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News & ArtsTuesday, January 24, 2012
2012 / Money The Protestant Wealth Ethic and the Spirit of American Capitalism
Posted by Goldy on Tue, Jan 24, 2012 at 9:16 AM
Romney has said he was unemployed. He's right. He actually does nothing to earn most of his income. He's just in possession of a giant pile of cash. He pays some people to do stuff with that giant pile of cash so it earns a rate of return. And because we are ruled by horrible people who think the lives of the 1% are more important than everyone else, the tax rate on any money that pile of cash earns is much lower than it is on the money earned by people who actually work.
There's a reason why they call it "unearned income." It's because this income isn't earned. And yet, over the past few decades, we've managed to flip our entire tax system on its head so as to favor this sort of income over that earned from doing actual work.
We simply don't value work in America anymore. And we sure as hell don't value workers. Just listen to the Republicans' vehement defense of so-called "job creators," inherent in which is an implied derision of those who merely perform those jobs. As if "giving" somebody a job was an act of charity in itself.
Raise the issue of income equality and Republicans scream "class warfare," and yes, in raising this issue I am advocating a bit of class warfare, if not a war of aggression. But the problem is deeper than that. As a nation, our values are fucked. Ours is a culture that celebrates speculation and derides hard work, that puts a dollar value on everything, and then sorts society from high to low. It is our Calvinist heritage taken to its pathological conclusion, in which the so-called "Protestant work ethic" no longer has anything to do with actual work.
3
The theory behind a lower tax rate on capital gains is that it encourages people to re-invest some of their money instead of just blowing it all. I think the capital gains tax should be a bit higher than it is, but I can see why investment income is treated differently. Money humping other money is where jobs come from after all.
4
"As a nation, our values are fucked."
well said, lad.
there are not many steps below recognizing homosexual pairings as "marriage" on the descent into chaos.
(but rest assured, Danny will find and advocate them all in due time....)
well said, lad.
there are not many steps below recognizing homosexual pairings as "marriage" on the descent into chaos.
(but rest assured, Danny will find and advocate them all in due time....)
5
when did america, meaning specifically the elected government and their appointees, ever truly value labor and not capital? the 30's? even then it was more interested in defusing socialism/labor than economic fairness.
there is no golden age. the US government has always existed to serve wealth.
there is no golden age. the US government has always existed to serve wealth.
7
@5, During the 1950s and 1960s, when our progressive tax code helped facilitate the greatest expansion of the middle class in the history of the world.
8
I don't mind reward for investment. What I mind is wealthy assume none of the risk or responsibilty that come with that reward. The risk for loses has been assumed by the 99%. The responsiblity has disappered as well. People with large amounts of money benefit from everything society offers from infrastrure to police, education and military defense, yet they pay less than their share for their use and benefit.
9
Yes, the tax rates are certainly fucked.
However. Last I checked, it still takes a shit ton of hard work to become rich if you weren't born that way. Even Mitt Romney had to work his ass off for that money. I'm sure he regularly did 80-90 hour weeks at Bain Capital during his stay there.
However. Last I checked, it still takes a shit ton of hard work to become rich if you weren't born that way. Even Mitt Romney had to work his ass off for that money. I'm sure he regularly did 80-90 hour weeks at Bain Capital during his stay there.
10
@7 Those progressive tax policies Goldy is talking about continued all through the '70s. However, the economic prosperity of the '50s and '60s did not. Big government isn't always the best thing for the middle class.
11
That's what the fucking bigot Seattleblues is clueless about...actually only ONE of the thing the asshole is clueless about.
12
@10: Big government isn't always the best thing for the middle class.
But placing a higher tax burden on the middle class is?
Come on - Romney's finances reveal the truth about "trickle down economics", namely that most of the hoard sits in an offshore account doing absolutely nothing for anyone besides the account holder. The amount of money that escapes those accounts isn't even a trickle.
If Romney wants to take his $100's of millions and actually do something with it that might help the economy and create jobs, then fine, give him a lower tax rate. But financial incentives for hoarding should be removed from our tax code.
But placing a higher tax burden on the middle class is?
Come on - Romney's finances reveal the truth about "trickle down economics", namely that most of the hoard sits in an offshore account doing absolutely nothing for anyone besides the account holder. The amount of money that escapes those accounts isn't even a trickle.
If Romney wants to take his $100's of millions and actually do something with it that might help the economy and create jobs, then fine, give him a lower tax rate. But financial incentives for hoarding should be removed from our tax code.
13
That unearned income also feeds pension funds, including for government workers, and equity for institutions like hospitals. That is as important as earned income in our society.
