"We are the only OECD state where some get back more than they pay in income tax"

[TheBigShort]

Ok, but then wealth just stays in assets. You are in a difficult situation here as you are speaking in broad terms and being analysed on the minutia. I see the problem with people who earn hundreds of millions a year due to their control of vast asset portfolios and businesses as being the problem. They are effectively trans-national, just like the biggest companies. That is what we need to look at and it requires a global solution.

This is a fair point. But it fails to grab the concept of a maximum personal disposable income of €2m.
You are correct in identifying people who earn vast sums of money and controlling asset wealth simultaneously. But if liquid income was limited to say, €2m a year, then the picture would change.
I may live in a house that is worth €3m, but if I can't afford to turn the lights on, what is the point? Logically speaking, I liquidate my €3m, subject to 7yr income cycle, I don't get caught with 100% tax over that time. I live accordingly and that wealth is liquid in the economy.
Similarly, I may own assets of €1bn. But if I am limited to a €2m a year lifestyle (there are only 300 people in Ireland who breach this limit), then so what?
What good is falling on a fortune like say, 1% Facebook shareholding, if you can't spend it!
But such wealth is not to be dismissed, gauranteed is a minimum lifestyle of €2m a year, indexed linked, for the rest of your life. Knowing also, that the wealth you have generated is slowly, but surely, being transferred to others, further enabling the productive and innovative process to the next generation.

 

[TheBigShort]

He wants to take all income earned above a certain amount and redistribute to those who have less.

No, that is not the point. I want a maximum income, set at a level that is almost universally desirable and simultaneously attainable (evidenced by our existing 300 €2m+ earners) to all.
However, I do want to eradicate, what I perceive to be unwanted and wholly unnecessary levels of wealth, in the control of a tiny proportion of people and, more importantly, held in that control, by virtue of the lavish lifestyles that such wealth control bestows them. Wealth that is ultimately generated by the input of thousands of fellow citizens, directly and indirectly, many of whom, through their honest efforts still struggle to keep their heads, and their families heads, above water.

€2m a year, 300 odd people, instead of wanting more, it is time to relinquish control over wealth.

My argument is that such an absolutist scheme would mean people just stop creating wealth beyond the point at which it will generate the maximum income

Your argument does not stand up.

it just creates a whole industry for tax evasion, sorry, avoidance, lawyers and accountants.

No, it doesn't. The market is only 300 people.

 

[losttheplot]

Is excessive income not redistributed when money is spent. Even if it's left in a bank, the bank can lend it out. If it's invested in business it creates employment.
Unless its all kept under the mattress, it's probably doing something beneficial for society.

 

[TheBigShort]

Is excessive income not redistributed when money is spent. Even if it's left in a bank, the bank can lend it out. If it's invested in business it creates employment.
Unless its all kept under the mattress, it's probably doing something beneficial for society.

That's a fair point. But again I would reiterate

 

[Firefly]

Is excessive income not redistributed when money is spent. Even if it's left in a bank, the bank can lend it out. If it's invested in business it creates employment.
Unless its all kept under the mattress, it's probably doing something beneficial for society.

Welcome to the thread and good post. Just hope you don't end up becoming your user name!

 

[losttheplot]

I think there was a suggestion a while back about limiting the length of threads to 2 pages. As this thread is now on 20 pages, I propose that the excess 18 pages be redistributed among the other threads.

One are where I think there should be a limit is some public pensions - especially the TDs who end up with the TDs and ministers pensions. These should be capped or means tested. If you've grown use to Charvet shirts and fine wines, then you should provide for it yourself.

 

[Firefly]

In this instance it refers to wages, and in no way shape or form could I agree that an income limit, applicable to 0.015% of the workforce equates to a society organised around the concept of equality of outcome.

I disagree. Granted 2m is a nice chunk of change but for a lot of growing businesses with a lot of employess that could be achievable. When deciding where to locate and invest, knowing there is a ceiling would act as a deterrent.

Ireland was mentioned as an example of a country in the post I responded to. My response was this;

You were asked "which country, say in Europe, most approximates this objective at the present time." Is your answer Ireland?

 

[Firefly]

No, that is not the point. I want a maximum income, set at a level that is almost universally desirable and simultaneously attainable (evidenced by our existing 300 €2m+ earners) to all.
However, I do want to eradicate, what I perceive to be unwanted and wholly unnecessary levels of wealth, in the control of a tiny proportion of people and, more importantly, held in that control, by virtue of the lavish lifestyles that such wealth control bestows them.

Until now you have said you would tax income over 2m a year at 100%. Are you also suggesting a wealth tax too?

 

[TheBigShort]

Until now you have said you would tax income over 2m a year at 100%. Are you also suggesting a wealth tax too?

