The 50% Tax Rate

bendix

So, in other words, by using the leverage available and playing the game the way it's played, you earned more than you're worth, which - in a way - makes you worth it, surely.

I can't work out if you're some kind of muddle-headed do-gooder, or a machiavellian fiend.

I have my suspicions though . .

lostinrates

pqrdef wrote: »

Pure fantasy.

Most organisations are hierarchical. A group of people report to a line manager who represents them at the next level up. Almost invariably the line manager gets paid more than his "subordinates". Whether he can in any sense be said to create more wealth than they do is a different question entirely. No point in labouring the issue, it's been done, just see Dilbert and the Pointy-haired Boss.

People near the top, especially, will make the case for their subordinates to be overpaid in order to boost their own case for even higher pay.

I was never worth what I was paid. Didn't stop me using whatever leverage was available. In organisations, you play the game the way it's played. The notion that people are paid what they're worth doesn't even make it into Economics 101 nowadays.

What about when people near the top are shareholders or partners....wages paid reduce clear profit which reduce their income. DH works or a law firm with such a set up and very decent wages for the sector. When I employ here I pay a decent rate for decent people....it makes sense to me to pay someone I can trust and rely on even if its a few £££ an hour more than someone else whose work I need to check up on.

dtsazza

tomterm8 wrote: »

No, that is neither a principal of fairness, nor is it workable.

We all pay for services we don't use. For example, we pay for doctors and hospitals that, god willing, we are not using. We pay for armies and police forces that, god willing, we will never need.

The basic principal of such services are not that we pay at the point of use, it is that they are public goods which, as a society, we have agreed to pay for.

The reason for this is that in the event of, say, getting cancer the average person can't afford to pay for the hundreds of thousands of pounds of medical costs associated with health care.

I do agree that that's the ideal. I doubt many people would disagree with the Marxist principle of "From each according to his ability, to each according to his need." But the reality of why we haven't had a successful Marxist society comes down to individual motivation.

In my case, I would have no problem subsidising vast amounts of public services if it was done in such a way that it provided a good baseline from which everyone could work from to make their own contributions.

However, I do have a problem with making contributions that change the motivations of others by giving them perverse incentives. To make a few potentially facetious examples: a smoker doesn't need to pay more taxes, or pay higher health insurance premiums, or worry about having to save up hundreds of thousands of pounds for lung cancer treatment. An unemployed single mother doesn't have to worry (as strongly) about securing a source of income for an additional child, when she'll be given extra money from the state and a (larger) house for having it. A mortgage-holder who's overstretched yet decided not to take out PPI doesn't need to worry, since they get SMI to cover the costs.

All of these introduce moral hazard, in that they allow the people involved to engage in risky and potentially net unprofitable activities, and reap all the benefits while the costs are borne by a third party (the taxpayer) who doesn't have a say in it.

To me this is also a breach of the social contract; it shouldn't be possible to get anything out of society without making a reasonable contribution yourself. Anything involving moral hazard screws that sideways. Public endeavours should act to magnify the effectiveness of individuals, as opposed to bearing costs for them.


So, Marxist = win, but you've got to find a way of making it happen in a way that appeals to peoples' self-interests too. Free market principles are remarkable good in some cases at doing this.

Pete111

bendix wrote: »

And you call me economically illiterate?

Who is this 'we' that are paying the top-earners? Do you think Apple pays Steve Jobs millions of dollars a year salary for the hell of it, or do you think it's because he has created billions of dollars of value to not just his company, his employees, the wider society in which those employees spend their money, and of course his shareholders who have seen their shares rise 6000% during his term as CEO?

'We' pay the salaries of top private sector bosses by buying the goods and services they create. If we didnt buy them, the companies would die. It's not rocket science.

Ergo, they create wealth. In those instances where high salary people don't perform, they are sacked. It's the basic tenet of the free market.

They are not parasites on the production of the working people, Mr Marx. Those working people would not be working if it wasn't for the entrepeneurs who created their jobs.