14
@3 I think this bit of Republican doctrine has been proven pretty clearly false by the current recession. A vibrant economy is where 'jobs come from'. Venture capitalists and corporations flush with cash does not necessarily result in a vibrant economy. Without demand there is no reason for them to create jobs with all of that money they have been encouraged to hoard (I mean invest) by low capital gains rates.
15
@12 You think money in the bank just sits there and doesn't do anything? Every 30 year mortgage and small business loan comes from money that other people have deposited in some financial institution or other. You think a guy like Steve Jobs could have gotten his company off the ground if there were no fat cats like Romney willing to invest in an idea that might make a lot of money?
16
@14: Yes, the key phrase is “do not necessarily create…” but that is what a lot of corporations flush with cash do. They create demand. There was no demand for the iPhone or iPad before Apple came along.
17
There are some middle-class retired folks who get a significant portion of their annual income from investment funds. Regardless of whether or not we want to allow different rates for earned and unearned income, we should consider the idea of making all tax rates progressive, or as they used to call it, graduated.
If my grandmother is getting $15,000 a year in dividends, and the rest of her income is, say, from social security, we might not want to tax that at the same rate as someone who's making 100 times that much.
As for the Republican argument that taxing dividends at a lower rate somehow creates jobs, I have one question: how? If I go out and buy a dividend-paying stock (which tend to be older, established companies), the money I pay for it doesn't go to the company, it just goes to another investor. And, if I'm not speculating in dividend stocks, but just holding them indefinitely for income, I'm not generating any new investment activity at all, as near as I can tell. How is that stimulative of jobs? Inquiring minds want to know.
How is Romney's (or anyone else's) offshore stashes of millions working to generate jobs in the U.S.? Offshore or onshore, accumulated wealth is largely static. It carries a very low multiple of economic activity. By contrast, salaries, pensions, social security, and yes, food stamps, generate several multiples of economic activity, generating new wealth along the way, finally doing what it always does, trickling up.
If my grandmother is getting $15,000 a year in dividends, and the rest of her income is, say, from social security, we might not want to tax that at the same rate as someone who's making 100 times that much.
As for the Republican argument that taxing dividends at a lower rate somehow creates jobs, I have one question: how? If I go out and buy a dividend-paying stock (which tend to be older, established companies), the money I pay for it doesn't go to the company, it just goes to another investor. And, if I'm not speculating in dividend stocks, but just holding them indefinitely for income, I'm not generating any new investment activity at all, as near as I can tell. How is that stimulative of jobs? Inquiring minds want to know.
How is Romney's (or anyone else's) offshore stashes of millions working to generate jobs in the U.S.? Offshore or onshore, accumulated wealth is largely static. It carries a very low multiple of economic activity. By contrast, salaries, pensions, social security, and yes, food stamps, generate several multiples of economic activity, generating new wealth along the way, finally doing what it always does, trickling up.
18
@14 I agree that adequate investment capital alone is not sufficient to build a healthy economy. It takes more than one ingredient to bake a cake.
19
@17 The capital gains tax is what you pay when you sell something for more than you paid for it. Dividends paid to shareholders are taxed differently.
20
Yes I believe the question is what is 'adequate' and I think the answer is that the current tax code encourages 'investment' far beyond what is adequate, hence the real estate bubble. A tax on transactions and a return to rational taxation of capital gains (and we have Newt to thank for the current rate by the way, and Clinton who rolled over for it) would go some ways toward discouraging the sort of financial shenanigans that got us where we are presently.
21
FYI, qualified dividends, which are pretty much all dividends on US stocks held for over 91 days, are taxed at the same preferential rate as long-term cap gains.
22
@17 has it right.
To all the wealth apologists, nobody is talking about confiscating the vast piles of money that the billionaires are hoarding/investing, just that the INCOME they get from those profits should be taxed somewhere closer to the rate at which people who get paychecks are taxed.
@9, Maybe, and only maybe, young Mittens put in some extra hours at the offices of Bain Capital while they were gutting companies for massive profits. But should maybe working an extra 25% more hours once in a while earn him 50,000% more than the average employee?
To all the wealth apologists, nobody is talking about confiscating the vast piles of money that the billionaires are hoarding/investing, just that the INCOME they get from those profits should be taxed somewhere closer to the rate at which people who get paychecks are taxed.
@9, Maybe, and only maybe, young Mittens put in some extra hours at the offices of Bain Capital while they were gutting companies for massive profits. But should maybe working an extra 25% more hours once in a while earn him 50,000% more than the average employee?
23
THE BAIN IDENTITY
He has a secret Swiss bank account (and dozens of Cayman Islands' accounts.
He appears to have amnesia and is never quite sure who he is.
He's being pursued by an evil fat man, codenamed The Newt!
THE BAIN IDENTITY
He's travelling around the country trying to find out who he is.
