Tax the rich

mollymosfet

KyussBishop wrote: »

Heh, this is a recurring fallacy which is so weak, that every time it is brought up no bad consequences are stated, just that "they'll leave" with the implication that it's a bad thing; what exact bad events will happen? (and back them up with proof)

We're talking about income tax here, not corporation tax; it's not like an entire company is going to up and leave, causing a large loss of jobs, just one person whose job opening will soon be filled by someone else, causing no loss in tax intake.

Past a certain income bracket, we would mostly be talking about overpaid management/executive positions at large companies as well; these are pretty heavily invested job positions, taking significant time to move up the ladder (and usually easily replaceable), so there aren't exactly going to be similarly paying jobs waiting for them as soon as they move to another country.


The general crux of the fallacy is that the jobs will leave, and there's just no proof of this at all.

Yes. Rich people do not equal jobs. While the Rich can invest they can also be a drain on the economy in other ways by hording wealth rather(as opposed to it being passed around).

mollymosfet

ResearchWill wrote: »

I read recently need to find it again, that less than 12,000 people in this state pay 18% of the income tax collected. That scarry.

http://www.ronanlyons.com/2009/07/28/a-little-quiz-on-irelands-income-tax/

That depends entirely on how much of the wealth they own. If they owned, for example, 40% of the wealth(Which is very possible, and I believe at least 25% may be accurate), then it would actually be fairly low. Also please note that he doesn't reference where he gets his stats and several other inconsistencies are pointed out in the comments. He does post a link to something on the revenue website but the link is now broken so there's no way of verifying it.

mollymosfet

Some damning info in this -

http://robertnielsen21.wordpress.com/2012/07/26/rich-get-richer-poor-get-poorer/

The top earners actually have more disposable income than pre-recession.

Wow.

mollymosfet

Cheerful Spring wrote: »

Still low plus the very rich also get around paying the right amount of tax here because of legal loopholes. The number of wealthy people in Ireland who pay that rate is questionable least to me. But your right 41% is the standard.

What is the scale they propose? I have not been following this story. I just gave an opinion on what was been said in this thread.

35% may be more realistic as to what they actually end up paying though. There are tons of loopholes we could close.

mollymosfet

Diarmuid wrote: »

An article on France's wealth tax http://www.washingtonpost.com/wp-dyn/content/article/2006/07/15/AR2006071501010.html

Capital in the country is not the same as money in the economy. I don't see much reason to trust that piece anyway.

Monty Burnz

mollymosfet wrote: »

Yes. Rich people do not equal jobs. While the Rich can invest they can also be a drain on the economy in other ways by hording wealth rather(as opposed to it being passed around).

I think this suggests that you don't understand this area very well. How do you suggest that they hoard wealth and stop it being passed around?

mollymosfet

Monty Burnz wrote: »

I think this suggests that you don't understand this area very well. How do you suggest that they hoard wealth and stop it being passed around?

Looking at 90% of what you've said in this thread you don't understand this at all.

The fact is that when you give more money to poorer people(tax the rich, increase welfare/minimum wage etc.) they are more likely to spend all of it very soon. Rich people often have far more money than they're realistically going to spend. So basically you get more money back from the poor than the rich.

Monty Burnz

mollymosfet wrote: »

Looking at 90% of what you've said in this thread you don't understand this at all.

The fact is that when you give more money to poorer people(tax the rich, increase welfare/minimum wage etc.) they are more likely to spend all of it very soon. Rich people often have far more money than they're realistically going to spend. So basically you get more money back from the poor than the rich.

Right, and what do you think rich people do with their money?

Icepick

mollymosfet wrote: »

Looking at 90% of what you've said in this thread you don't understand this at all.

The fact is that when you give more money to poorer people(tax the rich, increase welfare/minimum wage etc.) they are more likely to spend all of it very soon. Rich people often have far more money than they're realistically going to spend. So basically you get more money back from the poor than the rich.

wealth is not a limited pot so this does not matter as much as you think

Monty Burnz

Icepick wrote: »

wealth is not a limited pot so this does not matter as much as you think

In fact, it doesn't matter at all.

mollymosfet

Icepick wrote: »

wealth is not a limited pot so this does not matter as much as you think

... I'm pretty sure this line of thinking is what lead to the bubbles...

