# Inequality For All Documentary



## protomok (Jul 9, 2012)

Hi all,

Someone mentioned the "Inequality For All" Documentary presented by Robert Reich which I also recently watched. The documentary is available on Netflix, I'd definitely recommend watching it.

I wanted to see what other forum members thought of this documentary. The documentary highlights things like globalization, technology, exec compensation, stagnating wages combined with higher cost of living, etc. In general I think the documentary does a great job of describing _why_ we have inequality.

The issue I had with the documentary is the lack of solutions. Reich is a really likeable guy...but I found almost zero recommendations or solutions in the documentary. Reich sort of hints that if we bring back unions wages may go up...but doesn't really address the big issues like globalization or technology/automation.

Would be curious to hear your thoughts on it!


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## sags (May 15, 2010)

I like the documentary and found it full of information.

I tried to pay most attention to the facts.............graphs, and information that was presented.........rather than any ideological slant.

Perhaps Reich avoided citing any solutions..........which would have been perceived as political, or perhaps the solutions required would be too dramatic to contemplate.

The death of unions has caused a downward spiral in wages, which is pretty easy to understand why. If it is a good or bad event............is up to everyone to decide for themselves.

Inequality is an issue that even the wealthy are concerned about. They realize that too much is flowing to them..........and a properly functioning society requires a better balance.

How that problem is addressed............is the subject of great debate.

It would be helpful though............if the wealthy would realize the power they wield and decide to invest their money into small businesses (which have a very difficult time getting start up money), instead of buying yet another mansion or $100 million dollar painting.

If the government has no solution...........perhaps the wealthy can create the solutions themselves.


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## OptsyEagle (Nov 29, 2009)

Inequality is fundamental result of capitalism. You cannot have capitalism without someone having more then someone else. It's like trying to boil water, at atmospheric pressure, at 90 C. It just will not happen.

If you try to distribute it better, everyone will share a smaller pie. In some cases, this may be the right and compassionate thing to do, but it does not change the fundamental economic reality, that everyone else, except the ones distributed the new money, will have a smaller GDP pie to share.


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## m3s (Apr 3, 2010)

OptsyEagle said:


> Inequality is fundamental result of capitalism. You cannot have capitalism without someone having more then someone else. It's like trying to boil water, at atmospheric pressure, at 90 C. It just will not happen.


That makes no sense at all. Boiling water has a few measurable factors and it's a science not a social structure.

Capitalism is just a huge game of monopoly. Over time, the rich slowly get richer until eventually there's no point to keep going and all the paper money goes back into the box.

Water boiling is based on a science.. capitalism is just human made paper money. Like feudalism, this too shall pass.


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## OptsyEagle (Nov 29, 2009)

m3s said:


> Over time, the rich slowly get richer


How do the rich get richer? What makes anyone rich? Rich is simply having more wealth then the next guy. If everyone had the same amount of wealth, no one would be rich. You cannot have the rich, without the poor. Being rich is simply the ability to convince someone else to give you something that is theirs, or to do something for you...and that is all it is.

OK, so that part was explained in as many ways as I can think of. Now, a big part of capitalism is the carrot of wealth. The drive to improve your lot in life. Since this cannot be done, if everyone's lot improves at the same rate, then we are back to my point. Call it scientific or social or whatever you want... it is a fact of economics ... you cannot be rich, unless someone else is poor. Since I don't see us all voting to become poor, this issue the OP presented is pretty much unsolvable.

We can bring the poor up to a level where they are fed and maybe even housed, but anything more will seriously effect yours and my standard of living. Eventually the rich and middleclass will get fed up with that.


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## CPA Candidate (Dec 15, 2013)

A significant reason we have inequality is rooted in the income tax act and the fact that capital gains and dividends are taxed at a lower rate than wages. Who has money to invest? Not the poor, and not much of the middle class either. The rich have money to invest and benefit the most from how investment income is taxed.

My father is retired and lives off dividends and interest, he makes more money than I do working full time and pays lower taxes. He gets further ahead when he doesn't really need it, and young families fall behind because they actually work and pay higher rates of tax.

Capital gains and dividends should be fully taxed as wages are for a first step towards a more equitable society.

It should also be noted that this inequality is created by government, not capitalism.

