I really hope you're talking about taxes. That's where half of my salary is going to, not to some mythical "evil rich", but to pay for beurocracy and welfare programs.
My taxes are inflated so rich can pay a lower percentage than I do or even just skim off the government. Beyond that, my Rent and healthcare costs are ridiculously inflated, but you can find a lot of padding in other areas.
FYI even just at the federal level things are effed up. 33.9% of taxes collected are payroll taxes, but social security caps at ~120k. Hint it's just a tax, you can receive benifits without ever working and millions on disability are simply pulled off welfare rolls.
Volume and proportion are not the same thing. 50% of net is very easy when you have >10% of all wealth. No super rich individuals are taxed at 50% either of their net income either (if they are they are doing their taxes themselves and their lawyer is a fool), it is more common for ultra high wealth individuals to pay less than 10% of their net earnings.
I see your point, but don't forget that almost 50% of Americans don't pay any federal tax at all.[1] In fact some of them get EITC, so they are getting free money from the government on top of keeping all of their salary.
So my question still stands, what would be a fair breakdown of tax burden? Top 1% pay 100% of all income taxes? 90%?
I'm not trying to start an argument, I'm asking an honest question.
Unless we know what "fair" looks like, we don't know what needs to change.
I think asking what's "fair" is the wrong question. We should ask what is effective at creating the most utility. I believe the marginal utility of money is roughly logarithmic, and thus taking money from the rich and giving it to the poor creates a lot of utility. However, this must also be balanced with the economic incentives that (potential) inequality drives, which leads to a lot of utility creation.
The intuition I take out of this, is that letting people be billionaires is a complete waste of resources, because plenty of people would still aspire to wealth even if the richest person in the world had a fraction of that.
Sales tax is still tax. While they don't personally hand the money to the government it is still coming out of their money. I am not qualified to talk about how the US tax system fits together but I assume that 50% is paying some form of land tax through local government fees that are passed on as an increase in rent. I would also assume they drink or smoke (pretty hefty taxes there too). Consider also that fees are pretty much tax by any other name (they are government revenue), there is a rather large fee to cancel US citizenship.
If the top 1% has (for example) 90% of the income, then only paying 50% of the tax might be considered unfair.
The only number I could find is that the top 1% earns 22% of all AGI (adjusted gross income). This is income after all deductions, etc; the amount of income the tax rate is applied to.[1]
I'd be interested to see how much of all income is earned by the top 1%.
Income is income, Adjustment is where the lie comes from.
Sure, you can pretend it's meaningful number, but ex: charitable donations are not deductible from payroll taxes so they are clearly not going to reduce income. Or for a more obvious example, donate 1 million in appreciated and you get to deduct the full 1 million from income. (see if you can spot the problem with that.)
PS: Hypothetically, if they said AGI was income - 95% of income over 10 million per year would you still use it? After all that's just an adjustment.
I have no idea why you are calling it a lie. The AGI is clearly "adjusted" and the formula is public.
This might be more interesting...
In 2011, households in the top, middle, and bottom quintiles received 52, 14, and 5 percent of the nation's before-tax income, respectively; the shares of federal taxes paid by those households were 69, 9, and 1 percent.[1]
So the top quintile earns 52% of the before-tax income and payers 69% of all taxes. The bottom quintile earns 5% of all before-tax income and pays 1% of the taxes.
Market income
consists of labor income, business income, capital gains (profits realized from
the sale of assets), capital income excluding capita
l gains, income received in retirement for past
services, and other sources of income.
That 30 billion Gates donated would could for 0 on that scale making it BS. Use of a company jet for 1 year, 0.
PS: Of course it's also pretending the top 0.01% is the same as the top 1%.
If you exclude payroll taxes AND ALL OTHER TAXES. Then sure you can play with the numbers.
Reality is they are not paying 50% of income tax as social security is a federal tax on income. There are also plenty of regressive taxes. Pay for lunch that's taxed, pay for an accountant free. Guess who spends more on accountants?
Just because you call a tax an insurance fund or a pogostick, does not mean it's somehow not a tax. Government collects money from X, and hands it out to Y that's a tax.
I'm not from US, please stop assuming it about HN readers already.
Also, the percentage of income as basis for tax doesn't make any sense. I don't pay a percentage of income for broadband or Netflix or insurance, why should payment for government services be different?
A decent analogy for most governments is that they behave similarly to an insurance company with an army. You absolutely pay a percentage of the value of what you are insuring (here your life, wealth, earning potential) not a flat fee.
Because taxes aren't a personal payment for government services for yourself. You're paying into a shared fund on a capacity basis so that _everyone_ can have access to those services.
I know a guy in a project that generates a few millions per employee. His share is less than 10% in salary. In this case the discrepancy is easy to see, but the same is true in many other places where it's not so obvious.
But we can see it in the big picture, statistically half the money in the country goes to the 0.01% or something along those lines. All the gains from productivity went to the super-rich.
It doesn't make a lot of sense for you to keep your eyes fixed on taxes and welfare when there is a lot more money at stake. But it makes a lot of sense for the super-rich to ensure that you keep doing it.
I believe that an employer should make a substantial margin on an employee's labor. That provides a stable situation, covers for the employer's risk (if an employee's project/work fails to create value, they still get paid), and covers the overhead.
