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Forums - Politics - Is "the rich getting richer" a problem?

HappySqurriel said:
I guess you could ask an alternative question ...

Suppose you live in a world with only 2 participants, a rich person and a poor person, which of the following situations is more ideal (assuming constant buying power for the dollar in both worlds):

a) Poor person earns $10,000/year and the rich person earns $50,000 per year
b) Poor person earns $20,000/year and the rich person earns $150,000 per year

If inflation trippled in the (b) the poor is better off with a.  And if the means by which situation b arrived continues, and enables the rich person to continue this, and be able to rig the political system so the poor person will bail them out if things go south, then situation b is inferior.

How about this, how about in situation b, the poor person goes to $12,000, and the rich person ends up going to $14000?  That is closer to the reality of what is going on.  Everyone at the top has done a lot better, and the closer you get to the bottom, the less and less they share in these gains.  Or, even worse:

http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

http://tpmdc.talkingpointsmemo.com/2012/05/40-years-of-workers-left-behind-chart.php

At the rate you described, for every $10,000 the poor person on the bottom gains, the rich one gains $100,000 AT LEAST.  If you want to go by exponential growth, then the poor person's next step is $40,000 and the rich person would then go to $600,000.  And you argue political talk now, you would have politcians arguing the tax rate of the rich person needs to be slashed, and the poor person would have to pay more taxes than they are currently.  That is the talk going on.

So, answer me, who is really better off here?  By real standards, the bottom is stagnant, and the top is doing exponentially better.  This topic, however, is about philosophically whether the Matthew Effect is something that should be left alone or needs to be tempered some.



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Kasz216 said:

Here's the thing. I haven't done EXTENSIVE research on it, but the little research I've done has lead me to a fairly big conclusion.

"The rich only get richer when the economy is expanding."

It's worth noting, that although to the average person the whole "Top 1%" or whatever you want to call it look pretty static it actually varies WIDELY."

I'd cite 2008 where the gini coefficient actually SHRUNK during the crisis.

The rich primarily get richer by "outrunning" not "stealing".

So it doesn't really seem like an issue.

Honestly, the Rich haven't even been getting much richer recently to be honest. While the Gini Coefficent has rised since the 90's. It's risen for income of households, but NOT income of individuals.

What's created the great increase in wealth lately has mostly been an increasing trend for money to marry money. Not a real compound interest effect. Once women get "full" representation in the workforce at proper levels, the Gini coefficient likely may stabilize.

 

I don't understand smart talk??? lol



Indirect taxes such as sales/VAT taxes adversely impact the poor, working classes more than the middle class/rich.
Income tax cuts favour the middle class and rich who get a lot more money back in their pocket.
The tax burden has been shifted from the high income earners onto the low and middle income earners.

The upper classes are more likely to be investors who have much lower tax rates than the lower/middle classes whom generally work for a wage/salary with higher tax rates.



Andrespetmonkey said:
Well I guess rich people don't just sit on their money, and their spending will naturally create jobs, which is beneficial for society as a whole.

Or I have no idea what I'm talking about when it comes to economics and should get the hell out of this thread

Actaully the poor spend money because they have to but it's been shown that rich don't change habits no matter how much they make. So lets say Mitt romney's 25,000,000 dollars a year was in middle class pockets, they will Spend almost all of it, if not all of it. Mitt most likely does not spend anywhere near that and I would be surprised if he spent 1/4 of the money. So this is why we need a middle class. Tax's must go up on the rich to build things we have always built, Bettering our Infrastructure. Better road technology( We should have smart roads). Better water treatment and cleaning, faster internet, High speed rail, Green technologies, the list goes on and on and people don't want to tax the rich more. This needs to be done. This is where the right wins all the time, making the middle class poor get jealous over what the middle class guy makes. Your mad because someone makes a ok wage and get by well. WTF!. The middle class needs to reward good pay not get jealous and fight amongst our selfs. Rich need to pay, i do and so do others and when we make more!! we all win. So do the rich because there selling more products. I don't understand why people have a problem with this. Our teachers need better pay, so do our firefighters! why has our people turned against the hero's. O yea the rich guy pays to have us fight amoungst ourselfs. Remember big bizz see's profits over people, Not people over profits. Union yes. Remember if the rich's tax's go up, must likely yours go down. He won't feel it at all, you will.





Dark_Lord_2008 said:
Indirect taxes such as sales/VAT taxes adversely impact the poor, working classes more than the middle class/rich.
Income tax cuts favour the middle class and rich who get a lot more money back in their pocket.
The tax burden has been shifted from the high income earners onto the low and middle income earners.

