Income Inequality

[Danoff]

This is so hot right now. Basically, rather than talking about how you're doing, let's talk about how your neighbor is doing relative to you - as if that makes a difference in your life. Equalizing income is the goal of socialist policies, it also goes under the name of redistribution of wealth.

These days, income inequality is referred to as a problem - not as a symptom of any other problem, but a problem in-and-of itself. A problem per se. Why?

What difference does it make to you what other people have? What difference does it make to you whether when the economy grows, some group benefits more than some other group. Economic growth by its very nature must be unevenly distributed in order to be healthy. That's the only way that markets gain any efficiencies, it's the only way that economies can stay vibrant - by restructuring according to the current economic environment. Imagine if Tesla was told that they cannot benefit more than Ford from the current push toward electric cars because it's not fair. Would that promote a restructured economy poised to tackle the challenges of the future? That's the very reason why economic growth cannot be redistributed.

But I'll ask again, what bearing does a CEO's salary have on your life? It doesn't come at your expense, not in any way. You might simplistically say that the company could have given the CEO's bonus to the employees. That's true, but they could also give you your other co-worker salaries. Or they could give you a bonus by cutting the pay of any other employee. Each person's pay is negotiated up-front and the deal they take is one that is dialed in based on the available workforce, the value created at the position, and the various incentives needed at each position. You can't just wave your hand and disturb it and expect things to work out. It's an organically defined system that would take an intense amount of research and manpower to try to engineer artificially, with little hope of a better outcome.

Your pay is based on the value you create, how replaceable you are, and what you could be paid elsewhere. That's it! It's not based on your neighbors' pay or the CEO's pay or what Elon Musk pulls in.

I say stop worrying about income inequality, it's a symptom of a healthy economy. I say income inequality is not worth discussing. So let's discuss it.

 

[CodeRedR51]

Money: one the the worst inventions ever.

 

[Danoff]

Money: one the the worst inventions ever.

Best invention ever. Do you know how inefficient it is to barter? Currency is created spontaneously.

Diablo II trading is a great example. Bartering was the only way to exchange anything in the game, eventually people realized that bartering was too inefficient because it was hard enough to find someone who had something rare, even harder to find someone who had that rare thing who also needed the rare thing you have. A currency was born (organically, without any orchestration) to facilitate, and suddenly a booming trade economy developed.

 

[CodeRedR51]

Best invention ever. Do you know how inefficient it is to barter? Currency is created spontaneously.

Diablo II trading is a great example. Bartering was the only way to exchange anything in the game, eventually people realized that bartering was too inefficient because it was hard enough to find someone who had something rare, even harder to find someone who had that rare thing who also needed the rare thing you have. A currency was born (organically, without any orchestration) to facilitate, and suddenly a booming trade economy developed.

I would go so far as to say it's the one thing that we use on a day to day basis that causes the most problems. All anything is anymore is money, money, money. Too much, too little. As they say, it is the root of all evil. (something from the bible I can actually agree with)

 

[Dotini]

Money: one the the worst inventions ever.

Money, kingship, patriarchy, metallurgy, agriculture and war all came together as a package.

 

[Danoff]

I would go so far as to say it's the one thing that we use on a day to day basis that causes the most problems. All anything is anymore is money, money, money. Too much, too little. As they say, it is the root of all evil. (something from the bible I can actually agree with)

Money can't cause problems. It's just an intermediate state of value. People cause problems, and they will regardless of whether they're bartering objects or currency.

 

[SlipZtrEm]

I'm in no way going to pretend this is a reflection on my generation as a whole, but one thing I've noticed about my group of friends (mid- to late-20's) is that this sort of thing doesn't bother them (nor I). The idea of making a ton of money doesn't really enter the equation: making enough to support a fairly reasonable desired lifestyle is, and doing something enjoyable is important.

A friend works in the prosthetics field, and while there's definitely money there, it's also something she's incredibly enthusiastic about. She loves her work. When she inevitably starts making substantially more money than me, I'm not going to complain. I'm going to be proud of a friend that put in the work to get where she is.

I knew the money in advertising and graphic design was concentrated at the top. I still pursued it. It's what I like doing, and even if my yearly take-home is less than what my dad managed at a steel mill a decade or two ago starting out, I'm fine with it. My lifestyle doesn't require much.

The average price of a detached house in Toronto is now in the seven digits. It's nuts. But you know what? I don't need a house, certainly not a detached one. With no plans for kids (just a dog, soon), my girlfriend and I are fine living in a condo, and sharing certain amenities. It feels very socially responsible. I look at it this way: why pay for all the extra space for things like a theatre room or a gym when I'd use them so infrequently? Not that I'm saying those that do have those things have made a wrong choice: they haven't. It's just not mine. And that's fine.

Not a surprise, I find the people most vocal about pay inequality and wealth redistribution are those in favour of a massive hike in minimum wage. A legislated pay raise apparently is better than putting in effort to improve.

