Progressive taxation is 'soft Marxism'

[JR8]

'Tax featured heavily in everybody’s political pronouncements last week. For all the mutual accusations and ensuing heated denials, there was very little attention paid to one of the most contentious premises of the debate. The purpose of taxation used to be to subsidise the cost of running a government. Remember that? At first, it was primarily a means of financing armies and the ambitions of kings but in advanced democracies it became a way of providing services that were understood to be in the interests of the people as a whole.

Even then, the basic principle remained: taxation existed in order to pay for things that were thought necessary or desirable. Back in the day, before tax became the chief instrument of social engineering, there was even a conception of something called a “balanced budget”

[Strong Eagle]

From the same train of thought that thinks "trickle down" economics works and that rich people create jobs.

[beppi]

Making the rich richer helps everybody to earn more - on average.

[Strong Eagle]

Making the rich richer helps everybody to earn more - on average.

Back that up... It's bullshit. If anything, the rich are greedy bastards... one need only look at the continuous attempts on the part of the rich to lower taxes, eliminate unions, eliminate minimum wage, cut safety nets, gut any kind of a public support project... all under the bankrupt theory that if you'll simply give them more money, all will be better.

Again, it's bullshit... the statistics prove it up. Making the rich richer simply means they have more of the wealth... the statistics don't lie... income and wealth inequality are growing... actual earning power of the middle class has decreased significantly over the last 40 years... middle income debt is way up... and there is a good reason for this.

[Brah]

Is there a verifiable example of where trickle-down has actually worked?

[JR8]

... actual earning power of the middle class has decreased significantly over the last 40 years... middle income debt is way up... and there is a good reason for this.

...because they're greedy, and seeking to live beyond their means? You know, condo, Cartier, Carrera 911, and holidaying in the Caribbean each year?

Beyond such discretionary spending, the biggest debt most will ever choose to take on is a mortgage. But home-ownership is a desire, not a necessity; making that discretionary too.

You think middle-class earning-power has decreased? I'd say my parents slotted into that category. They bought a plot of land, a field, ('up north'), and my father built their first home on it, a small bungalow/single storey home. Both of them had full-time jobs, one in sales, the other in a service industry. I recall being stunned when some years ago, when I was describing having to fix up a rental flat between tenants, replacing the fridge 'again', and my mother made some passing comment that in their first home, they couldn't even afford to buy a fridge for something like 5 years, because they were SO expensive back then. So if spending-power, and 'purchasing-power' are the same, I see only that's it's *hugely* increased. The only general exception to that might be re: the price of land. But that's down to population growth, i.e. basic 'supply and demand', rather than greed.

Is there a verifiable example of where trickle-down has actually worked?

Look at all the jobs created that relate to just Bill Gates. All the people around the world who are selling MS products, or servicing their products, or writing programmes for their products etc etc. An idea born at Harvard, and all that's later spawned from it, is probably responsible for now feeding/housing a statistically material proportion of the population of Bangalore/etc., in far better health and comfort than they would have if MS had never existed.

And observe Bill Gates, he, and all his legions of employees, and his companies, and people around the world working with his products must be generating almost incalculable sums of taxes. None of which would happen, but for Bill and his light-bulb moment.

And yet despite all of this, what does Bill and his wife decide to do? Set up their own philanthropic foundation. Note: They decide to do that, rather than simply write bigger voluntary cheques to the government. If I were them, I can think of a few reasons why I'd do that:

- Why give it to a government in 'additional voluntary tax', when due to the inherent inefficiency of government, that's going to see maybe 25% of it immediately p'd down the drain in admin/overheads.

- Why give it a government, who will politicise it, and only give it to projects that suit their own agenda and interests? (A parallel is donating to the likes of charity 'umbrellas' like United Way in the US, it's highly politicised).

- If money is power, why not retain that power, and beyond all the taxes you pay, and your company generates and pays worldwide, why not decide what kind of difference you might personally make. There are plenty of such private such foundations, the Gates have helped fund their own one to the tune of US$38Billion*, together with Warren Buffet? Is that sum good enough for any nay-sayers?