The upper classes are more likely to be investors who have much lower tax rates than the lower/middle classes whom generally work for a wage/salary with higher tax rates.

I really don't think all is investing, It's also demand. If the middle class creates more demand then it's smart investment and also more likely your business will survive, More costumers.. The tax's going up on the rich won't even affect them investing, unless it goes above 50%. I think Infrastructure has always been a strong backbone for middle class. You get paid well, work your arse off and get better results from business and the ecconomy. If you make things easier and better, it will provide cheaper travel, faster results(which in business is massive) and will amp up the ecconomy. Ask any ecconomist, The faster money is moving with obvious regulations, The better the ecconomy.  I just don't get why people don't understand that money don't move on the top, which means a weaker ecconomy. So make them pay the same as everyone else. Just be fair. I pay a little over 25%, no loop holes. You give that to good things like Infrastructure, those workers will create massive demand.



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spaceguy said:




While Mitt Romney does pay way too little tax, that image is inaccurate and misleading.

Mitt Romney's effective tax rate is 13.9%. The school teacher's effective tax rate is not 25% - that's the tax rate within the bracket she earns. Assuming that the school teacher is single, she only pays 25% tax on $6000 of her income (in 2010), or $1500. On the rest of her income, she pays a total of $4681.25, so that her total tax is $6181.25, or about 15.5% effective tax rate.

 

Anyway, on the general topic, "the rich getting richer" isn't a problem, but "the rich getting richer at the expense of everyone else" is.



Aielyn said:
spaceguy said:




While Mitt Romney does pay way too little tax, that image is inaccurate and misleading.

Mitt Romney's effective tax rate is 13.9%. The school teacher's effective tax rate is not 25% - that's the tax rate within the bracket she earns. Assuming that the school teacher is single, she only pays 25% tax on $6000 of her income (in 2010), or $1500. On the rest of her income, she pays a total of $4681.25, so that her total tax is $6181.25, or about 15.5% effective tax rate.

 

Anyway, on the general topic, "the rich getting richer" isn't a problem, but "the rich getting richer at the expense of everyone else" is.

Did you factor in Social Security taxes also?  The percentage of income taxed paid in for social security is flat for everyone up to a certain level.  Beyond that, it then turns regressive, because above a certain income, people pay no taxes into the system for social security.

Either way, the teacher's effective tax rate is higher than that which Mitt Romney pays.  This happens because the system is rigged to end up benefitting investors, because it is believed that investing will fix everything.  

The way things got this way, starting in the 1980s, the top tax rate kept getting dropped, and everyone else was also given tax breaks to, to sell this.  Tax rates lowered on everyone to now, around half the people don't pay any income taxes at all.  With the cut in income tax came a raise in social security taxes.  Now with this a reality, you have politicians, who have argued for cutting taxes further on the top end (well all tax payers) arguing those who pay no income taxes now (they got cut, and had the Earned Income Tax Credit added) because they make too little, to need to start paying, because "everyone has to put skin in the game".  Question here: Why the heck would anyone support cuts on the high end, if it means their taxes will go up also in the process or they don't get anything?  Unless you sell a big bill of goods, you see how things got to where they are now.



The rich getting richer is a problem if they fail to create jobs. The rich getting richer creates a massive imbalance of resources and and power. Those who become rich kind of have a duty to give back (through domestic job creation) so the economy can run with fluidity. The people need to make money to spend money to keep the economy running and not being rich need a safety net of funds to fall back on through savings. The w. ealthy run the show in America because of the great imbalance at the expense of the people and its become obvious who congress supports. I guess history repeats itself.



It's the gap between rich and poor that's important, not the absolute wealth of the top 1%.



“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell

"When the power of love overcomes the love of power, the world will know peace."

Jimi Hendrix

 

S.T.A.G.E. said:
The rich getting richer is a problem if they fail to create jobs. The rich getting richer creates a massive imbalance of resources and and power. Those who become rich kind of have a duty to give back (through domestic job creation) so the economy can run with fluidity. The people need to make money to spend money to keep the economy running and not being rich need a safety net of funds to fall back on through savings. The w. ealthy run the show in America because of the great imbalance at the expense of the people and its become obvious who congress supports. I guess history repeats itself.



Yes history does repeat itself, You would think it's the 1920's of the future. Hopefully by the 2020's we will see this  as a lost decade of dumb decisions.