Wednesday, July 9, 2014

Rich People Are Robbers, Cheats and Sociopaths?

Jon had some pretty strong opinions to express as a comment on.  MinnPost Franken Defends Democrat Policies  As is often the case, his Liberal attacking comments were posted and my simple rebuttal was blocked. So here we go again:
"I am always fascinated with the concept of their "fair share".

Someone making $15,000 gets to use the schools, roads, bridges, libraries, services and pays almost no taxes after you figure in the cash benefits they receive like food stamps, medicaid, earned income tax credit, heating assistance, housing assistance, etc.

Apparently according to the link, someone making $1,000,000 pays ~$400,0000 in taxes and gets none of the cash benefits listed above. Yet apparently you don't think they are paying their fair share.

It is very interesting." G2A

"A billionaire has the same advantages as every other American? That's laughable. A billionaire gets what a billionaire wants and that's more money, more houses, more cars, more boats, just more of anything they want. Including welfare. True it's more than what we normally think of when we think of welfare but it's still welfare. There is no way a person on the bottom will ever achieve that kind of wealth and privilege by legal means. In fact most of the Robber barons of the 1800's were exactly that, robbers, cheats, and at best just sociopaths.

There comes a point where a person no longer cares about anyone but themselves. Even among other sociopaths any chance they get they'll cut each other loose if they figure it's advantageous to themselves, if and when they can. To the majority of the citizens of the US, the TP'ers are nothing if not hazardous to their lives. While not all are sociopaths, the TP'ers that aren't follow them blindly towards a cliff of their own making. They are listening to the crying of the wealthy TP'ers claims that they are being put upon by the poor. Good grief." Jon

My unacceptable response went something like this...
"So do you really believe that all these American Billionaires are Robbers, Cheats and Sociopaths?  I guess I disagree...
I just can not determine why some of these comments are blocked...

What do you think, are rich people robbers, cheats and sociopaths that need to be relieved of their ill gotten wealth?

Do the wealthy get something extra for their taxes that us normal tax payers don't? If so, what?


Anonymous said...

Some are certainly, but most are not.


John said...

That is my opinion also.

Yet many of the commenters at MinnPost seem to feel that these people should be severely taxed at a higher rate, apparently to punish them for something.

I can almost agree with your simple logic that they need to pay more because they have the money to pay those larger bills. I mean you can't get blood out of a turnip.

Then I would think the recipients of lower taxes and more programs would be grateful for the large burden these folks are paying. Yet all I hear from the recipients is "why aren't the rich paying more?" "why aren't they paying their fair share?"

They sound like a teenager who is angry because their parents didn't by them a nice enough car. Totally missing the point that they should be thankful for the free car they did receive...

John said...

Paul had posted this link. It was interesting, though I wonder why they started their data in 1980. NY Times Tax Share

Also, I find it frustrating as usual that they imply the wealthy are not paying a high enough percentage towards Payroll Taxes. When we are all aware here that SS and Medicare cap benefits therefore fairly they cap taxes (ie premiums).

Besides my usual frustration at calling them taxes when people are demanding that they get the money/benefits back... We should ignore these payments and consider them forced retirement saving and insurance payments.

Which supports my point that the bottom 20% or more of the so called tax payers actually have a positive effective rate once you add in the cash and insurance benefits they receive from the government.

Now I am not saying this is a bad thing since they do need to eat, however I do get tired of people implying that the tax rate paid by these low income folks is "high"... What silliness...

John said...

And as I commented to Paul, the rates for the wealthy are significantly higher now since ACA applied a surcharge and the Bush cuts were allowed to lapse for them and not us.

Anonymous said...

It's very difficult to tax rich people because they have so many ways, perfectly legal, of course to avoid taxes.

In talking about the severity of taxation, taxes are most severe in their impact on poor and middle people than the rich. I know I have a much harder time putting together the property tax payment on my house than Mitt Romney does on his. Equality can be determined in all sorts of ways. If what we are talking about is equality of severity, the rich would be taxed far more than they are.


John said...

I suppose if the tax system was about punishing people that may make sense.

However I think all of us are responsible for helping to fund this great country of ours.

The reality is that when people get stuff for free, they tend to have less appreciation and don't take good care of it.

Anonymous said...

"I suppose if the tax system was about punishing people that may make sense."

Taxation is about paying for stuff that benefits, us hopefully in a way that minimizes economic disruption. People with money are taxed, not because they are being punished, but because they have money.

"However I think all of us are responsible for helping to fund this great country of ours."

Sure, and all of us pay taxes. The poor are much more burdened by taxes than the rich.

"The reality is that when people get stuff for free, they tend to have less appreciation and don't take good care of it."

Some people may think the stuff they get that taxes pay for is free, but it isn't.


Laurie said...

John, what you say about fairness in taxation would make much more sense if there was fairness in compensation. Does a CEO really deserve $20 million a year? If half is paid in taxes that leaves him $10 million, which is still exorbitant.

If we were paid fairly, making the bottom 50% contribute more would make more sense. With inequality at its current level the ones who should be paying more are the super rich.