Just to make sure - there is no such thing as "wealth creator" or a "Job creator". The economy creates wealths and jobs, not individuals.

Diarmuid

mollymosfet wrote: »

Capital in the country is not the same as money in the economy. I don't see much reason to trust that piece anyway.

Why?, it doesn't match your world view?

Monty Burnz

mollymosfet wrote: »

... I'm pretty sure this line of thinking is what lead to the bubbles...

Just to make sure - there is no such thing as "wealth creator" or a "Job creator". The economy creates wealths and jobs, not individuals.

You have yet to explain to us how wealthy people 'hoarding' money is a 'drain' on the economy. And I'm astonished to learn that the economy is not made up of individuals.

Geuze

It's true that consumer spending doesn't increase in a linear fashion with income, so higher earners have a lower Marginal Propensity to Consume.

A lot of their income is saved, not consumed, so does not directly help domestic demand.

Of course, standard economics says that savings are lent out by banks and invested by borrowers, so that's how your savings are spent.

However, in Irl today, that's not really happening.

Geuze

Here's a proposal.

Families with children tend to spend more of their income.

People >65 with strong pensions don't, their last 100 is saved.

If we could transfer that last 100 of income from the pensioner to the family, consumer spending would rise, the economy would grow.

OK, savings would fall, but we have plenty of savings at the moment, and investment has fallen hugely, so no need for all those savings.

How do we do it? One option:

Abolish the >65 age tax credit
Abolish the >65 tax exemptions
Maybe have a general increase in income tax

BUT, give a income tax credit per child.

Result should be to put a little more purchasing power into the hands of those most likely to spend it.

Monty Burnz

Geuze wrote: »

Of course, standard economics says that savings are lent out by banks and invested by borrowers, so that's how your savings are spent.

You may have a point, but if those savings that are not being loaned out were not sitting in the banks, the banks would collapse, and then we would be in for a very interesting time.

A point you seem to be missing is that most discretionary consumption in this country is on imported goods - so of whatever is spent in the domestic economy, most of it would be going to pay workers in China and Germany rather than in Ireland.

Tipp Man

Geuze wrote: »

It's true that consumer spending doesn't increase in a linear fashion with income, so higher earners have a lower Marginal Propensity to Consume.

A lot of their income is saved, not consumed, so does not directly help domestic demand.

Of course, standard economics says that savings are lent out by banks and invested by borrowers, so that's how your savings are spent.

However, in Irl today, that's not really happening.

Surely wealthy people invest the majority of their money rather than saving it in banks especially considering how low interest rates have been - the returns would be small

Either way this money generally makes its way into other businesses either through direct investment or bank lending - unless its stashed underneath the floor boards of course

I'm surprised to see responses along the lines of "so what if they leave what difference will it make they don't earn THAT much"
If it would make no difference why would you bother taxing them more in the first place, if they don't earn that much?
If you want to tax them more because you think an increase will make any real difference to tax income, then surely it follows the loss of all their tax income would affect you

Their expenditure can & has been shown to affect everyone else, remember this?:
http://watchingamerica.com/News/94396/u-s-luxury-tax-%E2%80%94-a-total-failure/

However, in August 1993, two years after its introduction, the U.S. Congress decided to end the “luxury tax” because the tax revenues were disappointing and the livelihoods of common folks who made a living by selling “luxury items” were negatively impacted.
More importantly, problems slowly emerge from the shortfall of luxury tax collection, and the the yacht industry took an unexpectedly hard hit. Within a year, sales plunged 70 percent, and many firms had to lay off workers and even declare bankruptcy. Large numbers of workers lost their jobs. In Florida, 13,000 yacht workers were unemployed, and related industries were also affected. The impact was significant.

