What is a Fair Distribution of Income?

[adios]

I wrote in a reply in another post:

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BTW what is fair re-distribution on income anyway? I think that's relevant question that I've never heard an answer to from the Democrats, it's a fair question, and a question that can certainly be answered without any equivocation whatsoever. I'm going to make a separate post so I'll see if anyone of the raise tax advocates has an answer.

[/ QUOTE ]

Well does anybody have an opinion? For the most part income distribution is divided into quintiles so what percentage of income should each quintile have after the feds assess income taxes?

[El Barto]

I think one must consider the life cycle in this analysis. Over an average person's lifetime one will typically start near minimum wage and go upwards with more education and more experience.

I wonder what the income distribution of people aged 35 to 60 is. I imagine it is flatter than when you include all ages.

The same is true with asset distribution. As a group old people have the most assets, but they accumulated it over many years.

[MMMMMM]

IMO the income tax should be entirely replaced by a consumption tax with exemptions for basic necessities. So I'm afraid I can't answer your question;-)

www.fairtax.org

[eLROY]

That's easy. Suppose you have $10,000, and you want a red car. One guy has a red car for sale, and another guy has a blue car for sale. A fair distribution of income is $10,000 to the guy with the red car, 0 to the guy with the blue car.

[Utah]

I think that is fairly easy. Income should be distributed equally among all people (adjust for some sort of age curve), all else being equal.

The problem with this is that there is a tradeoff to equal distribution - overall wealth. This is the essence of capitalism, which forces inequality of income.

Lets say we run a nation of equal distribution. The graph would look like this

(wealth measurement)
10
9
8
7
6
5
4
3XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
2
1
___1___2___3___4___5___6___7___8___9___10
(percentile distribution of population)


total wealth = 3x10 = 30


Now, lets say we run it with a capitalistic model

10_____________________X (then heading off the charts)
9
8__________________X
7
6______________X
5
4__________X
3
2______X
1__X
___1___2___3___4___5___6___7___8___9___10

Overall wealth is some insanely high number relative to the equal distribution model.

In the second chart, people at the 30 percent distribution might complain very heavily that the inequality is completely unfair to them. However, they are better off than in the equal distribution model.

You cant have both. either you have equal distribution or inequality and high overall wealth. No one wants to recognize this reality.

To taxes: While high taxes are a bad idea, there is inherently nothing unfair or wrong with taxing the hell out of the rich (contrary to what the republicans say). Think of it as contigent rent in retail. In contigent rent, you pay for store square footage on a base rate + a percentage of future sales. This allows you to pay low rent when the store is not doing well but you pay higher if the store sales go through the roof.

[eLROY]

Some people get enjoyment from watching their favorite team win. Other people will pay extra for a clear diamond over a blurry one. Still other people look at other people, and take pleasure from whether their income is equal or unequal, and from meddling in it.

As such, equalizing incomes, creates extra income for those who enjoy equality. To equalize this, extra income must be given to people who enjoy income inequality. If the ability to meddle in other people's business is valuable to you, then you should have to compensate them when you get this gift. For some people, they see other people and suddenly it's like they have furniture to rearrange. To equalize income, you have to give people who want unequal income an equal ability to decide (and curtail) the activities of the equalizers.

Whoever takes the most pleasure in a given pattern of activities observed in society at large, should have the least cash income. People who watch TV shows, and get their enjoyment there, shouldn't get unfair excess enjoyment from also watching a favorable income distribution.

If equality is a good, of value to some people, then shouldn't the people who want that good have to pay for it? If equality is not a good, then why bother? Should people who enjoy equality realize their dreams on the backs of others? What if some people - all those idiots in Europe who buy magazines about "royals" for example - love inequality? Are they to be left out in the cold?

How much are you willing to pay to have your own aesthetic whim of "fairness" catered to instead of somebody else's? Or do you want some pleasure which others will be denied at the same price? Should andyfox, who is so rich and has all his healthcare whims fulfilled, also have his demands for fairness fulfilled while I am left with nothing?

[Cyrus]

"What is a Fair Distribution of Income?"

Rich people know their way around money. Poor people obviously don't. So, it would be an elementary and belated move towards justice in the American tax system, to, at last, send tax money from the poor to the rich.

Example: A guy is making $350,000 a year and another guy is making some $8,500 a year (don't ask). I submit that the latter's fortune carries way more probability to get squandered, while the former's (especially if helped to grow even more) will act as a multiplier in the economy.

So I would lower the tax rate of the guy making $350,000 a year to around -3% (yes, that's a tax refund) and raise the tax rate of the guy making $8,00 a year to something like 75%. This would be a fair distribution of income possible.

Note that the depleted resources afforded to the lower-earnings guy will also act as a strong stimulant towards him getting more work! The whole country's productivity will rise.

...I have a thesis based on the above ready to be written, in case anyone has a grant or two to spare.

[Utah]

Well, there is some truth to your analysis.

However, you are peddling in class warfare.

The guy making the $350,000 probably worked his ass off and made tons of sacrifices while the guy making 8k a year is probably unwilling to take the neccessary steps to better his lot in life.

[Ray Zee]

everyone needs to think they can make it or the desire to get ahead in life is gone. so the system needs to be designed that way. ours is somewhat.
an amount equal to the average yearly cost of living should be decuted from the tax role and taxes paid on ther overage. that still lessens the desire to improve but gives everyone an opportunity to get ahead without the constant struggle to just pay bills.
the best system is m's where we pay as we spend.
as it stands now the govt. waistes so much of the tax money most remain poorish just because of that.

[eLROY]

To say everyone has a right to an equal income, is to say everyone has an equal claim on everyone else's labor.

Before you can say everyone has an equal claim on everyone else's labor, you have to say that anyone has a claim on anyone's labor.

The only way for such a claim to exist is if you can put people in prison for not working.

This does not even begin to solve the problem of whether you should put them in prison for not digging ditches, or for not filling them in, for making red cars instead of blue cars, or for making blue cars instead of red cars...

Who gets to measure whether their respiration is sufficient to keep them out of prison?

The only way you can guarantee someone an income, is to guarantee them a right to someone's labor. To do that, you need to both A) threaten that laborer with prison, and B) discover specific information regarding what product the "income" will be, since money is just pieces of paper. Or, you can solve both those problems, by enticing the laborer with his own income which might be unequal, but which is proportional to how much the person whose income is his product, likes that product.