Wealth vs. Income

Most engineers will be familiar with the equation s=0.5*a*t^2+v*t+x. This formula tells you where you’ll be from where you are in a certain period of time, given acceleration is constant and you know the starting velocity. If acceleration is 0, it’s still constant and now your position is just the velocity multiplied by the time at that velocity. If you accelerate at 10 m/s^2 for 10 seconds starting at a speed and position of 0, you’ve traveled 500 meters. If you travel at 10m/s for 10 seconds, you’ve traveled 100 meters.

So, what does this have to do with money? Let’s call s your accumulated wealth. Then v would be your salary and a would be any adjustments to that income. That makes x anything that moves your income up or down, like expenses or one-time bonuses. Time remains the same.

This is the difference between wealth and income. Wealth is rarely constant. We are all either losing or gaining wealth by the year or even the day. Income tends to be stable, to the dismay of many. Even people with significant changes in incomes usually have even larger changes in their total wealth to match.

The United States used to tax wealth before they taxed income. The “rich white male landowners” of the past were the only ones allowed to vote because they were the ones paying the taxes. As the voting base expanded, so did the tax base. The federal government abandoned that system, presumably because it would eventually wipe out people who lived from the fruits of their land. The states didn’t really learn that lesson. Now people are being forced out of their only asset because they can’t pay property taxes. The feds avoid that by taxing wealth at the time of death.

The difference between wealth and income is one of the things being willfully ignored by OWS. 1% of people are “rich” and there’s something wrong with that. Maybe 1% of the incomes in this country are too high and there’s something wrong with that. Or is it that 1% of the population (over 3 million people) are controlling the government? 2% of the population could have switched votes in 2008 and gotten John McCain elected. Then again, he’s owned by Wall Street. That’s why he took federal matching funds instead of raking in unlimited cash.

There are 3 million Americans out there who make up 1% of the population. One percent of what? Are they the ones who made a lot of money last year, some for the first time? Are they people who are sitting on millions of dollars of assets from generations past? Right now, it’s both. Why is it 1%? It roughly equates to the top tax bracket, but that’s an income figure, not a wealth figure. I keep hearing about the “wealthiest” Americans, not the highest earners.

I’m sure I’ll get accused of being vague, but it’s the protesters who are being vague. You have to define your damn terms. We have an estate tax now. The wealthy are being taxed on their wealth. We have an income tax. People are being (progressively) taxed on their income. If you oppose the loopholes, join the Tea Party. If you oppose the accumulation of wealth, join the protesters. I’ll say one thing. If you think rich people don’t like paying tax on income, wait until you tell them they have to give up the assets they already paid taxes on.

About 1539days

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4 Responses to Wealth vs. Income

  1. yttik says:

    Most people honestly don’t know what they want. A lot of people also don’t understand the tax code, the simple fact that we tax income, not wealth. These cries to “tax the wealthy” are false, they ring hollow. The wealthy can actually join the protest too, because they know perfectly well that they can simply reduce their earned income and still have enough to live off of. They don’t have to generate a taxable income. I do. I can’t live without an income. So “tax the wealthy” just becomes a tax on people like me.

    What people are really protesting is the gap between wages and the cost of living, the loss of opportunity in this country, the increased prices. Somehow that all gets translated into cries of “down with capitalism,” “tax the wealthy,” or we’re “taxed enough already.”

    What’s really created problems in this country is the national debt. That’s like an invisible tax. That’s the reason I used to buy a loaf of bread for 40 cents and it now costs 3 dollars. Crony capitalism has also created hardship, little people can’t compete when they are taxed, they have regulations, but big corporations have waivers and corporate welfare.

  2. The sad, or pathetic, part of all of this whole mess, is that is hitting the people who are working for a living…the vendors, the local residents, the employees who will be late to work after trying to navigate the traffic jam that is being created in some areas. The little people who represent the engine of growth in this economy…and the people doing the protesting, show me that they have never been around a person who gets up and works, really works every day to earn his bread. ey We as a country have coddled our children for too many years and they reward this gift of properity by spiiting in all of our collective faces. Their parents should die of shame, because they failed these children and raised sponges that expect the world to applaud their breathing. I am sickened.

  3. forgive the typos, I can’t type blind…as it turns out.

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