Just to reiterate

the nuts and bolts of such a proposal would need in-depth scrutiny. But in essence it refers to the personal income of an individual as distinct personal wealth. There would be nothing stopping anyone from acquiring personal wealth greater than €2m, stocks, property, investments etc. What it would boil down to is effectively a €2m a year lifestyle.

The consequence of this, over a period of time, if such a proposal were adopted as a social norm, would be the eventual eradication of socially unjust controls of excessive wealth.
It is fine to have €1bn in a bank account, but what odds? Your lifestyle is restricted to €2m a year. As mentioned above, €1bn sitting in a bank account will be used to lend and invest into the economy at large - no change there. All that will happen is that money will recycle its way back into the economy and out of the control of one individual.
The bank will act as an effective conduit between those who create the wealth and those who benefit. Without a income limit, there is nothing to stop an individual placing €20m on black in a casino. The result being a massive transfer of wealth between two entities - the casino and the individual.
And yes, if the casino wins (invariably), the money can lie in a vault doing precious little. Alternatively the punter wins and buys a private island, a private jet, a castle, and a fleet of bespoke automobiles. All very nice, but mostly unproductive. Hoarding of wealth is another term for it.
A bank lending that money has greater scope to impact on all levels of society at anyone time.
Ultimately the point will be, why bother acquiring such vast sums of wealth? It's not as if €2m a year is insufficient?

 

[Purple]

TheBigShort, why not just have high inheritance taxes? Most people with vast incomes get it from inter-generational wealth.

 

[TheBigShort]

TheBigShort, why not just have high inheritance taxes? Most people with vast incomes get it from inter-generational wealth.

That would certainly be a consideration. But one problem is once the inheritance is acquired, an individual could be saddled with a tax liability that they can't afford to pay. In turn forcing the sale of assets, some with considerable sentimental value (family home etc). This builds resentment and in turn resistance.
I'm not seeking either, I'm seeking to establish, as a social norm, that the acquisition of extreme levels of personal wealth becomes a thing of past, a fruitless endeavor.

 

[Firefly]

The consequence of this, over a period of time, if such a proposal were adopted as a social norm, would be the eventual eradication of socially unjust controls of excessive wealth.
It is fine to have €1bn in a bank account, but what odds? Your lifestyle is restricted to €2m a year.

That's my point. If you can only take out 2m a year you are not going to take out any more as it will just be taken in full. The end result is that it would sit there. Any billionaire worth his/her salt would get a return of more than 2% so they would just continue to get richer. How would this eradicate their wealth? If there was a tax tomorrow of 100% on any income over 25k a year and you were in control of how much you took as salary, would you pay yourself more than 25k?

As mentioned above, €1bn sitting in a bank account will be used to lend and invest into the economy at large - no change there. All that will happen is that money will recycle its way back into the economy and out of the control of one individual.
The bank will act as an effective conduit between those who create the wealth and those who benefit.

A bank lending that money has greater scope to impact on all levels of society at anyone time.

Would these be the same banks who chase unfettered profits and give lavish bonuses to their executives?
The devil would be in the detail there.

Without a income limit, there is nothing to stop an individual placing €20m on black in a casino. The result being a massive transfer of wealth between two entities - the casino and the individual.
And yes, if the casino wins (invariably), the money can lie in a vault doing precious little. Alternatively the punter wins and buys a private island, a private jet, a castle, and a fleet of bespoke automobiles. All very nice, but mostly unproductive.

You could say that about someone who buys expensive things like paying 10k for a bicycle or 1k for the latest iPhone when they could buy something cheaper. All that money being spent on something unproductive? Shouldn't they just buy cheaper bikes and phones and shouldn't their income be instead re-distributed? Where do you draw the line?

Ultimately the point will be, why bother acquiring such vast sums of wealth? It's not as if €2m a year is insufficient?

If you were told that you were going to be paid for Mon-Wed and anything you do on Thur & Fri you wouldn't be paid for would you come in on Thur & Fri? If Mark Zuckerberg knew his income would be limited to 2m a year would he have grown Facebook to a size that employs 17k workers?

 

[Purple]

That would certainly be a consideration. But one problem is once the inheritance is acquired, an individual could be saddled with a tax liability that they can't afford to pay. In turn forcing the sale of assets, some with considerable sentimental value (family home etc). This builds resentment and in turn resistance.

So you can live in a €20,000,000 house and have another billion in assets as long as you don't have an income over €2 million? If someone has assets but cannot generate an income from them why would they bother putting those assets to productive use?

I'm seeking to establish, as a social norm, that the acquisition of extreme levels of personal wealth becomes a thing of past, a fruitless endeavor.

Why? Is €2 million a year an extreme level of personal wealth? You are talking about consultant doctors, solicitors, barristers, etc. At the moment there is a considerable amount of tax evasion by those people (consultants don't insist on being paid in cash for nothing). We'll just see far more of it with your proposal.

