I have a theory about this: We group money in magnitudes of tens up to a million but then jump up from 10x to 1,000x:
1
10
100
1,000
10,000
100,000
1,000,000
1,000,000,000
That’s a huge increase but our minds like patterns so we instinctively feel that a billion must be about 10x a million and not the 1,000x it really is, thus leading to huge inaccuracies.
Much of our perception is logarithmic, which is predictable, since patterns occur from proportion of quantities. Absolute quantities are meaningless in themselves. Even ten dollars as a quantity is meaningless except through prior experience understanding the value of a single dollar. Every value except the smallest is tenfold greater than some other value of at least some consequence.
I don’t really understand your initial assumption. What if someone has 10 million dollars? Would you say he has 0.01 billion?
I think that your theory has some merit, but I believe it’s more apparent when we describe the people who own the money, as opposed to the money itself: A millionaire will stay a (multi)millionaire until they become a billionaire.
I think the idea is that we still think of someone who has >1 million but <1 billion as having some number of millions of dollars, rather than subdividing “millions” into “millions,” “tens of millions,” and “hundreds of millions.” Of course we do subdivide that when we’re being particular about how incredibly rich some actor is or something, but generally they all fall on the same order of magnitude in our minds.
That’s my point. We (those of us that aren’t at least millionaires) don’t really differentiate in society between someone that has a million dollars and someone that has 10 million dollars; they’re both stuck in the “millionaires” tier.
So say you are making $50,000 a year, well it’s easy to see how you or someone like you could (theoretically) get to $100,000; that’s just the next tier up. And then it’s easy to imagine someone going from $100,000 to a million because that’s the next tier up again. But once you get there, people don’t tend to think of ten million as a tier and usually not a hundred million either. The next tier in our zeitgeist after million is billion.
So people tend to think of billion being kind of the same as going from $100,000 to $1,000,000. Hence the common disconnect about just how much more money a billionaire has than the common man.
I like to think of $1 billion in terms of how much money you need to spend. Let’s say you’re given $1 billion at birth, never earn another cent in your life, and live for exactly 75 years. To spend all of that money, you’d need to spend $36,500 per day, every day, for your entire life. Even then, you’d have nearly a million dollars left to pass down to your children.
If you only spent 36,500 a day, you'd probably die far far richer (like, 10s of billions) than you were born assuming you have it invested. You could spend more like 100k a day (adjusting up for inflation) and you'd probably almost certainly die a billionaire.
It feels elusive how anyone could spend so much, but controlling the content of mass media has been of great service for the interests of the Kochs and the Wilkses.
Percentages don’t scale well into the billions, you will still need brackets.
A billionaire can give away 98% of their wealth and still comfortably be a multi millionare.
A full time cashier on the minimum wage can barely even survive on 100% of their wage. When it comes to living a healthy fulfilling life, If they contribute just 5% of their wage to tax they are sacrificing far more a billionaire paying 98% tax would be.
There is – the income bracket isn’t what all your money is taxed at. It’s a graduated scale. I’m going to make up numbers here just for an example.
I make $125,000. The first $5000 has no tax on it. The next $20000 are taxed at 5%. The next $25,000 are 10%. The next $30,000 is taxed at 15%. The next $30000 is taxed at 20%. And the last $15,000 are taxed at 35%.
So my total tax is 20000(0.05) + 25000(0.1) + 30000(0.15) + 30000(0.2) + 15000(0.35) = $19,250. My effective tax is 15.4%, even though I’m taxed higher than that on $45000 of my $125000.
It’s a piecewise function basically. And it works really well here because you start getting into very discretionary spending when it gets high, you’re not buying the essentials. You could have a bracket that has 75% tax on everything above a million for instance, and poorer people would be completely unaffected. This is why the myth of “if I get a raise I’ll be in a higher bracket and pay more in taxes” is incorrect.
Yeah so everyone is saying that the issue is that this system stops at the last bracket at 35%. If there was some continuous way to calculate the percentage, this pattern would be able to keep going.
