Tiberius Posted October 22, 2014 Author Share Posted October 22, 2014 TYTT already explained how they are different. Income is an agreement between an employer and employee with very little risk to the earner. Capital gains comes from taking after tax dollars and investing it sometimes taking a huge risk but with that risk there can be a great reward. There needs to be an incentive to take that risk and one of the incentives is better tax treatment. Just because some people use capital gains to grow their wealth or live off of does not make it income. Now if you were talking dividends that's another story. Many people do use dividend as income however there is a much greater risk to them as well so they are also given a better tax treatment. Investing is how companies grow. If people stopped investing because there was no incentive to take that risk and went with safer routes to generate income (ie. bonds) then many company's growth would slow greatly or cease altoghether. Now to your second question. What if the person maiking $500k a year blew it all on coke and hookers and lived in a $1,000 a month apartment? Would you consider that person wealthy? Hence the differene between income and wealth. 1) That's bunk. Jobs have risks too. What if you get too sick to work? There is an accident? The business closes? So that argument makes no sense at all Your second point is equally pointless. A person with two million dollars could blow their wealth in the same way Link to comment Share on other sites More sharing options...
Deranged Rhino Posted October 22, 2014 Share Posted October 22, 2014 1) That's bunk. Jobs have risks too. What if you get too sick to work? There is an accident? The business closes? So that argument makes no sense at all Your second point is equally pointless. A person with two million dollars could blow their wealth in the same way Link to comment Share on other sites More sharing options...
birdog1960 Posted October 22, 2014 Share Posted October 22, 2014 (edited) Here are a couple takes on how inequality impact economies: http://www.imf.org/e.../pdf/kumhof.pdf http://www.economoni...-of-inequality/ thanks for these. i especially like roubini's piece. unfortunately, i doubt they'll be looked at by many here. " the rise of the middle class and the increasing living standards of the working class was thus not a mechanical result of economic growth, but the active outcome of many economic policies—such as universal publicly provided education financed by progressive taxation, to give just one example—that increased the skills, knowledge and human capital and the economic opportunities even of individuals born in disadvantaged economic circumstances. Social mobility in any society was never the result of market forces, but the outcome of progressive economic, fiscal, taxation and other social policies" Edited October 22, 2014 by birdog1960 Link to comment Share on other sites More sharing options...
TPS Posted October 22, 2014 Share Posted October 22, 2014 TYTT already explained how they are different. Income is an agreement between an employer and employee with very little risk to the earner. Capital gains comes from taking after tax dollars and investing it sometimes taking a huge risk but with that risk there can be a great reward. There needs to be an incentive to take that risk and one of the incentives is better tax treatment. Just because some people use capital gains to grow their wealth or live off of does not make it income. Now if you were talking dividends that's another story. Many people do use dividend as income however there is a much greater risk to them as well so they are also given a better tax treatment. Investing is how companies grow. If people stopped investing because there was no incentive to take that risk and went with safer routes to generate income (ie. bonds) then many company's growth would slow greatly or cease altoghether. Now to your second question. What if the person maiking $500k a year blew it all on coke and hookers and lived in a $1,000 a month apartment? Would you consider that person wealthy? Hence the differene between income and wealth. As you stated, there are larger rewards for those who take risks. Adding a tax incentive for "risk-taking" is a matter of public policy, not the reward for taking that risk--that's built into the risk premium on any investment. Also, there is a significant distinction between investment by companies vs investing in companies. Buying shares of stocks has almost no impact on the decision of firms to invest in real capital. Link to comment Share on other sites More sharing options...
Tiberius Posted October 22, 2014 Author Share Posted October 22, 2014 Oh come on Greg, don't be a bottom feeder, what's your criticism? Link to comment Share on other sites More sharing options...
DC Tom Posted October 22, 2014 Share Posted October 22, 2014 Oh come on Greg, don't be a bottom feeder, what's your criticism? Greg, if you'd like to use "You're an idiot" to answer this question, I grant you license. Link to comment Share on other sites More sharing options...
Tiberius Posted October 22, 2014 Author Share Posted October 22, 2014 Greg, if you'd like to use "You're an idiot" to answer this question, I grant you license. And I bet he does! I was thinking, "Gees, is he Tom's new suck up?" Link to comment Share on other sites More sharing options...
Chef Jim Posted October 22, 2014 Share Posted October 22, 2014 1) That's bunk. Jobs have risks too. What if you get too sick to work? There is an accident? The business closes? So that argument makes no sense at all Your second point is equally pointless. A person with two million dollars could blow their wealth in the same way 1) There are insurances for those things. 2) What it the net worth (ie wealth) of someone who has two million dollars and blows it all? Link to comment Share on other sites More sharing options...
DC Tom Posted October 22, 2014 Share Posted October 22, 2014 1) There are insurances for those things. It's also not a risk of employment. Link to comment Share on other sites More sharing options...