Good article showing that he's not the only one:
http://www.huffingtonpost.com/2012/08/08/france-income-tax_n_1757139.html

Monty Burnz

Tipp Man wrote: »

Surely wealthy people invest the majority of their money rather than saving it in banks especially considering how low interest rates have been - the returns would be small

Either way this money generally makes its way into other businesses either through direct investment or bank lending - unless its stashed underneath the floor boards of course

Yes, this is the point that Mollymosfet seems to not understand - savings (yours, mine, middle income people's, poor people's, rich people's) goes into a pool of capital that is loaned out to (or buys bonds from) businesses that create jobs and wealth. Unless, as you suggest, people have all their savings in banknotes or gold that they bury in a hole in the ground.

I had to laugh at the idea that people don't create wealth, that the economy does - much like Einstein didn't propose the theory of relativity, science did. :rolleyes:

spikey95

It's staggering how the rich wants more and more. As if they don't have enough already! I don't want to tarnish everyone with the same brush but it seems that they are more likely to cut corners and save their precious millions than an average Joe.

Monty Burnz

spikey95 wrote: »

It's staggering how the rich wants more and more. As if they don't have enough already! I don't want to tarnish everyone with the same brush but it seems that they are more likely to cut corners and save their precious millions than an average Joe.

Perhaps it is by not wasting money that they became wealthy in the first place? Is there a lesson to be learned there?

spikey95

Monty Burnz wrote: »

Perhaps it is by not wasting money that they became wealthy in the first place? Is there a lesson to be learned there?

I see it more as them trying to find loopholes to avoid paying taxes and saving their on a Swiss account.

mollymosfet

Diarmuid wrote: »

Why?, it doesn't match your world view?

No, because there's no guarantee that said capital is actually being invested in anything, or anything useful. Capital is one sense just money that's sitting there until it's used. Money that's actually moving around is far more useful.

mollymosfet

Monty Burnz wrote: »

Yes, this is the point that Mollymosfet seems to not understand - savings (yours, mine, middle income people's, poor people's, rich people's) goes into a pool of capital that is loaned out to (or buys bonds from) businesses that create jobs and wealth. Unless, as you suggest, people have all their savings in banknotes or gold that they bury in a hole in the ground.

I had to laugh at the idea that people don't create wealth, that the economy does - much like Einstein didn't propose the theory of relativity, science did. :rolleyes:

But they don't. Again, how do you explain the fact that taxes on the rich, in the US for example, are at an all time low, yet this has not lead to more jobs than were present in the 70s when there was a very high tax rate?

It's bollocks.

http://articles.businessinsider.com/2011-12-12/news/30500948_1_entrepreneurs-and-investors-capital-gains-and-income-jobs

mollymosfet

Tipp Man wrote: »

Surely wealthy people invest the majority of their money rather than saving it in banks especially considering how low interest rates have been - the returns would be small

Either way this money generally makes its way into other businesses either through direct investment or bank lending - unless its stashed underneath the floor boards of course

Again, if this was true, the US would have no problem with unemployment currently, and countries that tax the rich higher such as in mainland europe would be struggling more than us. But they're not. There's only so far other factors can compensate for that too.

I just don't understand how the economic right viciously reject the world around them yet still act like they're the more mature, down to earth ones. It's very frustrating.

Count Dooku

mollymosfet wrote: »

Again, if this was true, the US would have no problem with unemployment currently, and countries that tax the rich higher such as in mainland europe would be struggling more than us. But they're not.

mostly because they didn't use so much incomes from unsustainable sources, like property bubble, for their spending

Monty Burnz

mollymosfet wrote: »

No, because there's no guarantee that said capital is actually being invested in anything, or anything useful. Capital is one sense just money that's sitting there until it's used. Money that's actually moving around is far more useful.

Nonsense. Sorry. You don't seem to understand the difference between consumption and investment. One creates wealth, the other does not.

Monty Burnz

mollymosfet wrote: »

But they don't. Again, how do you explain the fact that taxes on the rich, in the US for example, are at an all time low, yet this has not lead to more jobs than were present in the 70s when there was a very high tax rate?

It's bollocks.

So Sergiy Brin and Larry Page didn't create billions of euros of wealth by creating Google?