Had an interesting debate with another poster the other week. He was churning out the 'Highly paid executives are unworthy and contribute nothing as the lower tiered workers are the clever/hardworking ones who mask their incompetance' line.

Given that these days pretty much everyone tends to start at the bottom when embarking on a career and look to move upwards as they gain skills and experience, I asked him why a previously hardworking and intelligent 'worker bee' would suddenly morph into a stupid, lazy, greedy Exec with nothing to add to the running of a business when they attained a certain level of seniority.

I'm still awaiting a response....

Kennyboy66

bendix wrote: »

And you call me economically illiterate?

Who is this 'we' that are paying the top-earners? Do you think Apple pays Steve Jobs millions of dollars a year salary for the hell of it, or do you think it's because he has created billions of dollars of value to not just his company, his employees, the wider society in which those employees spend their money, and of course his shareholders who have seen their shares rise 6000% during his term as CEO?

A fairly poor example as Steve Jobs salary at Apple has always been $1 per year.

He owns plenty of shares, but I doubt his motivation has ever been about the money.

pqrdef

bendix wrote: »

So, in other words, by using the leverage available and playing the game the way it's played, you earned more than you're worth, which - in a way - makes you worth it, surely.

I thought it was about wealth creation, not market manipulation.

pqrdef

Pete111 wrote: »

I asked him why a previously hardworking and intelligent 'worker bee' would suddenly morph into a stupid, lazy, greedy Exec with nothing to add to the running of a business when they attained a certain level of seniority.

It's a question of focus. One guy might apply his hard work and intelligence to organising the warehouse or scheduling the lorries, and the next guy will apply his hard work and intelligence entirely to the business of climbing the greasy pole. Which one gets to the top?

pqrdef

dtsazza wrote: »

All of these introduce moral hazard, in that they allow the people involved to engage in risky and potentially net unprofitable activities, and reap all the benefits while the costs are borne by a third party (the taxpayer) who doesn't have a say in it.

And fire insurance allows people to play with matches. Not a brilliant reason not to have some, let alone to ban it.

There are separate questions here. One is about the extent to which people's mishaps are self-inflicted rather than accidental. Views will differ widely on that.

The other is about the extent to which insurance should be voluntary rather than mandatory, and what happens to people who opt out.

Neither is simple. There are those who would opt out of healthcare schemes and pay for their own treatment, but there's always the residual risk that they're unable to pay.

And we might feel that somebody who drives like an idiot should invalidate his car insurance, but we would hesitate to apply that to third-party cover if it meant that an injured third party didn't get compensated. Of course this is particularly relevant to the case of single mothers, where there are always innocent third parties involved.

bendix

At the end of the day, pqr, everyone is paid exactly what they are worth to their employers. Otherwise they wouldn't be paid it. It's a truism you simply can't escape from.

How they positioned themselves to be worth it is irrelevant, but to come at it from your childish - nobody should earn high salaries - logic is ridiculous.

If you think it is possible to create a flat society, take a look at those nations that have tried it and see how they have fared to date. All such attempts to flatten society fail to address and manage one inescapable truth - human nature and its desire to progress.

pqrdef

bendix wrote: »

At the end of the day, pqr, everyone is paid exactly what they are worth to their employers. Otherwise they wouldn't be paid it. It's a truism you simply can't escape from.

My original claim was that nobody is so much better than the rest of us as to be worth more than 6 times an average wage. You've twisted the meaning of "worth" so far that it no longer has any connection with being better than the rest of us. So I'll stand by what I said.

bendix wrote: »

If you think it is possible to create a flat society, take a look at those nations that have tried it and see how they have fared to date. All such attempts to flatten society fail to address and manage one inescapable truth - human nature and its desire to progress.

We don't know how to stop the rich and powerful accumulating even more wealth and power. But nor do we know how to solve the problems that invariably arise when they do. First "let them eat cake", and then the revolution. Madame Guillotine flattened a fair bit of society, just above shoulder level.

And those who would suppress the revolting classes by force don't seem to prosper for too long, even though Cameron seems intent on joining them.

Perhaps it comes down to how much the rich will give in order to be left in peace with the rest.