In addition, the government of Alberta needs to move to a progressive income tax system. The current flat tax regime is ridiculously inequitable. Tim Horton coffee pourer or $1 million/year oil executive all pay the same rate of tax? Ridiculous.


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## OptsyEagle (Nov 29, 2009)

CPA Candidate said:


> It should also be noted that this inequality is created by government, not capitalism.


You need to go back to school and relearn a few lessons. Not only does inequality and capitalism go together like pie and ice cream, but governments, at least the democratic ones, spend most of their time trying to redistribute the wealth, more equally. If it wasn't for capitalism, they might have been successful.


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## Nemo2 (Mar 1, 2012)

CPA Candidate said:


> Capital gains and dividends should be fully taxed as wages are for a first step towards a more equitable society.


That'll certainly provide people with the incentive to invest in businesses/corporations.


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## lh0628 (Dec 17, 2013)

CPA Candidate said:


> A significant reason we have inequality is rooted in the income tax act and the fact that capital gains and dividends are taxed at a lower rate than wages. Who has money to invest? Not the poor, and not much of the middle class either. The rich have money to invest and benefit the most from how investment income is taxed.
> 
> My father is retired and lives off dividends and interest, he makes more money than I do working full time and pays lower taxes. He gets further ahead when he doesn't really need it, and young families fall behind because they actually work and pay higher rates of tax.
> 
> Capital gains and dividends should be fully taxed as wages are for a first step towards a more equitable society.


But this will discourage people from investing in companies, private or public, and that leads to fewer employment.

Taxation is just an act of balancing income distribution, balancing is the keyword. Where the balance lies is different depending on who you ask..


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## Guban (Jul 5, 2011)

CPA Candidate said:


> A significant reason we have inequality is rooted in the income tax act and the fact that capital gains and dividends are taxed at a lower rate than wages. Who has money to invest? Not the poor, and not much of the middle class either. The rich have money to invest and benefit the most from how investment income is taxed.
> 
> My father is retired and lives off dividends and interest, he makes more money than I do working full time and pays lower taxes. He gets further ahead when he doesn't really need it, and young families fall behind because they actually work and pay higher rates of tax.
> 
> ...


Capital gains is also a tax on inflation. If I buy a property for $100 k and sell it for $150 k many years later, the fair market value has risen even though the relative value does not necessarily increase. Inflation increases the dollar value, and the taxes payable even though it is really not worth anything more. Do you think we should tax inflation?

Dividends have a preferential treatment because they have already been taxed in the corporation before being distributed to the shareholder. Are you asking for taxes on money that has been taxed already?


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## OnlyMyOpinion (Sep 1, 2013)

Thread has got me wondering, what does CPA stand for? 
Seems unlikely to be chartered professional accountant as I'd originally thought.


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## sags (May 15, 2010)

The question could be turned around to ask...........why tax work at a higher rate than capital gains or dividend income ?


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## protomok (Jul 9, 2012)

First off, I would encourage everyone to actually watch the documentary...you don't even have to get off the couch, it's on Netflix! 

Second, I would challenge the assertion that increasing capital gains tax would destroy business. What evidence is there that increasing capital gains tax would cause businesses to leave? If capital gains tax was increased to 75% of marginal rate would any of us honestly leave Canada...really? Plus, thanks to the TFSA the lower - middle class income families would be less affected by capital gains tax increase...it would primarily be felt by the ultra wealthy.

Another potential solution to inequality is increasing minimum wage. The US could benefit greatly from a minimum wage increase, the CBO has done extensive research and although for sure there will be job losses the benefit to the economy and reduction in low wage earners on welfare will overall help the economy - http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-MinimumWage.pdf. In Canada we've recently increased increased minimum wage and it's now > $10/hour in every province which IMHO will for sure help with income inequality.

Remember "income distribution" goes both ways. Right now our tax code is structured to transfer wealth from poor -> rich...we can either give up and say it's just "natural" capitalism, or we can try to fix it.


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## Nemo2 (Mar 1, 2012)

protomok said:


> Second, I would challenge the assertion that increasing capital gains tax would destroy business. What evidence is there that increasing capital gains tax would cause businesses to leave? If capital gains tax was increased to 75% of marginal rate would any of us honestly leave Canada...really?