And I don't know what point you are making re. low taxes in the US? It doesn't speak to anything I've said here.

KyussBishop

bluewolf wrote: »

I'm surprised to see responses along the lines of "so what if they leave what difference will it make they don't earn THAT much"
If it would make no difference why would you bother taxing them more in the first place, if they don't earn that much?
If you want to tax them more because you think an increase will make any real difference to tax income, then surely it follows the loss of all their tax income would affect you

Their expenditure can & has been shown to affect everyone else, remember this?:
http://watchingamerica.com/News/94396/u-s-luxury-tax-%E2%80%94-a-total-failure/



Good article showing that he's not the only one:
http://www.huffingtonpost.com/2012/08/08/france-income-tax_n_1757139.html

The idea behind that is essentially trickle-down economics, which is largely considered to be false:
https://en.wikipedia.org/wiki/Trickle-down_economics

As I mentioned in one of my previous posts early on in the thread: You have to show that the income streams and jobs themselves disappear; it doesn't matter if high earners disappear, if someone else takes their job and thus income (which is still taxed at the higher rate).

Chazz Michael Michaels

KyussBishop wrote: »

these are pretty heavily invested job positions, taking significant time to move up the ladder (and usually easily replaceable), so there aren't exactly going to be similarly paying jobs waiting for them as soon as they move to another country.

Talk about baseless assumptions...

KyussBishop

Chazz Michael Michaels wrote: »

Talk about baseless assumptions...

So I take it you disagree with me then? Are you going to provide a counterargument, or just stick with the one-liner?

Chazz Michael Michaels

KyussBishop wrote: »

So I take it you disagree with me then? Are you going to provide a counterargument, or just stick with the one-liner?

Jesus, that was quick.

Anyway, your point seemed made up, to be honest. Executives move around all the time, just pick up the FT and have a read.

KyussBishop

Chazz Michael Michaels wrote: »

Jesus, that was quick.

Anyway, your point seemed made up, to be honest. Executives move around all the time, just pick up the FT and have a read.

You've picked that point out of the wider context of my post really; a large percentage of managerial/executive positions can't just up and move out of the country over a short period of time, to similar jobs with the same income elsewhere.

Diarmuid

KyussBishop wrote: »

it doesn't matter if high earners disappear, if someone else takes their job and thus income (which is still taxed at the higher rate).

Like when Denis O Brien / JP McManus / John Magnier / Tony O Reilly / Michael Smurfit / Dermot Desmond moved abroad, someone else replaced them and their income in Ireland. Oh wait, that didn't happen

Monty Burnz

Diarmuid wrote: »

Like when Denis O Brien / JP McManus / John Magnier / Tony O Reilly / Michael Smurfit / Dermot Desmond moved abroad, someone else replaced them and their income in Ireland. Oh wait, that didn't happen

We still have Mick Wallace.

Tipp Man

Diarmuid wrote: »

Like when Denis O Brien / JP McManus / John Magnier / Tony O Reilly / Michael Smurfit / Dermot Desmond moved abroad, someone else replaced them and their income in Ireland. Oh wait, that didn't happen

And whoever does replace them quickly realises they are being a mug for paying high taxes and joins those listed above on tropical islands and alpine highlands

KyussBishop

Diarmuid wrote: »

Like when Denis O Brien / JP McManus / John Magnier / Tony O Reilly / Michael Smurfit / Dermot Desmond moved abroad, someone else replaced them and their income in Ireland. Oh wait, that didn't happen

What about them? Again focusing on a narrow aspect of my argument, that was not applied to all high earners yet does apply a significant portion.

If you propose that higher taxes on the rich makes the economy worse off (the context my argument was made in), the burden of proof is on you to show that; my arguments give examples of specific instances where high taxes will not have a negative impact, I don't apply them to all high earners like you try to make out here.

If you disagree with me, you have to show the loss caused by such a tax, will be greater than the gain.

Monty Burnz

KyussBishop wrote: »

What about them? Again focusing on a narrow aspect of my argument, that was not applied to all high earners yet does apply a significant portion.

