this has to be the stupidest graphic i have ever seen
not only does it assign unrealistic income values, it uses different income brackets AND different deduction possibilities for each scenario. I walk away from this graph with absolutely no knowledge.
The combined income of my apt doesn't even make $180,000/yr and we live in one of the top 5 richest counties in the US! It's not about perspective. Those number aren't relative. They're rich by any measure, especially if you're retired and don't have mortage/loan obligations.
That's a vary unusual view of the middle class as by definition of Median and your bands more than half of all households below the middle class. It's true that the original definitions of middle class was not peasant and not aristocracy but the US does not have peasants or aristocracy so the definitions changed with the times.
There is no one classification to rule them all -- I'd just like to point out that comparing "American" anything to NYC specifically is a waste of time. To anyone that lives in NYC and perhaps a few other cities in the country, you'd know generalized statistics for the country are way off the real world situation found in the city.
Generalized statistics are quite reasonably applied to NYC. The NYC average wage (37k) is only about 10k more than the national median, 28k.
Yes, the wealthiest people in the world live in NYC, but the average New Yorker is not substantially wealthier than the average American, by any measure. He is, in fact, poorer, thanks to cost of living. There are census tracts in NYC where the median income is under $10,000.
According to the BLS[1], the average wage (based upon weekly pay in 2012 Q1) in Manhattan is $128k and the average wage in other boroughs is around $41k.
2. Manhattan (County of New York) is the richest county in NY by per capita income (as opposed to resident income: Manhattan is home to hundreds of thousands of urban poor)
3. the arithmetic average wage is not the same as the median personal income. The average wage in America is around $41k. The median wage is about 28k.
Median family income is extremely deceptive in NYC, because adults typically cannot afford to live without roommates. Median household income is $48,631. The arithmetic average wage is around 37k.
By any measurement, 180k is a hell of a lot of money for two retirees living alone. That's over double the average wages of two working adults. That is quite wealthy, even in NYC. (I just looked it up: median income for a black man over 65 in New York is $14,400 a year. For his female companion, $9,966. These people are earning roughly 8x the median for their demographic.)
Edit: As a local, I'm really, really sick of hearing that the "middle class" in NYC includes 200k households. Because it doesn't. HN posters, such as myself, are privileged individuals. We forget about the veritable sea of average workers underneath us on the income scale.
> We forget about the veritable sea of average workers underneath us on the income scale.
If you ever need a reminder, hang around a McDonald's in the early morning and watch the number and kind of people that are obviously eating it every day.
That was one of the most shocking things about NYC for me, coming from another country.
I wouldn't jump to conclusions that it is due to income. There are many other reasons why that might be the case, such as convenience. It's the Starbucks, Duane Reade, Chase, etc. model of retail -- put one every 2 blocks, sometimes on the same block across the street -- because people are lazy and will go somewhere convenient, even if it isn't in their best interests. If people were truly concerned about budget, they would cook at home and not pay McDonalds to cook their food. (http://www.thesimpledollar.com/2007/09/12/does-cooking-at-ho...)
Your increase due to what? Marginal income tax rates only increased for taxable income above $400k single ($450k married). Perhaps you are referring to the Payroll Tax increase, which hits the first $113K of income by 2%? (but then your increase would be the same as someone making $113k payroll income)
Tax cuts with an end date really don't seem like "tax hikes" to me. Yes, taxes are going to go back up, but the rates were set up with an end date, people know their taxes are likely to go back up.
Further, griping about the temporary 2% payroll tax expiring? It was done as an aid to a sluggish economy. Things aren't rosy overall, but they are improving a bit.
Based on your comment, I can only surmise that your "nowhere near $230k" remark means you are really well past that mark in income, or your mortgage payment is indeed quite low.
If you were affected by the highest possible increase in payroll tax ie 2% of the first 113k of payroll income, that would be $2260 per year, or $188.33 per month.
He meant 'a mortgage payment' .. meaning one month's mortgage payment. If not, then yes $188.33 is highly unlikely to be a monthly mortgage payment even for the affordable Austin, TX area.
I read this as total yearly tax increase being greater than one month's mortgage payment. "A payment" is usually one month of your mortgage (maybe plus taxes & insurance depending on your situation), isn't it?
The median household income in the US is something like $45K/year. The people in these examples are paying more than that in taxes every year, except for the retired couple struggling along on $180K.
I don't like that the headline has changed. Sure, it may have been editorialized, but if the editorialized headline was inappropriate, the whole submission should have been removed. Without the original headline, this post makes no sense.
If you're confused, the original headline was along the lines of "WSJ - Out of Touch?". The implication was that with the WSJ saying their idea of a retired person makes $180,000, their single parent of two makes $260,000, etc, the WSJ is out of touch with the common person's actual salary, especially during a recession.
We should add for those still wondering that the point of the post was really about the graphic that accompanies the article. You can find it by clicking on the cartoon to the left of the article (for the people whose browsers don't open the graphic automatically).
Well especially during a recession there are some Americans who could be making this much, or even used to make this much, but are un- or under-employed. Some may have retired with that much, but the falling stock market decimated their retirement.
And this is pretty much why I have switched from the WSJ to Bloomberg Business Week. It's Wall Street news for people who can't help but laugh at info-graphics with single moms earning $260k standing with their sad looking young children.
Also: I'm trying to figure out what's interactive about this "interactive graphic."
Also: It's amusing to play "guess the profession." Mine: the single mom and the single women are lawyers--senior associates but not partners. The single mom is divorced. In the family of six, the dad is an MD at a bank, but in one of the less cash-cow divisions. The wife is a college educated stay at home mom. The retired couple: the man is a retired NYPD deputy chief, and the woman is a retired teacher. The single woman lives in Manhattan, the single mom lives in a gentrified part of Brooklyn, the retired couple has a nice place in one of the gentrified parts of Harlem, and the family of four lives in Greenwich and the dad commutes down every morning.
Hah, I felt exactly the same way. How ever will the parents with 4 kids making $650k per year ever be able to survive without that $21k taken in taxes? Will they not be able to remodel that master bath at their 2nd beach home in Nantucket for another month? Will they have to slum it in the penthouse of the 4-star hotel in Cancun for Thanksgiving this year?
If you read the entire article you'll notice that this isn't the only "interactive graphic". Go down further to where it says "How the Tax Law Might Affect You". It pretty much covers all the bases.
This submission seems to be deliberately misleading. The article itself is far less insulting.
I'm sure that the kids are sad because their 1 parent is always off doing a more-than-fulltime job so they are always left at daycare where the creepy dad figure tries to teach them about jesus christ and tells them that if they play video games and listen to rock music they will be going to hell.
That is one most biased examples of reporting I have seen. Blatantly trying to manipulate peoples perceptions by leaving out the cases that will apply to the vast majority of people.
I'm really disappointed that the WSJ would lower themselves to that.
I'm a little surprised at the comments here on HN. I expected a much less sarcastic and "chip on the shoulder" attitude.
No one is saying that rich people can't afford to pay more taxes. It's not a question of they're going to starve and be out on the streets. The real issue is, approaching 50% taxes (EDIT: state + federal + medicare/medicaid + social security) is in conflict with the American concept of capitalism. The fact of the matter is, there is nothing proportionate about how much you benefit to how much you pay. The more you make, the more you pay to Uncle Sam both as a proportion of your income and as an actual number.