Not so much that businesses/people would leave Canada - rather that investors would be a lot more reticent to put money into 'risky' areas, (rather than guaranteed deposits such as GICs), if they're not being compensated accordingly by the 'lure' of lower taxes.


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## Toronto.gal (Jan 8, 2010)

Guban said:


> Dividends have a preferential treatment because they have already been taxed in the corporation before being distributed to the shareholder. *Are you asking for taxes on money that has been taxed already?*


It's rare for people to be asking for double taxation.


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## Toronto.gal (Jan 8, 2010)

OnlyMyOpinion said:


> Thread has got me wondering, what does CPA stand for? *Seems unlikely to be chartered professional accountant as I'd originally thought.*


Why unlikely? Given the 2nd part of his/her username, I would say it's rather likely.


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## Guban (Jul 5, 2011)

Nemo2 said:


> Not so much that businesses/people would leave Canada - rather that investors would be a lot more reticent to put money into 'risky' areas, (rather than guaranteed deposits such as GICs), if they're not being compensated accordingly by the 'lure' of lower taxes.


The capital gains inclusion rate has been as as high as 75% in the past. Did this have an impact on businesses or investors? I don't recall any discussion about this, but it was a long time ago. Google says between 1990 and 2000, so there should have been some noticeable effect if this is true.

http://business.financialpost.com/2012/04/21/how-to-calculate-your-capital-gains-tax-or-not/

The above article points out that a tax on capital gains is a double tax too. I previously noted the tax on the inflationary component of a stock price increase, but did not realize that the double tax due to capital gains from retained earnings. A company's value rises when it retains earnings. These earnings are taxed. When an investor sells the company and pays capital gains taxes, he/she is effectively paying taxes on money that has already been taxed in the hands of the corporation.


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## OptsyEagle (Nov 29, 2009)

protomok said:


> Another potential solution to inequality is increasing minimum wage. The US could benefit greatly from a minimum wage increase, the CBO has done extensive research and although for sure there will be job losses the benefit to the economy and reduction in low wage earners on welfare will overall help the economy


An increase in minimum wage will be purely inflationary. Milton Freedman won a nobel prize in economics when he confirmed that inflation is caused by money supply and only money supply. If you give money to someone without requiring a corresponding increase in their production of goods and services, then that money will simply increase the price of the existing goods and services. That is the law of economics.

Yes. The individuals on minimum wage will be a little better off but it will all come from a reduction in the standard of living of all other individuals in that economy. If you are earning $20 an hour now, you may not think that increasing the minimum wage will have any effect on you, but it does. If you currently rent an apartment to live in, and there is an increase in minimum wage, then those people with more money in their pockets, all bidding on the SAME number of rental units will simply bid up the rent that you will now have to pay. The individuals on minimum wage, working in a company that has a global product line will immediately be unemployed and those products you purchase, that are not global in nature (restaurants, movie theatres, etc.,) will simply cost more, therefore reducing your standard of living.

In my opinion, the question about raising the minimum wage is never asked correctly. You don't ask a voter if he/she thinks someone else should pay another $5 an hour so that someone else could have a better standard of living. You ask the voter, will you allow your standard of living to be reduced by $1 to $2 per hour of wage decrease equivalent, so that someone you do not know, that may not have worked as hard as you, can be GIVEN a $5 per hour raise?

Now see what the voter says to that, when the question is properly explained.


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## the-royal-mail (Dec 11, 2009)

^ I agree with Eagle on the question. The trouble with these types of social discussions is indeed in the generality of the demands being made by various parties. They ask people if we should do more to help X. Most people would say yes to that. But if you pose the question like this, I guarantee you will get a very different and far more democratic response:

Q: Some people say we should do more to help X. How much of a payroll deduction (every 2 weeks) are you willing to give to address this demand?

1. $50 extra, taken off each paycheque
2. $100 extra, taken off each paycheque
3. $500 extra, taken off each paycheque
4. I cannot or will not give anything extra off my paycheque for this.

Otherwise known as "putting your money where your mouth is"

Reality lies in the answer to the above question, not the bogus manner in which these questions are normally asked.


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## HaroldCrump (Jun 10, 2009)

Hey, you stole my survey :frown:

I should have trademarked it when I had the chance.