If you want a fair society you'll also have to tackle welfare fraud and the black economy. There are far more than 300 people involved there, probably more like 300,000 people. It is a bit much to say that someone can't earn above X amount while there are others who can not bother to work at all, no legally anyway, and live their entire lives off others.

 

[Purple]

If you were told that you were going to be paid for Mon-Wed and anything you do on Thur & Fri you wouldn't be paid for would you come in on Thur & Fri?

That's what happens to me now. It's called income tax! I still come in though but Thursday and Friday are the two days a week I work in indentured servitude to the State.

 

[Firefly]

That's what happens to me now. It's called income tax! I still come in though but Thursday and Friday are the two days a week I work in indentured servitude to the State.

Explains why you're so grumpy on Fridays!

 

[Firefly]

That's what happens to me now. It's called income tax! I still come in though but Thursday and Friday are the two days a week I work in indentured servitude to the State.

On a serious note though, imagine if you didn't have to come in to work on Thur and Fri yet received the same after tax income, would you bother?

 

[Purple]

On a serious note though, imagine if you didn't have to come in to work on Thur and Fri yet received the same after tax income, would you bother?

No, of course not. Who would?

 

[Firefly]

No, of course not. Who would?

And that's the problem with socialism

 

[TheBigShort]

The end result is that it would sit there. Any billionaire worth his/her salt would get a return of more than 2% so they would just continue to get richer. How would this eradicate their wealth?

True, but it is effectively notional wealth. It actually has no intrinsic value, or very little, as it is effectively redundant in the possession of someone who already earns €2m a year.

If there was a tax tomorrow of 100% on any income over 25k a year and you were in control of how much you took as salary, would you pay yourself more than 25k?

Over a 7yr business cycle, absolutely, I would want to guarantee my income as much s possible in the event of a job loss.
But I still wouldn't propose such a notion as that would be organising society around equality of outcome (have you moved on from that?) given the vast number of working people it would affect.

Would these be the same banks who chase unfettered profits and give lavish bonuses to their executives?
The devil would be in the detail there.

Accept lavish bonuses and salaries greater than €2m wouldn't be a thing of the past. Speaking of bankers, BoI recently appointed a new CEO on €950,000 pa, assuming a bonus of €950k on top and even this banker would not be affected by a€2m income cap.

You could say that about someone who buys expensive things like paying 10k for a bicycle or 1k for the latest iPhone when they could buy something cheaper. All that money being spent on something unproductive?

True, there is waste at all levels, and it will be a tall order to eradicate it all. But perhaps a starting point would be to identity excessive waste.

If Mark Zuckerberg knew his income would be limited to 2m a year would he have grown Facebook to a size that employs 17k workers?

Mark Zukerberg is a US citizen. Like minimum wage, a max wage would vary from jurisdiction to jurisdiction. The €2m cap I propose is a ball park figure. In the US there is an income limit for NFL players, albeit it is massive at something like $167m a year.
Zukerberg intends to give 99% of his wealth away. Perhaps he has his own notion of what is a sufficient amount of wealth to possess? Obviously, it differs to me, but the principle appears to be similar, ditto Gates, and various other multi millionaires.

So you can live in a €20,000,000 house and have another billion in assets as long as you don't have an income over €2 million? I

But realistically, would a house ever be worth €20,000,000 if it was known that nobody had access to greater than €2m a year? An income limit would put a downward pressure on over inflated asset prices.

If someone has assets but cannot generate an income from them why would they bother putting those assets to productive use?

If you don't put them to productive use, your competitor will. If the product is viable and marketable, someone, if not you, will take the opportunity. Isn't that the 'invisible hand'?

Why? Is €2 million a year an extreme level of personal wealth? You are talking about consultant doctors, solicitors, barristers, etc. At the moment there is a considerable amount of tax evasion by those people (consultants don't insist on being paid in cash for nothing). We'll just see far more of it with your proposal.

No, €2m is not an extreme level of wealth. It is a ball park figure. Raise it to €3m if you want. The point is, that it is certainly sufficient, attainable, but broadly out of reach for 99.985% of the population.

It is a bit much to say that someone can't earn above X amount

It only matters if it affects you directly. It makes no odds to me as I don't come anyway near it, nor likely to. It only affects some 300 people in Ireland. Raise the cap to €3m and you may only be talking about 50-100 people.

That's what happens to me now. It's called income tax! I still come in though but Thursday and Friday are the two days a week I work in indentured servitude to the State.

So Fireflys notion that you wouldn't come in was wrong.

On a serious note though, imagine if you didn't have to come in to work on Thur and Fri yet received the same after tax income, would you bother?

Bother with what exactly?

 

[TheBigShort]

On a serious note though, imagine if you didn't have to come in to work on Thur and Fri yet received the same after tax income, would you bother?

So if I earn €300 mon-wed, and if I come in Thur-Fri, and still end up with €300 why wouldn't I bother? Is that it?