Hard work = $250,000 ?
Find a Conversation
| 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?


Pages
<>
Great article !
People don't look at the BIG picture.
<
I disagree with you, but I'm pretty sure
Hi Kristen,
That's a really interesting question. :-) I do think that illegal workers are contributing to the problem, although they aren't necessarily competing for ALL of the low-paying jobs. But yeah, I think that tackling that problem may be one of the necessary steps toward a solution. I do think that both reducing illegal immigration and finding a path to legalization for illegals who are already here would both be helpful. Making illegals legal means that they don't go under the table anymore and people can't get away with paying them less than minimum wage. I have to admit that this is an issue I need to learn more about in order to evaluate the different policy options. One of the other posters made a point about the strong work ethic of some immigrant workers (not all illegal), and I thought this was interesting in light of wanting to encourage a good work ethic in our society.
I just read an interesting article and thought I would share some snips:
MM: To what extent is inequality addressed through tax policy?
Wolff: One reason we have such high levels of inequality, compared to other advanced industrial countries, is because of our tax and, I would add, our social expenditure system. We have much lower taxes than almost every Western European country. And we have a less progressive tax system than almost every Western European country. As a result, the rich in this country manage to retain a much higher share of their income than they do in other countries, and this enables them to accumulate a much higher amount of wealth than the rich in other countries.
Certainly our tax system has helped to stimulate the rise of inequality in this country.
We have a much lower level of income support for poor families than do Western European countries or Canada. Social policy in Europe, Canada and Japan does a lot more to reduce economic disparities created by the marketplace than we do in this country. We have much higher poverty rates than do other advanced industrialized countries.
MM: Do you favor a wealth tax?
Wolff: I’ve proposed a separate tax on wealth, which actually exists in a dozen European countries. This has helped to lessen inequality in European countries. It is also, I think, a fairer tax. If you think about taxes that reflect a family’s ability to pay, a family’s ability to pay is a reflection of their income, but also of their wealth holdings. A broader kind of tax of this nature, would not only produce more tax revenue, which we desperately need, but it would be a fairer tax, and also help to reduce the level of inequality in this country.
MM: In broad outlines, how would you structure such a tax?
Wolff: I would model it after the Swiss system, which I think is a pretty fair system. It would be a progressive tax. In the United States, the first $250,000 of wealth would be exempt from the tax. That would exclude 80 percent of all families. The tax would increase at increments, starting out at .2 percent from about $250,000 to $500,000. The marginal rate would go up to .4 percent from $500,000 to $1 million, and then to .6 percent from a $1 million to $5 million, and then to .8 thereafter.
It would not be a very severe tax. In fact, the loading charges on most mutual funds are typically of the order of 1 or 2 percent. It would not be an onerous tax, but it could raise about $60 billion annually. Eighty percent of families would pay nothing, and 95 percent of families would pay less than $1,000. It would really only affect very rich families.
We have much lower taxes than almost every Western European country.
And we also have higher growth and less unemployment than almost every Western European country.
"if all illegal workers were phased out....there would be more room for citizens to find good jobs...and the jobs would pay more than they do currently."
KAREN
hi Bridgette,
i agree, it isn't the whole story, but i think it is a large contributor to some of the issues with low paying jobs.
i also noticed the comment (that was a great post by the way) on the migrant workers being so motivated...
and i paused and thought more about it.....one of my thoughts was....people are more motivated when they need to be....those workers probably don't have many options at home...at least not as many options as thier american counterpart....that to me was teh difference between the farm employers' different experiences with the two groups....the american doesn't NEED to work as hard, they will probably be taken care of even if they don't....whereas some migrants DO NEED to work hard, they won't be taken care of if they don't.
in
-Kristen
<>
That's interesting, although there is a flip side too. Because of that intense motivation, some immigrants are willing to accept hours and job conditions that Americans consider to be inhumane. So its not always that the Americans are lazy, but that the immigrants are desperate enough that they allow themselves to be mistreated.
Pages