6 ms·

This is a disingenuous rebuttal. The difference in wealth between someone worth $45B, and two people each worth $1 million and -$1million respectively, is ident

by cmurf 11y ago

This is a disingenuous rebuttal. The difference in wealth between someone worth $45B, and two people each worth $1 million and -$1million respectively, is identical. The millionaire is worth less than 0.01% of the first. If this were a card game, the millionaire could go piss himself. If it were possible to put $45B into a typical savings account earning 1% interest per year, that $45B person will make more money doing nothing in 1 day than the millionaire is worth. The thing is, it's not possible to do that. It's actually difficult to make only $1 million per day off $45B in assets. You'd have to give away huge chunks of assets to avoid making $4+ million per day. The problem is hoarding. It's no longer enough to go back to a 94% income rate for the top bracket like we used to have for ~30 years expressly to prevent this amount of hoarding.

marcoperaza 11y ago
Hoarding? Do you think rich people just stuff their money in a mattress? Even if they deposited it all in checking accounts, the banks would reinvest it all over the economy.
- cmurf 11y ago
  Yes I do, that mattress is called stock.
  - marcoperaza 11y ago
    If you're buying newly issued stock, that's going to be directly spent on business expenses like salaries and payments to other companies. Even buying existing stock directly supports the market for companies to raise money in that way. If you're buying existing stock, someone on the other end is receiving your money that they will then spend or invest as they see fit. Very little money is idle, since it's in no one's interests for it to be.
- leot 11y ago
  Yes, the problem is hoarding. Which is proportional to the delta in potential and actual productivity of the already wealthy (and their assets). Here's a quick demonstration: imagine all US taxation (apart from excise taxes) was replaced by a 3% yearly tax on household net wealth. No income taxes. No corporate taxes. No cap gains. No weird deductions based on expected future whatever. The question now is: cui bono? The hard working, high growth individuals (wealthy or not) benefit because their income and capital gains remain untouched -- they just need to earn enough in returns to offset the 3% tax. And who loses? The hoarders engaged strictly in "wealth preservation" (https://books.google.com/ngrams/graph?content=wealth+preservation&year_start=1900&year_end=2008&corpus=15&smoothing=3 https://books.google.com/ngrams/graph?content=wealth+preserv...).
  - codeismightier 11y ago
    You clearly have not thought though the consequences of your proposal. Here are just a few of the problems: * What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman? * What if the ultra-wealthy buy property and then mark it down? I.e. they buy paintings, then "accidentally" "damage" them. Whoops, a billion dollars in artwork gone, sorry IRS. Later, it is miraculously repaired. Will the IRS have to start sending undercover agents to inspect people's art collections? * A 3% wealth tax is still less than the growth rate of many financial assets. I.e. the stock market grows at ~7%. So the rich will still get richer. And if you increase the tax to say, 8%, congrats, you just destroyed the financial markets.
    - leot 11y ago
      I don't understand your response. The primary purpose of the proposal was to illustrate what "hoarding" is. Did it accomplish that goal? If not, why? To address your concerns generally -- every tax policy has a variety of impacts on behavior. Multiple countries already have a wealth tax, so they are definitely workable. There are behavioral and policy methods of addressing potential negative consequences. To respond more specifically: > What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman? That's a straw man argument for a host of reasons. We already carve out exemptions for primary dwellings, and there's no reason why this wouldn't