[0xffff2]

> My question is how much, if any, social unrest this will lead to.

My question is how many people have absolutely no ties to the stock market? I'm pretty far from any definition of rich, but I still have a 401k, so you're not likely to see me rioting because the S&P 500 is in the green.

[thescriptkiddie]

Only 52% of americans own any stock whatsoever [0], and the richest 10% of americans own 84% of all stock.

[0] https://news.gallup.com/poll/190883/half-americans-own-stock...

[1] https://www.nber.org/papers/w24085

[lotsofpulp]

All taxpayers (since they will have to make up for shortfalls) and recipients of defined benefit pensions (since they will have to accept reductions in benefits) are also indirectly exposed to changes equity prices.

[ardy42]

> All taxpayers (since they will have to make up for shortfalls) and recipients of defined benefit pensions (since they will have to accept reductions in benefits) are also indirectly exposed to changes equity prices.

But that needs to be put in its proper context. Even if you have a small amount of stock or indirectly benefit from stock prices in some way, it'd be stupid if you let that mentally tie yourself to the stock market.

For instance, shortfalls in taxes do not necessarily need to be made up by "all taxpayers." With progressive taxation, they can be made up by some taxpayers (which will likely consist of most HN commentators, since software engineers are relatively wealthy).

[lotsofpulp]

Not if the shortfall is made up via asset price inflation and dollar devaluation. Then the non asset owning class takes the brunt of the pain.

Which is what I believe has been happening for decades. Progressive taxation can help, but I doubt the political will exists to tax capital gains.

[thephyber]

> I doubt the political will exists to tax capital gains

A friendly reminder that capital gains is taxed (when it is realized).* I assume that you are actually complaining about closing loopholes that exist for avoiding paying the full rate.

* Obviously this comes with the caveat that the tax code is large with lots of "loopholes" (in quotes because they were mostly intentionally created). Capital gains losses are somehow socialized as tax deductions and the "carried interest loophole" allows certain fund managers to treat capital gains as a different class of income.

[zerocrates]

The number of people in the US with defined benefit pensions is quite low and consistently falling.

[at-fates-hands]

> and the richest 10% of americans own 84% of all stock.

The top 20% of earners also handle close to 90% of the tax burden, while close to 50% of the population pay nothing in taxes.

[apazzolini]

Man, that 50% of the population that's able to buy things without paying sales tax is really fortunate. How do I sign up for that benefit?

[BetaDeltaAlpha]

You could move to Oregon...

...In all seriousness, the parent comment was probably referring to the Federal Income Tax.

[apazzolini]

Yes, I'm aware that's what he was referring to, but it's not the entirety of the tax burden in the US, and even people who pay nothing in income tax still pay taxes.

This is precisely why a flat tax disproportionally impacts lower income people.

[CuriousSkeptic]

Unless it’s a flat tax on capital assets.

I think it would be interesting to try out a model where _only_ capital assets are taxed. No sales tax, no income tax, no capital gains tax.

It should dampen the effect of the rich getting richer only from rent collecting, while still making sure the market allocates capital to where it provides the most economic value (I.e can be turned into enough revenue to pay the tax in question)

[karatestomp]

> 50% of the population pay nothing in taxes.

Sales tax is almost 11% here. And I'm in a red-leaning purple state, not "Taxachusetts" or anything. Property tax on vehicles. FICA ("it's not a tax!" yeah OK, but it is really)

[dragonwriter]

> The top 20% of earners also handle close to 90% of the tax burden,

Only if you only count the income taxes, and ignore other (mostly regressive) payroll, excise/sales, and other taxes at the federal and state levels.

[WillPostForFood]

Including all those taxes, the top 20% still pay 66% of all taxes.

https://theintercept.imgix.net/wp-uploads/sites/1/2019/04/ch...

[GcVmvNhBsU]

The top 20% also owns 86% of the wealth, so it seems like they are still coming out ahead.

[jessaustin]

Well, they do have all the money. Besides, the 19.9% shouldn't complain to the 80%. Rather, they should complain to the 0.1% whose lobbyists write the tax code in the first place. We can be sure they had their reasons to set up this level of progressive taxation rather than some other level.

[JoeAltmaier]

That's because the top has looted the economy, leaving little or nothing for the rest of us. Its not a reflection on the bottom 50% at all.

[econcon]

I don't think it's because top are lotting, more like people at top have bigger leverage. But in all, all people are equally likely to loot if the places were changed.

[at-fates-hands]

> That's because the top has looted the economy

Can you explain how this happens? How does one "loot" one of the largest economies in the world?

[chrisco255]

Monetary policy and globalism. We've got an economy built on debt. We went from a production based economy 40 years ago to a consumption based one. We exported skills. We believed that a service-based economy was sustainable in the long run. We went off the gold standard and embraced an inflationary monetary policy that punished savers. Then we built a retirement system (including state pensions) dependent on yields, which causes retirement funds to chase ever riskier asset classes. We made debt so available for so many things, like education, healthcare, real estate, etc, and we made it so artificially "cheap" that it drove up prices. We never really recovered from the 2008 real estate bubble. The Fed's answer was to buy mortgage-backed securities by the trillions, and bailed out the people responsible without punishing anyone. So we kicked the can down the road and now, this downturn is so massive that we will not be able to escape the deep financial consequences and it is going to take years to overcome this. We have nothing left to borrow against and we're in tens of trillions in debt.