It is not a question of how much can you "afford to give" while remaining well off - I think it's a much more core issue at hand: is someone who makes (to bring this closer to home) $250k as a single individual, perhaps doing freelance software development and consulting, culpable to the tune of $80k out of their salary to help everyone else out?
Yes, it's a moral question. It's a philosophical question. And it's also a legal question: even if they are morally obligated - is it the government's job to enforce that?
Many people I know in that bracket actually give that much or more in very directed donations to non-profit entities (meaning they're no longer in that bracket thanks to tax deductions) because they feel they a) distrust the government to wisely spend their money to solve the problems, b) they should have a say in where their money goes, and c) it is not the government's job to take and redistribute wealth.
As for those that don't make such donations - can you absolutely say they must?
Also remember, these tax hikes are really not targeted at the so-called "filthy rich" that have been the focus of all the ire and angst in recent years by groups such as "Occupy Wall Street" - they just affect the upper middle class. Capital gains taxes are ridiculously lower than income taxes. Your wall street bankers and trust fund babies don't have "income" in the traditional sense. You're not taking this money from people that have invested money and are making more money explicitly not doing anything, these taxes are on the upper class of working citizens.
The biggest targets are small business owners, startups, lawyers, doctors, engineers, and others of their kind. Can you say for an absolute fact that they owe ~40% of their annual income to the government? I can tell you for a fact that the difference between a freelancer in high demand earning $250k/year vs $100k/year is a matter of the hours you work. If you kill yourself to work around the clock to make more money.... you are rewarded with higher taxes. It's not a different class of people that are being taxed higher - it's just people that have worked harder for longer and are, as a result, more well off. This is literally the anti-thesis of core American values: work harder and be, quite frankly, punished for it.
(I'm not saying everyone can automatically make $250k/year by working harder and that if you don't make that much then you are lazy - I'm saying the difference between $50k/year and $350k/year is a matter is a matter of quantity, not type; whereas the difference between $250k/year and $200MM/year is a different beast.)
At the end of the day, people need to decide if you are paying for services provided by the government or if we are asking the upper middle class to subsidize the rest of the country. There's nothing inherently better or worse about one or the other - it's a matter of philosophy. At the end of the day, are our core principles capitalistic or socialistic? There's something to be said for both, and I'm not saying it's wrong to have socialistic taxes such as those that were just recently repealed in France - but if that's the case, we need to own up and admit that is what we want.
It is an exercise in futility to ask to levy taxes on the middle class and above to subsidize the cost of a welfare nation while pretending that is not the case. If that's ...
You're projecting. Most of the comments are about how ridiculous the infographic is with single moms making 250k and looking sad. It's more of a laugh at the elites who read WSJ and think these kind of incomes are NORMAL than about the tax implications.
"Approaching 50%" sounds very misleading to me. The top percentage on that graphic is 30%, for 196.3/650. And before the increases, the top percentage was 27%, for 70.4/260.
From that perspective, those changes look like much ado about nothing to me. 30% is a long, long way from 50%.
Edit: it's also, other than for the retirees, not very graduated at all. 28% for the 230K earner, 30% for the 650K earners. Personally I would like to see a higher marginal rate bracket, as well as a raise on capital gains, which you mention in your edit, if we're trying to balance the budget. (Side question: are capital gains taxes done progressively at all? Would it make sense to have marginal rates and tax smaller capital gains much less than large ones? Why or why not?)
(Further edit on that note: my personal crazy idea of the moment is to have dramatically higher rates on, say, 500K+ marginal income, but not matchingly high rates on capital gains of that same amount; my idea being to try to encourage higher levels of compensation to be given in forms like equity that would require long-term business success, not just short term profits, to pay off. But I'm not tax lawyer or accountant or whatever, so I'm sure there are problems with that idea...)
Including state and local taxes opens up a huge additional can of worms since that varies so much; if you want to do it really thoroughly, you have to start looking into how common renting vs buying is and how property taxes vary.
You could also throw sales taxes in. This would show how its impact is felt more at certain income levels.
They also don't include nearly the amount of deductions and exemptions that Americans actually use.
For the most recent year of data, the average American paid 7.2% of income in Federal income tax. Even the Top 1% of income earners only paid 21% and the next 4% paid 14.6% [1]
There are people who pay 40%+, however they're a relatively small bunch. Basically singles making $250-$400k in ordinary income. Basically, no quintile, nor the top 5% or 1% sub-groups pay more than about 30% on average: http://www.ctj.org/pdf/taxday2011.pdf
> The fact of the matter is, there is nothing proportionate about how much you benefit to how much you pay.
I strongly disagree. I think how much money you make is a very good measure of how much you benefit from the existence of government and civilized society.
Take the family of four. The father sends his kids to public school in Connecticut. But he works at an investment bank. He draws his salary from the economic activities of companies he provides M&A advice to. Those companies benefit from having a work force educated at the public expense. Does the father just benefit from the education his own kids receive, or does he benefit from the educations of the workers at each of his clients?
> The biggest targets are small business owners, startups, lawyers, doctors, engineers, and others of their kind. Can you say for an absolute fact that they owe ~40% of their annual income to the government? I can tell you for a fact that the difference between a freelancer in high demand earning $250k/year vs $100k/year is a matter of the hours you work. If you kill yourself to work around the clock to make more money.... you are rewarded with higher taxes.
No, you are rewarded with more money. If I work more and make $250k instead of $100k, I still have $80-90k extra in my pocket. As someone taxed over 40%, I don't think "man, I'm sick of carrying the weight for all these other people." I think: "all these other people ultimately generate the wealth that allows me to live the way I do." There is a point at which I'd be upset and contemplate moving, but we're not near that point.
The fact is that anywhere else I'd want to live has higher taxes. That's the relevant criterion at the end of the day. My dad, an extremely ambitious man, left Bangladesh (taxes around 8% of GDP) for the U.S. (taxes around 26% of GDP) completely unconcerned about the increased taxes. Do I ever think: "man, it'd be great to go back to Bangladesh and pay low taxes!" Of course not. When I tell my wife "hey honey we should move there" it's never to a low tax place like Botswana. It's France, Germany, Canada, etc. Hell, I could save a lot of money and move to Texas but I'm not willing to do that either. Taxes pay for a pleasant civilized society.
Indeed, it's the doctors, lawyers, engineers, etc, who benefit from that the most. We don't have "fuck you" money. We can't go to a low-tax jurisdiction in the middle east and set up a luxurious bubble for ourselves amid the squalor. We live in cities, use public transit, and have to interact with everyone else. We get to live very well in pleasant surroundings as a result of these taxes.
> I think how much money you make is a very good measure of how much you benefit from the existence of government and civilized society.
Please explain how a web designer making $250k a year freelancing out of an apartment in NYC is "benefiting" from the government more than a $30k/year individual on welfare.
How much do web designers make in Somalia? How much do construction workers make in Somalia? Compute the incremental benefit for each of those people in moving from Somalia to NYC and you have your answer.