When I worked in private client banking I was in the 'Office of the CAO', and that gave me a very wide perspective over who our clients were, where their wealth came from, what their life-goals were, and how they and 'we' were going to set a lifetime course for them to achieve them. Most clients had some element of philanthropy within their plans. But also some had a wish to be philanthropic (other than via government) but simply didn't know how, how to target their giving in an informed and effective way.

Hence why you nowadays will find the likes of http://en.wikipedia.org/wiki/New_Philanthropy_Capital
'(NPC) is a charitable organisation based in London. It states its mission is to direct more funding to effective charities and help donors make more informed decisions on how to give ... NPC has been called "the equivalent of an equity-research firm for the philanthropic marketplace."

And indeed when the CAO, myself, and many others were booted out of our bank in the post 9-11 rout, he was one of the original group that founded the above organisation. He could have gone on in his pretty stellar career, I doubt by then he'd hit 50, but he probably thought enough is enough, and time for something different (indeed he told me as much).

People with the means generally do want to help others, just not via governments with their inefficient self-interested blunt-tool taxes. Just because this giving isn't externally enforced, published, or visible, doesn't detract from the reality of there being much more of it going on in the background than the man on the street might imagine.


* http://en.wikipedia.org/wiki/Gates_foundation
'In 2007, its founders were ranked as the second most generous philanthropists in America, and Warren Buffett the first'

[PNGMK]

I've been convinced for over a decade now (slow learner) that every form of government in Australia and the US and the UK (the three tax systems I know best apart from Singapore) have tax systems that exist to stop the middle class accumulating and building inter-generational wealth. Australia is the worst at it.... they bleed you dry through a thousand taxes and regulations designed to make sure you die almost penniless. I can go into the specifics but I'm sure you all know what it's like.

Until recently Singapore was almost the opposite. The recent introduction of ABSD, sales stamp duty and the far back introduction of GST where the first steps towards the same model of wealth stripping - I expect to see a CGT (capital gains tax), possibly a death or inheritance tax and definitely some changes to CPF (i.e. taxing CPF deposits) come in here as well.

[beppi]

Making the rich richer helps everybody to earn more - on average.

Back that up... It's bullshit. If anything, the rich are greedy bastards... one need only look at the continuous attempts on the part of the rich to lower taxes, eliminate unions, eliminate minimum wage, cut safety nets, gut any kind of a public support project... all under the bankrupt theory that if you'll simply give them more money, all will be better.

Again, it's bullshit... the statistics prove it up. Making the rich richer simply means they have more of the wealth... the statistics don't lie... income and wealth inequality are growing... actual earning power of the middle class has decreased significantly over the last 40 years... middle income debt is way up... and there is a good reason for this.

Haha, I got you there!
Here's my explanation for the mathematically less inclined:
If of a thousand people, 999 earn $1 and one guy earns $1000, the average income is slightly below $2 per head.
If now we help the rich guy to double his earnings to $2000 (and that of the others stays still), the average per head income has increased by 50% and is now at almost $3 per head. That is surely great news for the 999 people!
(Didn't we talk about a sarcasm tag before?)

[Strong Eagle]

Making the rich richer helps everybody to earn more - on average.

Back that up... It's bullshit. If anything, the rich are greedy bastards... one need only look at the continuous attempts on the part of the rich to lower taxes, eliminate unions, eliminate minimum wage, cut safety nets, gut any kind of a public support project... all under the bankrupt theory that if you'll simply give them more money, all will be better.

Again, it's bullshit... the statistics prove it up. Making the rich richer simply means they have more of the wealth... the statistics don't lie... income and wealth inequality are growing... actual earning power of the middle class has decreased significantly over the last 40 years... middle income debt is way up... and there is a good reason for this.

Haha, I got you there!
Here's my explanation for the mathematically less inclined:
If of a thousand people, 999 earn $1 and one guy earns $1000, the average income is slightly below $2 per head.
If now we help the rich guy to double his earnings to $2000 (and that of the others stays still), the average per head income has increased by 50% and is now at almost $3 per head. That is surely great news for the 999 people!
(Didn't we talk about a sarcasm tag before?)

