Buffett: Tax the Rich

[respect]

1. What does investing in the stock market do for the company except, if purchasing shares in that company is done with the market, increase the value of that companys shares? The majority of issued shares available on the market aren't new issues to raise capital for reinvestment, are they?

2. Where does the money earned from dividends and capital growth go if earned by very few individuals, especially if reinvested straight back in? What contributes to the economy more, 1000 people buying one loaf of bread each or 1 guy buying 10?

I've seen the %age of tax paid by the top x% of earners being greater than the bottom 50% used as a positive argument. That confuses the hell of out me.

Who would buy new issues of stock in the first place if there wasn't earning potential?

 

[bikerdruid]

Who would buy new issues of stock in the first place if there wasn't earning potential?

in a fair society, the workers would own all production.
investment would mean actually pulling up your sleeves and getting to work.
no one should make a profit on another's labour.

 

[respect]

in a fair society, the workers would own all production.
investment would mean actually pulling up your sleeves and getting to work.
no one should make a profit on another's labour.

FYI, your communist fantasies do not work in the real world.

 

[3point14]

FYI, your communist fantasies do not work in the real world.

They sort of do every now and then.

 

[bikerdruid]

FYI, your communist fantasies do not work in the real world.

worker's cooperatives work in all societies.
family businesses are a prime example.
ever heard of 'the family farm'?

 

[Skeptic Ginger]

None of that changes the fact that you are not making capital investments. You are making a wage. You are not tieing your money up in capital investments for a year or more, and assuming a risk that the money you invested will disapear in part or in whole.

I invest in capital in my business, I buy equipment and sometimes I buy more than a year's worth of supplies if I'm aware of a pending price increase or shortage. There is no guarantee that when I buy supplies that far ahead I will be able to sell them or that there won't be a price drop. And after investing in equipment to be able to provide a new service there is no guarantee anyone will want the new service or that I will want to continue providing that service.

For example, I bought equipment to be able to do on site cholesterol screens when one client asked me to put on an employee health fair. I haven't done any health fairs since and decided I didn't want to market the service as it was too far outside my specialty. It's not equipment I am likely to be able to resale.

 

[respect]

They sort of do every now and then.

Whole Foods does something similar in the United States. Nonetheless, neither business started that way.

 

[respect]

worker's cooperatives work in all societies.
family businesses are a prime example.
ever heard of 'the family farm'?

A handful of people can live together and share everything. It does not work on a larger level.

 

[Skeptic Ginger]

No. Skeptigirl is a contract employee. She has no capital investments at risk.

I am most definitely NOT a contract employee. As a matter of fact there is a very specific legal definition of contractor vs contract employee and I am legally an independent contractor.

 

[bikerdruid]

A handful of people can live together and share everything. It does not work on a larger level.

why would it have to?
large corporations are notorious for their inhumanity.
they have no place in a fair society.

 

[Skeptic Ginger]

She is free to set up her business differently if she would like. As it is, she undoubtedly has plenty of tax write offs but is earning a wage as a contractor. Capital gains would come from selling some (or all) of her investment.

Right. But I still have a capital investment that I risked to earn my profits. And my profits are still treated as income and not as gain.

 

[respect]

why would it have to?
large corporations are notorious for their inhumanity.
they have no place in a fair society.

Right, ownership via stock means no humanity.

 

[Skeptic Ginger]

Now we're just messing with semantics.

Both the worker and the investor invest money. The worker also invests time and effort. Both put their money at risk in the case that the business fails. Indeed, the investor often has many fingers in many pies and the failure of their investment in small business doesn't hurt them nearly as much as it does the person doing the actual work.

Why treat one any differently to the other? Certainly from a tax point of view.

This is the bottom line. The argument is being made that somehow the risk is what differs when clearly it doesn't differ.

You can say that lower taxes on capital gains in the tax code is designed to encourage investment, or to avoid punishing retiring homeowners who cash out home equity when they buy smaller homes, or whatever the goal is. Identify the end goal, not some arbitrary value judgement.

In this case, our economy is not suffering a supply side shortage. We are suffering a demand side shortage. Why should we be maintaining a tax code that favors supply and not demand when we need demand? Either stop using the tax code to encourage investment or demand, or switch to a code that encourages demand since that's what the economy currently needs.

 

[bikerdruid]

Right, ownership via stock means no humanity.

correct.
no one should make a profit on the labour of another.

 

[respect]

correct.
no one should make a profit on the labour of another.

Why not? Business owners are putting their wealth at risk.

 

[bikerdruid]

Why not? Business owners are putting their wealth at risk.

why would they need to do anything with their wealth, except live comfortably?
no one should be able to make a profit on the backs of the workers.

 

[respect]

why would they need to do anything with their wealth, except live comfortably?
no one should be able to make a profit on the backs of the workers.

Who will hire the workers?

 

[bikerdruid]

Who will hire the workers?

you miss the point.
the workers should own their own labour.
all means of production should be owned cooperatively by the workers.
there should be no bosses.

 

[respect]

you miss the point.
the workers should own their own labour.
all means of production should be owned cooperatively by the workers.
there should be no bosses.

Poor people would be screwed as they would lack the start up capital needed to go into business for themselves.

 

[lomiller]

Generally because we think it's a Good Thing^TM for peopleto make capital investments. The lower tax rate helps offset the risk of loss.

We may think investing is a good idea, but the bulk of capital gains is earned on money that would be invested anyway so it’s incentive value is questionable at best.

The lower tax rate helps offset the risk of loss.

As per above, the risk of loss is already going to be offset by expectations of higer returns and incentivizing reckless investing is generlay not a good idea.