Video about wealth inequality

[Sarah CB]

I think people have very different ideas about what the word "sacrifice" means.

 

I know you're being farcical to make the point that the tippy tipy top should be allowed to hoard the planet's resources for their own person gain (which includes wealth AND power)....and to be sure you're welcome to support those ppl who assuredly view YOU and your family as disposable plebes but by all means....

 

but to compare the sacrifice of parents to the "sacrifice" of a few percentage points of taxes paid by the unimaginably wealthy....is not nice, if nothing else.

 

Really?  And what do you mean by sacrifice?

I'm not talking about the tippy tip - people who live off their investments.  I'm talking about people who make a lot of money 2 or 3 or 400,000 a year.  Compared with people who are comfortable (not poor, not middle class) and who easily *could* earn more if they didn't have a line drawn in the sand.

[SKL]

Literally everyone has qualified their statements to be talking about the ACTUAL 1%.

 

Not you lucky duck savings account superstars.

 

Pro tip: the 1% never EVER worries about "them" changing the rules to come get their money to hand it out to poor folks on street corners. They need not worry because THEY set the rules of the game. They own the whole monopoly board, as it were.

 

Nope, that would mean there are 3 million Americans directly at the decision-making table or paying off the decision makers.  Well, guess what.  Some of us are not cheaters.  Some of us don't like dirty politics (or any politics for that matter).  And some of us are too busy making real things happen in the community to go lobby Washington.

 

And why should we have to lobby Washington to protect what we've earned from further taxation?

[Sarah CB]

Literally everyone has qualified their statements to be talking about the ACTUAL 1%.

 

Not you lucky duck savings account superstars.

 

Pro tip: the 1% never EVER worries about "them" changing the rules to come get their money to hand it out to poor folks on street corners. They need not worry because THEY set the rules of the game. They own the whole monopoly board, as it were.

 

So what is the actual 1%?  Because, I just looked online and it looks like it's anyone who makes $380,000 or more.  Does that sound right?

 

You really think THEY set the rules and own the monopoly board?  Better get your tinfoil hat.

 

People who make $380,000 are working hard for their money.  They're doctors.  They're lawyers.  They're upper level management.  They're engineers.  

 

I'm guessing they're probably too busy working to be playing Monopoly.

 

I think when you guys are talking about the 1% you're actually talking about the .01%.  People who have so much invested that they don't have to worry about an 80 hour a week day job.  

[Scarlett]

This whole thing just leaves me stunned.  I am stunned by the amount of money some people have to live on....and I am stunned that people are furiously amassing wealth to care for some future unknown...

 

I will say I don't look at any individual and say, 'hey you have too much, give me/other less advantaged people some.'  That isn't how my mind works.  A poor kid hits the jack pot and gets to play in the NFL?  More power to him.  My issue is with the entire system.  How it just doesn't work for a large segment of society.  

 

I don't believe it will be fixed by any human.  However, I can do my part to help the individuals that I come across.  That help varies.  Sometimes it is encouragement, sometimes help navigating the aid that is available, sometimes it is my cash, a meal whatever I can offer.  And as for our own family we strive to stay out of debt and keep our expenses low.  That is our game plan. It takes a lot of stress off us by not over worrying about the future--although I admit I am not very skilled at that.  

[MotherGoose]

So what is the actual 1%? Because, I just looked online and it looks like it's anyone who makes $380,000 or more. Does that sound right?

 

You really think THEY set the rules and own the monopoly board? Better get your tinfoil hat.

 

People who make $380,000 are working hard for their money. They're doctors. They're lawyers. They're upper level management. They're engineers.

 

I'm guessing they're probably too busy working to be playing Monopoly.

 

I think when you guys are talking about the 1% you're actually talking about the .01%. People who have so much invested that they don't have to worry about an 80 hour a week day job.

Absolutely true. All we hear is "you make too much money for this or that tax break, so hand it over." And hand more over, because the government knows better what to do with your money than you. The government does, of course, have an excellent track record of wise spending.

[Sarah CB]

 

 

I don't believe it will be fixed by any human.  However, I can do my part to help the individuals that I come across.  That help varies.  Sometimes it is encouragement, sometimes help navigating the aid that is available, sometimes it is my cash, a meal whatever I can offer.  And as for our own family we strive to stay out of debt and keep our expenses low.  That is our game plan. It takes a lot of stress off us by not over worrying about the future--although I admit I am not very skilled at that.  

 

I think that is what is truly important about the video and about this conversation.  What can we do to help those who don't have enough so that they can increase their own earning potential.  Also, how can we care for them?  I'm a big believer in socialized health care.  I live in Canada and I am more than happy to pay my taxes knowing that that money goes towards our health care system.  Knowing that no one will ever go bankrupt here because they can't afford health care.  I think the most efficient way to make a difference is to look at how we can care for others and how we can take down barriers to wealth.  And I do think that minimum wage should be a living wage.  Someone working 40 hours a week should be able to live - no matter what their job is.

