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Old 10-03-2021, 11:12   #901
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Re: Science & Technology News

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Everything I have seen which says that simply assumes that the economy is a zero sum game, such that one person being very rich is money out of the pocket of the poor -- and this is manifestly not the case.
It certainly is true that wealth creation is not always a zero-sum game, but there are plenty of examples in history where one person's wealth, or one group's wealth, came at the expense of another person or group.

Slavery is one obvious example.

Women being paid less than men for equal work is another example.

Then there are the many wars of conquest, large and small.

Child labor.

Monopolistic business practices.

The list goes on and on.

Here is a story I recently read about how black farmers in the Mississippi Delta were systematically forced off their farms by various means, some quasi-legal, and others totally illegal.


The Great Land Robbery
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Old 10-03-2021, 11:33   #902
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Re: Science & Technology News

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It certainly is true that wealth creation is not always a zero-sum game, but there are plenty of examples in history where one person's wealth, or one group's wealth, came at the expense of another person or group.

Slavery is one obvious example.

Women being paid less than men for equal work is another example.

Then there are the many wars of conquest, large and small.

Child labor.

Monopolistic business practices.

The list goes on and on.

Here is a story I recently read about how black farmers in the Mississippi Delta were systematically forced off their farms by various means, some quasi-legal, and others totally illegal.

The Great Land Robbery

I agree completely. But I don't think it contradicts my point at all. None of those cases would be even slightly ameliorated by progressive taxation.
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Old 10-03-2021, 11:58   #903
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Re: Science & Technology News

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I agree completely. But I don't think it contradicts my point at all. None of those cases would be even slightly ameliorated by progressive taxation.
I disagree.

For instance, it is often difficult to legislate against monopolistic practices or underpaying women. Progressive taxation can take some of the sting out of these unfortunate situations.

And groups who have been enslaved or who have been decimated by genocidal policies (like Native Americans), can be partially assisted or recompensed by progressive taxation.

Since we in the US don't have the social safety net that the Nordic countries have, progressive taxation can act sort of like a crude social safety net for the disadvantaged.

Furthermore, I don't see how a flat tax can help the above problems, but only worsen them.
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Old 10-03-2021, 12:17   #904
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Re: Science & Technology News

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Everything I have seen which says that simply assumes that the economy is a zero sum game, such that one person being very rich is money out of the pocket of the poor -- and this is manifestly not the case.
And this is manifestly NOT what I, or indeed anyone I've brought into this discussion is saying.

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Only if you assume that the wealth of the wealthy is money out of the pocket of the poor. And you should not assume that, because it's not true.
Well, it is true in some cases, but more in overtly authoritarian situations which we need not get into. We are discussing the problems of the relatively rich nations, not issues of abject, absolute poverty.

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I have never seen anything credible which shows that the wealth GAP, as opposed to the lagging wealth of the poorest people, causes anything. Everything I have seen simply assumes that these two things are the same. If you have something different, please show it and we will discuss.
I just cited a few papers which ascribe the growing wealth gap as a drag on many social and economic indicators. Or are you trying to say "lagging" means the poorer groups will catch up? This is not supported in ANY data I've seen. If you have such, please cite. The data I see shows that all but the top are not just lagging, they are falling further behind. This is what a widening wealth gap means. This is what an increasing GINI charts.

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Meanwhile, what about my thought-experiment?
Like I said, I prefer to deal in reality. No need for thought experiments specifically set up to prove one point when we have actual data and credible research.

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This describes a different "wealth gap", than what we have been talking, the one described in the Gini Index. This is a gap between low income households and the population as a whole. Now I somewhat agree with this and is better formulated than what I said.
I fail to see how this is any different.

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To the extent that "the Joneses" are the population as a whole, I somewhat agree with this -- a society which allows anyone to fall very far behind the general average level of wealth is not doing enough.
That EXACTLY the whole point. You've got it .

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However, even this is not the most important thing. The most important thing is that the poorest people have enough of everything.
And then you lose it . Once again you're missing the fundamental point of the research. The impacts of the increasing wealth gap deals with RELATIVE wealth, not absolute.