similarly apply, up to some limit. But even absent that, real assets are real assets, and there are multiple ways of extracting liquidity from them (and moreover doing so generates wealth for society). You can take on a "reverse mortgage", or rent out one of your rooms, or sell it and rent, or take out an annuity that's secured against your home, among other possibilities. > What if the ultra-wealthy buy property and then mark it down? I.e. they buy paintings, then "accidentally" "damage" them. Whoops, a billion dollars in artwork gone, sorry IRS. Later, it is miraculously repaired. Will the IRS have to start sending undercover agents to inspect people's art collections? That's fraud/non-compliance/tax evasion, and it's already a massive problem in the current tax system, except now it's cloaked in things like a "double dutch with an irish sandwich". In any case, this is a problem that is dealt with every day, in business, by insurance companies, and there's no reason why the same techniques couldn't be used by tax officials. > A 3% wealth tax is still less than the growth rate of many financial assets. I.e. the stock market grows at ~7%. So the rich will still get richer. And if you increase the tax to say, 8%, congrats, you just destroyed the financial markets. Yes, and a 95% income tax rate will destroy the labor market. So? And yes, at 7% CAGR on the S+P the wealthy continue to get wealthier (assuming all their assets are in equities, a big assumption). But note that, in the process, we've eliminated income taxes, so everyone else will be getting richer faster. A win-win.
codeismightier 11y ago
What's the problem with hoarding? There's no difference between a billion dollars stuffed under the mattress, never to be spent, and a billion dollars burned up in a fire. If the rich aren't spending, they are not consuming resources or causing pollution, so it's as if their money never existed. And if they do one day decide to draw down their accounts, then it wasn't being hoarded. >> If this were a card game, the millionaire could go piss himself. Thankfully the economy is not in fact a card game, and no billionaire can force you to piss yourself.
- jessaustin 11y ago
  Just don't say that to a billionaire. It might make for an unpleasant learning experience.
coliveira 11y ago
A practical problem of wealth accumulation is that it eventually becomes a moral hazard. If you have people with more $10B and a system of unlimited political contributions as in the US, they have so much power that it is difficult to maintain the democratic equilibrium. It is now known that the Koch brothers and Sheldon Adelson have more power over the republicans than the RNC, having elected hundreds of local and national politicians. In the left there is George Soros and a few others. Are we really willing as a society to give away so much political power to billionaires? I think a very practical solution is an extreme large tax on billionaires. There is no reasonable reason why a single person would like to have more than a billion dollars. This is practically an inexhaustible amount of money that should be considered as a practical limit. After that, you can happily pay 99% tax and enjoy making this country better.
- cvwright 11y ago
  Interestingly, at least according to The Atlantic, the political power of these billionaires seems to be failing. This article [1] frames the rise of Donald Trump (!) in the 2016 presidential race as an effect of the growing disconnect between billionaire donors like the Kochs and the Republican voting base. [1] http://www.theatlantic.com/magazine/archive/2016/01/the-great-republican-revolt/419118/ http://www.theatlantic.com/magazine/archive/2016/01/the-grea...
  - surrealize 11y ago
    Donald Trump is going to save us from self-interested billionaires? This isn't a story about how the political power of billionaires is failing, it's a story about one billionaire winning against some other billionaires. The underlying problem of wealth inequality and its effect on the political system remains.