[Murphy101]

To me, at some point we need to replace the word "wealth" with:

 

Food

Water

Medicine

Clothing

Houses

Education

Legal protection

 

The conversation is talking about wealth like it is some abstract thing that we can just make more of.

 

But in many ways, the most important ways, the ways that make this of such great social and political concern - it isn't.

 

Wealth is about assets which allow the freedom and the ability to make choices about life.

 

If I told you 1% of the population control and own 40% of all the things I listed, would we be okay with that? Because in essence, that IS the way it is.

 

We wouldn't think "but only the bottom 30-40% are being threatened with starvation". Well maybe some would. There's always that one guy, right? But I sure wouldn't.

 

Having 1% of our nation own 40% and growing of it is just untenable from my perspective and I have zero qualms about forcibly reducing that to less than 15%. I think it should happen legally bc if it doesn't, there are few societies or governments in history that has survived it, and none I'd ever want to live in. Most didn't for long and usually ended very ugly.

 

I'm not republican and I'm not democrat.

 

I might be in favor of chesterton's view of distributionalism.

 

Because I don't care how hard someone worked.

It's wrong for anyone to hoard for themselves while letting others starve, while lecturing them to just go out and grow some food for themselves.

 

And we shouldn't have to wait until there is literal starving to take reasonable measures to avert it.

[Sarah CB]

I completely agree, but I don't think someone who works 70-90 hours a week should be penalized for working too hard...   

 

I am totally with you on that one.  

[idnib]

I believe the $8-$9 million dollar figure is the median of wealth (not income) of the 1%. If you include the outliers from the very top into an average, I think it's about $19-$20 million. I don't have time to look it up right now. I'm just posting what I remember reading last year, maybe in The Economist.

[Carrie12345]

I completely agree, but I don't think someone who works 70-90 hours a week should be penalized for working too hard...   

 

I am really, truly, trying to wrap my head around that thought process of "penalty".

Personally, (biased, anecdotal, however you want to look at it) I can't think in terms of simple hours.  We had less money and paid less taxes at 70-80 hours/wk than we currently do at 40-60 hours/wk.

[livetoread]

I feel less sorry for those in higher tax brackets, knowing that they are basically paying the same rate of tax I do on the same amount of income. Given that we have a graduated tax system, we all pay the same amount of tax on the same income. The person making 45k and the person making 300k still pays 10% on the first x amount and 15% on the next x amount etc. They pay more tax on the money that they earn greater than my household earns, but the rates are the same for all of us up to that point. So those earning more are taxed extra on the extra money, and the same on the same money, if that makes sense. It's not like if you earn enough to bump into the next bracket, you have to pay the higher amount on all your earnings - it's just on the amount that is in the higher bracket.

 

Of course, there are many exceptions to this, including limits on deductions etc., but the basic premise is true, rich people don't pay more taxes than you do, they pay the same on the same amount of money and they only pay more on the extra. Of course there are the very wealthy living off capital gains who almost certainly pay less than us, and there are those who earn enough to take advantage of the many tax breaks and shelters offered and still have enough to live, and thus pay less too. There are also those who might make too much or too little to be able to take advantage of the tax breaks, and they end up paying more.

Edited February 19, 2016 by livetoread

[Sarah CB]

I am really, truly, trying to wrap my head around that thought process of "penalty".

Personally, (biased, anecdotal, however you want to look at it) I can't think in terms of simple hours.  We had less money and paid less taxes at 70-80 hours/wk than we currently do at 40-60 hours/wk.

 

Lucky you!

 

For me - I know people who work a strict 40 hr work week who get paid very well and who are not willing to work more in order to earn more.

 

I also know people who work 80 to 90 hours per week - who chose to make that sacrifice and do earn more because of it.

 

Because of the way the tax brackets work, the person making more pays a greater percentage of their income - so they're already basically being penalized for working more.  I don't think the answer to any of the problems we're talking about is to increase income taxes - penalize people even more than they are already being penalized.  

 

What I can't wrap my head around is someone telling the orthopaedic surgeon at the local hospital that they haven't sacrificed enough already - never mind the years and years of school (not just school, gruelling school), never mind the huge student loans, never mind the personal sacrifice they make when they miss family events and vacations and have to work horrendous hours - now we want to tax them even further.  I kind of feel that if they were willing to do all that and they're already paying more taxes than 99% of people that we should leave them alone.

[SKL]

To me, at some point we need to replace the word "wealth" with:

 

Food

Water

Medicine

Clothing

Houses

Education

Legal protection

 

If I told you 1% of the population control and own 40% of all the things I listed, would we be okay with that? Because in essence, that IS the way it is.

 

First of all, no it isn't, because small net wealth is NOT the same as small income / means to meet basic needs.  I've explained it multiple times but again, you can enjoy a comfortable life and still have a small difference between your debts and your assets on paper.  You can have an extravagant life and thereby push your net worth below zero.  You can have low net worth because you haven't been saving for long, either because you're young, or because you didn't consider it a priority.  You can have low net worth because you bought too much house and then the book value went down.  All these categories will put you on the 'low wealth" side of the equation even though you don't lack food, water, medicine, clothing, a home, education, or access to attorneys.  So no, the chart does not say what you are saying.

