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When famous bank robber Willy Sutton was asked why he robbed banks, he reportedly replied "Because that's where the money is." And when our next President, no matter who it is, and Congress try to unscrew this financial mess, they will quickly realize two things:

- It will require a crapload of money.

- Poor people don't have money

Like a group of Willy Suttons, they will come after the rich because no one else will have any money. The fairness part of the debate will become moot.

The problem is that the rich are the only group powerful enough to stop the government from raising their taxes. So my question to you today is this: What is the best way to confiscate money from the rich?

There must be some way to give the rich a spoonful of sugar to make the medicine go down. Somehow the impression of unfairness has to be mitigated so they comply willingly. Allow me to jump to some bad examples to make the point.

Suppose the next President made the following pitch. "This is a once-in-a-century cash crisis. To get us through, we are going to tax the rich heavily for the next ten years. In return, the rich will each get two votes in every election."

Now remember that the spoonful of sugar can be more psychological than economical. A double vote is the one sort of thing a rich person can't already buy. And it wouldn't have much impact on democracy because there aren't that many rich people. Everyone gets something. The poor get money, the rich get slightly more influence.

Or suppose the rich were required to fund alternative energy projects directly, and in return get some equity, like a mandatory venture capital model. I would much rather give my money to a specific venture with a tiny chance of payback, as opposed to the general tax fund.

I would also feel okay about a tax increase if 100% of the extra money went to buy healthcare for those who couldn't afford it, and I knew how many people that was. For example, if I got a tax bill from the government with a specific dollar amount, and next to it an estimate of the number of people it will give healthcare to, I couldn't feel so bad about it. I'll only get pissed if my money goes into some general fund to buy bridges to nowhere.

Or suppose Congress makes a deal with the rich, something along the lines of raising their taxes only if the government reforms something in particular that is widely agreed to need reform. I wouldn't mind paying extra taxes if it inspired the government to be more effective or efficient going forward.

Or how about requiring the rich to buy foreclosed houses, with a requirement that they rent them to others for the next 15 years? The rich can qualify for the lowest loan rates (or pay cash), so the credit problem would be solved. While the rental income wouldn't cover the loan and other costs, there is some potential that the investment could turn at least neutral when home prices rise in the future. Low income people would get extra places to rent, and rich people wouldn't feel so screwed if they owned property that had some chance of breaking even. And banks would be solvent.

And suppose you require the rich to install solar panels and other energy solutions to each foreclosed home they purchase, and optionally roll that expense into the mortgage. That would create lots of jobs and reduce national energy consumption at the same time.

In business school we learned that you can usually reach a deal whenever two parties put different values on things. Do you have any better ideas for how the government can confiscate money from the rich and make everyone happy about it?

 
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Sep 23, 2008
Why don't we just level everyone out to the same amount of wealth? That would be great! There would be no more rich, no more poor, everyone would be equal! And who better than the government to decide this! I'm on board!!!
 
 
Sep 23, 2008
First, it is the "rich" that are being bailed out in this situation. So you are going to take from them in order to give to them?! Sounds like they already have it worked out.

Second, do you truly believe that there is nothing to give back from the existing federal budget that could pay for the bailout? Nothing? The question assumes a realistic baseline that does not exist.
 
 
Sep 23, 2008
I am surprised, shocked even, that you Mr. Adams, of all people would advocate theft.
You say the argument of "fairness" is moot. I say the argument of "greater good" is moot.
I don't care who it benefits, you cannot solve a problem by harming someone.
Theft is theft is theft, whether it's a small time burglar or an army of politicians.
 
 
-2 Rank Up Rank Down
Sep 23, 2008
You seem to imply that there is something unfair about raising the taxes of the rich and they should therefore be compendated. If on the other hand the tax system is already messed up with some rich families facing lower marginal tax rates than some poor families then taxing the rich more is simply returning the system to balance and no compensation should be expected. The NBER paper below does a good job of calculating METRs and shows just how in need of reform the US tax system is.

"Does It Pay, at the Margin, to Work and Save?" by Laurence J. Kotlikoff and David Rapson
http://www.fairtax.org/PDF/DoesItPayToWorkAndSave-120906.pdf

Abstract:
Building on Gokhale, Kotlikoff, and Sluchynsky's (2002) study of Americans' incentives to work full
or part time, this paper uses ESPlanner, a life-cycle financial planning program, in conjunction with
detailed modeling of transfer programs to determine a) total marginal net tax rates on current labor
supply, b) total net marginal tax rates on life-cycle labor supply, c) total net marginal tax rates on saving,
and d) the tax-arbitrage opportunities available from contributing to retirement accounts. In seeking
to provide the most comprehensive analysis to date of fiscal incentives, the paper incorporates federal
and state personal income taxes, the FICA payroll tax, federal and state corporate income taxes, federal
and state sales and excise taxes, Social Security benefits, Medicare benefits, Medicaid benefits, Foods
Stamps, welfare (TAFCD) benefits, and other transfer program benefits. The paper offers four main
takeaways. First, thanks to the incredible complexity of the U.S. fiscal system, it's impossible for anyone
to understand her incentive to work, save, or contribute to retirement accounts absent highly advanced
computer technology and software. Second, the U.S. fiscal system provides most households with
very strong reasons to limit their labor supply and saving. Third, the system offers very high-income
young and middle aged households as well as most older households tremendous opportunities to arbitrage
the tax system by contributing to retirement accounts. Fourth, the patterns by age and income of marginal
net tax rates on earnings, marginal net tax rates on saving, and tax-arbitrage opportunities can be summarized
with one word -- bizarre.
 