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You wouldn't say that someone living in Switzerland and earning the equivalent of $100 000 a year, 100x less than what the top 10% earns, is worse of in any conceiveable way than a person in Cuba, earning the equivalent of $10 a month, which is only 10x less than the top 10%, would you? It would be absurd. Of course the absolute level matters and very very much, more than any other factor, where money is concerned.
Switzerland and Cuba both score low (well) on the GINI scale. It's hard to find comparable data for Cuba, but from what I can find it suggests both populations score high on most of the quality of life measures. Education, health and healthcare, levels of mental health, "happiness" (whatever that really means), are all quite comparable. Not so much on the political freedom side though . The Swiss person likely has more stuff, but as we've noted many times, beyond the necessities of life, that doesn't add much to the quality of life (and as you yourself state below).

A more apt comparison would be a low GINI country to a high GINI, say Switzerland to the USA. Take your median income earner in both countries, and compare quality of life measures. I think we both know what that would look like.

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But note that where equality is REALLY important is NOT what concerns money. It is what concerns access to education and health care, and therefore social mobility. This is one of the bitterest curses of U.S. society, which contrary to our mythology has one of the lowest levels of social mobility in the world.
Completely agree, which is what I've been citing all along. And in countries that are more unequal, these social supports or services are more unequally allocated. Lack of social mobility is a DIRECT consequence of high wealth inequality.

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"Improving" the Gini Index by reducing the number of wealthy people does exactly zero to solve this problem. As I said, tearing down the top levels brings zero benefit of any kind -- it simply destroys wealth. And on the contrary, the absolute quantum of wealth in society plays an enormous role in whether it is possible to provide this access to everyone.
This assertion not supported by data. In fact some of the studies and research I pointed to directly contradicts this statement of yours. It doesn't seem to matter how a country achieves a lower GINI score. It can be through high redistributive taxes such as in Switerland and much of the Nordic countries (which I assume would be your "destroying wealth" example) or through social mores that make obscene wealth unseemly (like in Japan). The outcomes are similar.

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You've cited opinionated dictum from writers with obvious political bias, based on strong assumption that the economy is a zero sum game.
This is patently false. I've cited reputable research and researchers. I find this accusation verging on insulting. It seems to me you've not bothered to look at most of my citations. Meanwhile most of your claims are not cited or supported at all, and are simple assertions based on your personal experience. Again, we both know the value of anecdotal evidence.

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I don't agree. Flat (or flattish) taxes are good for economic growth, and economic growth is what gives countries the means to solve social problems. The evidence doesn't show any bad effect of flat taxes, nor does it show any good effect of steeply progressive taxes. And the countries with the best functioning societies have nearly flat taxes.
As stated many times already, the scholarship indicates that flat tax regimes promote higher levels of inequality. And that leads to all the stuff we've just gone through. I grant it's not a necessary link, as the research also indicates, but it is there.

The case against progressive tax systems largely seems to come down to complexity and therefore less efficiency. This also is borne out in the same research I cite.

So the optimal tax system answer may indeed be some sort of "flattish" approach, as it seems the Nordic countries (and to some extent places like Canada and New Zealand) seem to have figured out.

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I disagree also about the tax system being unimportant. On the contrary, tax policy is one of the most important of economic policies, which has an enormous effect on economic activity. If you want less of something -- tax it; if you want more of it -- susidize it. First day of Econ 101. Tax policy has enormous effects on savings, investment and entrepreneurship, on job creation, on incentives to work. Get it wrong and you can wreck an economy in short order. Wreck the economy, and you wreck people, and you wreck the welfare state if you have one -- because all of that costs money.
Soooo, are you suggesting one can't enact these kinds of tax incentive/disincentives in a flat tax regime? Obviously it can be done in progressive tax systems since it's done all the time. This sounds like you're making an argument against a flat tax approach.

Personally, I see no reason why this kind of tax policy can't and wouldn't be applied regardless of which tax approach is at work. It's certainly done with VAT (HST) here in Canada where some classes of goods and services are not taxed for exactly this purpose. Of course, this gets us back to complexity and efficiency problem.