If you want full value (which might be zero or negative at times) for your labor, you should start your own thing and keep 100% of the value you create.
If my employer wasn't making at least 3x (and ideally more like 5x) the total cost they were spending on me, I'd start worrying about the stability and longevity of that relationship. (So far, very happily employed there almost 13 years and no end in sight.)
> I believe that an employer should make a substantial margin on an employee's labor. That provides a stable situation, covers for the employer's risk (if an employee's project/work fails to create value, they still get paid), and covers the overhead.
A workers' cooperative can do the same job. What justifies the privatization of the cooperative's profits to a single individual?
The profits go to the owner, whatever that is. The employees chose the company (and implicitly the ownership structure) when they began employment. It's not like citizenship where one is born into the situation and the contract is mythical; they had to sign one.
Do you not believe in the sanctity of property rights?
Where in sokoloff's answer did they specify that the margin went to an individual? I interpret "employer" to mean the employing company, composed of many individuals who, like sokoloff, also want stability.
I'll address the ownership angle as that's simple (at least in my mind): because someone (or several someones) put up the capital to start the business. They own it.
If they want to exchange some ownership for some cash, they can sell all or part of their ownership stake. If they want to exchange some ownership for labor or other services, they can create a stock or option grant program, typically with vesting. There doesn't seem to be anything unnatural to me about someone putting capital at risk to form a business owning the resulting business. No different than putting my capital at risk/committed to buy a house or a car. I pay for them and I own them.
If you want to avoid that situation that you find exploitive, you are free to start your own (individually or as a collective) and keep/share as you judge best.
You could make a similar argument for taxes. The state provides a stable environment, covers risk, and handles overhead. Yet people (in some countries, at least) are significantly more accepting of corporations taking many times the value they are creating in profit versus the state taking a proportion of their earnings in taxes.
Only up to a point; unless you are rich you are in effect required to take a job in most countries, and there is often not any choice available in employment. Compare that to the state where the relationship is not optional but you do get a vote in how it is run. Plus you potentially have the option of moving to another country.
You have a choice of many different employers and you have the choice to form your own venture (be it software development, business consulting, running a restaurant, doing landscaping, driving Uber, or even walking dogs and doing general errands).
I'm not aware of countries where your choice is "do this one specific job for this one specific employer or else starve".
You may in theory have a choice of employers but in practice you may not. I'm an experienced programmer and have a fairly wide choice of jobs I might take up but in the past I have literally had to take whatever job was available.
Starting your own venture may be possible but is dependent on aptitude, access to capital and the state of the economy (it's unlikely that we could all start our own businesses for example; the market wouldn't support it).
The recent rise in economic migrants suggest that it many cases it really is easier to switch countries than switch jobs in one's own country.
Spend some time tracking who gets what from the government, directly through tax subsidies, and indirectly from fed zirp policies, its total kleptocracry.
Special laws, ie you're now mandated to purchase healthcare, special barriers to entry, copyright give aways etc etc, the rich get super rich through government corruption.
You see the part of your salary that goes to taxes; less visible is the share of the economic gain produced by your work that doesn't make it into your salary I the first place.
My salary is negotiated on open, highly effective market. Share of my work that goes to the company shareholders represents their investment. If the company fails, I don't risk anything, but they will lose the money they put into the company in the first place. Naturally, if the company succeeds, they have to get capital gains on that investment. The fact that I will be able to get any salary from this company at all will be a direct consequence of a risk that they took upon themselves, not me.
Why do you assume that an economic gain would automatically be added to someone's salary? Salary is based on supply and demand, not the value you create.
That's why an assembly worker building a $20K Ford makes about the same as one building a $100K SUV.
I'm pretty sure that what I said not only does not assume that economic gains would automatically be reflected in salary, but indeed that it's entire premise is that economic gains from work are often not, automatically or otherwise, reflected in salary but instead captured by capital.
Ford makes $776,348 per employee. I will take a stab in the dark and say that the assembly worker is making substantially less than that regardless of whether it is $20k or $100k car while still producing far more value than the cost of either vehicle.
As already mentioned, that is revenue, not profit. If you take $1000 worth of material (costs) and make something you can sell for $2000 (price), then you've created $1000 in value, not $2000.
My point is that the value created by a worker doesn't define the salary (although it creates a cap, you can pay more than value created).
A great example are lawyers. With the glut of lawyers out there, a lot of lawyers are getting paid less than $50K/yr. I would argue the work they do is worth more than that, but since there are so many lawyers chasing so many jobs, salaries fall.
That is revenue. Revenue per employee can be a useful measure, but usually it's better to look at net income since industries have varying levels of expenses. Ford's net income in 2015 was about $40,000 per employee. That's healthy, but low enough, when you consider that multiple employees and systems are involved in the design, production and sale of vehicles, that the less profitable vehicle lines need to be cost controlled to stay in production.
You realize that if the rich paid the same percentage of their income that you pay, you'd pay drastically less taxes? And that a lot of your taxes go to the evil rich?
If you were robbing people and paying no taxes I'd want the government to do something about it. Likewise when the rich rob everyone and pay no taxes I want the government to do something about it.
