Spreading the wealth

[Florestan]

Here is a theoretical, but nevertheless very interesting, question, IMHO.

According to the Bureau of Labor Statistics, the average annual wages in the U.S. were $36,764 for 2002.

Now, if all incomes in the US would be limited at $40.000 / year and the exceeding amount would be equally divided among all US citizens, how much would be the supplementary gain?

[Catison]

Good question, but these sorts of things don't matter.  What really matters is that everyone is equal. 

[scarpia]

Here is a theoretical, but nevertheless very interesting, question, IMHO.

According to the Bureau of Labor Statistics, the average annual wages in the U.S. were $36,764 for 2002.

Now, if all incomes in the US would be limited at $40.000 / year and the exceeding amount would be equally divided among all US citizens, how much would be the supplementary gain?

If the excess wages were redistributed you would have the same amount of total wages divided among the same number of people averages wages would be exactly the same.

[Keemun]

Here is a theoretical, but nevertheless very interesting, question, IMHO.

According to the Bureau of Labor Statistics, the average annual wages in the U.S. were $36,764 for 2002.

Now, if all incomes in the US would be limited at $40.000 / year and the exceeding amount would be equally divided among all US citizens, how much would be the supplementary gain?

The only "supplementary gain" would be to those who currently earn less than $40,000/year, which would be offset by an even greater "loss" to many who earn more than $40,000/year.  As a whole, there would a loss because the $40,000/year exceeds the average.

Either way, the policy would not work.  If I am guaranteed to make $40,000/year whether I work for it or not, I have no economic incentive to work.  If enough people who currently earn more than $40,000/year decide they don't want to work because their neighbor receives the same amount of income for staying home watching television, the pool of total income to be redistributed will be insufficient to provide a $40,000/year income for everyone.  If nobody works, where will this income come from?  In order to avoid a total collapse of the U.S. economy, the government would have to adopt a forced work program where it assigns everyone a job and forces them to do it, then takes their earnings and redistributes them "evenly" to everyone.   Aside from being impractical, this program would violate the U.S. Constitution, so there would first need to be an amendment to the Constitution allowing it.  Neither the Congress nor the people would approve such an amendment.   

[Florestan]

Are you implying that taking from those who have more and giving to those who have less will result in general misery? 

[Todd]

Aside from being impractical, this program would violate the U.S. Constitution, so there would first need to be an amendment to the Constitution allowing it.  Neither the Congress nor the people would approve such an amendment.

I can just imagine the arguments for rolling back the 13th Amendment . . .

[Bulldog]

Here is a theoretical, but nevertheless very interesting, question, IMHO.

According to the Bureau of Labor Statistics, the average annual wages in the U.S. were $36,764 for 2002.

Now, if all incomes in the US would be limited at $40.000 / year and the exceeding amount would be equally divided among all US citizens, how much would be the supplementary gain?

That would be an excellent way to destroy a civilization.   

[adamdavid80]

Don, as usual, is right.  What's the purpose of the question?  What information are you trying to ascertain?  Or, in all seriousness, is this simply an attempt at a "gotcha" question?

[scarpia]

The only "supplementary gain" would be to those who currently earn less than $40,000/year, which would be offset by an even greater "loss" to many who earn more than $40,000/year.  As a whole, there would a loss because the $40,000/year exceeds the average.

There would be no "loss" because, as was proposed, the money subtracted from the $40k and over people would be exactly equal to the amount added to the $40k and lower people.   Clearly we need to levy a tax on rich people to improve math education in the schools, which in the US is worse than any other industrialized nation.

[Florestan]

What's the purpose of the question? 

The same purpose of all questions: to be answered. Do you have an answer?
[/quote]

[adamdavid80]

The same purpose of all questions: to be answered. Do you have an answer?

Well, it's a false question.  You're not taking into account region, state, profession, etc.

Alabama's income is VASTLY different from New Yorks.  NY City's income and cost of living is vastly different from Poughkeepsi, NY.