Seriously? Talk about a strawman. No one is comparing how much taxes are in Somalia to NYC. Tell me how much more a web designer in NYC benefits from the government than another random person in NYC taking welfare.
You asked: "Please explain how a web designer making $250k a year freelancing out of an apartment in NYC is "benefiting" from the government more than a $30k/year individual on welfare."
How do you measure how much someone benefits from the government? Your comment suggests you're looking only at the value of services directly received, but that's not the proper way of computing the total benefit. You have to do a marginal analysis, looking at the incremental benefit as you go from "no government" to "government."
The economic insight here is that your benefit from the existence of government is not a fixed amount valued by the services you utilize directly. Rather, it's a percentage of the incremental gain in wealth that is enabled by the existence of government. And because societies without government basically cannot create more than subsistence-level wealth, that increment is a big number.
You have to do a marginal analysis, looking at the incremental benefit as you go from "no government" to "government."
That's not a marginal analysis. A marginal analysis would be going from "slightly lower taxes, slightly less government" to "slightly higher taxes, slightly more government".
You seem to want to debate (all by yourself) primitive tribal society vs civilization.
The question was: "how does someone making $250k benefit more from government than someone making $30k living on welfare?" My point is that how you calculate how much you benefit from "government" (not bigger or smaller government, just government in general) is not just a function of direct services received, but the incremental gain in wealth going from no government to the government you have. Ergo, the fact that the guy making $250k in NYC would lose a lot more than the guy making $30k if there was no "government" he benefits more from the existence of "government."
This is not an argument about the desirability or optimality of bigger or smaller government or higher or lower taxes. That should be an empirical fight.
Mortgage interest deduction, corporate subsidies and tax breaks to large companies that employ that web designer, governmental subsidized infrastructure
Also, the kind of society, economy and marketplaces created by the existence of such a stable government (and society) that creates the demand and the need for the existence of web properties that would require a web designer to create them. I mean, come on at some point there was 'webvan' that delivered groceries to your doorstep. In somalia, you walk miles to get some or you grow your own ! And that is just one example. Even in developing countries like India, ecommerce is just picking up now a days. Few years back such 'conveniences' were non-existent, meaning no need for 'web-designers' in such a society.
It feels like you could use the exact same argument to justify a 99% income tax. If government passed a 99% income tax, would you support it with this argument, or would a different argument come into play to say it's too much?
Yes you could, if that were the only operative consideration. The U.S.A. is a club and the people are free to charge whatever fee they wish for membership. In the absence of belonging to any such club, we'd just be subsistence farmers so any fee between that and what you can make as a member of the club is in my opinion fair in that sense.
Of course that's not the only operative consideration. There are other clubs that charge different fees, which might be less. You can always move to Club Canada or Club Germany, (or wherever). In a globalized society the "fair" tax rates are limited not by some abstract ethical consideration, but by competition between countries to offer the most pleasant societies for the lowest tax burdens.
Comparing any Western economy to a warn-torn and completely corrupt country that just happens to not have an income tax is a bit absurd isn't it. You're implying that if only they paid a high income tax in Somalia all all their problems would be solved. To say nothing of the fact that there's a reason for it. The country basically has a barter economy making tax collection impossible. It does however have an official tax policy:
From http://www.nationsencyclopedia.com/Africa/Somalia.html:
In 1986, tax rates on wages and salaries ranged from 0% to 18.9%. Income from trade and the professions was taxed at rates of up to 35%. Indirect taxes are imposed on imports, exports, mortgages, vehicle registration, sugar, alcohol, and a number of other goods and services. In 2003, Somolia's sales tax rate was 10%.
And you're ignoring the fact that many countries in the world do not charge income tax are quite nice places to live. Bermuda, Monaco, Kuwait and UAE to name a few.
> And you're ignoring the fact that many countries in the world do not charge income tax are quite nice places to live. Bermuda, Monaco, Kuwait and UAE to name a few.
I would strongly disagree that anywhere in the Middle East is a nice place to live (besides Israel), but in any case you're using four very bad examples. None of those places are sustainable societies on their own. Bermuda and Monaco are rent seekers--they are so pleasant because they are tax havens for wealth created elsewhere. Kuwait and UAE don't create any wealth to speak of either--their "GDP" is really just consumption of capital that happened to be under their ground. See: http://www.columbia.edu/~mh2245/papers1/erc01.pdf.
> I would strongly disagree that anywhere in the Middle East is a nice place to live (besides Israel)
Precisely! Israel has notoriously high taxes: if you're going to make an argument about how high taxes and socialism (literal socialism, as in state-owned companies) are a bad idea, this is one country where you can confidently do this. I (and many Israelis) would agree that Israel could probably benefit from lower taxes, more privatization, and less regulation. Ironically this is why, despite being Jewish and strongly "pro-Israeli", I oppose foreign aid to Israel: it helps prop up an inefficient system in Israel and serves as corporate welfare for US arms manufacturers (I think some of it has explicit provisions that it must be spent with, e.g., Colt or Lockheed-Martin as opposed to IMI or IAI).
Yet, go up to any Ayn Rand fanatic and ask them if they'd prefer to live in UAE/Qatar/Bahrain or in Israel. They'll say they'd prefer Israel as it's a socially liberal, democratic state, that recognized basic individual rights.
Democracy and individual rights require an entire infrastructure of impartial judiciary, tightly scrutinized police, a citizen's army that can defend the borders against immense odds. A socially liberal populace is the end-result of education. None of those things are free.
There are indeed countries that are pleasant on the surface (i.e., are not Somalia), and have very low tax rates without relying on natural resources. Almost always they either a) have high amount of "hidden" inequality (some states in the US, some countries in Asia and Eastern Europe) b) are police states (Singapore) c) are both (Middle East)
I would also say states in the "a" category (with most favorable outcome -- individual rights, inequality of opportunity and income, but equality before the law) also on average have higher tax rates than states in "b" and "c" categories.
> There are indeed countries that are pleasant on the surface (i.e., are not Somalia), and have very low tax rates without relying on natural resources. Almost always they either a) have high amount of "hidden" inequality (some states in the US, some countries in Asia and Eastern Europe) b) are police states (Singapore) c) are both (Middle East)
I really can't think of any pleasant countries, to tell the truth, that have appreciably lower taxes than the U.S. Hong Kong, Taiwan, and Singapore are all special cases, and I'm not sure their examples are really generalizable.
The Middle Eastern countries (UAE, etc) can't be counted because their wealth comes from selling off their natural capital. Selling off the furniture isn't really "income". Hong Kong and Taiwan are special cases. A lot of their expenditures are heavily subsidized (e.g. defense, by China and the U.S., respectively).
Sort by the Heritage Foundation column, from lowest to highest. The first country on that list I'd even consider living in is Lithuania. But even then it's not an entirely fair comparison. Countries like Lithuania are subsidized by regional stability propped-up by the defense spending of bigger neighbors. Moreover, the eastern european countries generally don't have the aging problem the U.S. and western european countries have. Then you've got Croatia, South Korea, and the U.S. around 27%. I'd live in any of those places. Going from there up to 35%, you've got some really livable countries: Japan, Switzerland, Australia, Ireland, Canada, New Zealand. If the U.S. eliminated it's deficit entirely based on tax increases (discounting the effects of the recession which we continue to be in) we'd probably only be around Ireland and Australia in terms of taxes.