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Because everything costs money, it is crucially important to grow the economy in absolute terms. The wealth gap (however you count it) is far less important than the size of the pie -- the resources which you have available to solve problems, and the opportunities which people have. One more time -- would you prefer to live in equal Cuba? Or in unequal Switzerland, or even unequal U.S. with all of its problems? There's no comparison.
As I said, the relevant comparison/question is; would you prefer to live in Switzerland on the median income or the USA on their median?

The issue with growing wealth inequality is NOT simply that the pie is growing. The applicable analogy here is that while the pie IS growing, some wedges are also expanding, and therefore some are shrinking. All wedges are getting larger in absolute terms, but in relative terms some are getting larger and some are getting smaller. And indeed, in the extreme GINI cases, some wedges are even getting smaller in absolute terms.

This is the relative wealth gap that researchers are finding is the core issue of concern, not absolute wealth (beyond subsitance).
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Old 10-03-2021, 12:21   #905
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Re: Science & Technology News

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I disagree.

For instance, it is often difficult to legislate against monopolistic practices or underpaying women. Progressive taxation can take some of the sting out of these unfortunate situations.

And groups who have been enslaved or who have been decimated by genocidal policies (like Native Americans), can be partially assisted or recompensed by progressive taxation.

Since we in the US don't have the social safety net that the Nordic countries have, progressive taxation can act sort of like a crude social safety net for the disadvantaged.

Furthermore, I don't see how a flat tax can help the above problems, but only worsen them.

Only if it's a zero sum game. Which was my point all along.


It is counterproductive, stupid, and even evil, to tear down everyone at the top, to "take the sting out of" some other kind of oppression. You want to deal with oppression, deal with oppression. Not this.
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Old 10-03-2021, 15:19   #906
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Only if it's a zero sum game. Which was my point all along.
It's not a zero-sum game, but neither is it an infinite-sum game. As Mike's research has shown, there are negative consequences to great income disparities. And those who accumulate great wealth often have done so to the determent others.

Is it true that "Behind Every Great Fortune is an Equally Great Crime?"*
Quote:
It is counterproductive, stupid, and even evil, to tear down everyone at the top, to "take the sting out of" some other kind of oppression. You want to deal with oppression, deal with oppression. Not this.
I'm not advocating to "tear down everyone at the top." But I am trying to recognize that certain types of people, and certain aspects of a capitalist economy, are harmful to the less fortunate.

No doubt there are multiple ways that a self-governing society can moderate excessive behaviors and outcomes. I admire what many of the Nordic countries have done. But I have no idea of how to get the US from here to there. We can't even pass Universal Health Care, let alone a Universal Basic Income.

So we work with what we've got, and what we've got is a progressive tax -- along with various social programs. Some work well, some fair, some terrible.

* Behind Every Great Fortune is an Equally Great Crime
This chapter examines the accuracy of the quote “behind every great fortune is an equally great crime”, attributed to Balzac. In our times great individual fortunes are generally generated via the instrument of the business firm. The question then becomes when are firm profits a crime? Firm profits are, in general, explained by one or more of three factors: luck, efficiency, and collusion. While it is difficult to regard luck as a crime, luck does not reflect merit. Profits due to efficiency seem like the least problematic case, and collusion seems the clearest case of when fortune coincides with crime. A variety of cases lie, at least in a dynamic sense, at the intersection of the three conditions. Unfortunately, history suggests that big business and big government can collude to keep profits flowing to the former and contributions flowing to the latter. While luck and efficiency may help initiate wealth, the system tolerates connivance, making Balzac’s statement more plausible than it ought to be.
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Old 10-03-2021, 16:05   #907
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Re: Science & Technology News