 
Sep 23, 2008
My idea isn’t a full one, but more of half a thought I suppose. Some see the problem as "the rich have money and we don't, therefore they should be able to give some up, it's a good cause after all!" and others see it as "I work hard everyday, taking on multiple jobs to secure a decent living for myself and my family, and now because I work I’m being punished?" I believe at some point that those 'rich' people will see that they will eventually get more if they quit their jobs and become 'poor'. That will in no way help solve the problem at hand. What I propose is some form of test for those who claim they are ‘poor’ that instead of giving them free stuff, make them earn it in some form. Make the way they earn it unpleasant as well, I think that will motivate them to get a job rather than use the current system of “I get more money when I wait for them to give it to me then if I were to go get it myself". Like I said, the thought is incomplete as it is, but the bottom line is:There are people out there that really need the help, but we shouldn’t have to carry the load of those who don’t.
 
 
+1 Rank Up Rank Down
Sep 23, 2008
Turn the Dept. of Defense into an amusement park: 1/2 hour thrill rides in a fighter jet for $100K, drive an M1 Abrams tank over an old car for $50K (for an extra $20K, you get to blow it up), etc.

The Russians are already on to this with the $20M "space tourist" rides.
 
 
+8 Rank Up Rank Down
Sep 23, 2008
Here is how I would confiscate vast amounts of money from the rich:

First off, taxes are always going to be unpopular. Besides, what makes a person rich isn't their income so much as it is their assets. So you would have to make huge income tax increases on the rich before it made a difference, and even then, they'd just move their money to funds with no reportable annual gains and sit on it. Obviously, you need to tax their assets.

So where to rich people keep their vast hordes of money? Not in matresses or cookie jars, but rather, they keep it invested. Stocks, mutual funds, real estate, etc. You need to tax their investment accounts and properties.

But that's downright evil. You can't tax that directly, people would revolt. No, you'd have to come up with a way that didn't look like a tax. Make it seem like it was the right thing to do instead.

You'd have to come up with a way to get the suckers to sell you their assets at a huge discount. Create some kind of panic that results in a fire sale. How about mortgages? You could force banks to give mortgages to unqualified poor people and minorities. That carries a bonus of making you look like a savior to the people. Once there's a huge amount of those mortgages, create a scare to drive the perceived value of all mortgages down to nothing.

At this point, convince regional banks to invest in some entity that you control by telling them they'll be safe. Then destroy their equity in that entity. That transfers all of their wealth to you right off.

Now, you have people begging to give their assets to you, because all of those mortgages have a *perceived* value of almost nothing. At this point, convince banks that you will "rescue" them by buying trillions of dollars in mortgages for pennies on the dollar. Again, you look like a savior. Wait a few years for the prices to stabilize and you make a KILLING.

And, voila! You've taken trillions from the rich by destroying banks and stealing mortgage backed securities. On top of it all, you've expanded your power through regulation AND you look like a hero for saving the world economy!
 
 
Sep 23, 2008
The rich will already being doing those things because they are good investments.

The last thing we need is the government REQUIRING a particular investment. Each person "voting" on what they think has the most potential with their dollars is far more efficient than an "all knowing" government panel deciding how to spend it for them. We will never spend someone else's money as carefully as we spent out own. (paraphrasing Milton Friedman).
 
 
Sep 23, 2008
How about we forget this whole notion of "screw the rich, they deserver it" and remind ourselves what makes this country exceptional (look that word up). Every idea that comes form someone about redistributing wealth because it is "fair" is pure and utter BS. The "rich" as defined by today's politician are thoe top 49% of wage earners in this country, whatever that line of income happens to be at the present moment. Just enopugh to not have the majority. They pay 95% of the taxes in this country, and provided 100% of the jobs in either creating a business or supporting them.
And then when the government screws up the economy (who was running Fannie Mae and Freddie Mac? Private enterprise my ass) by giving loans to those that cannot afford it and then lowering interest rates to less than 1% to fuel a run on equity, well surprise surprise, who has to bail it all out.

Time to throw all the social engineering out of our government, once and for all. They have screwed everything they have touched, and peole want more. There are a couple of posyts about govt healthcare. Have you ever seen a VA hospital. Have you ever seen what Medicare pays compared to private health insurance. Costs will NOT go down, and quailty will not stay up.

