Poor Vs. Rich Debate

Major flaws in the thinking of conservatives here (which they tend to exploit in their constituents and Fox viewers):

1.     Each dollar that a rich person has was earned through effort just as each dollar that I have was earned through effort, and if those poor people just worked harder, they could have as much money as I do.

Let’s consider this with some simple algebra. If I make $50,000, then under this assumption someone making $25,000 just needs to double his efforts. He needs to exert 50 units instead of only 25 units of effort. Those who use this logic never consider what is then needed for me (who makes $50,000) to earn $100,000, $500,000, or even $1 million (the actual people we are usually talking about). Well, I already work pretty hard for what I have, but for me to increase my effort from 50 units ($50,000 worth of effort) to 1,000 units ($1 million worth of effort) I would need to work 20 times harder. That means working an 800-hour week instead of a 40-hour week, lifting 1,000-lb UPS packages instead of 50-lb UPS packages, and walking 100 miles instead of 5 miles per day to deliver mail. People who argue that raising taxes on the rich is punishing success believe that the rich earned all of their money. This is because for the low/middle class (i.e., us), every dollar we have is, in fact, a dollar that we earned, but this isn’t the case for the filthy rich (or they’d be dead).

2.     The rich (i.e., top 2%) should be labeled as job creators.

There is no evidence to support that decreasing a CEO’s personal income tax leads him to invest more into his business. Influences of the industry (supply and demand) mostly drive whether a business owner hires more people, not how much money he has. He is not going to hire more workers if his product isn’t selling. He will only hire more workers if people are buying his product. In other words, he will not hire people if they're just going to sit around. His personal take-home income is mostly irrelevant here. There are even several examples of companies laying off workers despite tax breaks and increased revenue. (http://www.mediaite.com/tv/maddow-draws-contrast-between-kochs-record-revenue-and-kochs-declining-work-force/).

3.     Taxing the rich decreases incentives.

This stems from the flaws in assuming that every dollar a rich person has is a dollar they earned and in assuming each dollar increase equals a unit increase in happiness. Are you telling me that if we limit Donovan McNabb’s salary to $1 million instead of $6 million, he’ll find another job to make more money? (I don’t think he’s capable of being a hedge fund manager.) High-paid individuals will continue to do exactly what they’re doing because they are just as happy at $1 million as they are at $6 million. Again, for the low/middle class, each dollar more usually does mean more happiness. However, research is consistent in showing that once our physiological needs are met, money has much less of an effect on our happiness.

 

Many strategically believe that this is the relationship between money and happiness.

As income increases, so does happiness in the same way at all levels of income.

 

 

However, it is actually more like this.

   

As income increases, so does happiness, but less so among higher incomes than lower incomes. So if you're poor, a little money makes you really happy. However, if you're rich, that same amount of money has a very little effect on your happiness. (This is why Donovan McNabb would be just as willing to play football for $1 million as he is for $6 million. In regards to happiness, $1 million to $6 million is much less of a difference than $10,000 to $50,000.)