This thread oozes busybody jealousy.
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Old 10-03-2021, 16:33   #908
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This thread oozes busybody jealousy.
If so why are you posting in it?
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Old 10-03-2021, 16:35   #909
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If so why are you posting in it?
Its a distraction after a hard day restoring my sloop.
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Old 10-03-2021, 16:36   #910
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Its a distraction after a hard day restoring my sloop.
So nothing to contribute, just want to try and rile folks up for amusement's sake?
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Old 10-03-2021, 17:21   #911
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So nothing to contribute, just want to try and rile folks up for amusement's sake?
No - I just received my degree as a climate scientist and want to get the skinny of the word cruisers ops.
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Old 10-03-2021, 18:04   #912
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No - I just received my degree as a climate scientist and want to get the skinny of the word cruisers ops.
"... word cruisers ops." Huh?
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Old 10-03-2021, 18:15   #913
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"... word cruisers ops." Huh?

What at first looks like a typo may in fact be a very apt description of us on this forum.
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Old 11-03-2021, 02:37   #914
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Re: Science & Technology News

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And this is manifestly NOT what I, or indeed anyone I've brought into this discussion is saying.

Indeed, and I am glad to be having this discussion with intelligent people However, you are failing to see how this misconception underlies all those studies you've linked to -- they all confound the issue of poverty per se with wealth gaps. Why do you refuse to look at the thought-experiment I posted earlier? I took some trouble with that. It is highly illustrative. I would love to hear your comments.



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. . . I just cited a few papers which ascribe the growing wealth gap as a drag on many social and economic indicators. Or are you trying to say "lagging" means the poorer groups will catch up? This is not supported in ANY data I've seen. If you have such, please cite. The data I see shows that all but the top are not just lagging, they are falling further behind. This is what a widening wealth gap means. This is what an increasing GINI charts.

No, by "lagging" I mean the poor are not prospering -- they lack opportunity and don't have enough of everything, they lag the broader mass of society. As I've said -- there might be a case for a wealth gap between the poor and say the lower middle class could be associated with lack of opportunity and social mobility and THAT could be a mechanism which creates misery. But the Gini index does not measure that.



None of your papers that I could discern are designed to parse this. All of them are based on zero sum game assumptions.



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Like I said, I prefer to deal in reality. No need for thought experiments specifically set up to prove one point when we have actual data and credible research.

Sorry, but the research doesn't show what you think it does, and you are missing some big points. The thought experiment is really helpful. I've clicked your links, now please do me the courtesy of reading and thinking through this thing I've done for you.


[QUOTE=Mike OReilly;3361803]I fail to see how this is any different.

That's my point, and this failure to see is crucial. The Gini index dumbly measures the diversity of income (incidentally not wealth) in the population. I assert that this is a meaningless metric, for reasons I think fairly powerfully illustrated in my thought experiment. Because the presence of wealthy people does not harm the least fortunate in society; on the contrary, it's a benefit. It's not the gap between the poor and the wealthy which means anything; it's rather the gap between the poor and the next rungs on the ladder. There you will be able to measure whether a society is either taking care of, or giving opportunity to, the least fortunate. The Gini index fundamentally does not measure this.

[QUOTE=Mike OReilly;3361803]That EXACTLY the whole point. You've got it . . . And then you lose it . Once again you're missing the fundamental point of the research. The impacts of the increasing wealth gap deals with RELATIVE wealth, not absolute. [QUOTE=Mike OReilly;3361803]


See the previous paragraph. There is no mechanism by which the income gap between the top and bottom negatively affects the poor. These two income gaps are mathematically different things.


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Switzerland and Cuba both score low (well) on the GINI scale. It's hard to find comparable data for Cuba, but from what I can find it suggests both populations score high on most of the quality of life measures. Education, health and healthcare, levels of mental health, "happiness" (whatever that really means), are all quite comparable. Not so much on the political freedom side though . The Swiss person likely has more stuff, but as we've noted many times, beyond the necessities of life, that doesn't add much to the quality of life (and as you yourself state below).

A more apt comparison would be a low GINI country to a high GINI, say Switzerland to the USA. Take your median income earner in both countries, and compare quality of life measures. I think we both know what that would look like.

I discuss Switzerland in more detail below.


But I agree that this is an apt comparison. And what to we get?