by cmurf 11y ago

marcoperaza 11y ago

Hoarding? Do you think rich people just stuff their money in a mattress? Even if they deposited it all in checking accounts, the banks would reinvest it all over the economy.

cmurf 11y ago
Yes I do, that mattress is called stock.
- marcoperaza 11y ago
  If you're buying newly issued stock, that's going to be directly spent on business expenses like salaries and payments to other companies. Even buying existing stock directly supports the market for companies to raise money in that way. If you're buying existing stock, someone on the other end is receiving your money that they will then spend or invest as they see fit. Very little money is idle, since it's in no one's interests for it to be.
leot 11y ago
Yes, the problem is hoarding. Which is proportional to the delta in potential and actual productivity of the already wealthy (and their assets). Here's a quick demonstration: imagine all US taxation (apart from excise taxes) was replaced by a 3% yearly tax on household net wealth. No income taxes. No corporate taxes. No cap gains. No weird deductions based on expected future whatever. The question now is: cui bono? The hard working, high growth individuals (wealthy or not) benefit because their income and capital gains remain untouched -- they just need to earn enough in returns to offset the 3% tax. And who loses? The hoarders engaged strictly in "wealth preservation" (https://books.google.com/ngrams/graph?content=wealth+preservation&year_start=1900&year_end=2008&corpus=15&smoothing=3 https://books.google.com/ngrams/graph?content=wealth+preserv...).
- codeismightier 11y ago
  You clearly have not thought though the consequences of your proposal. Here are just a few of the problems: * What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman? * What if the ultra-wealthy buy property and then mark it down? I.e. they buy paintings, then "accidentally" "damage" them. Whoops, a billion dollars in artwork gone, sorry IRS. Later, it is miraculously repaired. Will the IRS have to start sending undercover agents to inspect people's art collections? * A 3% wealth tax is still less than the growth rate of many financial assets. I.e. the stock market grows at ~7%. So the rich will still get richer. And if you increase the tax to say, 8%, congrats, you just destroyed the financial markets.
  - leot 11y ago
    I don't understand your response. The primary purpose of the proposal was to illustrate what "hoarding" is. Did it accomplish that goal? If not, why? To address your concerns generally -- every tax policy has a variety of impacts on behavior. Multiple countries already have a wealth tax, so they are definitely workable. There are behavioral and policy methods of addressing potential negative consequences. To respond more specifically: > What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman? That's a straw man argument for a host of reasons. We already carve out exemptions for primary dwellings, and there's no reason why this wouldn't similarly apply, up to some limit. But even absent that, real assets are real assets, and there are multiple ways of extracting liquidity from them (and moreover doing so generates wealth for society). You can take on a "reverse mortgage", or rent out one of your rooms, or sell it and rent, or take out an annuity that's secured against your home, among other possibilities. > What if the ultra-wealthy buy property and then mark it down? I.e. they buy paintings, then "accidentally" "damage" them. Whoops, a billion dollars in artwork gone, sorry IRS. Later, it is miraculously repaired. Will the IRS have to start sending undercover agents to inspect people's art collections? That's fraud/non-compliance/tax evasion, and it's already a massive problem in the current tax system, except now it's cloaked in things like a "double dutch with an irish sandwich". In any case, this is a problem that is dealt with every day, in business, by insurance companies, and there's no reason why the same techniques couldn't be used by tax officials. > A 3% wealth tax is still less than the growth rate of many financial assets. I.e. the stock market grows at ~7%. So the rich will still get richer. And if you increase the tax to say, 8%, congrats, you just destroyed the financial markets. Yes, and a 95% income tax rate will destroy the labor market. So? And yes, at 7% CAGR on the S+P the wealthy continue to get wealthier (assuming all their assets are in equities, a big assumption). But note that, in the process, we've eliminated income taxes, so everyone else will be getting richer faster. A win-win.

codeismightier 11y ago

What's the problem with hoarding? There's no difference between a billion dollars stuffed under the mattress, never to be spent, and a billion dollars burned up in a fire. If the rich aren't spending, they are not consuming resources or causing pollution, so it's as if their money never existed. And if they do one day decide to draw down their accounts, then it wasn't being hoarded. >> If this were a card game, the millionaire could go piss himself. Thankfully the economy is not in fact a card game, and no billionaire can force you to piss yourself.

jessaustin 11y ago
Just don't say that to a billionaire. It might make for an unpleasant learning experience.

coliveira 11y ago

A practical problem of wealth accumulation is that it eventually becomes a moral hazard. If you have people with more $10B and a system of unlimited political contributions as in the US, they have so much power that it is difficult to maintain the democratic equilibrium. It is now known that the Koch brothers and Sheldon Adelson have more power over the republicans than the RNC, having elected hundreds of local and national politicians. In the left there is George Soros and a few others. Are we really willing as a society to give away so much political power to billionaires? I think a very practical solution is an extreme large tax on billionaires. There is no reasonable reason why a single person would like to have more than a billion dollars. This is practically an inexhaustible amount of money that should be considered as a practical limit. After that, you can happily pay 99% tax and enjoy making this country better.

cvwright 11y ago
Interestingly, at least according to The Atlantic, the political power of these billionaires seems to be failing. This article [1] frames the rise of Donald Trump (!) in the 2016 presidential race as an effect of the growing disconnect between billionaire donors like the Kochs and the Republican voting base. [1] http://www.theatlantic.com/magazine/archive/2016/01/the-great-republican-revolt/419118/ http://www.theatlantic.com/magazine/archive/2016/01/the-grea...
- surrealize 11y ago
  Donald Trump is going to save us from self-interested billionaires? This isn't a story about how the political power of billionaires is failing, it's a story about one billionaire winning against some other billionaires. The underlying problem of wealth inequality and its effect on the political system remains.