 

Second, whatever the real % of people controlling access to basic needs, I don't believe it is better for the government to have more control over it than they already have.  Our government does not inspire confidence in its ability to make social improvements.

 

[SKL]

I feel less sorry for those in higher tax brackets, knowing that they are basically paying the same rate of tax I do on the same amount of income. Given that we have a graduated tax system, we all pay the same amount of tax on the same income. The person making 45k and the person making 300k still pays 10% on the first x amount and 15% on the next x amount etc. They pay more tax on the money that they earn greater than my household earns, but the rates are the same for all of us up to that point. So those earning more are taxed extra on the extra money, and the same on the same money, if that makes sense. It's not like if you earn enough to bump into the next bracket, you have to pay the higher amount on all your earnings - it's just on the amount that is in the higher bracket.

 

Of course, there are many exceptions to this, including limits on deductions etc., but the basic premise is true, rich people don't pay more taxes than you do, they pay the same on the same amount of money and they only pay more on the extra.

 

Incorrect.  Deductions, exemptions, credits, etc. phase out after a certain income, and surtaxes apply.  The tax structure is intentionally designed to make sure upper-middle and high income people pay more tax on each dollar of income than you do.

[Murphy101]

Incorrect. Deductions, exemptions, credits, etc. phase out after a certain income, and surtaxes apply. The tax structure is intentionally designed to make sure upper-middle and high income people pay more tax on each dollar of income than you do.

As it should be bc frankly taking a pint or even two pints from someone who already has plenty is a lot healthier than taking 1 pint from someone already bleeding out.

[SKL]

As it should be bc frankly taking a pint or even two pints from someone who already has plenty is a lot healthier than taking 1 pint from someone already bleeding out.

 

Assuming the government is the right person to have the money in the first place.

 

Anyway, I was just correcting misinformation, not arguing about its fairness.

[Murphy101]

Assuming the government is the right person to have the money in the first place.

 

Anyway, I was just correcting misinformation, not arguing about its fairness.

A government will have a lot more over sight and be a lot more at the mercy and discretion of the common people than individuals.

 

And a huge reason we have a problem with government management is because so much of it is mucked with by the same individuals that are in the 1-5%. Infiltrating and using the government in various manners helps to maintain their status quo.

[Murphy101]

You can have an extravagant life and thereby push your net worth below zero. You can have low net worth because you haven't been saving for long, either because you're young, or because you didn't consider it a priority. You can have low net worth because you bought too much house and then the book value went down. All these categories will put you on the 'low wealth" side of the equation even though you don't lack food, water, medicine, clothing, a home, education, or access to attorneys. So no, the chart does not say what you are saying.

Except for missing the glaring fact that they have to have the wealth to begin with to buy too much house or live an extravagant life. 🙄

 

This is why Donald trump can declare bankruptcy 4 times and it doesn't affect him at all. It sure didn't give him equal net worth as just about anyone else who has to file bankruptcy even once.

[frogger]

If you are going to fairly redistribute then you must redistribute globally. In other words almost all Americans will give up a large percentage of income to those in third world countries. That would be a fair redistribution.

 

 

Secondly, housing, food, medicine etc. are finite resources but we are no where near to using them up. Instead of giving people more money why not support policies that increase the supply of housing. Right now the Fed's pour money into housing and locals block housing development through zoning, regulations, etc restricting supply. Then we wonder why the price of housing goes up. We wonder why housing eats up such a large percentage of the average Americans income.

 

There is such a disconnect with what people want and what is available for education also. I'm guessing because most money comes from the government. My husband just wanted to finish his degree and was working full time and had a bunch of kids and a house to work on but he had to pay for the rec. center and student life crap.

 

You can give the middle class as much money as you want and it won't make any difference at all if housing, health care, and education take up an even bigger percentage of their income. People use politics to make money off of these things because they can because the middle class think if the politicians take care of these things they will be better off. Snort!

[SKL]

A government will have a lot more over sight and be a lot more at the mercy and discretion of the common people than individuals.

 

And a huge reason we have a problem with government management is because so much of it is mucked with by the same individuals that are in the 1-5%. Infiltrating and using the government in various manners helps to maintain their status quo.

 

Yeah, politicians who are selling votes to one group or another to improve their position, at the cost of both unfairness and waste.  It works both ways.  These are the last people we need as middlemen in the economy.  They're already deep enough in there, they don't need to be deeper.

 

[Carrie12345]

I am really, truly, trying to wrap my head around that thought process of "penalty".

Personally, (biased, anecdotal, however you want to look at it) I can't think in terms of simple hours.  We had less money and paid less taxes at 70-80 hours/wk than we currently do at 40-60 hours/wk.

 

 

Lucky you!

 

For me - I know people who work a strict 40 hr work week who get paid very well and who are not willing to work more in order to earn more.

 

I also know people who work 80 to 90 hours per week - who chose to make that sacrifice and do earn more because of it.

