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Experiencing Scale

Reading this "expose" was mildly interesting as the general direction of the facts are well known and the details are meant to provoke outrage. People are able to compare themselves to what is within conceptual range. You could envy your neighbor who lives in the same sub-division but has the nicer house and cars, take more vacations than most. So that is within range but a bit on the higher end of a scale you are able to see your place on - this drives envy. The ultra-rich Americans this article cites are not within our conceptual realm, the way they earn and spend money is nothing the ordinary person is familiar with - this is scale where we don't even have a place, the unit of measure is a few orders of magnitude higher. 

It would make sense to frame the problem statement in terms of consequences for the rest of us as a result of these folks not paying any taxes. If for example, CEO was capped at N times higher than the lowest earning associate in the company, it would mean three months a year of paid vacation for all, free childcare until kindergarten for every employee, free healthcare and so on. Those are concepts all of us can grasp easily. So to learn that we could have had all of those things and much more in our current jobs and cannot, might promote the kind of visceral response such revelations seek. The story is not about income tax loop-holes, it is about the human potential of 99% of the population stolen, trod-upon and destroyed.

Since then, the concept that income comes only from proceeds — when gains are “realized” — has been the bedrock of the U.S. tax system. Wages are taxed. Cash dividends are taxed. Gains from selling assets are taxed. But if a taxpayer hasn’t sold anything, there is no income and therefore no tax.

Contemporary critics of Macomber were plentiful and prescient. Cordell Hull, the congressman known as the “father” of the income tax, assailed the decision, according to scholar Marjorie Kornhauser. Hull predicted that tax avoidance would become common. The ruling opened a gaping loophole, Hull warned, allowing industrialists to build a company and borrow against the stock to pay living expenses. Anyone could “live upon the value” of their company stock “without selling it, and of course, without ever paying” tax, he said.

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