I think we're in agreement. Taxes are a small but seemingly inevitable cost to pay for living in a liberal democracy.
I am also not using pleasant literally here: as in, places stuffwhitepeoplelike.com crowd like to visit and rave about, but would not chose as a place to settle down with children.
I like US (Bay Area in specific) and am not going anywhere. As far as within the US, I considered Seattle area, Portland area, and Austin as mental exercises, but Bay Area seems to represent the best set of trade offs in terms of what I want.
US could have either lower taxes or same taxes and greater social benefits if excessive military adventures or the drug war were curtailed, however, but the change would probably come gradually.
I am curious as to how Taiwan and Singapore are able to sustain low tax rates despite welfare states, military on active alert, and in Singapore's case, an expansive police state. Would never be able to live in Singapore (I can say that with absolute certainty), slight chance I might consider Taiwan (but probably a "no" too).
> Please explain how a web designer making $250k a year freelancing out of an apartment in NYC is "benefiting" from the government more than a $30k/year individual on welfare.
Oh come on, this is ridiculous. You know this is not true given US as it is. It may be true of a social democracy in Europe, but this is just not true of the US.
The wealthy web designer in NYC benefits from police protection, public transport he can take everywhere, subsidies and grants his university (whether public or private) has received, the use of eminent domain to build said transport, the use of eminent domain to turn over land to a real estate developer that built his apartment building, and (most obviously!) the Internet (once called ArpaNet) from which he makes his living. After tax, the web designer has far more left over and suffers less anxiety as he isn't living paycheck to paycheck (unless he so wishes).
I don't know New York geography as well, so I'll switch to Bay Area to discuss the $30k/year individual (who, by the way, is not eligible for welfare). First, they likely can't even reside close to an area with public transport and jobs, so they're commuting two hours from, e.g., Stockton or Modesto (having to pay for vehicle maintenance, car insurance, license and registration fees themselves). Yes, they do benefit from the freeways, but the stress involved in driving on the freeway (high traffic, long commute, high risk of accidents) is far greater than the stress involved in taking the New York Metro.
They're far more likely to have an unpleasant experience with police personally (being pulled over, searched, etc...). Their city police forces are also reluctant to pursue anything other than violent crime. After tax, a far higher percentage of their income goes to meet the basic needs, and it usually does not -- they're underinsured, they suffer from obesity (due to eating cheaper, poor quality food: fast food joints and microwaveable mac-n-cheese, etc...), and overall poor health.
I have a lot of sympathy with libertarian views (I voted for Gary Johnson as a protest vote in 2012 elections, actually), but their sympathies are simply misplaced: argue for less welfare for the upper classes (e.g., mandate that new public transportation must cover the poor communities first, oppose use of eminent domain by real estate developers), lower taxes for the poor, higher long term capital gains in place of higher income tax (with some reasonable limitations as not to stunt economic growth), etc...
The wealthy do not mind high income taxes. Simply put, look at their voting patterns: 75% of them vote for Democrats, 25% of them vote for Giuliani/Schwarzenegger Republicans. Neither are "small government" advocates. If they did want lower taxes, they'd immediately have the government's ear: e.g., this is why capital gains remains low.
Sad fact is the government listens to wealthy more so than to the poor. This is why some "progressive" policies (that mostly benefit the wealthy) get implemented quickly and others (that mostly benefit the less well-of) linger. You can argue that in a theoretical society Internet could be built by free enterprise, cities could be built without eminent domain, etc... but we don't live in this society now. Right now, if you're concerned about government handouts, go after people like me instead of your hypothetical "$30k/year individual on welfare".
Diminishing marginal utility tells us that a progressive tax code makes the most sense. 10% of a wealthy person's income is worth less to that person than 10% of a poor person's income. It makes sense to have higher rates on higher incomes because that's the fair way to do things.
On the other hand, heterogeneous preferences suggest that redistribution to the lower classes might be welfare destroying.
Rich people tend to want money a lot, as demonstrated by their propensity to work very hard. In contrast, poor people tend to prefer time to money, as demonstrated by their propensity to avoid working and not even look for work. If we transfer money from people who value it to people who don't, that's hardly a good thing.
> Rich people tend to want money a lot, as demonstrated by their propensity to work very hard. In contrast, poor people tend to prefer time to money, as demonstrated by their propensity to avoid working and not even look for work.
I'm gobsmacked at this generalization. I seriously don't know what to say. I hope you realize how wrong this is, because I don't really know how to explain it.
Extremely successful people tend to work for passion more than money. A progressive tax system would not lower output in this case. Think Warren Buffet.
There is a swath of upper income folks who can throttle their work to their own personal marginal utility. A lawyer can choose to work for a low pressure firm for a great (not lucrative) salary. An IBanker can choose a less demanding M&A position at an established company for a substantial paycut. A doctor can choose a hospitalist position over private practice (or regulate his/her hours/# patients at their private practice). An entrepreneur can cash out of his first company and choose to not start another company. The restauranteur can be content with launching 2 successful restaurants.
Now the trick is how do you ensure the tax code does not stop these professionals from performing that extra effort. For many 400k a year looks like a striking sum but typically these folks are killing themselves for salaries in that range. Most could easily throttle back to a 200k salaried position.
Morally you are not obligated to pay taxes. Forced taxation (redundant) violates the non-aggression principle. Forget the propaganda you hear; taxation is theft, regardless of the perceived benefits or ex post facto justification for the theft. People in a situation of coercion and force crave propaganda so they can feel like they still have some sort of control and that the violations of their property rights are justified.
There are plenty of government services I don't want or need but am forced to pay for, or at least my grandchildren will be forced to pay for (wars, welfare state, war on drugs, etc). It's not right and we need to evolve beyond using such violence.
How do you enforce non-coercion principle against private coercion without a police and judiciary that is obligated to protect everyone fairly (including those who are unable to pay for police services at one point or another)?
Let's say I go and swing my fists, but manage to hit your nose. Then, I jump into my car and drive home on a (private owned, presumably) road. Now suppose you're in poverty: how do you pay for police to come and investigate what happened, for the prosecutor to start a trial against me. Suppose I am now assigned to pay you restitution and become indigent: how would I pay to ensure that I am not tortured in prison, appeal my case (I had a nervous tick that forced my arm to swing, so I should not have to pay as high of restitution)?
Protecting your rights from (government or individual) transgressions is a categorical imperative: we must be able to provide to everyone, even if they are fully indigent.
Yet it, absolutely, does not come for free. So we need some kind of taxation (or other income scheme) to ensure the bare minimum.
I would agree that it's unwise to spend it on foreign wars and the war on drugs: so let's first stop having foreign wars and the war on drugs!
However, the wealthier an individual is, the more it costs the government to protect their life, liberty, and property. Think of how much money is spent to keep a square foot of Manhattan safe as opposed to a square foot of Modesto.
I agree that in some cases taxes are inhumane: e.g., I think it's wrong to force pay someone who earns no income to either pay a property tax or sell their property. I also think eminent domain gets abused unfairly.