U.S.: Steeply progressive income taxes, very low consumption taxes (consumption taxes are regressive), extremely high corporate income taxes, highest in the world after the latest changes.


Switzerland: Explicitly regressive income tax (the top rate of 13.2% is reduced to 11.5% after 755k CHF), very high regressive consumption taxes, very low corporate income taxes, among the lowest in the world.

Switzerland is not getting prosperity or even equality from progressive taxation.


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Completely agree, which is what I've been citing all along. And in countries that are more unequal, these social supports or services are more unequally allocated. Lack of social mobility is a DIRECT consequence of high wealth inequality.

By what mechanism? This is manifestly not true. This merely assumes the zero sum game. It's not the unequal allocation, it's the LACK of ADEQUATE allocation to the bottom levels, which causes the lack of social mobility. Lack of ACCESS.


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This assertion not supported by data. In fact some of the studies and research I pointed to directly contradicts this statement of yours.

This is merely assumed. Show me where the data actually says reducing the number of wealthy people will help the lot of the poor. This is manifestly false. Just remove wealthy people and you hurt all of society. See my thought experiment.



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It doesn't seem to matter how a country achieves a lower GINI score. It can be through high redistributive taxes such as in Switerland . . .

What? Swiss income taxes are slightly progressive ("flattish") up to 176k CHF, but the top rate is only 13.2% (!), which then GOES DOWN (!) to 11.5% (!!) over 755k, the only explicitly regressive income tax I've ever seen -- https://taxsummaries.pwc.com/Switzer...ersonal-income


Redistributive? Swiss taxes are anything BUT redistributive. NONE of the happiest countries have steeply progressive, redistributive taxes.



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. . . and much of the Nordic countries (which I assume would be your "destroying wealth" example) or through social mores that make obscene wealth unseemly (like in Japan). The outcomes are similar.

You are projecting false assumptions onto these places. The Nordic tax system are almost flat and rates are not extremely high considering what you get for them -- much less "redistributive" and much less "wealth destroying" than any others in the world but for countries with fully flat taxes.


On the contrary, the Nordic tax systems are intensely designed to NOT destroy wealth. The welfare state is funded disproportionately by CONSUMPTION taxes; income taxes have very little progressivity, and there are tax breaks for activities which lead to wealth accumulation and and investment. Have you not read any of the links I've provided? One more time:


* All Nordic tax systems have slightly progressive and fairly low national taxes, and large FLAT regional taxes
* Zero wealth taxes
* Zero inheritance taxes
* Low corporate income taxes, some of the lowest in the world.
* Tax breaks for dividend income
* Tax breaks for capital gains


The wealthy in the Nordic countries pay LESS tax than the middle class as a percentage of income (because of tax breaks on dividends and capital gains, and because of the regressive effect of very large consumption taxes).



Nordic societies achieve happiness not be tearing down the top, but by PULLING UP THE BOTTOM.



If the Gini index were an accurate metric of how well a society works, then you could "improve" the Gini index and "improve" society by removing or pushing down the top levels. And in fact that is what underlies some proposed policy in the U.S. from some quarters -- Bernie Sanders and Elizabeth Warren would dramatically increase taxes on the wealthy, impose wealth taxes, increase the inheritance tax -- just let the rich pay for everything. This is totally different from the Nordic approach; practically the opposite. The Gini index assigns equal value to tearing down the top levels of society, as to pulling up the bottom levels. But these are obviously not equal in value; in fact the first is positively harmful.


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This is patently false. I've cited reputable research and researchers. I find this accusation verging on insulting. It seems to me you've not bothered to look at most of my citations. . .

I've probably not read all of them (I bet you haven't either), but I did spend some time with them, and that was what I found. If I missed something, I would be glad to be educated, if you're willing to do some exegesis rather than just posting links.



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. . . As stated many times already, the scholarship indicates that flat tax regimes promote higher levels of inequality. And that leads to all the stuff we've just gone through. I grant it's not a necessary link, as the research also indicates, but it is there.

I did not find any clear evidence of that in the scholarship, and you can't see any correlation in actual examples. As we've discussed, none of the countries with flat taxes has particularly bad inequality, and those countries with the best societies have nearly flat income taxes and regressive taxes overall.



