Hard work = $250,000 ?
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| Fri, 10-24-2008 - 9:07am |
I’ve read repeatedly that the $250,000 is hard earned money that the government has no right to tax. Personally, I don’t believe that hard work consistently results in high salaries and I’m not convinced that people who make more money work harder or deserve more than most people. Most people, I believe, do work hard and most people are rewarded with 25,000 – 45,000 salary. Not all some hard workers make more and some make less. What do you think? Is the Just World view valid?
http://www.princeton.edu/~rbenabou/beliefs7csend.pdf
most people have a strong need to believe that they live in a world that is just, in the sense that people generally get what they deserve, and deserve what they get. When confronted with data that contradicts this view they try hard to ignore, reinterpret, distort, or forget it —for instance by finding imaginary merits to the recipients of fortuitous rewards, or assigning blame to innocent victims.
Because of their imperfect willpower, individuals constantly strive to motivate themselves (or their children) towards effort, educational investment, perseverance in the face of adversity, and away from the slippery slope of idleness, welfare dependency, crime, drugs, etc. This is another recurrent finding from the sociological evidence. In such circumstances, maintaining somewhat rosy beliefs about the fact that everyone will ultimately get their “just deserts” can be very valuable. Furthermore, if enough individuals end up with the view that economic success is highly dependent on effort, they will ultimately represent a pivotal voting block, and set a low tax rate. Conversely, when individuals anticipate that society will carry out little redistribution, the costs of a deficient motivation to effort or savings are much higher than with high taxes and
a generous safety net. Each individual thus has greater incentives to maintain his belief that effort ultimately pays, and consequently more voters end up with such a world view.
For instance, data from the World Values Survey shows that only 29% of Americans believe that the poor are trapped in poverty, and only 30% that luck, rather than effort or education, determines income. The figures for Europeans are nearly double: 60% and 54% respectively. Similarly, Americans are more than twice as likely as Europeans to think that the poor are lazy (60% versus 26%).
Indeed, 59% of Americans agree or strongly agree that “in the long run, hard work usually brings a better life”; this view commands much less support in Europe, ranging from 34% in Sweden to 43% in Germany.
Is the “American dream,” according to our theory, just a self-sustaining collective illusion?


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And they're never going to make $250,000, because they don't have the skills that someone will pay them $250,000 to use.
Boo hoo.
There's no magic to any specified level of income, other than the fact that Obama will start socking it to those who cross that threshold.
Regardless of how much you make, you can make more if you improve your skill set and work smarter.
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chose a different career...
one that pays the salary they want...
there are plenty of careers that provide that salary if anyone wants to put in the time / effort / sacrifice..
Look at BO who became a lawyer....he could have easily been making that much if he had stayed with it.
-Kristen
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not that alone, but the point is that that kind of dedication is often needed to succeed....and a lot of people on this board seem to brush that off....and ignore the sacrifices that families have made along the way...and just moan about how much money they make now, or how successful these people are.
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i dissagree with your sentiment here, i don't think that population is large enough to make much of a difference in these discussions....and...they may be born on third base, but without some effort of thier own, they will stay there, and we dont' tax financial position (wealth) we tax income...earned...so we only tax the money they make given thier effort.
AND.....just to get that baby onto 3rd base took effort by someone in the family, let's not pretend they were dropped there from out of nowhere.
-Kristen
Wow, till now, I've been enjoying reading this thread.
There are alot of good points in this thread, this is a great debate!
My thoughts on this matter are that I'm all for taxing people who earn more money at a higher rate.
I don't have a problem sharing the wealth with someone who isn't as fortunate as me or my family.
Absinthe-- I think your analysis about creating value is right on. Yes, top income earners do typically generate a lot of "value" for others. I do think that luck and other factors can play a role in how they get there (hollywood actors come to mind), but for the most part, I agree with your point about that. I'm not sure that its really the top earners though who are most disillusioned about the "just world" view though. So I don't think people who only make 100K a year are really so jealous of those making 250K. I think the problem is more the people on the low end of the pay scale who are doing jobs that don't generate a lot of economic "value," but are necessary to society; the people who are working really hard and not making enough to support their families. There does seem to be something "unjust" about that--if you are working hard at a job that society needs (otherwise it wouldn't be available), then why should your kids still be going hungry? I'm not arguing that increasing taxes on the wealthy fixes that problem, and I don't think that's at all the purpose of Obama's tax policy, anyway. But it is an interesting problem. In previous posts, I've said that unfairness has to exist to some degree for our society to function. But there are some levels of unfairness that can work against our society. We perhaps need people out there to have "some" faith in a just world--that if they work hard, they should be able to make ends meet at the least. Because if they can't believe that, then what is the point of them working at all? Why not turn to a life of crime or homelessness or just milking the system if all of your efforts will be in vain anyway?
"Most people, I believe, do work hard and most people are rewarded with 25,000 – 45,000 salary. Not all some hard workers make more and some make less."
KAREN
The problem with the capital gains tax is that it has the ability to actually hurt those who work hard, too. For example, my father owns the majority of the stock in a small, closely held corporation that he created, built up (and incorporated) 50 years ago. He has 2 partners who also own stock and work in the business. He would now like to sell his interest to a younger partner in order to retire. The partner had planned to purchase the stock this year so that my father could utilize the current capital gains tax rate. Unfortunately, thanks to the failing economy and credit freeze, the partner can't raise the money. The new plan is to purchase the stock next year.
With the raise in capital gains tax, my father will now pay roughly HALF in capital gains and state income tax. My father DID work hard for this money. He has worked 60-80 hour weeks most of my life. He has had SEVERAL years during various recessions that he did not take a paycheck in order to continue to pay his employees and even GIVE RAISES during recessions. During the 1990's, he did enjoy a 6 digit income (on the lower end of 6 digits) but not since 1999. He is very generous to charity. Please explain to me how exactly it is FAIR for him to pay roughly 50% in taxes on his sale of the business??? Especially considering that he will need it to fund his retirement since his 401k is down 40% and will not recover in his lifetime?
FWIW, my father came from a lower middle class family. He did not attend college. We were/are your typical middle class family.
Honestly, this is just one example of how Obama's taxcuts will hurt MIDDLE CLASS people.
Have you read this article? http://money.cnn.com/2008/10/24/magazines/fortune/tully_henrys.fortune/index.htm
I am a CPA by trade. Honestly, the high tax rates during Clinton's presidency didn't affect the top 5% of WEALTH nearly as much as it affected the upper middle income class, thus reducing their ability to retain wealth and join the "rich".
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