[blankface]

Thank God for this comment

The U.S. Dollar is backed by an ass whopping!

[econcon]

It's simple:

Think about it, a CEO of a big company is more likely to be in social circle of the politicians, judges and regulators.

They are more likely to be sympathetic to their immediate acquaintance who they see every week rather than those poor social economic class people who they have nothing in common with.

Add some dilllusion and descrimination in the mix, like "they are poor because they are lazy" and it becomes easy to make policies which benefit your immediate social circle.

And lot of poor people don't even have time or motivation to analyze those policies and even if someone manages to do that, they don't have enough influence to do anything about it.

[JoeAltmaier]

Even simpler. The folks in a company that can write checks, write them to each other.

[eli_gottlieb]

You pay people less than their cost of living, demand that the state make up the difference in food stamps and health-care subsidies, and then pocket the difference.

https://www.socialeurope.eu/time-for-postcapitalism

[standardUser]

In a society where the bottom 50% have virtually no wealth and are in debt, how much do you think they should pay in taxes and how do you expect them to pay for it?

[fzeroracer]

If someone making 1m/yr pays 1% in taxes and someone making 10k/yr pays 90%, the millionaire is still covering over 50% of the tax burden despite being impacted far less by the taxes on his wealth.

[lleolin]

In that case, I would love to be handling 90% of the tax burden right now.

[fallingfrog]

They pay sales tax, social security tax, and they never make anywhere near as much in wages as the value of what they produce, which is the biggest tax of all but since it’s a hidden, implicit tax, you can’t see it.

[sudosysgen]

Sure, but without the bottom 50% the top 20% would not be able to make nearly as much money as they do.

Progressive taxation is aware of the exploitive nature of capitalism. Just because people are being exploited doesn't mean they don't contribute, much to the contrary.

[bo1024]

The idea of the 401k is such an amazing hustle for the wealthy.

* Middle-class Americans consistently pump money into the stock market generically (not information trading), raising the value of all your stocks over time.

* Now you have a gun to their head to support policies that pump up the value of your stocks even more.

* Also, when shit hits the fan, they can't easily cash out, but you can. Both on a mega-scale (recession), and individual stocks (when companies tank, you sell first, and 401k index or diversified funds take a hit).

I'm not an expert in this stuff but it smells from miles away.

[jazzyk]

Just a pedantic note - I have most of my 401K money in Certificates of Deposit, so you do not have to pump the market.

However (thanks, Federal Reserve!), you get punished with interest rates below inflation, so people, increasingly desperate to protect their savings from inflation, put their money in risky investments (not just the stock market, also overpriced real-estate, etc).

[thedragonline]

If you research the history, you discover that the 401k was designed for the C-suite, not ordinary workers. Some calculating Wall Streeter(s) somewhere decided that it's a reasonable retirement vehicle for ordinary shlubs. It is not. See this: https://www.pbs.org/wgbh/frontline/article/teresa-ghilarducc...

[ardy42]

> The idea of the 401k is such an amazing hustle for the wealthy.

You make a very interesting point!

I wonder what a "reverse 401k" program would look like (e.g. box the wealthy into aligning their actions with the interests poor/middle class while only marginally benefiting themselves).

[nitrogen]

I wonder what a "reverse 401k" program would look like (e.g. box the wealthy into aligning their actions with the interests poor/middle class while only marginally benefiting themselves).

Pensions? Those also don't seem to work all that well.

[q92z8oeif]

> aligning their actions with the interests poor/middle class

Any attempt to recognize classes exits will lead to class war. Everyone is upper class, or waiting to join upper class, anytime now.

[eli_gottlieb]

Class war is good.

[SketchySeaBeast]

Taxes?

[karatestomp]

About half of households own no stock at all. It's a safe bet a good portion of the other half have little enough that "the market's up!" isn't very meaningful for them.

[SketchySeaBeast]

What does what you have in your 401k matter if your house and car are being repossessed? I suppose you could pull it all out at penalties and with a bunch of taxes, but that's going to be work, and assumes you have enough in there to make it worthwhile.

[CydeWeys]

Penalties are waived for certain exigent circumstances, which I believe this would qualify as.

[SketchySeaBeast]

The larger penalty would still probably be the taxes, which I assume aren't waved, and again assume there's enough in there to make it worthwhile. I know for myself, even though I've been diligently saving for my relatively short career, I don't think there is.

[xyzzyz]

You are going to pay those taxes anyway when you retire. 401k is only beneficial if you expect to pay lower tax rate when you finally retire. Unless you expect the federal tax rates to go significantly down across the board, withdrawing from 401k when you have no other income is actually a great idea, or it would be without the 10% penalty.

However, you typically can borrow money from your 401k, and pay no penalty, which makes it a good option if you need temporary liquidity.

[CydeWeys]

And considering how early this pandemic hit in the year, if you were laid off in March you didn't even make 25% of your salary yet. That means your taxes are likely to be quite low for the year, so this is actually a good time to withdraw money from a 401k and take the tax hit.

If I ever have a full year gap between jobs (like some kind of a long sabbatical), I'm going to be doing a lot of Traditional to Roth converting, for exactly this reason.

[standardUser]

There is in fact a special exemption this year to the 10% tax penalty for taking money out of retirement accounts for COVID-19 related purposes. But make sure your specific account offers that exemption before withdrawing anything.