Can you clarify what you mean by “dead”?
If the money isn’t put in a safe or under their mattress it does provide value to the economy, even if it is only put in a bank account.
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deleted. Just not worth it.
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I 100% agree with this. My personal theory is that is one of the MOST convincing arguments for limited government. If you have a government that is severely limited in scope and authority then buying them off becomes pointless. Rather than GE spending millions to buy tax breaks, they could make more stuff or pay dividends to investors. Imagine a tax code the size of a jehova’s witness pamphlet instead of 70,000 pages of case law and loopholes. I consider that type of activity “soft corruption”. Because while legal, it has no place in a free market (my opinion).
I 100% disagree with this. You are talking about the capital in capitalism. Every time you buy more shares in your 401k you are investing and seeking return. Investors seeking return are the only reason you have a phone/computer to type this on or a job to go to.
If you look at areas without capital markets you will see what I mean. Africa has more natural resources than any other continent, and plenty of people willing to work, yet the continent’s economies royally suck. There’s no safe way to provide debt and equity to business opportunities there because of rampant corruption and lack of trustworthy capital markets.
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[quote=“Basement_Gainz, post:123, topic:225475”]
Rather than GE spending millions to buy tax breaks, they could make more stuff or pay dividends to investors.[/quote]
The flip side is that if GE didn’t have to pay tens of millions in taxes they could make more stuff or pay dividends to their investors.
What tax breaks has GE bought anyway?
I always cringe when people type the word “loophole” when referring to tax code. Do you have an example?
This is one of those impossible pipe dreams that ignores how complex global business is. What in the tax code do you think should be scrapped?
On a side note, those Jehova’s witness pamphlets are just a taste of a 500 and some odd page book…
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Money ‘offshored’ for tax purposes.
Interesting interpretation of how the wealthy hold all of their money, but ok. Are you talking about a specific country when you mean “the wealthy”?
I took it as in general, but if we use that logic wouldn’t any investment in your non-native country also be “dead money”?
I agree. Less taxes = less control and more individual sovereignty.
Sorry for using the word loophole and triggering everyone. When @EyeDentist mentioned $ as speech he was referring to the Citizen’s United ruling that progressives hate. Even though Unions could give to PAC’s for years they take issue with businesses giving to PAC’s.
So GE makes wind turbine parts. GE gives to the PAC of a legislator that promotes subsidies and tax breaks for wind. That legislator gets eleceted and votes on that law. GE gets cash from the government and tax breaks. I argue that they bought those subsidies and tax breaks. This is entirely legal, and entirely seedy and disgusting (again my opinion). FYI all major coporations do this, whether they are the darlings of the left or the right.
My “pamphlet” comment was overly hyperbolic. But I do argue that a simplified tax code that doesn’t favor one industry over another or try to incentivise behaviors with the invisible foot of government would be more just. Every corporation may take these deductions and pays this rate etc… no favoritism and picking winners and losers.
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I was referring to offshoring money to tax havens such as the Cayman Islands.
But even setting that aside, when discussing the possible negative effects of wealth inequality, I assumed we were considering the relationship between wealth inequality in America and its negative effects in America. If a wealthy individual invests in a distant nation, it will likely be a long time before the rising tide over there lifts the boats over here (if it happens at all).
Good points. I was trying to steer the discussion toward establishing that harm was done to the lower/middle classes because of wealth inequality. So if the wealthy pull money that never belonged to me out of their accounts and invest it to earn returns overseas… How am I harmed? How does that make me worse off?
As a middle class guy I can invest in overseas companies as well, so I can share in that prosperity if I choose.
I suppose you could argue that had the money been invested here I may have somehow benefited more than if I had invested in overseas companies.
If the wealthy person broke laws to accomplish that then prosecute them. Even if I feel cartain tax laws are unjust, the rule of law is important. So your point is taken that the wealthy are more adept at using shell corps and sheltering income. But the argument that harms the lower classes is weak. You are far more adept at bodybuilding than me, does that harm me?
