An argument that the economic stagnation experienced by all but the rich since 1973 is the way that things will be for a very long time.
I'd argue that even if that is the case, the situation has been aggravated by the adoption of tax policies that favor the über-rich. It is insane that a person who lives off passively-generated investment income is taxed at a lower rate than a person who holds a decent job.
Actions, Meet Consequences
39 minutes ago
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It's what I loved about my country ever since my first history class: That America had broken the cycle of being enslaved to the biggest bully with the biggest club, from prehistory.
It's devastating and believable that it was only a fluke.
Just as discouraging as Larry Niven's notion that, if we ever lose our civilization, we'll never get this technology back. All the easy resources are gone. It takes this level of technology just to maintain itself on what resources remain.
I didn't know Niven thought that, but I have for years. All of the resources that can be extracted with Stone-age technology have been- coal, iron, copper, tin.
It will take a geologic era or two to refresh those resources, as there will have to be upwellings of new mountain ranges rich with minerals.
Where do decent jobs come from? Mostly by people "passively" investing, and risking their money.
Not even close to being true these days. Job growth has largely been confined to smaller businesses, which are not the subject of passive investments.
Not in all cases. I work at a major Japanese company that's invested hundreds of millions in my state in the past few years, billions overall. (The same area where I used to work at a now-closed GM plant...)
But the capital is still required. What happens to existing jobs if the owners sell, and nobody else is willing to passively invest?
Another reason for different tax treatment is risk--I'm not risking my savings in order to get a paycheck.
The world needs both workers and investment. Good investment isn't all that passive, it figures out what is likely to be successful, and allocates resources accordingly. Imperfectly, but better than other methods of resource allocation that we've discovered so far. There is also a lot of indirect investment by little people--pension funds, mutual funds.
The other question is how many times should income be taxed? Corporate profits are taxed, then the dividends or capital gains are taxed. Then most of the time the money is taxed again when it is eventually spent...
I want to know why it's fair that a person with a really valuable skill who works and pulls in $150,000 a year is taxed at a higher rate than someone who is paid $150,000 in dividends.
The message there is that the government favors capital over labor. I don't see that as being equitable in the least.
Why different rates?
1. Risk. A wage earner isn't risking his savings. An investor is risking--look at anyone who held GM stock for instance.
2. Double taxation--A wage earner is an 'expense' to the business, their check comes from pre-tax funds. Dividends have already been taxed as profits, then they get taxed again
3. Rarity--while there are plenty of people capable of earning $100,000 per year, (There's enough overtime available to me that I could) there aren't that many people capable of getting that much in investment income.
4. Probably the most important--What you tax you get less of, what you subsidize you get more of. We want more investment, and I'm fine with someone getting rich if they are creating jobs or making goods more affordable.
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