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## Ethan (Aug 8, 2010)

CPA Candidate said:


> Capital gains and dividends should be fully taxed as wages are for a first step towards a more equitable society.


Not trying to pile on, but a corporation generally pays dividends out of after tax income. If a private company were to flow money from the corporation to the shareholder through bonuses or dividends, roughly the same amount of taxes would be collected by the government, the allocation of taxes paid between the corporation and the individual would be different though. It's all a part of tax integration.

Capital gains are a different argument. The traditional argument is that preferable tax treatment for capital gains stimulates investment in the economy. I think that rings true for private companies, venture capital and IPO's, but it doesn't necessarily ring true with existing publicly traded companies. If I invest $50,000 into Royal Bank, it does nothing to stimulate the economy. If I were to invest $50,000 into a startup looking for a more efficient way to manufacture automobile parts, or to start my own private business, that would have an effect on the economy. Trading shares on an exchange transfers money from one owner to another, investing in privates companies/venture capital/IPO's puts that money to direct use.

I could understand eliminating capital gains on existing publicly traded companies but I think we should leave the existing rules in place for private companies, venture capital, IPO's etc. We already follow this principle somewhat through the lifetime capital gains exemption.



> In addition, the government of Alberta needs to move to a progressive income tax system. The current flat tax regime is ridiculously inequitable. Tim Horton coffee pourer or $1 million/year oil executive all pay the same rate of tax? Ridiculous.


Why should they pay different tax rates? The oil executive will still pay substantially more taxes than the Tim Horton's worker despite receiving a similar amount of benefits (ie healthcare, infrastructure etc.) from the government.


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## protomok (Jul 9, 2012)

Guban said:


> The capital gains inclusion rate has been as as high as 75% in the past. Did this have an impact on businesses or investors? I don't recall any discussion about this, but it was a long time ago. Google says between 1990 and 2000, so there should have been some noticeable effect if this is true.


One noticeable effect is that the gap between rich and poor has rapidly increased since 2000 when the capital gains tax dropped from 75% of marginal rate to 50%. Of course there are many other trends that have been contributing to the gap between rich and poor, namely globalization and automation/technology.



OptsyEagle said:


> An increase in minimum wage will be purely inflationary. Milton Freedman won a nobel prize in economics when he confirmed that inflation is caused by money supply and only money supply. If you give money to someone without requiring a corresponding increase in their production of goods and services, then that money will simply increase the price of the existing goods and services. That is the law of economics.
> [/U]


Right, ECON101...errr mine was called ECON1001 . Increasing the minimum wage could potentially cause inflation and job losses...this is known. But any chart of inflation adjusted wages I see is showing minimum wage dropping since ~1960s, e.g. http://i2.cdn.turner.com/money/inte...um-wage-since-1938/images/minimum-wage-ie.png. Therefore we're paying low wage earners less AND we have had gains in productivity...minimum wage employees are producing more and being paid less. Plus IMHO many of the few manufacturing jobs that are actually paying minimum wage are going to automated or moved to Asia regardless of whether or not we increase minimum wage. I think we're kidding ourselves if we think keeping minimum wages low will save manufacturing here in Canada and the US.

Anyway I'm definitely open to hearing other suggestions beyond tax reform and increasing minimum wage. I think for example getting govt salaries and pensions under control would not be a bad place to start, investing more in education so that University tuition does not become U.S style expensive...some degrees at the universities here in Ottawa are now >10k per year for tuition alone


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## m3s (Apr 3, 2010)

OptsyEagle said:


> How do the rich get richer? What makes anyone rich? Rich is simply having more wealth then the next guy. If everyone had the same amount of wealth, no one would be rich. You cannot have the rich, without the poor. Being rich is simply the ability to convince someone else to give you something that is theirs, or to do something for you...and that is all it is.
> 
> OK, so that part was explained in as many ways as I can think of. Now, a big part of capitalism is the carrot of wealth. The drive to improve your lot in life. Since this cannot be done, if everyone's lot improves at the same rate, then we are back to my point. Call it scientific or social or whatever you want... it is a fact of economics ... you cannot be rich, unless someone else is poor. Since I don't see us all voting to become poor, this issue the OP presented is pretty much unsolvable.
> 
> We can bring the poor up to a level where they are fed and maybe even housed, but anything more will seriously effect yours and my standard of living. Eventually the rich and middleclass will get fed up with that.