The solution again is a simpler tax code. Allow companies to repatriate foreign earnings for instance. And instead of allowing foreign earnings to be sheltered, allow them back in and tax them reasonably.
In a more globalized world I disagree, investments and companies are not always bound by borders… but I digress, I think we’re getting off topic.
I’m no expert on Cayman Island banking…but wouldn’t the banks in the Cayman Islands still be able to use that money for investments? A quick googling found swiss banks complied with US officials because of the threat of taking away access of the New York financial hub. So the offshored money is being used again to help the economy.
I’m not saying it is necessarily good practice, but the money does not go there and die. It is leveraged, like all banks do with deposited money, for other investments.
For one thing, opportunity cost accrues to you. If those monies were more evenly disbursed in the population, they would be more likely to remain in circulation and/or investments over here.
I suppose that is a function of whether one considers opportunity costs to be inconsequential.
There is also the relationship between wealth inequality and economic growth. I’m sure you’re aware of Pinketty’s book Capital, in which he argues cogently that we (the First World, the US in particular) are approaching the point at which wealth concentration could impede growth. This is of course a theory, not a fact. But to the extent he is on to something, the rise in wealth inequality is a harbinger of significant direct costs to the rest of us.
Perhaps. But the tax receipts are lost forever, and those monies must be made up for by the less-wealthy, ie, those of us who don’t have Cayman Island accounts. That’s a direct cost of wealth inequality on the rest of us.
I agree, but not having the tax revenue it legally should is vastly different than being “dead” or not useful to the economy.
I think its a fair point, although I didn’t like your phrasing. Do you know how significant of an issue offshoring is? I know it happens, but considering it’s “hidden” money I’m not sure if there is a good way to know how much it happens.
You could argue that money offshored or invested in countries that produce goods more cheaply than we can and that we buy from directly benefit the less wealthy.
I’m not sure how you arrive at this conclusion? The tax code is progressive and tax revenue isn’t finite. The less wealthy don’t pay more in tax dollars if the wealthy pay less. We just run a deficit if outflows are higher (which is as much an indictment of spending as anything else).
A significant portion of the “less-wealthy” pay zero in income tax anyway.
@Basement_Gainz good post. I think it’s a mistake to treat all industries as if they are the same, but I generally agree with what you wrote.
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Great video Alrightmiami.
Too bad more people have not seen it.
Whether or not the money is properly considered ‘dead,’ the (original) question was, how are the less-wealthy harmed by the extreme concentration of wealth among a relatively few individuals. Tax avoidance is one way.
The US Public Interest Research Group estimates that “the average American taxpayer in 2013 would have to shoulder an extra $1,259 in state and federal taxes to make up for the revenue lost due to the use of offshore tax havens by corporations and wealthy individuals.”
(Disclaimer: I don’t know anything about this group, including whether their analysis should be considered reliable. Caveat emptor.)
How?
Ok, forgetting that your original answer did not say that and implied that all money that is held by the wealthy is not contributing to the economy, I agree, tax avoidance is a way. However, in a progressive tax system, a similar argument could be made that MORE tax revenue is generated by having money created by people who are taxed at a higher percentage. Without evaluating specific numbers related to offshoring, how that money would be distributed, at what rates…etc I think it is hard to say the impact wealth inequality has on tax revenues.
Thanks for the link, definitely not insignificant but I did find it interesting that “Of that $184 billion, $110 billion is avoided specifically by corporations”.
There is no way 1 person is responsible for as much value as 11M, yet 1 person has as much as this number of person.
It’s no because you own something that you are the one that should be credited for what it does.
According to this if everyone would recognize me as the master of the planet I could justify myself into taking everything because owning the planet I would be the one responsible for creating all of the value.
You act like its all about 1 idea from 1 person while its a sum of ideas and actions in a given organisation.
I am really not interested in hearing about markets, savings etc or whatever childish logic people put forward instead of the real issue.
You high again jasmin?
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Must be the wet climate in Canada that causes their weed to grow mushrooms.
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