One area I don't agree with, though, is CEO's taking increased bonuses when a company is losing money and/or cutting jobs. That probably makes me slightly hypocritical, but it's based on a personal experience.

 

[CodeRedR51]

People cause problems...

Can't say I disagree with you there.

 

[Danoff]

One area I don't agree with, though, is CEO's taking increased bonuses when a company is losing money and/or cutting jobs.

I think companies try to avoid that (not always successful) because it looks bad and hurts morale. It'll happen, no doubt, but it's not something they look to maintain or manufacture.

 

[JKgo]

...I disagree that money is a root of all evil - rather, it's our (well, some of us anyway) obsession with it instead.

 

[PureAlpha1206]

...I disagree that money is a root of all evil - rather, it's our (well, some of us anyway) obsession with it instead.

I agree.

Depending on what society or region you're a part of as well has a major impact on views on money. In the United States for example, money is flaunted everywhere you look and unless you have the most expensive everything, people feel like they aren't as good as the next man.

 

[SlipZtrEm]

I think companies try to avoid that (not always successful) because it looks bad and hurts morale. It'll happen, no doubt, but it's not something they look to maintain or manufacture.

Oh, agreed. I can even understand the reasoning that could be pushed forward for it (tough times ahead, a lot of work needed, an insurance policy of sorts, etc). But as you said, the hit to morale and publicity would be heavy, probably outweighing it.

I agree. Depending on what society or region you're a part of as well has a major impact on views on money. In the United States for example, money is flaunted everywhere you look and unless you have the most expensive everything, people feel like they aren't as good as the next man.

Which is silly, frankly. There will always be someone with more. Arguably, there should be. If folks measure themselves against others solely based on material possessions, that's not money's fault. Money is an inanimate object. It's the person's fault for placing it in such high importance.

Maybe it's the early-age focus on sharing that causes some to want it forced on others?

 

[BobK]

Money: one the the worst inventions ever.

What would you replace it with, then?

As they say, it is the root of all evil. (something from the bible I can actually agree with)

Actually, that's not what the Bible says; it's the love of money.

 

[Blitz24]

@Danoff, I will trade you two goats for your chocolate bar.

 

[CodeRedR51]

What would you replace it with, then?

Sand. We'll use sand now in exchange for items. Because why not.

Actually, that's not what the Bible says; it's the love of money.

Eh, same thing.

 

[Rallywagon]

My issue with the current wealth paradigm, at least in the US, is that it is despairing rigged for the top. I am not for a flat rate raise in the minimum wage, but I do think that it should at least follow exactly with the cost of living. Which it hasn't. It is my belief that a stronger lower and middle class leads to a strong economy. I am not concerned that this position in job x makes or than in job y. But I am concerned that the super wealthy are politically more represented, and with that comes the ability to sway politicians to create, as we see in the US, laws and regulations that benefit them, and allow them to pass off responsibilities, such as paying in on taxes, that the average citizen doesn't have access too. While I do not believe there should be a wealth redistribution, I do feel that wealthy people should not get special laws and privileges that the poor are not welcome to in regards to government, political and public rights. Cases where a kid can kill 5 people, and get probation because of "afluenza" should not be allowed, when someone who's parents make only 50k a year would be jailed, likely for life. Wealth should not equal special rights over another human.

 

[PureAlpha1206]

Which is silly, frankly. There will always be someone with more. Arguably, there should be. If folks measure themselves against others solely based on material possessions, that's not money's fault. Money is an inanimate object. It's the person's fault for placing it in such high importance.

Maybe it's the early-age focus on sharing that causes some to want it forced on others?

Perhaps. I also think that a big key to the way the U.S. is with money is because of how deceptively EXPENSIVE it is to truly have a decent living here. It almost forces people to place a different importance on money and it's quite sad.

 

[Danoff]

My issue with the current wealth paradigm, at least in the US, is that it is despairing rigged for the top. I am not for a flat rate raise in the minimum wage, but I do think that it should at least follow exactly with the cost of living. Which it hasn't. It is my belief that a stronger lower and middle class leads to a strong economy. I am not concerned that this position in job x makes or than in job y. But I am concerned that the super wealthy are politically more represented, and with that comes the ability to sway politicians to create, as we see in the US, laws and regulations that benefit them, and allow them to pass off responsibilities, such as paying in on taxes, that the average citizen doesn't have access too. While I do not believe there should be a wealth redistribution, I do feel that wealthy people should not get special laws and privileges that the poor are not welcome to in regards to government, political and public rights. Cases where a kid can kill 5 people, and get probation because of "afluenza" should not be allowed, when someone who's parents make only 50k a year would be jailed, likely for life. Wealth should not equal special rights over another human.

Yea, that's fine. I agree, wealth should not equal extra rights. Why is the solution to this (which is not income inequality, but crony capitalism) always more government though, when it is created by government? Laws that favor large institutions shouldn't be possible because we shouldn't have so many laws - and raising taxes (which is always the proposed solution) does exactly zero to solve that issue.

