Can you point my to a study that verify’s this? Most of the peer reviewed studies that I have seen show a much different picture. Many people gain from Social Security, some lose, but those are primarily the higher wage individuals.
You are very rich indeed
Money is soooooooo very overrated
There’s just one catch…we need it to live
Money actually means absolutely nothing in our quest for heaven, or for that matter for our happiness here on earth. In this country, alot of us have way too much of it. Let’s put it this way, how many people do ya’ll know that have a gross amount of money that are very happy people? When I look around, they are all dysfunctional to say the very least.With all due respect to Wikipedia, it’s still not income. There are many examples you might cite – such as living in a state that has no state income tax. Does the savings due to lack of an income tax amount to “income?” It doesn’t.
They still don’t have “income” from the house. They have reduced expenses, something quite different.
Pick any mid-range mutual fund, track it over four decades, and see how your money would have fared – remember, the FICA tax is 15.3% of your gross earned income.
Vern, I would first like to hear your definition of income. My version of income is based on the Haig Simons definition of income, which is a standard method used by economists to measure income.
The whole article can be found here:
You’ve just pointed out the difference between “income” and “unrealized wealth.” If we followed your definition, the government could tax you on the increase in value of your home while you were living in it. Ultimately, as the value of the home increased, the tax could exceed your** real** income.
Once more, what is your definition of income? I have said that my definition of income is the Haig Simons definition, perhaps the Vern Humphrey definition is better, but to evaluate it, I need to know what it is.
Mine avoids the pitfall of the Haig-Simons definition – it is an increase in the potential to consume, using the individual in question as the baseline.
An increase in the potential to consume? That sounds very suspiciously like the Haig Simons definition of income. I will agree, if you get a raise of $1000, you now have $1000 more to spend (ignoring taxes, for the moment). Now, let’s say that instead of getting a raise, you pay off your house. What happens to the money you were paying for principal and interest? That is now freed up to spend on other things. In other words, your potential to consume has gone up.
As I said, I avoid the pitfall of the Haig-Simons definition.
When the house is** paid off** my money goes for other things – there in no net increase in income, merely a reduction in outgo.
Nope – no more that my potential to consume has gone up because I could sell one of my kidneys.
Because I am not smart enough to figure out how to do multiple quotes, I have labeled your comments as 1, 2 and 3.As I said, I avoid the pitfall of the Haig-Simons definition.
I do that by using the individual in question as the baseline – not someone else.
When the house is** paid off** my money goes for other things – there in no net increase in income, merely a reduction in outgo.
Nope – no more that my potential to consume has gone up because I could sell one of my kidneys.
Both the kidney and the house are unrealized wealth.
Since I said $500,000 represents material wealth, let me give you my definition. If you have $500,000 in net worth, you are in the upper 10% of wealth for the US. Being in the top 10% of the wealthiest nation on the planet, seems to be a good definition of wealth to me.
Then you have misused it. To truly see if income has increased you must look at the individual in question. Is he getting more money this month than last month?
Nope. Let’s try another version of that – suppose my clothes are wearing out. So this month I will buy shoes, next month shirts, the month after, trousers, and so on.
What’s that got to do with the price of tea? I can sell a kidney – legal or not. So both the kidney and house are unrealized wealth – but not income until I sell.
So you are saying that there is no such thing as in-kind income?
If you think I said that, you are free to post a quote.
In theory we could say the moon is made of green cheese and earth was populated by beings from outer space.
Nope. Not until the wealth is realized does it represent potential consumption.
So if you don’t spend all your paycheck, do you go in and thank your boss for giving you a raise?
Before, you said the following:
You clearly stated that income is restricted to money. I have clearly stated that income can come in two forms: in kind and money. Sorry to bother you with the needless clarification.
Unfortunately, the Haig Simons theory has more empirical support than the green cheese theory. Although, I must admit, I may be biased because I happen to be an economist.
This is not even close to being true. Let’s suppose that I have $80,000 in Intel stock. I go to the Lexus dealer and I decide I want a fancy Lexus, the $80,000 in stock represents resources I can use to buy the car. It is not perfectly liquid, but I am sure I can get the dealer to postpone delivery for three days while waiting for the stock sale to clear.
Nope. Income is measured in money – which is an abstraction. If you have more dollars, more drachmas, or more ears of corn, you have more income.
Needless, indeed.
The Haig-Simons “theory” (as you present it) is not a theory at all. It’s a definition.
Note that in your own example, the dealer waits for the stock sale to clear. In other words, you can’t close the deal until you converrt unrealized wealth into realized wealth.