retain far more stock themself then the amounts sold
that stock is not subject to any tax ever unless sold

You seem to have a very limited grasp of what you're talking about. Essentially every claim here is false ("created out of thin air", "retain far more stock", "not subject to any tax"), but more importantly you betray a fundamental misunderstanding of the process.

estate taxes is something I am very well aware of having been involved with two large estates both people had receved huge estates [that they didnot earn and lived off the earnings without working] three other estates I was part of paid NO TAX as the limits are set quite high 3.5 million currently
BTW estate tax is eazy to dodge with a little planning [generation skipping trusts] and other gimics
or like our example bill gates and his untaxed EVER BILLIONS by creation of charity foundations
so for many estate taxes are NOT A DOUBLE TAX and maybe the ONLY tax on WEALTH

I favor high estate taxes, personally, but to say that estate taxes are not double taxation is simply false. True, stepped-up bases avoid capital gains taxes -- but that means that the gains are only single-taxed. All wealth subject to estate taxes were earned at some point and thus subject, at some point, to taxation.

Also, most states have special generation-skipping inheritance taxes; the feds may have one too, I'm not sure.

Another interesting point is inflation. If $1 million was earned in 1929 (a low point for the income tax -- it was higher before and after), the earner payed about $240,000 in taxes. If the remaining $760,000 was kept in a bank account earning 4% interest, it would be worth about $9,450,000 in 2009 after taxes.* This is just keeping up with inflation, which by the CPI would be $9,590,000.** But over this time, $2,250,000 would be payed out in taxes, or $4,480,000 in 2009 dollars. That's an effective tax rate of 31.8%. If the $9,450,000 was then inherited, the top $5,950,000 would be subject to a 45% tax. The total effective tax rate on the supposedly tax-free inheritance works out to 51.3%. This does not include the original $3,030,000 (2009 dollars) in income tax!

Let's do it differently. Suppose the $760,000 was invested in an amazing company that grew 20% (pretax) and -5% in alternate years. Value in 2009 is $13,000,000; taxes paid (corporate tax rate of 35% on profits only) are $32,140,000 in 2009 dollars. Even if inheritance and capital gains taxes can be avoided, that's a 71.3% tax rate. (Feel free to replace with your own example.)


* For simplicity, I assumed a constant 20% tax rate throughout. A better analysis would take into account varying rates over the period.
** Estimated using 3.22% per year. Again, if you'd like to do a better analysis, feel free.

 

[mheslep]

I favor high estate taxes, personally,

Why? It's not clear (to me) from the rest of the discussion.

 

[ray b]

You seem to have a very limited grasp of what you're talking about. Essentially every claim here is false ("created out of thin air", "retain far more stock", "not subject to any tax"), but more importantly you betray a fundamental misunderstanding of the process.



I favor high estate taxes, personally, but to say that estate taxes are not double taxation is simply false. True, stepped-up bases avoid capital gains taxes -- but that means that the gains are only single-taxed. All wealth subject to estate taxes were earned at some point and thus subject, at some point, to taxation.

Also, most states have special generation-skipping inheritance taxes; the feds may have one too, I'm not sure.

most corps issue only a small % of stock in a IPO
and ''give'' far more to the board, E O 's, banks and others to arrange the IPO
and the creators most times retain the larger numbers along with any VC's involved
or simply let the corp's retain the common shares on it's books or as a shell corp ect
and take out their ''share'' in preferred stock or some other trick

stock does have ''rules'' to do a IPO
but the is little to dispute the original IPO shares are madeup
most big stock holders are in at the beginning and are given the shares
or given reduced price shares ie options
and not subject to taxes at issue date

 

[russ_watters]

Ray, the concept of "stock" really isn't all that hard to grasp. Stocks are ownership of a company. I believe all corporations have stocks - that's how you define who owns the company. In sole proprietorships, there is a single owner of all the stock in the company. He/she can choose to hold it or sell it, but either way, all that stock is is ownership of the company and the value of the stock is a reflection of peoples' perceptions of the value of the company.

When a company decides to issue stock publicly, of course the owners of the company will retain much of the stock for themselves! The point of an IPO is to sell partial ownership of the company in order to generate capital (cash) for the company.

Also, you seem to be against the idea that stocks aren't taxed while they are held. Why would they be? Are you taxed on the money you have in your bank account or the value of the TV in your living room? I suppose the government could tax for any reason it wanted, but those would have a tough time being logically justified.

 

[russ_watters]

Hmm, I wonder why then that so many from the right believe that tax reductions to the rich and big business creates jobs then? When all it really does is increase profits.