I think you are going to another extreme that is taking away from today's situation.

Of course there is inequality in capitalism. As it continues to increase, I think the question and discussion should be how much is too much. The rich do get richer and it becomes a downfall to capitalism at some point. You bring up Milton Friedman from the '70.. maybe you should look at what Warren Buffet and Bill Gates are saying more recently. Do poor starving masses make everyone else richer, or do masses spending money make everyone else richer? Things have evolved and the discussion should evolve with it.. The Cold War is over and Russian socialism is no longer the threat

If you did not have time for the documentary, here is a good 6 min synopsis to get you up to date


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## PoolAndRapid (Dec 3, 2013)

..


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## OnlyMyOpinion (Sep 1, 2013)

Toronto.gal said:


> Why unlikely? Given the 2nd part of his/her username, I would say it's rather likely.


Agree, I might better have suggested that while a Candidate might propose taxing dividends and capital gains the same as employment income, I'd hope a CPA would not.


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## sags (May 15, 2010)

Toronto.gal said:


> It's rare for people to be asking for double taxation.


Happens all the time though.............

You buy a new car...........you pay tax.

I buy the car from you...........I pay tax.

Someone buys the car from me...........they pay tax.


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## OnlyMyOpinion (Sep 1, 2013)

sags said:


> Happens all the time though.............
> You buy a new car...........you pay tax.
> I buy the car from you...........I pay tax.
> Someone buys the car from me...........they pay tax.


Are you referring to the "Inequality For All" who live in Ontario (and pay HST even on a private sale), or in BC (and pay PST even on a private sale) - as compared to Sask or Alberta (who pay none) , etc?


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## Toronto.gal (Jan 8, 2010)

sags said:


> Happens all the time though...You buy a new car.....you pay tax. I buy the car from you.....I pay tax. Someone buys the car from me......they pay tax.


Happens all the time that investors ask for the elimination of DTC?


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## nathan79 (Feb 21, 2011)

OnlyMyOpinion said:


> Are you referring to the "Inequality For All" who live in Ontario (and pay HST even on a private sale), or in BC (and pay *PST* even on a private sale) - as compared to Sask or Alberta (who pay none) , etc?


It was raised from 7% to 12% in BC when the HST was introduced. The HST was defeated, but the "used car tax" was retained at 12%.


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## sags (May 15, 2010)

Toronto.gal said:


> Happens all the time that investors ask for the elimination of DTC?


Gosh no..............that would be a terrible idea.

Just saying that double, triple, quadruple,..........taxation already exists..............and doing it again is not beyond the realm of possibility for cash hungry politicians.


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## gimme_divies (Feb 12, 2011)

The issue isn't the tax rates, but is the actual enforcement of our tax laws and collection of taxes owed. If the rich simply paid their taxes, we could eliminate poverty in this country forever.

http://www.taxfairness.ca/en/news/huge-cost-tax-evasion-revealed-campaign-tackle-tax-havens-launches

“Canada needs to do more to curb tax havens and tax evasion, especially when deficit-cutting threatens to gut our social programs and undermine the ability of government to ensure food safety and environmental protection. A new study by the Tax Justice Network estimates that Canada is losing over $80 billion a year. That is more than half of all our health care spending. Going after resource extraction companies and Canadian banks, as well as many rich individuals who are taking advantage of tax havens to avoid paying taxes to Canada and to the developing countries where they are extracting resources, is a much better way to reduce the deficit than cutting spending on health, education and environmental protection.”


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## coptzr (Jan 18, 2013)

Will have to watch this...


Got to couple days ago. Was good watch and I think it brings awareness to the inequality in large companies but there are a lot of fine lines. Words no one really wants to talk about, such as equal/scaled pay, union, bonuses, etc... It is frustrating where the better the company performs efficiently and makes more profit the only winners are the guys in the boardroom. Many say the workers win by having a job, but in a lot of cases they actually lose their job. Better efficiency with less man hours equals more profit which equals bigger bonus. There is a problem when the workers are worried everyday about having a job and a CEO is worried about getting a fatter cheque. So the worker all the stress for $50k/yr and the CEO gets $5M/year. Problem is if anyone was in this position they would not complain.


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