There is no way to avoid paying the taxes you owe, whether you're a wealthy individual or a wealthy company. There's no way around it. Usually the "loopholes" that get referred to are a way to avoid double taxation. The irish dutch sandwich whatever it's called is exactly that, avoiding double taxation.

 

[Rallywagon]

You will have to enlighten me as to how moving large volumes of corporate income into shell companies in countries with more favorable tax codes isn't tax evasion as opposed to double tax. They are called tax havens for a reason.

 

[Danoff]

You will have to enlighten me as to how moving large volumes of corporate income into shell companies in countries with more favorable tax codes isn't tax evasion as opposed to double tax. They are called tax havens for a reason.

If your company is based in the US you have to pay US tax on all US profits and all profits in other nations. For the profits in other nations, you have to pay tax to those nations as well (double taxation). By moving your headquarters out of the US to a country like Ireland, you avoid paying US tax on profits from sales outside the US, and only have to pay US tax on US sales.

 

[Blitz24]

I'm confused for the reason on why you have to pay US taxes on non-US sales.

 

[Danoff]

I'm confused for the reason on why you have to pay US taxes on non-US sales.

It's considered income to the US company. It's actually not all that surprising, though it is a bit surprising to me that other nations charge US companies for income gotten from sales in those countries, I don't think we do that to non-US companies. For example, I doubt that a Japanese company would have to pay income tax (and file with the US) for sales in the US, but I'm not a tax expert.

Edit:

Wait, I guess we do. Because Google pays tax on US sales even though they're an Irish company now.



https://www.irs.gov/Businesses/International-Businesses

Income from Abroad is Taxable
There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with bank accounts in Liechtenstein. The IRS' interest, however, extends beyond bank accounts in Liechtenstein to financial accounts anywhere in the world. The IRS reminds you to report your worldwide income on your U.S. tax return and lists the possible consequences of hiding income overseas.

 

[TenEightyOne]

I'm confused for the reason on why you have to pay US taxes on non-US sales.

Say you set up a company selling cardboard boxes. You'll pay sales tax on all final sales of those boxes in the territory where you sell them (so VAT in the UK). This is usually transferrable along to the final purchaser.

You'll also pay taxes on your company's value gains in the territory where they're based. Larger companies (like Google) get out of this by buying services off their own companies who are in tax-favourable territories thereby showing a break-even or loss in the more-taxable territory where the parent company is based.

 

[Danoff]

Say you set up a company selling cardboard boxes. You'll pay sales tax on all final sales of those boxes in the territory where you sell them (so VAT in the UK). This is usually transferrable along to the final purchaser.

You'll also pay taxes on your company's value gains in the territory where they're based. Larger companies (like Google) get out of this by buying services off their own companies who are in tax-favourable territories thereby showing a break-even or loss in the more-taxable territory where the parent company is based.

So I was responding to corporate taxes rather than VAT. Value-added tax definitely discourages manufacturing in the nation that has it. There's no difference between a large company owning a smaller company to provide manufacturing in a lower VAT country compared to a large company contracting a smaller company that isn't owned by them but was set up by them for the purpose of manufacturing in a lower VAT country.

 

[TenEightyOne]

So I was responding to corporate taxes rather than VAT. Value-added tax definitely discourages manufacturing in the nation that has it.

I guess it depends on how it works in a territory. In the UK if I made motors and blades for bathroom fans I wouldn't pay the VAT when I sold them to the company that made the final assembly - they would pay the VAT at the final point of sale. I'd still be taxed on my companyt's overall value/profit of course.

 

[A2K78]

First off just as the idea of a wage gap is nothing but a myth created by left-wing social justice warriors so is the idea of a income inequality.

Right now the Federal Reserve via its stupid monetary policy is creating one real type of inequality and thats by making the wealthy/well-connected richer while making the average american poorer. Shockly I find it strange that people like Elizabeth Warren who claim to despise the wealthy actually want enable them.

 

[squadops]

Shockly I find it strange that people like Elizabeth Warren who claim to despise the wealthy actually want enable them.

That shouldn't surprise you should it? I mean without knowing too much about her my take would be that she creates problems to solve and panders to voters on welfare.

 

[A2K78]

Elizabeth Warren the anti-cronyism/anti-bankster politician? More like the pro-cronyism/pro-bankster politician:

http://www.freedomworks.org/content/elizabeth-warren-totally-fine-being-kept-dark-federal-reserve

https://c4ss.org/content/21770

 

[squadops]

What branch of the government is the Federal Reserve again? lol

 

[TenEightyOne]

First off just as the idea of a wage gap is nothing but a myth created by left-wing social justice warriors so is the idea of a income inequality.

Really?

Right now the Federal Reserve via its stupid monetary policy is creating one real type of inequality and thats by making the wealthy/well-connected richer while making the average american poorer.

As if there were some kind of gap in wages, you mean?