His former mission was the destruction of companies and jobs by loading them with endless debt!
THE BAIN IDENTITY
He may be identified by the following code phrases:
"I'm also unemployed."
"Corporations are people too, my friend."
His present mission: increase the national debt, destroy the nation's tax base while assassinating the American worker!
See THE BAIN IDENTITY, coming to a republicon primary near you.
[Legal disclaimer: Only those paying 13.9% in federal income taxes will be allowed in the theater --- all you little people paying 35% or greater --- KEEP OUT!]
Paid for by Super Pac Man
He has a secret Swiss bank account (and dozens of Cayman Islands' accounts.
He appears to have amnesia and is never quite sure who he is.
He's being pursued by an evil fat man, codenamed The Newt!
THE BAIN IDENTITY
He's travelling around the country trying to find out who he is.
His former mission was the destruction of companies and jobs by loading them with endless debt!
THE BAIN IDENTITY
He may be identified by the following code phrases:
"I'm also unemployed."
"Corporations are people too, my friend."
His present mission: increase the national debt, destroy the nation's tax base while assassinating the American worker!
See THE BAIN IDENTITY, coming to a republicon primary near you.
[Legal disclaimer: Only those paying 13.9% in federal income taxes will be allowed in the theater --- all you little people paying 35% or greater --- KEEP OUT!]
Paid for by Super Pac Man
24
THE BAIN IDENTITY
He has a secret Swiss bank account (and dozens of Cayman Islands' accounts).
He appears to have amnesia and is never quite sure who he is.
He's being pursued by an evil fat man, codenamed The Newt !
THE BAIN IDENTITY
He's travelling around the country trying to find out who he is.
His former mission was the destruction of companies and jobs by loading them with endless debt!
THE BAIN IDENTITY
He may be identified by the following code phrases:
"I'm also unemployed."
"Corporations are people too, my friend."
His present mission: increase the national debt, destroy the nation's tax base while assassinating the American worker!
See THE BAIN IDENTITY, coming to a republicon primary near you.
[Legal disclaimer: Only those paying 13.9% in federal income taxes will be allowed in the theater --- all you little people paying 35% or greater --- KEEP OUT!]
Paid for by Super Pac Man
He has a secret Swiss bank account (and dozens of Cayman Islands' accounts).
He appears to have amnesia and is never quite sure who he is.
He's being pursued by an evil fat man, codenamed The Newt !
THE BAIN IDENTITY
He's travelling around the country trying to find out who he is.
His former mission was the destruction of companies and jobs by loading them with endless debt!
THE BAIN IDENTITY
He may be identified by the following code phrases:
"I'm also unemployed."
"Corporations are people too, my friend."
His present mission: increase the national debt, destroy the nation's tax base while assassinating the American worker!
See THE BAIN IDENTITY, coming to a republicon primary near you.
[Legal disclaimer: Only those paying 13.9% in federal income taxes will be allowed in the theater --- all you little people paying 35% or greater --- KEEP OUT!]
Paid for by Super Pac Man
25
@22, SPG, 'fraid you are somewhat confused on many of those plutocrats:
the INCOME they get from those profits...
They are mostly debt-financed billionaires, which means they accumulated all that vast wealth from peddling securitized debt which, if you even vaguely comprehend the causes behind the recent econ meltdown, will realize that they privatized their profits, while offloading that debt they peddled onto the rest of us....
the INCOME they get from those profits...
They are mostly debt-financed billionaires, which means they accumulated all that vast wealth from peddling securitized debt which, if you even vaguely comprehend the causes behind the recent econ meltdown, will realize that they privatized their profits, while offloading that debt they peddled onto the rest of us....
26
@15: You think a guy like Steve Jobs could have gotten his company off the ground if there were no fat cats like Romney willing to invest in an idea that might make a lot of money?
Romney is neither a venture capitalist, nor does he make loans to small businesses and start-ups. So, yes, Jobs would have done (and did do) just fine without fat cats like him. Entrepreneurs depend on an entirely different breed of fat cat to get their companies off the ground.
Romney's money is probably sitting in hedge funds, mutual funds, stocks, and money markets. Those shares, purchased from other shareholders rather than directly from the originating companies, have little to do with funding new ideas. You could argue these types of investments do some good in that they create a market for entrepreneurs and early investors to cash out, but in my opinion, that doesn't warrant a huge tax break.
Romney is neither a venture capitalist, nor does he make loans to small businesses and start-ups. So, yes, Jobs would have done (and did do) just fine without fat cats like him. Entrepreneurs depend on an entirely different breed of fat cat to get their companies off the ground.