When you say continuous, do you mean the tax rates? I assume so, because those are discrete numbers. You’re basically saying then what whatever the last bracket is, it needs to scale from 35% (in this example) to 100% at a certain income?
I don’t dislike the idea necessarily, but I think the problem with the wealthy not paying enough in taxes isn’t the highest rate, but what is taxed and how. Selling stock for instance is taxed at a lower rate than income, so we’d need to add a stipulation that if you make more than X, it’s taxed as if it’s normal income. (You’d have to make some exceptions for retiring people but that’s easy enough)
The Inflation Reduction Act had an idea that I think is worth pursuing, or at least calculating how it would go for the rich. Companies making a certain amount of profit in a tax year have to pay some % (maybe 20?) if that’ll be higher than their taxes calculated normally. It stops the loophole that lets corporations get away with paying no taxes. If we did that for rich people, I wonder how it would go. My gut instinct is that it would actually help a lot.
Edit: I just described Alternate Minimum Tax, which is a thing already. We’d just need to close loopholes around it by not letting anyone claim a deduction on it.
Probably not to 100% (because then the net income would go down) but yeah something like that. And yes you’re right, there are still many loopholes for rich people to avoid taxes so those issues should probably be fixed first. But to be fair I don’t know much about taxes or economics, it’s just an idea I had.
because then paupers would pay the same rate as billionaires. At the same time brackets make sure eveyone pays the same for the set amount. So even if more brackets were introduced billionaires would pay the same rate on their first 100k as millionaires. People of wealth only pay higher on the actualy high level. Whats crazy is we have several brackets that basically run through the 5 figure range and just into the 6 but none higher were 5 figures should just have one lowest rate.
It’s a percentage that nominally increases as wealth goes up.
Poor people need to spend a higher percentage of their income meeting basic needs, so having them pay the same percentage as the wealthy puts a higher burden on the poor.
In top of that, the wealthy are able to put a higher percentage of their income in things like investments, which are taxed at a lower rate (to encourage investing in the economy over hoarding wealth), so a flat rate tax would be effectively a regressive tax.
The problem is investments vs income. It’s not a super straightforward problem to solve. Having said that other countries have implemented a wealth tax, so it can be done
For real. Once you are a billionaire, with even the most basic investments, you have to try REAL hard to become broke again. Spare money begets money. Spare dragon hoards begets dragon hoards. Any bitch baby billionaire whining about taxes can kiss every single asshole of single working parents, people struggling to cover student loan debts, people who perpetually rent because they can’t afford a home with a lower mortgage payment than there rent is, and every person who got ill and lost there job and home as a result. They don’t need more dragon hoards. They’ll be just fine.
What’s funny is millionaires arguing against tax increases on the right when they are much closer to the pleb than they are from the billionaires that are the ones who would really pay the price.
I had a dream this week that I won 2 billions somehow in a lottery. I had so many headaches thinking about all the friends etc… and how to give the millions away to all of them and family. And these guys are storing them like a dragon and it’s gold.
A bank account with one million dollars can be completely wiped at any time. This could happen by American healthcare cost due to illness or an accident, or a lawsuit from something like a handyman slipping on your property. A billion dollars wouldn’t even feel it.
By some measures, Musk’s decisions managing Twitter/X should earn him one million lifetimes of homelessness.
I know no one personally who would remain secure after losing billions of dollars, yet I keep hearing that owners take all the risks and workers are always protected from hardship.
With all the layoffs we see, that is fucking bullshit. The workers get shafted even when they are doing a good job because of dumb fucks c-suite gambling the company on bullshit technology, or simple cutting costs for the shareholders.
There’s a Tom Scott video where he illustrates the difference between a million USD and a billion USD, expressed as the size of a stack of 1 dollar bills.
A million was about the size of a football field and a less than two minute walk.
A billion took him from somewhere near London all the way to the east coast, and had him drive for over an hour.
What blows my mind is is that astronomers work with numbers incomprehensible to the human mind every day. Of course, they can calculate them, but to comprehend what a trip to our nearest galaxy would be like? Pretty damn difficult. What it would be like to travel from one end of the known universe to the other? Our fragile minds just can’t take in numbers of that magnitude.