Ya got me... my literalist wife must be rubbing off on me.

[PNGMK]

Singapore is the only country I've been in that offers a tax incentive to save (i.e. SRS). While Australia offers a lower tax on super annuation contributions it's still a bit rich to tax savings at 15% as they go in.

[stuckmojo]

Trickle down economics don't work as intended. It's more like a trickle-up effect.

I just watched a documentary called "Park Avenue: Money, Power and the American Dream", and although it's far too left-leaning for my taste, it does touch on important points

http://topdocumentaryfilms.com/park-ave ... can-dream/

The accumulation of wealth at the top has now gotten to a stage where there is no opportunity for those at the bottom of the pyramid, as they start off with a disadvantage too big to bridge.

The game is rigged.

That said, I don't question the charitable and philanthropic activities of the Bill Gates' of this world and very much agree that they are probable better arbiters of the way their donations should be spent.

[JR8]

Singapore is the only country I've been in that offers a tax incentive to save (i.e. SRS). While Australia offers a lower tax on super annuation contributions it's still a bit rich to tax savings at 15% as they go in.

UK has the ISA and TESSA. I was in a employee share scheme at work where 10% of my pre-tax salary went into company stock.

The US has Roth IRA's, and 401k's might also come into that sphere.

Canada has TFSA's.

The above is not exhaustive, but just some of the one's I've witnessed/heard of.

I think the common theme is that these are states that are incentivising citizens to create the own pension pot. Here the CPF serves that purpose but is not discretionary. Whether CPF has any kind of tax incentivisation I don't know, maybe the employer's contribution is in lieu of such a thing.

[JR8]

The accumulation of wealth at the top has now gotten to a stage where there is no opportunity for those at the bottom of the pyramid, as they start off with a disadvantage too big to bridge.

What on earth does that mean?

It sounds as if you are suggesting that there is a fixed supply of money/wealth in the world.

Rockerfeller's, Carnegie's etc, Gates, Bloomberg, Corzine, Jobs ... heaven's even King Solomon, he 'of the gold-mines', and Croesus .... which one of these do you think marked the end point for the wealth-stakes of 'little people'? Or are you going to try and pin it on that pleasant looking Mark Zuckerberg?

I've no idea how the achievement of wealth by some might 'disadvantage' those starting out: In fact isn't that precisely the reverse of 'The American Dream'*? So you're saying Zuckerberg killed the American Dream?



* 'The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work. In the definition of the American Dream by James Truslow Adams in 1931, "life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement" regardless of social class or circumstances of birth.
http://en.wikipedia.org/wiki/American_dream

[zzm9980]

Singapore is the only country I've been in that offers a tax incentive to save (i.e. SRS). While Australia offers a lower tax on super annuation contributions it's still a bit rich to tax savings at 15% as they go in.

UK has the ISA and TESSA. I was in a employee share scheme at work where 10% of my pre-tax salary went into company stock.

The US has Roth IRA's, and 401k's might also come into that sphere.

Canada has TFSA's.

The above is not exhaustive, but just some of the one's I've witnessed/heard of.

I think the common theme is that these are states that are incentivising citizens to create the own pension pot. Here the CPF serves that purpose but is not discretionary. Whether CPF has any kind of tax incentivisation I don't know, maybe the employer's contribution is in lieu of such a thing.

I think the main difference at least between 401k, Roth IRA and Singapore SRS is that the Singapore SRS is unlimited. The plans in the US both have caps on how much you can contribute per year to enjoy the tax incentive.

Still, the cap is probably high enough for most people who rely on them for a significant tax savings. Anyone who finds the caps restrictive likely has enough wealth to that they can take advantage of other avenues.

[JR8]

I hadn't even heard of this SRS until you mentioned it.

http://www.ecitizen.gov.sg/Topics/Pages ... cheme.aspx

But see the link, it suggests there are max/annual contribution limits. None the less, it still might be something of interest to others who are planning on sticking around, and feel the need to top-up any late-started CPF a/c.