 

Because of the way the tax brackets work, the person making more pays a greater percentage of their income - so they're already basically being penalized for working more.  I don't think the answer to any of the problems we're talking about is to increase income taxes - penalize people even more than they are already being penalized.  

 

What I can't wrap my head around is someone telling the orthopaedic surgeon at the local hospital that they haven't sacrificed enough already - never mind the years and years of school (not just school, gruelling school), never mind the huge student loans, never mind the personal sacrifice they make when they miss family events and vacations and have to work horrendous hours - now we want to tax them even further.  I kind of feel that if they were willing to do all that and they're already paying more taxes than 99% of people that we should leave them alone.

 

It certainly didn't feel "lucky" to have to work so many hours in order to survive in a bad neighborhood.  That's why I have trouble thinking in terms of hours.  Lots of people work hard for long hours.  Some aren't being "penalized" with more taxes, they're being forced by low wages.

[SKL]

Except for missing the glaring fact that they have to have the wealth to begin with to buy too much house or live an extravagant life. 🙄

 

This is why Donald trump can declare bankruptcy 4 times and it doesn't affect him at all. It sure didn't give him equal net worth as just about anyone else who has to file bankruptcy even once.

 

No.  You are talking about income.  Not wealth.  They are not the same.

 

As for bankruptcy, he has a number of businesses and some of the businesses filed bankruptcy.  He as an individual did not declare bankruptcy AFAIK.  It would be like if you had 20 houses and one of them was under water but he others were not.  You would probably still have some wealth.

 

Anyhoo we had probably better get off the topic of specific politicians.

 

[MistyMountain]

There are plenty of countries with less extremes between income and wealth with a progressive tax system and it has not caused people to stop working. The opposite is true. There are plenty of people who really are having a hard time meeting basics and who are under a lot of stress in this country. I know many people in that situation. It is very common nod it is becoming more common. There is less poverty in indistrialized nations with a smaller GiNI coefficient especially women and children.

[SKL]

OK I don't think paying a fair share of taxes is a punishment.  I think the majority of income earners should pay some dues.  I think a tax system can be too "progressive."  I understand why a flat tax is unlikely to fly, but I would rather have something closer to it, to recognize that everyone benefits from common expenditures.

 

Rather than attack rich people on the basis of numbers, bad practices should be targeted.  If business laws are equitable and income and wealth are earned legally, then who cares how much person X has at the end of the day?  Did he buy it at a fair price?  Did he pay his employees a legal price and follow the kajillion other laws governing employment?  Did he disclose it in accordance with the law?  Did he do all this without having fraudulent influence on the making of the laws?  Then fine.  Let him go invest some more and hire some more people and make a bigger difference in whatever his pet project is.

Edited February 19, 2016 by SKL

[fraidycat]

Even jobs that were never meant to be full-time jobs, like fast food restaurant jobs?

This doesn't even make sense. What a weird statement to make.

 

The person who started the hamburger joint started it so he could, you know... Start a business. Make money. It wasn't started so he could provide ONLY part time jobs to random individuals. As the business grew, he expanded to another location, so he could ...make more money. Grow the business. Next thing you know: it's a fast food chain. It still wasn't started as a part-time job factory.

[Murphy101]

No. You are talking about income. Not wealth. They are not the same.

That is a hefty load of poop. One cannot have wealth without income and all other factors of wealth are determined by their ability to generate income.

 

A house has no wealth value beyond its income value, whether it be just the equity accrued or whether it is paid off and could be sold for full value.

[Carrie12345]

So how do we balance that?  How do we make sure that you can make a livable wage and yet not punish other people for working hard?  I'm not being snarky..  I legitimately asking..  

 

I wish I knew the "right" answer.  I think a livable minimum wage is a start.

 

I also think there should be a limit on marking up the labor industry.  I know what my husband's company charged for his labor services years ago, compared to what they charged their customers.  I've seen what contractors charge compared to what they pay their subcontractors. I DO believe in mark ups to allow for business expenses and profit.  But I think it should be criminal to collect $45/hr and give the laborer $9.

[SKL]

That is a hefty load of poop. One cannot have wealth without income and all other factors of wealth are determined by their ability to generate income.

 

A house has no wealth value beyond its income value, whether it be just the equity accrued or whether it is paid off and could be sold for full value.

 

One cannot have wealth without income, but one can have income without wealth.  Many Americans have income without wealth.

 

If I bought a $100K house for cash, that house would be wealth, but it would NOT be income.

 

If I bought a $100K house and had $90K debt after all my expenses, my wealth would be $10K even if my income that year was $200K.

[SKL]

 But I think it should be criminal to collect $45/hr and give the laborer $9.

 

Not criminal, but very inefficient.

 

So the laws should be changed to allow the users of human capital to directly hire temporary workers without all kinds of red tape.

 

[MistyMountain]

Global inequality is a huge issue too and it does need to be addressed. It all comes down to resources. We pay next to nothing for the resources and labor we need abroad. The reasons some countries are poorer then others has nothing to do with the people in those countries. Some countries were able to develop because of the resources available in the area and other factors that allowed some groups a head start on industrialization. It is a multi faceted problem that would addressed differently then addressing it in our country. We do need to be efficient and sustainable about resource use though. The cheap labor from abroad that keeps prices low does have a cost. We are using up resources at too fast a rate at the expense of lots of people who are living in abject conditions.

