Re: The poor rich work harder

allan.sanger@xxxxxxxxx wrote:
On Jul 5, 7:00 am, Alan Lichtenstein <a...@xxxxxxxxxx> wrote:

mg wrote:

On Jul 4, 11:50 am, "Jerry Okamura" <okamuraj...@xxxxxxxxxxxxx> wrote:

"mg" <mgkel...@xxxxxxxxx> wrote in message

news:4c641044-cf3c-4bfa-9fd3-c52f592283ee@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

On Jul 4, 7:42 am, Gary <n...@xxxxxxxx> wrote:

How the Rich Spend Their Time: Stressed
by Robert Frank

Leisure class gives way to workaholic elite scrambling to maintain
their place in life

Being rich used to get you into the leisure class. Money meant freedom
-- from work, money worries, household chores and screaming kids (via
boarding school).

Now, however, the wealthy seem to be as besieged as ever. The leisure
class has given way to what I call the workaholic wealthy -- an elite
of BlackBerry-crazed, network-obsessed, peripatetic travelers who have
to keep scrambling to maintain their place in life.

According to research by Daniel Kahneman, the Nobel Prize-winning
behavioral economist, quoted in an article in the Washington Post,
"being wealthy is often a powerful predictor that people spend less
time doing pleasurable things and more time doing compulsory things
and feeling stressed."

People who make less than $20,000 a year, for instance, spent more
than a third of their time in passive leisure, like kicking back and
watching TV. By contrast, those making more than $100,000 a year (I
would call them affluent, not wealthy), spent less than a fifth of
their time in passive leisure. "The richest people spent nearly twice
as much time as the poorest people in leisure activities that were
structured and often stressful -- shopping, child care and exercise."

In short, stereotypes about the leisure class no longer hold true. "In
reality," Mr. Kahneman and his colleagues wrote in a paper they
published in the journal Science, "they should think of spending a lot
more time working and commuting and a lot less time engaged in passive
leisure."

Definitions are key here. Personally, I wouldn't classify exercise as
compulsory or stressful. And the true rich ($10 million or more), may
be exceeding their less-wealthy peers in true indolence. But my
experience suggests that the rich are as stressed and un-relaxed as
the merely affluent.

Why? Globalization and competition are probably the big reasons.
People with top jobs and businesses -- i.e., the wealthy -- have to
work harder than ever to remain competitive. Big investors also have
to work more in ever-more-complicated financial markets to maintain
their dinosaur-size nest eggs. Add to that the increasing complexity
of life at the top -- constant requests for money, overseeing wealth
managers, lawyers and household staff -- and the good life becomes its
own management job.

Maybe being rich isn't as relaxing as it seems.

http://finance.yahoo.com/banking-budgeting/article/105348/How-the-Ric...

The upper middle class are often those people who have "pulled
themselves up by their boot straps". They went to school. They worked
hard and they went to school some more. They work their guts out. They
put in a lot of extra hours and they have done everything right to
achieve the American dream. And they get screwed blue by the income
tax system.

Take, for example, a professional couple who maybe have masters or PhD
degrees. They've worked hard all their life and they have finally made
it to the top of their profession with maybe a combined salary of
$300,000 or more. These people pay at about the same income tax rate
as someone making $100 million and they pay at approximately double
the rate of a billionaire who makes his money off dividends and
capital gains.

Which means what?

Unless you believe in a flat tax, it means that taxes on the upper
middle class need to go down or taxes on the rich need to go up.

I used to think that it was simple to solve the tax inequities.
Unfortunately, I have come to realize that it isn't. The fundamental
inequity is that all income is not treated alike, and some sources of
income are accorded more favorable treatment than others, such as the
disparity between the tax rate for capital gains and income.


The whole premise that we tax income as opposed to consumption is
where the fault lies.

That is just another scheme that is used to maintain the disparity between the wealthy and the rest of the population. The wealthy 'consume' a far smaller percentage of their 'income' than do the less affluent, even if one includes the luxuries they purchase. All a 'consumption' tax does is to introduce another source of disparities for the one which already exists.

A 'consumption' tax creates the basis inequity of what is defined as 'consumption,' thus introducing a whole other pandora's box of subjective decisions which would introduce a tax scheme just as complicated as the one it intends to supplant. A fair source is income, since that can be simply defined, and all individuals receive income. the problem with the income tax arose because we didn't treat all SOURCES of income equally.

But we need investment income, and with the global economy, without
such, our domestic companies which contribute to our GDP would suffer a
competitive disadvantage. Money for business comes from essentially two
sources; loans and capital through stock sales, with the majority coming
from market capitalization through stocks. Diminish the ability of
companies to capitalize themselves, and you diminish the ability of
those companies to compete. So, we lower the capital gains tax to
'encourage' business investment, which IMHO, is needed.

But if by admitting that, we admit that there needs to be a difference
in the manner in which income is treated, how do we make it fairer?


Don't tax income regardless of its source. Tax consumption.

Consumption is only a scheme to substitute one set of inequities for another, while maintaining the status quo. The object is to change the status quo, which means that those who receive more income will pay more in taxes, as they should.

Well, first, we look for ways in which the treatment of income can be
made equal without disrupting the source of investment which we need to
maintain our economy. A prime example is the estate tax. Opponents
label it the 'death tax,' while proponents correctly say that it affects
only a small minority of individuals. Both are correct. My solution is
to eliminate the estate tax entirely, which is paid by the estate, and
instead, treat the inherited amounts as ordinary income as to the
individuals who receive it.


I would almost agree - that is, any part of the estate that has
already been taxed is not taxed again and any part of the estate that
hasn't been taxed is taxed just like anything else. Most estates are
invested capital as opposed to cash based.

The problem of the estate tax is that it taxes money distributed and not money received. A fair tax is to tax the recipients of moneys received as ordinary income, which they now do not pay, because the estate pays the tax before distribution. By so doing, NO part of the estate will be taxed as such and the estate will owe NO taxes on the money distributed, regardless of the size of the state. Each recipient of whatever share of the estate they receive, will be taxed on the income they receive, which is as it should be.

But then again, why not just tax the consumption that the inheritance
provides?

Because you are just substituting one set of subjective inequities for another. Consumption is undefined, as as such will require definition and will simply create another source of unfairness. Taxing all income alike is fair, because it does not require definition. Income is income. Period.

Regarding the capital gains tax, I would expand the time period which
money needs to be invested for the long term in order to qualify for the
lower tax rate. Right now, it stands at 1 year. I would think at least
three years would be fair. This will insure that investors make good
choices, and insure that their investments are locked up for the long
term. Anything less, would be taxed at the short term rate, which is
what the marginal tax brackets provide.

And of course, there are those tax subsidies which we grant for any
number of things. Those should be looked at yearly and renewed or sunset.


EITC perhaps?

Why not?

And let's not forget to index the Alternative Minimum Tax for inflation,
so we can get rid of those one shot fixes which really don't fix anything.

Just a few thoughts to make the tax code fairer, while recognizing real
economic needs of our economy, something neither the right nor the left
seems to care much about. And obviously, the flat tax scheme is not to
be considered at all. That's a scheme for simple minds and the VERY
wealthy.


A man's wealth is not what he has but what he does with it. Tax
accordingly.

So you say that is should escape taxation if he simply puts it under his mattress, while the poor slob who has to spend a large percentage of his income for basic necessities should foot the bill? And you think that's fair?
.

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