Yet, categorically, "the right to receive income in currency protected and recognized as result of government force" is an important one -- but one that can be curtailed as to allow enforcement of the more fundamental rights.
You're also ignoring the role even a minimal social safety net plays in reducing coercive power of private employers.
You may want to read what these guys have to say: http://bleedingheartlibertarians.com/, as well as actual classical liberals (see, e.g., Karl Popper's works)
I will definitely take a look at the site. I wouldn't want to ignore information based on my own bias.
I see the appeal of what you're saying, and I'm indeed concerned with private coercive power; however, explaining the "how" behind a free society is contradictory and presupposes State power. I can't tell you how it would work without the State, the same way I can't tell how an iPhone is made (besides some high-level explanation), or how the process came to be that produced it. I don't know what solutions people will come up with.
I would say, though, how is justice being served now? Is there not police corruption, abuse of power, innocent people thrown in jail (especially for drugs), unjust laws, etc? I would argue that this fair system you speak of does not exist, and would never exist under the State. I'm not saying it would exist in a free society (to err is human), but at least it wouldn't be centralized. At least we'd have third-party options. Maybe there would a financial incentive for you to not incite violence. Perhaps you'd be socially ostracized for your actions. Maybe I'd have to live with my broken nose. Again, not saying that this is the way it would work, only that there are plenty of creative solutions that don't involve a central, coercive agency.
Also, for any of this to happen, there must a multi-generational philosophical awakening, in which people would become less violent and more open to peaceful solutions.
> Is there not police corruption, abuse of power, innocent people thrown in jail (especially for drugs), unjust laws, etc?
You can fight against drug war (and this seems to be catching on) without abandoning the idea of police and judiciary.
Indeed, several high-taxation socialist countries in Europe (and here I'm using socialist literally) have decriminalized many drugs.
I don't see a correlation between this: taxation serves a legitimate purpose of protecting society, yet most drug prohibitions do not. If we de-criminalize drugs and you, say, start your own drug factory (not saying you will): who will protect you if the Zettas decides to move and destroy you as competition?
I do commend you for having the intelectual honesty to advanced anarcho-capitalism (as opposed to "government can tax me to go to war, but taxation is slavery if they use my taxes to provide healthcare"). However, I'll suggest this: if you want to focus on advancing the cause of anarcho-capitalism and small government, focus on drug war, foreign wars, police overreach, etc... first and then start talking about taxation. If you must talk about taxes, first start talking about gross abuses of taxation and eminent domain, e.g., using tax liens to confiscate homes of otherwise poor people and put them in the hands of real-estate developers. You can also talk about how the wealthy don't actually pay very high taxes in reality (long term capital gains vs. income), and so on... but the arguments about how the government is unfairly exploiting the rich to benefit the poor are simply silly.
The wealthy want and actively benefit from big government, so policies that make the government more (not less) responsive to the wealthy, actively hurt your cause.
David D. Friedman is the one anarcho-capitalist I am familiar with, but he mostly makes a consequentialist as opposed to ethical case for anarcho-capitalism (acknowledging the imperfections his system will have).
Wow. I knew I was below the Wall Street Journal's target audience, but I didn't realize how far below, assuming those four examples are meant to by typical WJS readers.
How can you be mad. They are showing you the numbers right there on the page. It's not like they're lying. How can they be out of touch if they know the numbers?
There is no incentive to pay higher taxes as an individual.
Country prosperity and supporting social services are nice concepts but ask any CPA how the average high earner feels about being "business partners" with the govt.
So an honest suggestion - what if there were some small incentives created in govt controlled systems for high earners?
Pay the highest tax rate? Free carpool lane access for the next year.
Nothing insane, but some direct positive benefit in a transaction that overwhelmingly feels negative.
And don't forget to multiply each of the "investment income" numbers by 25 for a rough calculation of their wealth, assuming a 4% return on investment. For example, that family of six with $180,000 of passive investment income has net worth of $4.5 million. They could move almost everywhere in the U.S. except Manhattan and San Francisco and never work another day in their lives.
I like how the 'poorest' person in the infographic makes $25k per year in investment income. Assuming an average rate of 8% in returns from an low-risk and diversified portfolio, that person has roughly $312,000 in investments. Man they have it hard.
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[ 4.5 ms ] story [ 167 ms ] threadnot only does it assign unrealistic income values, it uses different income brackets AND different deduction possibilities for each scenario. I walk away from this graph with absolutely no knowledge.
This graph is showing there are people out there earning a lot more than you and I, so we need to put our noses to the grindstone, stat!
No more talking about extended vacations, citizen.
Somehow I am just not worried about them.
There are tens of millions living on one tenth of that in this country and even millions living on one 1/20th
Four children on $650,000, what a horrible life those kids are going to have - those parents look so stressed and tired.
That single person on $230,000 looks pissed off they'll have to contribute a whole $2,900 extra. How horrible for her.
http://en.wikipedia.org/wiki/American_middle_class
Yes, the wealthiest people in the world live in NYC, but the average New Yorker is not substantially wealthier than the average American, by any measure. He is, in fact, poorer, thanks to cost of living. There are census tracts in NYC where the median income is under $10,000.
1. Manhattan is 7% of NYC's land area
2. Manhattan (County of New York) is the richest county in NY by per capita income (as opposed to resident income: Manhattan is home to hundreds of thousands of urban poor)
3. the arithmetic average wage is not the same as the median personal income. The average wage in America is around $41k. The median wage is about 28k.
Where are you getting this $28k figure from? BLS[1] more recently stated that the median wage was $758/wk in 2012 Q3 (~$40k/yr).
My figure comes from payrolls reported to the Social Security Administration: http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2011
"By definition, 50 percent of wage earners had net compensation less than or equal to the median wage, which is estimated to be $26,965.43 for 2011."
28k was a peak value from a graph that adjusted old dollar values to present dollars. (The SSA data is unadjusted for inflation.)
Urban poverty and inequality are inescapable facts in NYC.
By any measurement, 180k is a hell of a lot of money for two retirees living alone. That's over double the average wages of two working adults. That is quite wealthy, even in NYC. (I just looked it up: median income for a black man over 65 in New York is $14,400 a year. For his female companion, $9,966. These people are earning roughly 8x the median for their demographic.)
Edit: As a local, I'm really, really sick of hearing that the "middle class" in NYC includes 200k households. Because it doesn't. HN posters, such as myself, are privileged individuals. We forget about the veritable sea of average workers underneath us on the income scale.
If you ever need a reminder, hang around a McDonald's in the early morning and watch the number and kind of people that are obviously eating it every day.
That was one of the most shocking things about NYC for me, coming from another country.
These people are 'time poor' too.
Further, griping about the temporary 2% payroll tax expiring? It was done as an aid to a sluggish economy. Things aren't rosy overall, but they are improving a bit.
I don't think it's the raw dollars that matter but what the alternative for those dollars are (aka opportunity cost).
You must have a very low mortgage payment.
Anyway, that seems believable for Austin, TX.
In my case, the going rate of a house similar to mine rent-wise would be about 50% higher than my current mortgage payment.
[1] http://www.investopedia.com/terms/o/owners-equivalent-rent.a...