 

There are ways of designing things to last longer, using the waste from one company in other companies, we can design cities better, use more transportation options use better materials etc etc.

Edited February 19, 2016 by MistyMountain

[frogger]

One cannot have wealth without income, but one can have income without wealth.  Many Americans have income without wealth.

 

If I bought a $100K house for cash, that house would be wealth, but it would NOT be income.

 

If I bought a $100K house and had $90K debt after all my expenses, my wealth would be $10K even if my income that year was $200K.

 

 

Actually on any given year one can definitely have wealth without income.  If you are a billionaire just living off your assets than you have wealth without income. Elderly people fall under this category.  Of course, people who know how to manage wealth will keep it because they use it to make income. Lotto winners usually don't and often end up bankrupt. 

 

MistyMountain, I totally agree that resources are finite but really the amount of knowledge needed to properly distribute all resources is not available to the small human mind. There is no person I would trust to do such a thing.  It seems like our energy should be used to learn how to solve local specific problems not grandiose unattainable problems that are nation wide or world wide. 

 

I have often wondered if it would be worthwhile to have a company that helped those construction workers that try to self employ. Many I know can fix things but they can't advertise, keep up with paperwork, etc. Of course, if I owned one where you paid a percentage of your profit to the business or you could call it a cooperative then they would be able to pool resources and get group health insurance. The cooperative could provide training resources and navigate workman's comp, etc. Almost like a labor union but more of a business model and carpenter's could choose whether to join or not. The problem of course is that to handle all of the payroll taxes, health insurance, workman's comp, insurance on the work they do, advertising, courses, etc it would take a lot of money. It could work still as it would be spread out among the workers and more efficient but you know what they would say. I earn all the money and they take it for nothing. They didn't do anything to fix that house and yet I'm supposed to give them some. I'm sorry but the ignorance in what all is involved in business would make me look like a crooked loser even if they willingly joined because they were better off than trying to do it on their own. 

[Murphy101]

One cannot have wealth without income, but one can have income without wealth. Many Americans have income without wealth.

 

If I bought a $100K house for cash, that house would be wealth, but it would NOT be income.

 

If I bought a $100K house and had $90K debt after all my expenses, my wealth would be $10K even if my income that year was $200K.

Oh for crying... That's bull.

 

Income and wealth are the SAME THING.

Income disparity and wealth disparity are the same thing.

 

Yes. The house is income. It is income you are choosing not to spend (aka selling or renting out or whatever) no different than a savings account, which is also income. The only time this changes is if the house is no longer worth more than the loan on it. If it is even worth $5k more than the loan then it is worth at least that $5k in income/assets.

 

And your expenses are completely not relevant to your wealth/income because you are using income/wealth to PAY for them. You had to have it to begin with and it was income/wealth to be able to do so.

[Murphy101]

Actually on any given year one can definitely have wealth without income. If you are a billionaire just living off your assets than you have wealth without income. Elderly people fall under this category. Of course, people who know how to manage wealth will keep it because they use it to make income. Lotto winners usually don't and often end up bankrupt.

 

MistyMountain, I totally agree that resources are finite but really the amount of knowledge needed to properly distribute all resources is not available to the small human mind. There is no person I would trust to do such a thing. It seems like our energy should be used to learn how to solve local specific problems not grandiose unattainable problems that are nation wide or world wide.

 

I have often wondered if it would be worthwhile to have a company that helped those construction workers that try to self employ. Many I know can fix things but they can't advertise, keep up with paperwork, etc. Of course, if I owned one where you paid a percentage of your profit to the business or you could call it a cooperative then they would be able to pool resources and get group health insurance. The cooperative could provide training resources and navigate workman's comp, etc. Almost like a labor union but more of a business model and carpenter's could choose whether to join or not. The problem of course is that to handle all of the payroll taxes, health insurance, workman's comp, insurance on the work they do, advertising, courses, etc it would take a lot of money. It could work still as it would be spread out among the workers and more efficient but you know what they would say. I earn all the money and they take it for nothing. They didn't do anything to fix that house and yet I'm supposed to give them some. I'm sorry but the ignorance in what all is involved in business would make me look like a crooked loser even if they willingly joined because they were better off than trying to do it on their own.

By definition if a billionaire is living off his assets, then he has an income. The assets ARE the income. That's what all assets are.

[frogger]

Only if his assets are making money. If it is just money, or a house, or food in the cellar, or land, or gold bars sitting in your basement then no it is not income. In fact if you had investments that lost money you would have negative income but still be wealthy.

[SKL]

Oh for crying... That's bull.

 

Income and wealth are the SAME THING.

Income disparity and wealth disparity are the same thing.