/dev/null Posted October 22, 2014 Share Posted October 22, 2014 Greg, if you'd like to use "You're an idiot" to answer this question, I grant you license. Granting license in this situation is not necessary. When dealing with Gatorman, "You're an idiot" is in the public domain Link to comment Share on other sites More sharing options...
Tiberius Posted October 22, 2014 Author Share Posted October 22, 2014 1) There are insurances for those things. 2) What it the net worth (ie wealth) of someone who has two million dollars and blows it all? 1) There are ways to structure investments that reduce risk, also. Indexed mutual funds for instance. 2) And...what?? Link to comment Share on other sites More sharing options...
birdog1960 Posted October 22, 2014 Share Posted October 22, 2014 As you stated, there are larger rewards for those who take risks. Adding a tax incentive for "risk-taking" is a matter of public policy, not the reward for taking that risk--that's built into the risk premium on any investment. Also, there is a significant distinction between investment by companies vs investing in companies. Buying shares of stocks has almost no impact on the decision of firms to invest in real capital. interesting how you inflict a frontal assault on a major part of chef's argument but he appears preoccupied with setting gator straight on wealth and income - which is immaterial to the discussion. Link to comment Share on other sites More sharing options...
GG Posted October 22, 2014 Share Posted October 22, 2014 thanks for these. i especially like roubini's piece. unfortunately, i doubt they'll be looked at by many here. As opposed to looking at it and not understanding the content? Dogs watch a lot of TV too. Ever wonder why so few economists ever made good CEOs? Link to comment Share on other sites More sharing options...
GG Posted October 22, 2014 Share Posted October 22, 2014 As you stated, there are larger rewards for those who take risks. Adding a tax incentive for "risk-taking" is a matter of public policy, not the reward for taking that risk--that's built into the risk premium on any investment. Also, there is a significant distinction between investment by companies vs investing in companies. Buying shares of stocks has almost no impact on the decision of firms to invest in real capital. Don't have time for full response, but there's a lot of interplay between tax rates and deployment of capital, etc. I also wouldn't be so flippant as to ignore the links between stock prices and companies' capital decisions. Company would be more willing to invest in itself if there's investor confidence. Also income inequality manifests itself in many forms. But suffice it to say, the Obama economic teams' policies have exacerbated the recent income inequality statistics. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted October 22, 2014 Share Posted October 22, 2014 (edited) Don't have time for full response, but there's a lot of interplay between tax rates and deployment of capital, etc. I also wouldn't be so flippant as to ignore the links between stock prices and companies' capital decisions. Company would be more willing to invest in itself if there's investor confidence. Also income inequality manifests itself in many forms. But suffice it to say, the Obama economic teams' policies have exacerbated the recent income inequality statistics. I'd go a step further and make the argument that income inequality is one of the major reasons the standard of living is so high for America's "poor", when compared to the rest of the world. Edited October 22, 2014 by TakeYouToTasker Link to comment Share on other sites More sharing options...
Chef Jim Posted October 22, 2014 Share Posted October 22, 2014 1) There are ways to structure investments that reduce risk, also. Indexed mutual funds for instance. 2) And...what?? 1) How does an indexed fund reduce your risk? 2) We get it. You don't understand the definition of wealth. Link to comment Share on other sites More sharing options...
Tiberius Posted October 22, 2014 Author Share Posted October 22, 2014 1) How does an indexed fund reduce your risk? 2) We get it. You don't understand the definition of wealth. 1) Really? You seriously don't know? I thought you had something to do with investing. 2) You were talking about behavior, which makes income/wealth debate moot. I'd go a step further and make the argument that income inequality is one of the major reasons the standard of living is so high for America's "poor", when compared to the rest of the world. The more millionaires the more people living in the middle class Link to comment Share on other sites More sharing options...
Deranged Rhino Posted October 22, 2014 Share Posted October 22, 2014 1) Really? You seriously don't know? I thought you had something to do with investing. 2) You were talking about behavior, which makes income/wealth debate moot. The more millionaires the more people living in the middle class Behavior has no bearing on wealth? Link to comment Share on other sites More sharing options...
birdog1960 Posted October 22, 2014 Share Posted October 22, 2014 As opposed to looking at it and not understanding the content? Dogs watch a lot of TV too. Ever wonder why so few economists ever made good CEOs? i'm pretty certain i understand the roubini quote i pasted. not a lot to decipher there: the rise of the middle class was due to "progressive economic,fiscal and other social policies". not due to economic growth. interesting that in states like nc they are actually going after one of the reasons roubini gives for middle class success: education. keep em stupid. but you keep it up with your hand wave dismissal of arguments. it's befitting of a pompous ass like you. Link to comment Share on other sites More sharing options...
Tiberius Posted October 22, 2014 Author Share Posted October 22, 2014 Behavior has no bearing on wealth? Of course it does. But you can't tax people differently because one is a dirty drunk and the other is a vegan Link to comment Share on other sites More sharing options...
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