If you propose that higher taxes on the rich makes the economy worse off (the context my argument was made in), the burden of proof is on you to show that; my arguments give examples of specific instances where high taxes will not have a negative impact, I don't apply them to all high earners like you try to make out here.

If you disagree with me, you have to show the loss caused by such a tax, will be greater than the gain.

I actually did a quick search on Google scholar and found 4 papers (at which point I stopped looking for more) that demonstrated the negative effects of increasing marginal tax rates in terms of total tax income, but I didn't think anyone would be interested and closed all the tabs.

The research is out there - just search for 'marginal tax rate effects' in Google Scholar and Bob's your uncle.

There are two main negative effects - you drive high earners out of the economy (a particular danger for us as people can work in so many other countries) and high earners just don't bother to work so much as they value leisure time more over heavily taxed extra income.

KyussBishop

You'll need to cite them, as you don't even elaborate on what the 'negative effects' are and why they are b ad; and again, even if some high earners leave you don't show that the jobs leave too.

Even if they aren't replaced in some jobs (or if they work less), that money stays within the company and is spent on other resources instead; so again is not a net loss.

Also, even if there are some negative effects, it has to be shown that they are greater than the increased tax intake; none of this has been shown thus far.

Count Dooku

KyussBishop wrote: »

You'll need to cite them, as you don't even elaborate on what the 'negative effects' are and why they are b ad; and again, even if some high earners leave you don't show that the jobs leave too.

Even if they aren't replaced in some jobs (or if they work less), that money stays within the company and is spent on other resources instead; so again is not a net loss.

Also, even if there are some negative effects, it has to be shown that they are greater than the increased tax intake; none of this has been shown thus far.

Most of high earners are working or in MNCs or in state owned companies (banks, ESB etc). While Irish companies won't be able easily transfer high pay jobs abroad, multinational s won't such problems. Could you remind us what high taxes achieved 30 years go?

Icepick

mollymosfet wrote: »

But they don't. Again, how do you explain the fact that taxes on the rich, in the US for example, are at an all time low, yet this has not lead to more jobs than were present in the 70s when there was a very high tax rate?

The high tax rates are a myth because nobody paid them.

Monty Burnz

Icepick wrote: »

The high tax rates are a myth because nobody paid them.

It was these tax rates that created the whole Ansbacher culture. I'm inclined to wonder whether fiddling your taxes is a 'gateway' white collar crime.

Chazz Michael Michaels

KyussBishop wrote: »

You've picked that point out of the wider context of my post really; a large percentage of managerial/executive positions can't just up and move out of the country over a short period of time, to similar jobs with the same income elsewhere.

Why though? What are you basing this on? Be honest.

KyussBishop

Count Dooku wrote: »

Most of high earners are working or in MNCs or in state owned companies (banks, ESB etc). While Irish companies won't be able easily transfer high pay jobs abroad, multinational s won't such problems. Could you remind us what high taxes achieved 30 years go?

Again, we are talking about income tax not corporate; multinationals aren't just going to up and move out of Ireland due to higher income tax, and there's little indication they'll up and move the jobs either (they still need managers after all, and why shut down a profitable enterprise in Ireland?).

If you make a claim saying otherwise, you need to back that up with something.

Chazz Michael Michaels wrote: »

KyussBishop wrote:

You've picked that point out of the wider context of my post really; a large percentage of managerial/executive positions can't just up and move out of the country over a short period of time, to similar jobs with the same income elsewhere.

Why though? What are you basing this on? Be honest.

Eh, you're making the claim they will move; what are you basing that on? (burden of proof here does lie with you)

Are you suggesting that entire companies will up and leave (or just shut down), or that companies dependent on their managers/execs will continue on without any managers/execs? (be honest now..)

Chazz Michael Michaels

KyussBishop wrote: »

Again, we are talking about income tax not corporate; multinationals aren't just going to up and move out of Ireland due to higher income tax, and there's little indication they'll up and move the jobs either (they still need managers after all, and why shut down a profitable enterprise in Ireland?).

If you make a claim saying otherwise, you need to back that up with something.