 

Yes. The house is income. It is income you are choosing not to spend (aka selling or renting out or whatever) no different than a savings account, which is also income. The only time this changes is if the house is no longer worth more than the loan on it. If it is even worth $5k more than the loan then it is worth at least that $5k in income/assets.

 

And your expenses are completely not relevant to your wealth/income because you are using income/wealth to PAY for them. You had to have it to begin with and it was income/wealth to be able to do so.

 

I'm sorry, but you are 100% wrong.

 

What accounting book did you study?

[EmseB]

Income and assets are not the same thing. It's actually a big problem when it comes to financial aid and welfare programs -- people can have assets worth a lot on paper with no way to liquidate them (wealth), and have no income and be in dire straights financially. This is also why people can be "house poor". Because wealth is different than income. You can be disqualified for financial aid based on your assets on paper but still be unable to afford college or whatever it is. It's also why poor people have trouble saving money and getting off assistance in some cases, because their assets are counted against them, regardless of income.

 

I don't know of any accepted definitions in the economic or financial sphere that would say income and wealth are the same thing. I don't think further use of expletives will change the accepted uses of those terms. :)

[SKL]

Actually on any given year one can definitely have wealth without income.  If you are a billionaire just living off your assets than you have wealth without income. Elderly people fall under this category.  Of course, people who know how to manage wealth will keep it because they use it to make income. Lotto winners usually don't and often end up bankrupt. 

 

 

What I meant was that wealth originally comes from income, which I thought was relevant to Murphy's point.  (Not sure.)  It might have been earned or acquired in a prior year.  And I know it could have been a gift or inheritance, which might go by a term other than income depending on the context.  Point being that wealth doesn't just arise out of the ether (usually), it enters onto the balance sheet via the income statement.

 

Usually assets that the elderly live off of do earn interest, though it might not be much.  That wasn't my point, though.

 

Anyhoo, I think it is a lost cause to argue the terminology at this point.

 

[Scarlett]

What I meant was that wealth originally comes from income, which I thought was relevant to Murphy's point. (Not sure.) It might have been earned or acquired in a prior year. And I know it could have been a gift or inheritance, which might go by a term other than income depending on the context. Point being that wealth doesn't just arise out of the ether (usually), it enters onto the balance sheet via the income statement.

 

Usually assets that the elderly live off of do earn interest, though it might not be much. That wasn't my point, though.

 

Anyhoo, I think it is a lost cause to argue the terminology at this point.

 

And I think that has been the problem the entire thread. You, with all kinds of accounting knowledge, splitting hairs with us about terminology.

 

This discussion isn't about terminology. It is about the disparity between the haves and the have nots. Do you have any compassion for the poor guy who died at age 30 who was described up thread? Do you not cringe that some in this country have more than enough to live high on the hog while others can't afford health care?

 

I don't have a firm grasp on global economics or big business. But it doesn't take a genius to see there is a huge disparity in how people live. People who are humans who should have the same value as every other human.

Edited February 19, 2016 by Scarlett

[Pam in CT]

re different wealth distributions in the OP video:

I responded to someone who seemed to really care about the poor because I thought they were worth responding to and I can respect them. I wasn't going to respond to the video because it didn't seem worth responding to. Here is why I think that and then I will let you get back to discussing it.

He was talking about an ideal distribution of wealth. What is that? In my mind the socialism seemed more fair than his randomly picked nonsense. The reason most people wouldn't want the socialism is because it messes up incentives. I think crony capitalism messes it up also but that I suppose is another discussion. The ideal would be whatever gave enough incentives that everyone, or most everyone was the best off they could be. Of course, no one knows what that is but I am not sure why I should be more worried about some made up distribution than other social justice or economic issues.

The narrator used income and wealth interchangeably which meant he was spouting nonsense. They are often correlated but not always and not always for the same reasons. Regardless, they are certainly not the same thing. Also, neither income or wealth say as much about your well being as many think it does. Zero wealth because housing went down but you are living in a nice home and have an income that lets your kid play soccer or whatever floats your boat, and eating three squares a day with a healthy family versus 6 figure income stressed out, unable to afford a home because your medical bills for a chronic disease eats away at the money you saved. It isn't as easy to compute as people think it is.

I didn't hear anything about a middle class other than this narrators "ideal" distribution.

...

The video in the OP was based on data from a survey.  There was no discussion of any "ideal" distribution that the "narrator" (I presume you mean author?) thought was "best."  One distribution was how participants estimated wealth is distributed.  The next was what survey participants (not the author) thought on average would be reasonable for society.  The last was the actual current distribution.

 

Here's a link to a review of the same study in the Harvard alumni magazine that shows the same data in a slightly simplified form (you can follow their link for the underlying data). 

 

For me the biggest eye-popper was the difference between what participants believed to be the current distribution, and the actual distribution.

 

 

 

To be in the top 1% of wealth you need a net worth over 8 million dollars. I could be wrong , but I don't think this is you. I lived in Palm Beach most of my life and I've seen the 1%. It's not doctors and lawyers for the most part. 

 

That's the group that is accumulating more while others are (on average, not you specifically) getting a smaller share of the overall economy. That's who the video is talking about. 