If you're confused, the original headline was along the lines of "WSJ - Out of Touch?". The implication was that with the WSJ saying their idea of a retired person makes $180,000, their single parent of two makes $260,000, etc, the WSJ is out of touch with the common person's actual salary, especially during a recession.
It wasn't meant to read much into >_>
Also: I'm trying to figure out what's interactive about this "interactive graphic."
Also: It's amusing to play "guess the profession." Mine: the single mom and the single women are lawyers--senior associates but not partners. The single mom is divorced. In the family of six, the dad is an MD at a bank, but in one of the less cash-cow divisions. The wife is a college educated stay at home mom. The retired couple: the man is a retired NYPD deputy chief, and the woman is a retired teacher. The single woman lives in Manhattan, the single mom lives in a gentrified part of Brooklyn, the retired couple has a nice place in one of the gentrified parts of Harlem, and the family of four lives in Greenwich and the dad commutes down every morning.
But seriously, though, $260k single mom? What alternate universe do the editors live in?
This submission seems to be deliberately misleading. The article itself is far less insulting.
http://calculator2.taxpolicycenter.org
I'm really disappointed that the WSJ would lower themselves to that.
No one is saying that rich people can't afford to pay more taxes. It's not a question of they're going to starve and be out on the streets. The real issue is, approaching 50% taxes (EDIT: state + federal + medicare/medicaid + social security) is in conflict with the American concept of capitalism. The fact of the matter is, there is nothing proportionate about how much you benefit to how much you pay. The more you make, the more you pay to Uncle Sam both as a proportion of your income and as an actual number.
It is not a question of how much can you "afford to give" while remaining well off - I think it's a much more core issue at hand: is someone who makes (to bring this closer to home) $250k as a single individual, perhaps doing freelance software development and consulting, culpable to the tune of $80k out of their salary to help everyone else out?
Yes, it's a moral question. It's a philosophical question. And it's also a legal question: even if they are morally obligated - is it the government's job to enforce that?
Many people I know in that bracket actually give that much or more in very directed donations to non-profit entities (meaning they're no longer in that bracket thanks to tax deductions) because they feel they a) distrust the government to wisely spend their money to solve the problems, b) they should have a say in where their money goes, and c) it is not the government's job to take and redistribute wealth.
As for those that don't make such donations - can you absolutely say they must?
Also remember, these tax hikes are really not targeted at the so-called "filthy rich" that have been the focus of all the ire and angst in recent years by groups such as "Occupy Wall Street" - they just affect the upper middle class. Capital gains taxes are ridiculously lower than income taxes. Your wall street bankers and trust fund babies don't have "income" in the traditional sense. You're not taking this money from people that have invested money and are making more money explicitly not doing anything, these taxes are on the upper class of working citizens.
The biggest targets are small business owners, startups, lawyers, doctors, engineers, and others of their kind. Can you say for an absolute fact that they owe ~40% of their annual income to the government? I can tell you for a fact that the difference between a freelancer in high demand earning $250k/year vs $100k/year is a matter of the hours you work. If you kill yourself to work around the clock to make more money.... you are rewarded with higher taxes. It's not a different class of people that are being taxed higher - it's just people that have worked harder for longer and are, as a result, more well off. This is literally the anti-thesis of core American values: work harder and be, quite frankly, punished for it.
(I'm not saying everyone can automatically make $250k/year by working harder and that if you don't make that much then you are lazy - I'm saying the difference between $50k/year and $350k/year is a matter is a matter of quantity, not type; whereas the difference between $250k/year and $200MM/year is a different beast.)
At the end of the day, people need to decide if you are paying for services provided by the government or if we are asking the upper middle class to subsidize the rest of the country. There's nothing inherently better or worse about one or the other - it's a matter of philosophy. At the end of the day, are our core principles capitalistic or socialistic? There's something to be said for both, and I'm not saying it's wrong to have socialistic taxes such as those that were just recently repealed in France - but if that's the case, we need to own up and admit that is what we want.
It is an exercise in futility to ask to levy taxes on the middle class and above to subsidize the cost of a welfare nation while pretending that is not the case. If that's ...
From that perspective, those changes look like much ado about nothing to me. 30% is a long, long way from 50%.
Edit: it's also, other than for the retirees, not very graduated at all. 28% for the 230K earner, 30% for the 650K earners. Personally I would like to see a higher marginal rate bracket, as well as a raise on capital gains, which you mention in your edit, if we're trying to balance the budget. (Side question: are capital gains taxes done progressively at all? Would it make sense to have marginal rates and tax smaller capital gains much less than large ones? Why or why not?)
(Further edit on that note: my personal crazy idea of the moment is to have dramatically higher rates on, say, 500K+ marginal income, but not matchingly high rates on capital gains of that same amount; my idea being to try to encourage higher levels of compensation to be given in forms like equity that would require long-term business success, not just short term profits, to pay off. But I'm not tax lawyer or accountant or whatever, so I'm sure there are problems with that idea...)
You could also throw sales taxes in. This would show how its impact is felt more at certain income levels.
For the most recent year of data, the average American paid 7.2% of income in Federal income tax. Even the Top 1% of income earners only paid 21% and the next 4% paid 14.6% [1]
[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
I strongly disagree. I think how much money you make is a very good measure of how much you benefit from the existence of government and civilized society.
Take the family of four. The father sends his kids to public school in Connecticut. But he works at an investment bank. He draws his salary from the economic activities of companies he provides M&A advice to. Those companies benefit from having a work force educated at the public expense. Does the father just benefit from the education his own kids receive, or does he benefit from the educations of the workers at each of his clients?
> The biggest targets are small business owners, startups, lawyers, doctors, engineers, and others of their kind. Can you say for an absolute fact that they owe ~40% of their annual income to the government? I can tell you for a fact that the difference between a freelancer in high demand earning $250k/year vs $100k/year is a matter of the hours you work. If you kill yourself to work around the clock to make more money.... you are rewarded with higher taxes.
No, you are rewarded with more money. If I work more and make $250k instead of $100k, I still have $80-90k extra in my pocket. As someone taxed over 40%, I don't think "man, I'm sick of carrying the weight for all these other people." I think: "all these other people ultimately generate the wealth that allows me to live the way I do." There is a point at which I'd be upset and contemplate moving, but we're not near that point.
The fact is that anywhere else I'd want to live has higher taxes. That's the relevant criterion at the end of the day. My dad, an extremely ambitious man, left Bangladesh (taxes around 8% of GDP) for the U.S. (taxes around 26% of GDP) completely unconcerned about the increased taxes. Do I ever think: "man, it'd be great to go back to Bangladesh and pay low taxes!" Of course not. When I tell my wife "hey honey we should move there" it's never to a low tax place like Botswana. It's France, Germany, Canada, etc. Hell, I could save a lot of money and move to Texas but I'm not willing to do that either. Taxes pay for a pleasant civilized society.
Indeed, it's the doctors, lawyers, engineers, etc, who benefit from that the most. We don't have "fuck you" money. We can't go to a low-tax jurisdiction in the middle east and set up a luxurious bubble for ourselves amid the squalor. We live in cities, use public transit, and have to interact with everyone else. We get to live very well in pleasant surroundings as a result of these taxes.