Government is not and has never been the answer. Looking to it as the answer ids looking for trouble down the road.
 
 
Sep 23, 2008
[A double vote is the one sort of thing a rich person can't already buy. ]

Kinda like I can't drive 5mph above the speed limit. Because it illegal. Right?
 
 
+1 Rank Up Rank Down
Sep 23, 2008
One reason to argue about not increasing taxes (too much) on the rich is that mostly rich people are in some sort of business or other. They would just pass the tax increase down to whatever products they are selling with a price hike. So who is hurting, the poor of course.
I am all in favor for increasing taxes for the millionaires (don't know the exact definition of rich - translate to $x in total household income? - Scott please supply the x), if they promise not to pass down the buck.
 
 
Sep 23, 2008
Rich people pay a lot of tax. But corporations pay very little tax. About 2/3 of US corporations pay no tax.
 
 
Sep 23, 2008
Fire@will writes:
The "rich" don't have enough money to make everyone else rish. Confiscate all the wealth of the wealthiest ten percent and I'll bet it would not pay our debts for a month. Then what?

From http://en.wikipedia.org/wiki/Distribution_of_wealth:
The United States is one of the richest countries in the world, and in 2000, the mean wealth was $143,727 per person.[10] In the United States at the end of 2001, 10% of the population owned 71% of the wealth, and the top 1% controlled 38%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.

Hence, the rich actually DO have enough wealth to make EVERYONE in the US rich - if it were possible to redistribute this wealth without causing massive inflation, which it would not be.

One of the best-kept secrets of the rich is that being wealthy (not just having lots of zeros in your bank balance, but being able to have a life of leisure, space, and privacy) requires other people to be poor.
 
 
Sep 23, 2008
What, me revolt?
 
 
Sep 23, 2008
Define "the rich"
 
 
+7 Rank Up Rank Down
Sep 23, 2008
I get a little sickened/annoyed/angry by claiming people that can't AFFORD healthcare, housing, etc. There MAY be some that are legitimately in this situation but there seems many more who SAY they can't AFFORD healthcare but have new iPhone, latest $150 athletic shoes, 21" rims on their cars, premium cable channels, smoke a carton of cigarettes a week. Many can afford health care, insurance, etc. but choose not to and/or make bad decisions over and over again.

Again, the bottom 50% of the wage earners pay virtually NO TAXES... and in fact get earned income tax credit which is already redistributing wealth. As someone mentioned, collecting just $120 dollars/year from 100 million people works better and is more fair than collecting $120,000/year from 100,000 people.

As far as the recent financial crisis, look no further than Chris Dodd and Barney Frank who controlled committees that, by regulations, forced banks to give money to those that could not otherwise qualify for the loans in the name of "affordable housing". Republican efforts in 2003 and 2005 to force banks to require more stringent standards were quashed. Ironic that this is the first major event that the Democratic controlled congress is NOT calling for investigations... because they know where the trail leads. When "big oil" is demonized, they march their CEO's before congress. They crucify Ken Lay and those they deem responsible for Enron crisis. This is much worse.... why no investigation? Where is Frank Raines, Jim Johnson and others responsible for mismanagement of Fannie Mae and Freddie Mac? Why aren't they being called before congress?
 
 
Sep 23, 2008
Of course, anytime that we bestow a societal good such as healthcare to a child or to an adult who needs it for emergency reasons and who is not able to get it on his own, by definition the money that goes into doing that is sucked away from people who may (or may not) benefit from the later fruits of this charity or from similar charities themselves. I think that most people, like you, would not necessarily mind a small dollar amount tax hike if it happened to save the lives of certain people, but you're absolutely right that the uncertainty of where the money from taxes ends up and the distrust of the administrators is a big deterrent to what I'd hope is the natural impulse of human charity.
 
 
-1 Rank Up Rank Down
Sep 23, 2008
The only fault I can find with the basic premise of this is the idea that the rich are bailing out the poor. The fact is the bailout is FOR THE RICH! That's why there's no bailout for individual foreclosures. The poor losing money only hurts them but the rich losing money apparently is bad for everyone, especially the politicians who rely on the rich to fund their campaigns and junkets. So the rich should be more than happy to help out their fellow richies. Oh wait , the rich want all the money so giving any to anyone else is anathema. By the way, the rich don't want two ordinary votes. They just wait and see who gets elected and buy the big votes the ones that actually accomplish their aims.
 
 
Sep 23, 2008
A Stock Transaction Tax with the tax rate tied to the Federal Deficit. This would tax people who have money and are looking to make more money. Linking it to the deficit would prompt the government to straighten up or have to answer to the wealthier folks who have to pay it. The government tends to react faster to the wealthy and businesses.
 
 
Sep 23, 2008
Tax cuts.

They increase tax revenue due to the rise in economic activity they create.

Tax increases shrink the economy and reduce revenue.
 
 
 
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