And as I keep saying -- we should not get hung up on nominally flat taxes -- what we are interested in is rather the degree of FLATNESS of taxes, presence of absence of progressivity. It's not a binary choice, don't you agree? Even nominally flat taxes are slighly progressive because of the standard deduction, and nominally slightly progressive taxes like in the Nordic countries are actually regressive because of the large consumption taxes, so it's not binary.


There is no evidence anywhere -- and again, I'm glad to be educated if I missed something -- that flatter tax regimes hurt the lower classes, or even lead to more inequality (which is not the same thing). The examples we have been looking at consistently show the opposite. That's not "anecdotal" -- that's a broad representative sample of real countries.


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The case against progressive tax systems largely seems to come down to complexity and therefore less efficiency. This also is borne out in the same research I cite.

I don't see any shred of that in the research. Unless I missed something, it's all in the assumptions and commentary. And I disagree that complexity is the main problem with steeply progressive taxes. Complexity is not inherent to them (as SailOar has shown); complexity is how steep progressivity "for show" is ameliorated by loopholes. Without the loopholes the taxes wouldn't be collected because the disincentives are too strong for carrying out the taxed activity, ergo loopholes. The inefficiency comes not from any complexity of progressivity (SailOar posted the simple formula), but from the horrendous inefficiencies of tax-driven irrational economic behavior. And the other case against steeply progressive taxes is that you disincentivize economic activity when you disproportionately tax higher earners. The economic activity of higher earners is often (not always -- some of it is monopolistic, exploitative, thievish -- but taxes are not the right weapons to fight those evils) disproportionately valuable to society -- enterprise creation, investment, job creation. Nordic countries know not to kill these geese who lay golden eggs. Bernie Sanders and Jeremy Corbyn do not.



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Originally Posted by Mike OReilly View Post
. . . So the optimal tax system answer may indeed be some sort of "flattish" approach, as it seems the Nordic countries (and to some extent places like Canada and New Zealand) seem to have figured out.

The Nordic formula, which is really worth studying, because these are almost uniquely successful societies in almost every way and according to almost every possible metric:


1. Flattish income taxes (completely flat above the middle-middle class level, and actually quite regressive if you consider consumption and dividend taxes),

2. Simplified tax regime almost without deductions
3. Very high consumption taxes (you don't care if there is less consumption; and food and some other necessities are exempt)

4. Very low taxes on activities which lead to savings and investment even though the direct benefit of this goes disproportionately to the rich (because you really want more of this; it strongly even if indirectly benefits everyone)
5. No inhibition to the accumulation of family wealth (zero wealth and zero inheritance taxes) (because you want to have wealthy families in society; they play a positive role, and also because you want people to have an incentive in the first place to accumulate wealth)
6. Pay-as-you-go welfare state -- financed mostly by the middle class itself, NOT by redistribution.

7. High efficiency and high quality in the delivery of services by the state (where the UK and US fail miserably)
8. High degree of social solidarity and trust and consensus; absence of polarization.



The Nordic model blows out of the water shibboleths of both the left and the right of North America:


1. No dear, the state is not always worse than the private sector in producing and/or allocating certain goods (like health care). Sorry Ronald Reagan, you were wrong about this.

2. Nevertheless, capitalism is the engine of wealth creation -- embrace it fully, provide economic freedom in every possible form [Nordic countries rated HIGHER than the U.S. for economic freedom; i.e. more purely captalistic]. Sorry Bernie Sanders.

3. You don't need to soak the rich in order to pull up the lower classes. Sorry Elizabeth Warren.

4. Wealth of the upper classes is not necessarily money out of the pocket of the lower ones, in fact having wealthy upper classes is very beneficial to everyone. Sorry Jeremy Corbyn.

5. Yes, we can afford to protect everyone, keep everyone out of poverty. Sorry Mitch McConnell.

6. In fact doing so pays its own way -- it's a net gain.


Quote:
Originally Posted by Mike OReilly View Post
Soooo, are you suggesting one can't enact these kinds of tax incentive/disincentives in a flat tax regime? Obviously it can be done in progressive tax systems since it's done all the time. This sounds like you're making an argument against a flat tax approach.