Romney's money is probably sitting in hedge funds, mutual funds, stocks, and money markets. Those shares, purchased from other shareholders rather than directly from the originating companies, have little to do with funding new ideas. You could argue these types of investments do some good in that they create a market for entrepreneurs and early investors to cash out, but in my opinion, that doesn't warrant a huge tax break.
27
Capital gains is currently taxed according to your effective tax rate up until it reaches 15 percent. 15 percent is currently the *maximum* amount capital gains and qualified dividends can be taxed. This is the reason why I don't understand why we can't just tax capital gains as regular income. That's *already happening* for the vast majority (quite possibly all) of middle class investors. I make about $32k a year, and my effective income/capital gains tax rate is only 8 percent.
I see. So why is it that investment gains themselves aren't good enough? The only people who gain from the current 15 percent cap are the filthy rich who don't have to work. Excepting a very few outliers, they aren't spending everything they own anyway.
And the low capital gains rate encourages big investors to repeatedly buy/sell and game the market instead of making long-term investments. Which do you think is more harmful to the economy?
If my grandmother is getting $15,000 a year in dividends, and the rest of her income is, say, from social security, we might not want to tax that at the same rate as someone who's making 100 times that much.
Capital gains is currently taxed according to your effective tax rate up until it reaches 15 percent. 15 percent is currently the *maximum* amount capital gains and qualified dividends can be taxed. This is the reason why I don't understand why we can't just tax capital gains as regular income. That's *already happening* for the vast majority (quite possibly all) of middle class investors. I make about $32k a year, and my effective income/capital gains tax rate is only 8 percent.
The theory behind a lower tax rate on capital gains is that it encourages people to re-invest some of their money instead of just blowing it all.
I see. So why is it that investment gains themselves aren't good enough? The only people who gain from the current 15 percent cap are the filthy rich who don't have to work. Excepting a very few outliers, they aren't spending everything they own anyway.
And the low capital gains rate encourages big investors to repeatedly buy/sell and game the market instead of making long-term investments. Which do you think is more harmful to the economy?
28
@25 You're conflating a couple of separate issues. Debt securitization isn't the source of most plutocrats' wealth. "Financial engineering" of this sort is a fairly new phenomenon and the beneficiaries were mostly public corporations whose directors and managers might have done very well, but not by billions.
Bear in mind, too, that the companies who securitized their debt usually turned right around and loaned out the same money again, so they could do it all again. They were making money on the production of the product, not pocketing the proceeds. It was a huge amount of economic activity, all wasted to build the biggest pyramid on the weakest foundation. When it fell over, it caused the current recession.
Bear in mind, too, that the companies who securitized their debt usually turned right around and loaned out the same money again, so they could do it all again. They were making money on the production of the product, not pocketing the proceeds. It was a huge amount of economic activity, all wasted to build the biggest pyramid on the weakest foundation. When it fell over, it caused the current recession.
29
The theory behind a lower tax rate on capital gains is that it encourages people to re-invest some of their money instead of just blowing it all.
This is flawed in so many ways I don't even know where to begin.
First, people as rich as Romney certainly are in no danger of "blowing it all".
Second, why is it in society's interest for the rich to invest rather than spend? Answer - it isn't. Our economy would get a huge boost if the wealthy started spending (i.e., "trickling") at a higher rate.
Third, raising the capital gains tax rates would have zero impact on investing. Where else will do you think wealthy people will park there money, in their mattresses?
This is flawed in so many ways I don't even know where to begin.
First, people as rich as Romney certainly are in no danger of "blowing it all".
Second, why is it in society's interest for the rich to invest rather than spend? Answer - it isn't. Our economy would get a huge boost if the wealthy started spending (i.e., "trickling") at a higher rate.
Third, raising the capital gains tax rates would have zero impact on investing. Where else will do you think wealthy people will park there money, in their mattresses?
30
@7: so now both liberals and conservatives want to return to the 50's & 60's? the left for tax rates & an expanding middle class, and the right for traditional nuclear families.
i just want to go back for the furniture.
i just want to go back for the furniture.
31
i'm surprised hardly anyone mentioned the red herring up @9. if hard work is the yardstick we want to use for determining who should have all the wealth, it's the lunch ladies and retail employees and coal miners and factory workers who should rule the world. the idea that romney deserves to be a bazillionaire because he worked hard for it is absurd. we all work hard.
32
@31, Yes, a lot of wealthy people work hard, if by "hard" you mean long, stressful hours (though I don't think that currently applies to Romney and the unearned income he enjoys off wealth managed by others). The question here is not whether coal miners should earn more than Romney, but whether they should be taxed at a higher nominal rate.
So really, it's your comment that is the red herring.
So really, it's your comment that is the red herring.
33
I am Catholic so I guess that means I am (or have permission to be) lazy, huh? Protestants are going to get heart attacks if they keep up with that ethic of theirs!
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