Please explain how a web designer making $250k a year freelancing out of an apartment in NYC is "benefiting" from the government more than a $30k/year individual on welfare.
You asked: "Please explain how a web designer making $250k a year freelancing out of an apartment in NYC is "benefiting" from the government more than a $30k/year individual on welfare."
How do you measure how much someone benefits from the government? Your comment suggests you're looking only at the value of services directly received, but that's not the proper way of computing the total benefit. You have to do a marginal analysis, looking at the incremental benefit as you go from "no government" to "government."
The economic insight here is that your benefit from the existence of government is not a fixed amount valued by the services you utilize directly. Rather, it's a percentage of the incremental gain in wealth that is enabled by the existence of government. And because societies without government basically cannot create more than subsistence-level wealth, that increment is a big number.
That's not a marginal analysis. A marginal analysis would be going from "slightly lower taxes, slightly less government" to "slightly higher taxes, slightly more government".
You seem to want to debate (all by yourself) primitive tribal society vs civilization.
This is not an argument about the desirability or optimality of bigger or smaller government or higher or lower taxes. That should be an empirical fight.
Of course that's not the only operative consideration. There are other clubs that charge different fees, which might be less. You can always move to Club Canada or Club Germany, (or wherever). In a globalized society the "fair" tax rates are limited not by some abstract ethical consideration, but by competition between countries to offer the most pleasant societies for the lowest tax burdens.
From http://www.nationsencyclopedia.com/Africa/Somalia.html: In 1986, tax rates on wages and salaries ranged from 0% to 18.9%. Income from trade and the professions was taxed at rates of up to 35%. Indirect taxes are imposed on imports, exports, mortgages, vehicle registration, sugar, alcohol, and a number of other goods and services. In 2003, Somolia's sales tax rate was 10%.
And you're ignoring the fact that many countries in the world do not charge income tax are quite nice places to live. Bermuda, Monaco, Kuwait and UAE to name a few.
I would strongly disagree that anywhere in the Middle East is a nice place to live (besides Israel), but in any case you're using four very bad examples. None of those places are sustainable societies on their own. Bermuda and Monaco are rent seekers--they are so pleasant because they are tax havens for wealth created elsewhere. Kuwait and UAE don't create any wealth to speak of either--their "GDP" is really just consumption of capital that happened to be under their ground. See: http://www.columbia.edu/~mh2245/papers1/erc01.pdf.
Precisely! Israel has notoriously high taxes: if you're going to make an argument about how high taxes and socialism (literal socialism, as in state-owned companies) are a bad idea, this is one country where you can confidently do this. I (and many Israelis) would agree that Israel could probably benefit from lower taxes, more privatization, and less regulation. Ironically this is why, despite being Jewish and strongly "pro-Israeli", I oppose foreign aid to Israel: it helps prop up an inefficient system in Israel and serves as corporate welfare for US arms manufacturers (I think some of it has explicit provisions that it must be spent with, e.g., Colt or Lockheed-Martin as opposed to IMI or IAI).
Yet, go up to any Ayn Rand fanatic and ask them if they'd prefer to live in UAE/Qatar/Bahrain or in Israel. They'll say they'd prefer Israel as it's a socially liberal, democratic state, that recognized basic individual rights.
Democracy and individual rights require an entire infrastructure of impartial judiciary, tightly scrutinized police, a citizen's army that can defend the borders against immense odds. A socially liberal populace is the end-result of education. None of those things are free.
There are indeed countries that are pleasant on the surface (i.e., are not Somalia), and have very low tax rates without relying on natural resources. Almost always they either a) have high amount of "hidden" inequality (some states in the US, some countries in Asia and Eastern Europe) b) are police states (Singapore) c) are both (Middle East)
I would also say states in the "a" category (with most favorable outcome -- individual rights, inequality of opportunity and income, but equality before the law) also on average have higher tax rates than states in "b" and "c" categories.
I really can't think of any pleasant countries, to tell the truth, that have appreciably lower taxes than the U.S. Hong Kong, Taiwan, and Singapore are all special cases, and I'm not sure their examples are really generalizable.
The Middle Eastern countries (UAE, etc) can't be counted because their wealth comes from selling off their natural capital. Selling off the furniture isn't really "income". Hong Kong and Taiwan are special cases. A lot of their expenditures are heavily subsidized (e.g. defense, by China and the U.S., respectively).
See: See: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu...
Sort by the Heritage Foundation column, from lowest to highest. The first country on that list I'd even consider living in is Lithuania. But even then it's not an entirely fair comparison. Countries like Lithuania are subsidized by regional stability propped-up by the defense spending of bigger neighbors. Moreover, the eastern european countries generally don't have the aging problem the U.S. and western european countries have. Then you've got Croatia, South Korea, and the U.S. around 27%. I'd live in any of those places. Going from there up to 35%, you've got some really livable countries: Japan, Switzerland, Australia, Ireland, Canada, New Zealand. If the U.S. eliminated it's deficit entirely based on tax increases (discounting the effects of the recession which we continue to be in) we'd probably only be around Ireland and Australia in terms of taxes.
I am also not using pleasant literally here: as in, places stuffwhitepeoplelike.com crowd like to visit and rave about, but would not chose as a place to settle down with children.
I like US (Bay Area in specific) and am not going anywhere. As far as within the US, I considered Seattle area, Portland area, and Austin as mental exercises, but Bay Area seems to represent the best set of trade offs in terms of what I want.
US could have either lower taxes or same taxes and greater social benefits if excessive military adventures or the drug war were curtailed, however, but the change would probably come gradually.
I am curious as to how Taiwan and Singapore are able to sustain low tax rates despite welfare states, military on active alert, and in Singapore's case, an expansive police state. Would never be able to live in Singapore (I can say that with absolute certainty), slight chance I might consider Taiwan (but probably a "no" too).
Oh come on, this is ridiculous. You know this is not true given US as it is. It may be true of a social democracy in Europe, but this is just not true of the US.
The wealthy web designer in NYC benefits from police protection, public transport he can take everywhere, subsidies and grants his university (whether public or private) has received, the use of eminent domain to build said transport, the use of eminent domain to turn over land to a real estate developer that built his apartment building, and (most obviously!) the Internet (once called ArpaNet) from which he makes his living. After tax, the web designer has far more left over and suffers less anxiety as he isn't living paycheck to paycheck (unless he so wishes).
I don't know New York geography as well, so I'll switch to Bay Area to discuss the $30k/year individual (who, by the way, is not eligible for welfare). First, they likely can't even reside close to an area with public transport and jobs, so they're commuting two hours from, e.g., Stockton or Modesto (having to pay for vehicle maintenance, car insurance, license and registration fees themselves). Yes, they do benefit from the freeways, but the stress involved in driving on the freeway (high traffic, long commute, high risk of accidents) is far greater than the stress involved in taking the New York Metro.
They're far more likely to have an unpleasant experience with police personally (being pulled over, searched, etc...). Their city police forces are also reluctant to pursue anything other than violent crime. After tax, a far higher percentage of their income goes to meet the basic needs, and it usually does not -- they're underinsured, they suffer from obesity (due to eating cheaper, poor quality food: fast food joints and microwaveable mac-n-cheese, etc...), and overall poor health.