Try looking at it from the other side of the coin: how can reduced profits (much less losses) create jobs?

 

[WhoWee]

as far as I can tell all stock is created out of thin air at it's begining
people like bill gates start a CORP
build it to a point and go public by selling stock
BUT retain far more stock themself then the amounts sold
that stock is not subject to any tax ever unless sold

the SEC is a bad joke as far as regulations
AND THEY SURE DO ALLOW STOCK TO BE CREATED and SOLD
a CORP needs to meet certain conditions to sell stock but the stock is created
yes they do have some rules on some trades but NONE ON OTHERS

lets not mix up STATE and FED taxes you can move to a better taxed state
even if you move out of the USA FEds tax laws still apply if you remain a citizen


personal property is a state tax in some states NOT A FED TAX

luxury taxes is a very limited list of things taxed and mostly dead now
bringing it back is not a bad idea

estate taxes is something I am very well aware of having been involved with two large estates both people had receved huge estates [that they didnot earn and lived off the earnings without working] three other estates I was part of paid NO TAX as the limits are set quite high 3.5 million currently
BTW estate tax is eazy to dodge with a little planning [generation skipping trusts] and other gimics
or like our example bill gates and his untaxed EVER BILLIONS by creation of charity foundations
so for many estate taxes are NOT A DOUBLE TAX and maybe the ONLY tax on WEALTH

there is no nonsense in my post but a lot in yours
and a whole load of neo-conned spin and BIG LIES too

ray b, I posted links to support my comments. You need to do the same. Why don't you start with this "the SEC is a bad joke as far as regulations
AND THEY SURE DO ALLOW STOCK TO BE CREATED and SOLD
a CORP needs to meet certain conditions to sell stock but the stock is created
yes they do have some rules on some trades but NONE ON OTHERS".

When you're done with the SEC, please post specific evidence to support your claims of "BIG LIES"- or retract your nonsense.

 

[CRGreathouse]

Why? It's not clear (to me) from the rest of the discussion.

It doesn't follow from the rest, it's a sidenote. I mention it only because it's relevant: while a claim like "estate taxes are not double taxation" would support my dislike of estate taxes, I disagree with it because it's wrong.

Edit: Since you're looking at that post of mine already, any comments on my examples?

 

[WhoWee]

...at a very high cost that comes from lower employee wages and higher product prices.

Actually, I was referring to Aflac policies. They fall under Section 125 or "Cafeteria" plans. The Aflac policies are paid by the employees (individual choice - not mandatory) and monthly premiums typically cost less than 2 to 3 times the workers hourly wage - usually less than $50 per month.

The company saves money and the employees have some protection at a low cost.

 

[ray b]

Ray, the concept of "stock" really isn't all that hard to grasp. Stocks are ownership of a company. I believe all corporations have stocks - that's how you define who owns the company. In sole proprietorships, there is a single owner of all the stock in the company. He/she can choose to hold it or sell it, but either way, all that stock is is ownership of the company and the value of the stock is a reflection of peoples' perceptions of the value of the company.

When a company decides to issue stock publicly, of course the owners of the company will retain much of the stock for themselves! The point of an IPO is to sell partial ownership of the company in order to generate capital (cash) for the company.

Also, you seem to be against the idea that stocks aren't taxed while they are held. Why would they be? Are you taxed on the money you have in your bank account or the value of the TV in your living room? I suppose the government could tax for any reason it wanted, but those would have a tough time being logically justified.

this board is over moderated by the rightwing
who are very active suppressing extreme views

I never said I had anything against stock ownership
I have owned some myself

what I am against is the super rich like gates or buffet being taxed at such low rates
or never taxed on billions earned by stock value growth
except maybe at their death
while the neo-conned bleat about the rich being over taxed
when the true fact is most of the wealth never is taxed or way under taxed
let alone the false claim it is double taxed

yes most of the funds in my bank account was taxed both income and SS
but bill gates never paid a dime on his wealth of billions

any interest earned from that account is taxed at my full rate
but bill gates never paid a dime on his wealth of billions

my tv was taxed at 7% state sales tax plus a tax on the power it uses
but bill gates never paid a dime on his wealth of billions

only workers pay double taxes income and SS
most of the real rich don't pay much income or SS tax

 

[D H]

this board is over moderated by the rightwing
who are very active suppressing extreme views

 

[berkeman]

this board is over moderated by the rightwing
who are very active suppressing extreme views

This thread is now locked pending moderation and cleanup. Sorry Ray.