 

However, yes, if you make say, $400,000 you are in the top 1% of income and are included in increased taxes, although mostly the stuff I'm hearing is about tax rates on investment income. 

 

 

I think when we are talking about the wealthy, we are talking about the .01 or even .001 percent. It's a very, very small group of people.

 

Right.  From the study Kristoff was referencing:

 

The wealthiest 20 individuals in the United States today hold more wealth than the bottom half of the U.S. population combined. These 20 super wealthy — a group small enough to fly together on one Gulfstream G650 private jet — have as much wealth as the 152 million people† who live in the 57 million households that make up the bottom half of the U.S. population.6

Twenty human beings.  152 million human beings.  Twenty people hold more assets than half the people in this country.

 

Here are the 20:  Company men: Bill Gates (Microsoft), Larry Ellison (Oracle), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Larry Page and Sergey Brin (Google), Michael Bloomberg (Bloomberg), and Phil Knight (Nike). Nine family heirs: two Koch brothers, four Waltons (Wal- Mart), and three fortunate souls from the Mars candy empire. investors Warren Buffett and George Soros and casino mogul Sheldon Adelson.  

 

 

 

I can look up my county's data.  Of course that doesn't tell me WHO makes what (or how much anyone has saved,) but it does give me a fair view of my community.

For the record, 2.37% of local households make $200,000 or more. 24.8% of local households make $30,000 or less.  We do have a flat state tax and flat local tax, which I used to think was awesome.  Now I look at our crumbling infrastructure and I'm less enamored with the concept.

Thanks for this idea; a lot of interesting insights going down the associated bunny trails.  Here is my county.  My state has among the worst distributions in the nation.

 

[SKL]

I'm not American, and I have a question about this. Does your failure to qualify for tax breaks that people making less money do qualify for affect you in such a way that your income after taxes is effectively reduced to the same amount as some of those people who do qualify for tax breaks? Or are you still significantly better off than those people? 

 

There are windows of income within which after-tax income is lower though pre-tax income is higher.  In general, though, this is not the case.

 

But in most cases, the reason person A is "still better off than person B" is that Person A put more in.  More time/effort into public school, more effort/time/money into higher education, more hours, more risk tolerance, more talent, more something.  Of course I am going to get flamed because it is politically incorrect to admit that some people put more in so they can get more out.

 

If I work 16 hours, why shouldn't I keep 2x as much as someone who works 8 hours at the same job?  But in reality the difference can be stark at certain marginal tax rates.  Working 2 shifts means I pay several times what my share would have been if I worked 1 shift.  That doesn't make sense to me.

[Sarah CB]

 

 

Here are the 20:  Company men: Bill Gates (Microsoft), Larry Ellison (Oracle), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Larry Page and Sergey Brin (Google), Michael Bloomberg (Bloomberg), and Phil Knight (Nike). Nine family heirs: two Koch brothers, four Waltons (Wal- Mart), and three fortunate souls from the Mars candy empire. investors Warren Buffett and George Soros and casino mogul Sheldon Adelson.  

 

 

 

Thanks for this idea; a lot of interesting insights going down the associated bunny trails.  Here is my county.  My state has among the worst distributions in the nation.

 

So - let's just pick on Mark Zuckerberg for a minute.  This guy is not holding any resources (there have been comments about wealthy people hoarding resources).  He created Facebook - out of thin air.  

 

Can someone explain to me how Mark Zuckerberg making money on Facebook has somehow prevented someone else from making money?  

 

Or, how about this - Mark Zuckerberg was able to use something he created to earn more than he ever would have working for someone else.  Consequently, he is now employing many people and he is also paying a *lot* more taxes than someone who didn't create Facebook. Plus, his employees are paying taxes.  As far as I can see, Mark Zuckerberg has done the country a huge favour by making money on Facebook - he is generating wealth for himself and for a lot of other people and he is paying a boatload of taxes.  How is this bad?  How does his accumulation of wealth prevent someone else from becoming wealthy?

[SKL]

And I think that has been the problem the entire thread. You, with all kinds of accounting knowledge, splitting hairs with us about terminology.

 

This discussion isn't about terminology. It is about the disparity between the haves and the have nots. Do you have any compassion for the poor guy who died at age 30 who was described up thread? Do you not cringe that some in this country have more than enough to live high on the hog while others can't afford health care?

 

I don't have a firm grasp on global economics or big business. But it doesn't take a genius to see there is a huge disparity in how people live. People who are humans who should have the same value as every other human.

 

Well of course the definition of wealth matters when the whole video was about *wealth* distribution.  How can you discuss *wealth* distribution based on a totally made up definition of *wealth*?  You can't.

 

What does this have to do with a guy who had poor parents and lifelong addictions?  Well you have that in Hollywood too.  Rich people have the same problem with drugs.  Having a ton of wealth didn't save Bobbie Christina Brown or a lot of other people.  Of course every life that is lost to drugs is sad, and it would be great if this country (or any country) could get a handle on that problem, but that has nothing to do with the distribution of wealth.

