Should the U.S. Have a Maximum Income?

[dmcowen674]

8-10-2012

http://finance.yahoo.com/news/u-maximum-income-no-184218761.html

Should the U.S. Have a Maximum Income?



French President Francois Hollande says he wants to tax earnings over $1.2 million at 75%. Some people worry that vertiginous tax rates will drive the rich out of France.


Hamilton Nolan says he has a better idea: "Let's have a maximum annual income of, oh, $5 million, pegged to inflation."


Catapult 'em! you might say. After all, it's practically all CEOs and financiers up there, anyway. America's top 0.1% -- that's annual income of at least $1.7 million -- comprises 43 percent executives, managers, and supervisors at companies that aren't banks and 18 percent were financiers.



The rest are lawyers (7 percent), doctors (6 percent), or in real estate (4 percent), according to Tim Noah. If you don't want those kind of people in your country, a 100% tax rate at $5 million is a good way to ensure they leave.

But wait, how would this idea even work? What would it do? We don't know what would happen if we applied a top marginal rate of 100% because something like this has never been tried in an advanced economy that I'm aware of.

But for the super-rich, it certainly sends a clear message: Don't work so hard. And if you want to work hard, do it some place else.

 

[dmcowen674]

Yes, the country would be so better off if they left.

 

[bfdd]

If there's a minimum I don't see any reason why not? IMO I believe minimum and maximum wages are unconstitutional so whatevers.

 

[Smoblikat]

Yes, the country would be so better off if they left.

I agree, with 50% of Americans paying 0% income tax, and the "rich" paying out their ass for everyone it makes sense to kick them out.

 

[Smoblikat]

If there's a minimum I don't see any reason why not? IMO I believe minimum and maximum wages are unconstitutional so whatevers.

there is no minimum amount of income you can get, there is a minimum wage. But that only applies to those who wish to sell their time, not goods or services.

 

[OCGuy]

I think it should be 40% of whatever the OP makes.

 

[MooseNSquirrel]

Repeat after me:

Floors not ceilings!

Those with no ceilings pay for the floors!

No need for limits.

 

[Jaskalas]

This is quite a stupid idea. If a person makes $100 million now, you want to take $95 million by capping them at $5 million. After a short period of time, everyone would target $5 million and there would be no $95 million to loot.

This idea shorts itself.

High tax percentage on $100 million nets you at least $75 million, and you keep getting it year after year.

 

[CrackRabbit]

No, that is a horrible idea.

 

[Hayabusa Rider]

Thats fine. Now lets export everyone who is at poverty level and chronically unemployed. Adios!

 

[MrMuppet]

We don't know what would happen if we applied a top marginal rate of 100% because something like this has never been tried in an advanced economy that I'm aware of.

Well, actually, some paid a 102% marginal tax here in Sweden back in the 70s.

Swedish author Astrid Lindgren wrote a famous Op-Ed about it and it became known as the Pomperipossa effect.

Apparently there's an English Wikipedia article on it:
http://en.wikipedia.org/wiki/Pomperipossa_in_Monismania

 

[Eos]

This is quite a stupid idea. If a person makes $100 million now, you want to take $95 million by capping them at $5 million. After a short period of time, everyone would target $5 million and there would be no $95 million to loot.

This idea shorts itself.

High tax percentage on $100 million nets you at least $75 million, and you keep getting it year after year.

Yeah. The people who make this kind of money most likely have the ability to set their reported salary.

 

[jackstar7]

If somehow this came to be, I imagine it'd be partnered with an even lower cap gains tax rate and you'd just see compensation via stock in a higher ratio than what is currently practiced.

Compensation comes in various forms.

 

[IGBT]

a cap on welfare and public assistance would be more logical.

 

[DucatiMonster696]

That's a nice way to kill economic growth in your economy via strangulation of potential investment dollars flowing back into the economy and instead being handed over to government to start new "Wars on **insert cause to justify government's hand in your pocket here plz** " or worse forcing money and potentially people to flee your nation for a safe harbor overseas.

 

[Greenman]

Yes, the country would be so better off if they left.

I agree Dave. The very thought of agreeing with you frightens me to the core, but there it is.

 

[RampantAndroid]

a cap on welfare and public assistance would be more logical.

This. OP, go create your own little commune on an uninhabited island already. Stop posting nonsense here.

 

[Fenixgoon]

income is an incentive to do work. if you cap income, you cap incentive. very counterproductive.

 

[MovingTarget]

income is an incentive to do work. if you cap income, you cap incentive. very counterproductive.

To play devil's advocate here, a disincentive to work in some cases isn't a bad thing. Work enough to live comfortably (in this case to live like a king) and leave some work for the rest of us schmucks. We already see this to an extent with Social Security as the elderly can retire despite being able to work while younger generations take their place in the workforce. You also have another similar situation in the 40-hour work week. Sure, people have the incentive to work more if they are able, but applying a disincentive for companies to allow this lets others become gainfully employed. In either case, the effect is similar. The net effect to society at large can be positive.

 

[a777pilot]

Should the U.S. Have a Maximum Income?

YES!

It should be no more than $100 billion per year, adjusted for inflation.

I'm assuming you are asking about personal income, not a business.

 

[DucatiMonster696]

To play devil's advocate here, a disincentive to work in some cases isn't a bad thing. Work enough to live comfortably (in this case to live like a king) and leave some work for the rest of us schmucks. We already see this to an extent with Social Security as the elderly can retire despite being able to work while younger generations take their place in the workforce. You also have another similar situation in the 40-hour work week. Sure, people have the incentive to work more if they are able, but applying a disincentive for companies to allow this lets others become gainfully employed. In either case, the effect is similar. The net effect to society at large can be positive.

You assume that there is a static or finite amount of labor required to be completed in a economy and this is inherently false. This fallacy is well known as the term/phrase in economics called the "Lump of Labor" fallacy.

http://www.investopedia.com/terms/l/lump-of-labour-fallacy.asp

The way this fallacy works is that its proponents assume that within a given economy there is a static amount of jobs/labor to be performed and that activities such as a reductions of work hours, Luddite style stalling or preventing technological advancements, and the actions proposed by the president of France in limiting income, etc would all have positive effects on this presumed "Lump of Labor" and can produce "positive" results in a economy such as a lower unemployment rate.

However if you were to ask any credible economist they'd quickly tell you that this view is completely false because the amount of labor in demand and in supply is not a static variable but instead varies due to natural occurrences (be they economic, social or political) based on the needs which arise within a given economy. Therefore a restriction on the amount of hours someone can work or on the amount of income they can earn will not yield a higher standard of living, or a reduction in the cost of living, and will in many cases cause more unemployment, etc.

 

[SNC]

There should be a maximum post count for the OP.

 

[Matt1970]

Yes, the country would be so better off if they left.

Yep, kick out the wealth and then everyone is poor. Good job.

 

[waggy]

ok..dave that is a fucking stupid idea.

 

[a777pilot]

The real question is....Should there be a minimum wage?

I'll start: NO!