Americans Lose Faith That Hard Work Leads to Economic Gains, WSJ-NORC Poll Finds

Wealth inequality is high. High enough you can feel it like a vibe in the air. The richest people in the world are telling everyone to get onboard with technology that is determined to make a lot of those same people's jobs redundant. All with an explicit goal of increasing the price of stock most of those people do not own.

IMO there's two economies, maybe divided by those who participate in the stock market and those who don't. We, Americans, have largely given up trying to improve the lives of people not in the first group. Economies are living, breathing entities and we're just grinding poorer people for fuel so richer people can have another house, another boat, another company. A lot of regular joes are really stressed out about paying rent. The loss in faith is warranted.

Income taxes are higher than capital gains taxes.

This isn't based on economic theory or anything, it's just a political choice we have made as a country. We've chosen to reward those who move money around and trade capital more than we reward those who labor. And this at a time when, supposedly, the country is trying to increase its ability to build things.

I thought this specific fact worth mentioning.

This is simply incorrect.

To make the tax incidence on wages and capital gains equivalent, you must first deduct losses due to inflation and risk. For wages, inflation and risk round to zero. For long-term capital gains inflation and risk are large and often the majority of the "gain". Short-term capital gains are already taxed like wages.

In the US, unlike some other developed countries, there is a very limited ability to deduct losses due to inflation and risk from long-term capital gains. Consequently, if they made the tax rate the same as wages then the tax incidence on capital gains would be much higher than wages.

As a policy matter in the US, they fix this large difference in tax incidence by reducing the tax rate instead of adjusting the cost basis for inflation and allowing full deductibility of losses.

If you pencil out the implications of these two policies, I suspect you'd find that you like the way the US does it better. Making risk and inflation deductible to equalize tax incidence enables a lot of financial structuring.

The way we calculate risk is inherently extremely biased towards the wealthy.

In terms of real, relative risk, being a laborer is much more risky than being an investor.

The investor may lose hundreds of millions, but it doesn't matter. The laborer may lose 500 dollars after being fired, and it could kill them.

We've detached risk from real risk. Real risk is - will I eat, will I survive.