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A Capitalist’s Dilemma, Whoever Wins the Election

Posted on November 6th, 2012 at 1:51 by Desiato in category: Commentary -- Write a comment

[Quote]:

The major political parties are both wrong when it comes to taxing and distributing to the middle class the capital of the wealthiest 1 percent. It’s true that some of the richest Americans have been making money with money — investing in efficiency innovations rather than investing to create jobs. They are doing what their professors taught them to do, but times have changed.

If the I.R.S. taxes their wealth away and distributes it to everyone else, it still won’t help the economy. Without empowering products and services in our economy, most of this redistribution will be spent buying sustaining innovations — replacing consumption with consumption. We must give the wealthiest an incentive to invest for the long term. This can create growth.

  1. Interesting.

    Consider this: Canada is trying to get a deal with China to permit Chinese to be able to invest here more easily. There is, according to the government, not enough (i.e. cheap, no-questions-asked) capital in Canada to fund things like the tar sands development, clubbing baby seals, whatever.

    This, after 100 years of getting capital from the U.S. (“Selling Out to the Americans”) for things like railways, canals, dams etc. American capitalists are no longer interested in anything risky, apparently.

  2. The language needs two different words. Investment with the aim to rake in money needs a word different from Investment to sustain a community for a long time. Both make the ‘investor’ richer, but in different ways, in different time frames. There’s “risk” – what if they close that loophole? – and “risk” – what if this project fails?

    Taxes are usually never meant to “redistribute” wealth – they are meant to fund long term projects that benefit society – like schools, roads, police.

    Often, the wealthiest 1 percent are NOT investing in the future of society, and taxing them for that is worth it.

  3. But then again, I’ve had some wine, so I’m probably rambling

  4. One of the suggestions in that article is to create more distinctions than just “short term capital gains” and “long term capital gains”. A number of people have suggested very high taxes on intraday trades (flipping shares (or other property) the same day).

  5. @John: taxes are often used to redistribute wealth, either directly of indirectly. Surely that’s where the money for welfare payments, employment insurance, pensions, and child benefits come from? Often these benefits are means-tested or taxed back to eliminate net benefits to the wealthy.

  6. Even those taxes that do distribute wealth are not primarily meant for just that, redistributing wealth. It is well know (well, perhaps well-known outside the USA) that keeping all income within a certain bandwidth, say the highest earner making no more than, say, 15 times the amount the lowest earner makes, is required to maintain a stable society. So that income re-distribution effect by taxes can be seen as a way to keep society stable in the long term.

  7. Baldly, for social policy reasons tax money is given out to stop the poor from revolting?

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