I have a lot of sympathy with libertarian views (I voted for Gary Johnson as a protest vote in 2012 elections, actually), but their sympathies are simply misplaced: argue for less welfare for the upper classes (e.g., mandate that new public transportation must cover the poor communities first, oppose use of eminent domain by real estate developers), lower taxes for the poor, higher long term capital gains in place of higher income tax (with some reasonable limitations as not to stunt economic growth), etc...
The wealthy do not mind high income taxes. Simply put, look at their voting patterns: 75% of them vote for Democrats, 25% of them vote for Giuliani/Schwarzenegger Republicans. Neither are "small government" advocates. If they did want lower taxes, they'd immediately have the government's ear: e.g., this is why capital gains remains low.
Sad fact is the government listens to wealthy more so than to the poor. This is why some "progressive" policies (that mostly benefit the wealthy) get implemented quickly and others (that mostly benefit the less well-of) linger. You can argue that in a theoretical society Internet could be built by free enterprise, cities could be built without eminent domain, etc... but we don't live in this society now. Right now, if you're concerned about government handouts, go after people like me instead of your hypothetical "$30k/year individual on welfare".
See also Tyler Cowen's insightful comments on a similar snark-fest: Beware of moral arguments which do not address "At which margin?"*
http://marginalrevolution.com/marginalrevolution/2010/09/doe...
What alternative do you propose?
Rich people tend to want money a lot, as demonstrated by their propensity to work very hard. In contrast, poor people tend to prefer time to money, as demonstrated by their propensity to avoid working and not even look for work. If we transfer money from people who value it to people who don't, that's hardly a good thing.
I'm gobsmacked at this generalization. I seriously don't know what to say. I hope you realize how wrong this is, because I don't really know how to explain it.
http://www.bls.gov/cps/cpswp2010.pdf
Extremely successful people tend to work for passion more than money. A progressive tax system would not lower output in this case. Think Warren Buffet.
There is a swath of upper income folks who can throttle their work to their own personal marginal utility. A lawyer can choose to work for a low pressure firm for a great (not lucrative) salary. An IBanker can choose a less demanding M&A position at an established company for a substantial paycut. A doctor can choose a hospitalist position over private practice (or regulate his/her hours/# patients at their private practice). An entrepreneur can cash out of his first company and choose to not start another company. The restauranteur can be content with launching 2 successful restaurants.
Now the trick is how do you ensure the tax code does not stop these professionals from performing that extra effort. For many 400k a year looks like a striking sum but typically these folks are killing themselves for salaries in that range. Most could easily throttle back to a 200k salaried position.
There are plenty of government services I don't want or need but am forced to pay for, or at least my grandchildren will be forced to pay for (wars, welfare state, war on drugs, etc). It's not right and we need to evolve beyond using such violence.
Let's say I go and swing my fists, but manage to hit your nose. Then, I jump into my car and drive home on a (private owned, presumably) road. Now suppose you're in poverty: how do you pay for police to come and investigate what happened, for the prosecutor to start a trial against me. Suppose I am now assigned to pay you restitution and become indigent: how would I pay to ensure that I am not tortured in prison, appeal my case (I had a nervous tick that forced my arm to swing, so I should not have to pay as high of restitution)?
Protecting your rights from (government or individual) transgressions is a categorical imperative: we must be able to provide to everyone, even if they are fully indigent.
Yet it, absolutely, does not come for free. So we need some kind of taxation (or other income scheme) to ensure the bare minimum.
I would agree that it's unwise to spend it on foreign wars and the war on drugs: so let's first stop having foreign wars and the war on drugs!
However, the wealthier an individual is, the more it costs the government to protect their life, liberty, and property. Think of how much money is spent to keep a square foot of Manhattan safe as opposed to a square foot of Modesto.
I agree that in some cases taxes are inhumane: e.g., I think it's wrong to force pay someone who earns no income to either pay a property tax or sell their property. I also think eminent domain gets abused unfairly.
Yet, categorically, "the right to receive income in currency protected and recognized as result of government force" is an important one -- but one that can be curtailed as to allow enforcement of the more fundamental rights.
You're also ignoring the role even a minimal social safety net plays in reducing coercive power of private employers.
You may want to read what these guys have to say: http://bleedingheartlibertarians.com/, as well as actual classical liberals (see, e.g., Karl Popper's works)
I see the appeal of what you're saying, and I'm indeed concerned with private coercive power; however, explaining the "how" behind a free society is contradictory and presupposes State power. I can't tell you how it would work without the State, the same way I can't tell how an iPhone is made (besides some high-level explanation), or how the process came to be that produced it. I don't know what solutions people will come up with.
I would say, though, how is justice being served now? Is there not police corruption, abuse of power, innocent people thrown in jail (especially for drugs), unjust laws, etc? I would argue that this fair system you speak of does not exist, and would never exist under the State. I'm not saying it would exist in a free society (to err is human), but at least it wouldn't be centralized. At least we'd have third-party options. Maybe there would a financial incentive for you to not incite violence. Perhaps you'd be socially ostracized for your actions. Maybe I'd have to live with my broken nose. Again, not saying that this is the way it would work, only that there are plenty of creative solutions that don't involve a central, coercive agency.
There are a few books here that go into the possible solutions: http://freedomainradio.com/FreeBooks.aspx
Also, for any of this to happen, there must a multi-generational philosophical awakening, in which people would become less violent and more open to peaceful solutions.
You can fight against drug war (and this seems to be catching on) without abandoning the idea of police and judiciary.
Indeed, several high-taxation socialist countries in Europe (and here I'm using socialist literally) have decriminalized many drugs.
I don't see a correlation between this: taxation serves a legitimate purpose of protecting society, yet most drug prohibitions do not. If we de-criminalize drugs and you, say, start your own drug factory (not saying you will): who will protect you if the Zettas decides to move and destroy you as competition?
I do commend you for having the intelectual honesty to advanced anarcho-capitalism (as opposed to "government can tax me to go to war, but taxation is slavery if they use my taxes to provide healthcare"). However, I'll suggest this: if you want to focus on advancing the cause of anarcho-capitalism and small government, focus on drug war, foreign wars, police overreach, etc... first and then start talking about taxation. If you must talk about taxes, first start talking about gross abuses of taxation and eminent domain, e.g., using tax liens to confiscate homes of otherwise poor people and put them in the hands of real-estate developers. You can also talk about how the wealthy don't actually pay very high taxes in reality (long term capital gains vs. income), and so on... but the arguments about how the government is unfairly exploiting the rich to benefit the poor are simply silly.
The wealthy want and actively benefit from big government, so policies that make the government more (not less) responsive to the wealthy, actively hurt your cause.
David D. Friedman is the one anarcho-capitalist I am familiar with, but he mostly makes a consequentialist as opposed to ethical case for anarcho-capitalism (acknowledging the imperfections his system will have).
Country prosperity and supporting social services are nice concepts but ask any CPA how the average high earner feels about being "business partners" with the govt.
So an honest suggestion - what if there were some small incentives created in govt controlled systems for high earners?
Pay the highest tax rate? Free carpool lane access for the next year.
Nothing insane, but some direct positive benefit in a transaction that overwhelmingly feels negative.