Where do you get that? The incentives, or rather lack of disincentives, are inherent to flat or flattish taxes. The harmful disincentives are inherent to steeply progressive systems, which is why loopholes and complexities are introduced to ameliorate these disincentives. But at the cost of tax-driven economically destructive behavior.


Quote:
Originally Posted by Mike OReilly View Post
Personally, I see no reason why this kind of tax policy can't and wouldn't be applied regardless of which tax approach is at work. It's certainly done with VAT (HST) here in Canada where some classes of goods and services are not taxed for exactly this purpose. Of course, this gets us back to complexity and efficiency problem.
Exactly. I think it's fairly harmless with VAT, but with income taxes and, especially, corporate taxes, it is monstrously destructive.

Quote:
Originally Posted by Mike OReilly View Post
. .. As I said, the relevant comparison/question is; would you prefer to live in Switzerland on the median income or the USA on their median?

I would prefer to live at the median in Switzerland than living at the median in the U.S., and sure as hell would prefer living as a poor person in Switzerland to living a poor person in the U.S., in fact I would prefer living in Switzerland in almost any scenario. How does this relate to the discussion? The U.S. has steeply progressive taxes and ruinously high corporate income taxes. Switzerland has very low and ultimate regressive income taxes, and low corporate taxes.


Quote:
Originally Posted by Mike OReilly View Post
The issue with growing wealth inequality is NOT simply that the pie is growing. The applicable analogy here is that while the pie IS growing, some wedges are also expanding, and therefore some are shrinking. . .

With this phrase "and therefore" the zero sum game fallacy creeps back in.



Quote:
Originally Posted by Mike OReilly View Post
. .. All wedges are getting larger in absolute terms, but in relative terms some are getting larger and some are getting smaller. And indeed, in the extreme GINI cases, some wedges are even getting smaller in absolute terms. . . . This is the relative wealth gap that researchers are finding is the core issue of concern, not absolute wealth (beyond subsitance).


Again, I have not found a shred of evidence that the lack of growth of the bottom rung of wedges, is CAUSED by the growth of upper rungs of wedges. Not a shred. Nor has any mechanism by which such causation would take place been proposed. I would be glad to be educated, but doubt there ever could be any such evidence, because it just doesn't work that way.


Because the cause of stagnant lower rung wedges is manifestly NOT the existence of rich people (at least not, as you've said, in modern developed societies; in feudalism it was very different, and it is different today in authoritarian, kleptocratic states).



The causes are lack of opportunity, first of all, and lack of our taking care of them, secondly. Neither of these things come because of the existence of rich people. And the solution is not all that complicated. Access to health care and, especially good quality education, first of all. Second, pull them up out of grinding poverty (in absolute, not relative terms) by whatever means necessary, but the most efficient by far way is with a Minimum Basic Income -- direct and unconditional transfer. Keep economic growth going by all means necessary, with the greatest possible degree of economic freedom, in order that there is wealth in society enough to pay for all of this, and so that jobs are created. So once people are not in fear of starvation or homelessness, they are able to allocate more time and energy to education and training, and their bargaining power in the labor market is increased. This is a virtuous circle.



The Gini index will naturally "improve" in the long run, as the poor become more prosperous. The measures proposed above reduce the gap between the poorest and the next rungs, but not necessarily between the poorest and top rungs. The whole concept of the Gini index is harmful, because many phenomena which are very harmful will appear to "improve" the Gini index (like simply removing rich people -- say, all your entrepreneurs emigrate because you passed Elizabeth Warren's wealth tax), and many phenomena which are beneficial (like the great success of some entrepreneurs) will appear to "worsen" the Gini index, at least in the short term.
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Old 11-03-2021, 04:10   #915
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Re: Science & Technology News

Mike and DH, are immigration polices, both legal and illegal, considered a major factor in a country's wealth and income gap?
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