Eh, you're making the claim they will move; what are you basing that on? (burden of proof here does lie with you)

Are you suggesting that entire companies will up and leave (or just shut down), or that companies dependent on their managers/execs will continue on without any managers/execs? (be honest now..)

No it doesn't, since you were making the claim. The fact that you don't know that means that I am going to stop following this thread.

Waste of time.

Monty Burnz

KyussBishop wrote: »

Again, we are talking about income tax not corporate; multinationals aren't just going to up and move out of Ireland due to higher income tax

Simplistic thinking - many high-skilled jobs attract people from around the world. Think Google HQ, for example. If companies find they can't attract the right people due to reduced take-home pay, or they are forced to increase salaries to compensate for these increased taxes, they may well shut up shop and open in a more friendly business environment.

KyussBishop

Chazz Michael Michaels wrote: »

No it doesn't, since you were making the claim. The fact that you don't know that means that I am going to stop following this thread.

Waste of time.

I am saying that a significant percentage of high earners won't just up and leave, that there won't be enough jobs available to them to make it amenable for leaving, and their jobs can be refilled here (avoiding/ameliorating most potential negative effects of the increased taxes).

I've outlined the basis of why I think that, yet you argue they will leave; if you argue that, that requires taken on the burden of proof, it can't just be asserted.

Monty Burnz wrote: »

Simplistic thinking - many high-skilled jobs attract people from around the world. Think Google HQ, for example. If companies find they can't attract the right people due to reduced take-home pay, or they are forced to increase salaries to compensate for these increased taxes, they may well shut up shop and open in a more friendly business environment.

Tax is after salary, not something a business has to care about when taxation changes, particularly not high-earner tax, and a multinational is hardly going to leave Ireland and lose their corporation tax, to make up for a tax that only affects their workers (which will put the corporation significantly below previous earnings).

Monty Burnz

KyussBishop wrote: »

Tax is after salary, not something a business has to care about when taxation changes, particularly not high-earner tax, and a multinational is hardly going to leave Ireland and lose their corporation tax, to make up for a tax that only affects their workers (which will put the corporation significantly below previous earnings).

AAAAGHGHGHGH.

Unbelievable. I'll try to make this simple: please flag at which number your understanding of my point breaks down.

1. Many companies rely on highly skilled, mobile workers (Google was the example)
2. Highly skilled mobile workers go where the pay is good (they are mobile)
3. Highly skilled mobile workers will be hit by higher taxes
4. This makes their pay less good (take home pay goes down)
5. They may leave and/or become harder to recruit as pay is less good
6. Companies will have to pay extra to recruit these highly skilled mobile workers (to restore after-tax pay levels)
7. This means companies' cost bases go up
8. If their cost base goes up, they may decamp to more business friendly economies

Ok? Now at what point does this thesis break down?

Seriously, this isn't even proper economics, this is basic common sense.

Welease

KyussBishop wrote: »

Tax is after salary, not something a business has to care about when taxation changes, particularly not high-earner tax, and a multinational is hardly going to leave Ireland and lose their corporation tax, to make up for a tax that only affects their workers (which will put the corporation significantly below previous earnings).

I'm not going to divulge personal information, but that statement is not true as I have previously received considerable payments as part of schemes to cover personal income shortfalls by relocating to Ireland.
Corporations do take into account the effect of taxation/pension & other benefits for their staff, and in many cases will have to spend extra in order to attract staff to those locations.

The bulk of the corporations being mentioned here won't leave Ireland directly.. but as they are already based in multiple locations around the world, they simply don't expand operations in Ireland further because of the extra costs involved.

It's also worth noting, that many staff can and will be located close to where the senior management reside.. If you force those senior staff elsewhere, then there is a good chance that within 5 years the bulk of those staff will also have been moved to the new location (again something I have seen happen again and again in corporations).

hognef

Monty Burnz wrote: »

[...] you drive high earners out of the economy (a particular danger for us as people can work in so many other countries) [...]

Who are 'us' in the quoted sentence? The Irish? Can the Irish work in other countries more easily than other nationalities? Which nationalities are you comparing with?