 

[Sarah CB]

Well of course the definition of wealth matters when the whole video was about *wealth* distribution.  How can you discuss *wealth* distribution based on a totally made up definition of *wealth*?  You can't.

 

What does this have to do with a guy who had poor parents and lifelong addictions?  Well you have that in Hollywood too.  Rich people have the same problem with drugs.  Having a ton of wealth didn't save Bobbie Christina Brown or a lot of other people.  Of course every life that is lost to drugs is sad, and it would be great if this country (or any country) could get a handle on that problem, but that has nothing to do with the distribution of wealth.

 

 

Absolutely.  I think a lot of the conversation has been lost in confusion over this.

 

There is a difference between wealth and income.  There's a difference between wealth and standard of living.  And between income and standard of living, I guess.  Although, I think income more closely correlates to standard of living than wealth does - at least for most people.  And I've seen a lot of people with high, high incomes and no wealth.  And with low incomes and a very decent standard of living.

[Scarlett]

Well of course the definition of wealth matters when the whole video was about *wealth* distribution. How can you discuss *wealth* distribution based on a totally made up definition of *wealth*? You can't.

 

What does this have to do with a guy who had poor parents and lifelong addictions? Well you have that in Hollywood too. Rich people have the same problem with drugs. Having a ton of wealth didn't save Bobbie Christina Brown or a lot of other people. Of course every life that is lost to drugs is sad, and it would be great if this country (or any country) could get a handle on that problem, but that has nothing to do with the distribution of wealth.

 

It has everything to do with it. And the problems aren't just with addiction. My question to you was where is your compassion for people who are suffering.

[frogger]

We do have a tax on the lowest income bracket but that mostly affects teenage workers because they can't claim any dependents. If you make that as a head of household though you get that money back. In fact you can get more back then you paid.

[ChocolateReignRemix]

We do have a tax on the lowest income bracket but that mostly affects teenage workers because they can't claim any dependents. If you make that as a head of household though you get that money back. In fact you can get more back then you paid.

A lot of teen workers have an effective rate of zero due to the personal exemption.

[frogger]

True, if their parents don't claim them. I would have loved being able to have a personal exemption. :)

[JeanM]

So - let's just pick on Mark Zuckerberg for a minute.  This guy is not holding any resources (there have been comments about wealthy people hoarding resources).  He created Facebook - out of thin air.  

 

Can someone explain to me how Mark Zuckerberg making money on Facebook has somehow prevented someone else from making money?  

 

Or, how about this - Mark Zuckerberg was able to use something he created to earn more than he ever would have working for someone else.  Consequently, he is now employing many people and he is also paying a *lot* more taxes than someone who didn't create Facebook. Plus, his employees are paying taxes.  As far as I can see, Mark Zuckerberg has done the country a huge favour by making money on Facebook - he is generating wealth for himself and for a lot of other people and he is paying a boatload of taxes.  How is this bad?  How does his accumulation of wealth prevent someone else from becoming wealthy?

 

I have nothing against Mark Zuckerberg personally. I don't even know him. The fact is that he is paying a *lot* less taxes than he would have if Facebook had been invented 50 years ago (impossible, I know). This link (http://qz.com/74271/income-tax-rates-since-1913/) has a nifty tool that you can use to see how the tax rate has changed for various income brackets over time. In 1962 if your income was $10 million, your effective tax rate was 89%. In 2012, the effective tax rate was 34.8%.

 

As far as I can tell, this shifts more of the tax burden to people with lower income. The tax rate has *not* decreased similarly for the middle class. And goodness knows the tax burden is not decreasing. This isn't necessarily stopping someone else from becoming wealthy, but it is making it harder for the average middle class worker to keep his/her head above water.

 

This is obviously a multifactorial problem, and the tax rate is only one of many factors that *may* be playing a role in the increasing inequality in the US.

 

[SKL]

It has everything to do with it. And the problems aren't just with addiction. My question to you was where is your compassion for people who are suffering.

 

I can have compassion for people who are suffering, and even do a lot to help them, and still not confuse two completely different nouns and accept a patent misunderstanding of a chart.

 

I maintain that comparing is damaging to the soul and does nothing to fix material problems.  The presence of very wealthy people in a population does not cause people to starve or to develop drug addictions.  Emotions don't trump logic.

 

This comes up in over and over.  You have no idea how much I do for the people who need the most help.  Being OK with Bill Gates's wealth doesn't make me a cold-hearted witch.

[Paige]

Assuming the government is the right person to have the money in the first place.

 

Anyway, I was just correcting misinformation, not arguing about its fairness.

 

The government wouldn't have needed to step in and tax if people had a history of being charitable to the degree needed to keep people from starving and freezing without it. "Little Match Girls" used to be more than a sad Christmas story. 

 

We could argue about whether governments are using their taxes effectively, but nobody's come up with a better solution. I personally know people who say that governments should be out of the business of helping the poor. They think it does a terrible job and discourages personal, community, and church charities which would do a better job if the government let them keep their money to invest as they saw fit. It's a nice idea, but history shows that it doesn't work that way.