John said...

If that CEO makes decisions and takes actions that earn an extra $100 million for the shareholders... Does their compensation seem appropriate then?

Laurie said...


John said...

Please explain?

You mean you wouldn't pay someone $200 if they made you $1000?

Laurie said...

one person is not responsible for a company making $100 million.

Why are the CEO's of American companies compensated so much more generously than their European counterparts? Are they that much smarter? Or do the Europeans do a better job of valuing the contributions of employees at all levels. Why weren't CEOs so highly valued thirty years ago? I guess they have gotten much smarter or greedier or something.

Just the Facts: CEOs and the Rest of Us

Anonymous said...

Why are the CEO's of American companies compensated so much more generously than their European counterparts?

It's a product of the American approach to corporate governance. Basically CEO's get paid so much because they are the ones who decide how much they get paid, and it turns out they are really effective negotiators with themselves.


John said...

Technically they negotiate with a board of Directors in most cases.

Though I do acknowledge that their seems to be too much in bred back scratching between Board members and CEOs.

Still doesn't resolve the question, would you pay someone $200 if you felt confident that they could earn you an additional $1000?

John said...

Based on Hiram's comment, I wonder if the Target CEO fired himself?

Sean said...

The problem isn't high CEO pay for those who do produce shareholder value; it's that most CEO pay packages are largely disconnected from whether or not they're actually creating that value.

Laurie said...

I would pay someone $200 but I wouldn't pay anyone $20 million.

I think that is a dumb analogy.

I think there must be plenty of capable people willing to lead a company for a paltry $5 million, maybe someone from Japan or Germany.

John said...

From what I understand, most of the compensation programs are tied to the price of the company's stock, which is the "value" of the company. Market Capitalization

Wiki American Executive Pay

John said...

It is not silly.

$200 is to you as $20 million is to some of these very large corporations. If the CEO's leadership increases profits by $100 million, they have no problem paying the bonus or letting them exercise the stock options. They still have $80 million that they may not have had.

And remember if you own mutual funds or stock, you are profiting from those increased profits.

At what cost is another question.

Sean said...

Yes and no.

Stock options are heavily used, but generally speaking, CEOs are given stock options on a predetermined schedule regardless of performance, and the option generally either awards them the stock at no cost or allows them to purchase it at lower than the actual share price.

As such, the amount of downside risk associated with these options is very limited.

Of course, the other issue is the incredible severance packages that failed CEOs receive as well.

Consider this scenario from a local Fortune 500 company in the last two years:

CEO fired after overseeing a drop in the share price from 16.53 to 2.05 in three years. CEO earned $17.5 million over that time, despite only having a base salary of about $800,000. Tellingly, just one quarter before he was fired, the Board voted to give this CEO a bonus for his performance in the previous fiscal year.

Chairman of the Board that hired the failed CEO names himself the new CEO, and announces that the company is looking to sell all or part of itself.

Old Chairman/New CEO gets a base salary nearly 2x that of the old CEO, and when the about half of the company is sold seven months later, he walks away with a total paycheck of nearly $13 million.

The new management installs a third CEO who gets the same base salary as the Old Chairman/New CEO as well as 1.5 million shares of stock -- regardless of performance -- over the next three years. (At least this CEO is producing, as the company's stock is back over the $8 mark.)

Sean said...

And, of course, CEOs often cook the books for their own benefit (think United Health's backdating of stock options or General Mills goosing its revenue numbers by "channel stuffing".)

jerrye92002 said...

Re: CEO compensation, I agree that it is often excessive, particularly when it is decoupled from actual company financial performance, which it often is. On the one hand, these people draw enormous salaries because they are uniquely talented, just like a star athlete. On the other hand, these enormous salaries are necessary to induce somebody to take the job, since many of us wouldn't want it if it were offered on a silver platter. It involves a lot of politics, 24/7 stress, and the potentially short career. The best solution all around was offered 40 years ago in a book called "The Peter Principle." Robert Townsend proposed that CEOs be given a reasonable executive salary – somewhere around $100,000 per year – and stock options that did not vest until five years after the CEO retired, with a mandatory retirement after five years as CEO.

As for tax fairness, the AFL-CIO constantly bangs on their "tax incidence study" showing that, if you include all taxes, the poor pay about the same effective rate as the rich, while the middle class pays a little less. The solution, of course, is to get rid of the vast multitude of tax systems, each of which is constantly jiggered to make it more "fair," and resulting in an overall system that cannot possibly be fair. What we need is the simple, fair FAIR tax.

Now as to the original question: my first response is to ask, at what point in my rising earnings do I cease being a poor, downtrodden victim and become one of the "robbers, cheats and sociopaths"? I think the answer is obvious, and it is never. Studies do show, however, that those who earn their income from working capital do better during periods of slow economic growth than those who earn their income from working. On the other hand, it is axiomatic that allowing capital to work is the driver for economic growth, so what we are seeing today is government trying to punish the rich and having the punishment fall on the poor and working-class. That's typical government efficiency and the law of unintended consequences solidly in play.