So if you're saying a lawyer in NYC would be limited to a $40,000 a year income, it wouldn't work at all.  No one would spend the itme and money to become a lawyer bc it wouldn't be affordable, and NYC's infrastructure would immediately collapse..  End of that conversation.

If you're saying the money that someone earns goes DIRECTLY to someone else, that's also false.  The additional taxes will go into the pulbic pool, for those who can't afford healthcare or for the federal govt assist in providing education, or research, or roads, hospitals, etc.

It's for the benefit of not "welfare" recipients, but the public good and the sustainability of the country.

For all of McCain's talk of "socialism", Obama IS offering a tax cut to those earning less than $250,000.  And for those earning more, it's a difference of LESS than 5%.  Hardly socialism.

(and not even Russia ever practicved what you're saying...I can assure you Andropov lived a much more opulent lifestyle than some guy shovelling shit in the horse stables)

[adamdavid80]

The same purpose of all questions: to be answered. Do you have an answer?

And to respond "to be answered" is hardly an adequate response to someone asking "Why do you ask?".  If you need proof, try that response with your wife soemtime.     

[scarpia]

The same purpose of all questions: to be answered. Do you have an answer?

I've already answered it, to the extent you have defined it.  

There would be no gain.  If you mean, "what would be the gain to the people who are below the mean?" (excluding those above who have their incomes cut) the gain would be modest.  The mean income of people who make no more than the mean value of $36764 is less than this value, it's probably about $25-30k.  If you clipped off the high incomes and gave it to the low incomes everyone would make exactly the mean.    So the income of the low-income segment would rise $5-10k.  That would last for about 1 month, after which the economy would collapse and revert to Afghanistan levels.  This would result in the world at large reverting to the Iron age, perhaps the Bronze age.

Now why don't you tell us what your point is and get it over with, or we'll have to call in M.

[Florestan]

So if you're saying a lawyer in NYC ...

If you're saying the money that someone earns goes DIRECTLY to someone else...

I'm not saying anything. I was just asking a theoretical question. It has nothing to do with Obama or McCain.

[Florestan]

Now why don't you tell us what your point is and get it over with, or we'll have to call in M.

There is no point at all beside knowing what would be the gain of those earning less than $40.000, as you correctly perceived.

Why all this anxiety?

[scarpia]

There is no point at all beside knowing what would be the gain of those earning less than $40.000, as you correctly perceived.

Why all this anxiety?

Well then, I've given you your answer.  A better estimate would require knowledge of the probability density function of income, which is not available to me as far as I am aware.

[Keemun]

I can just imagine the arguments for rolling back the 13th Amendment . . .

Talk about unintended consequences. 

There would be no "loss" because, as was proposed, the money subtracted from the $40k and over people would be exactly equal to the amount added to the $40k and lower people.   Clearly we need to levy a tax on rich people to improve math education in the schools, which in the US is worse than any other industrialized nation.

There would be a loss because that is not what was proposed.  The proposal was to redistribute $40,000, which is more than the average income of $36,764.  In that situation, more money is being redistributed than is currently available.  Multiply the difference ($3,236) by the number of persons included in the sample and that is the total loss.

[scarpia]

There would be a loss because that is not what was proposed.  The proposal was to redistribute $40,000, which is more than the average income of $36,764.  In that situation, more money is being redistributed than is currently available.  Multiply the difference ($3,236) by the number of persons included in the sample and that is the total loss.

Your reading comprehension is the problem.  It was proposed that income be limited to 40k and that the excess be redistributed.  The total income is conserved, but there is a transfer of income from wealthy to poor, result in a net gain for poor, and an offsetting net loss for wealthy.

[adamdavid80]

Here's an equally probing question:  What if all the Monopoly money was real?  How would that affect GDP?  Would oil prices soar? Would global poverty be exasperated or ended?

[karlhenning]

I'd buy the Baltimore & Ohio Railroad.