4 ms·

How do you then prevent a regressive tax policy, given capital is almost the exclusive form of wealth accretion for the 1%?

by m0th87 11y ago

ZenoArrow 11y ago
You could tax assets, e.g. land-value tax.
- jnordwick 11y ago
  That is still a tax on capital and like to cause a lot of social issues. Property taxes tend to drive people out of their homes and out of business too easily. Plus then you taxing inflationary effects probably more than anything else. Real estate for example is very inflation sensitive and your tax bill would be all over the place if you taxed the capital gain on that. Then what do you do when the land falls in value? Do you really think the government would give a rebate? And then when it rises again, hopefully they wouldn't tax it again (the basis for the last taxation should have been raised), but I wouldn't put it past legislators grabbing for money by saying you can only back back 5 years or something to determine the tax basis.
  - ZenoArrow 11y ago
    > "That is still a tax on capital" What's your definition of capital? "and like to cause a lot of social issues." Which parts of this article on land-value tax do you disagree with? https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
    - sokoloff 11y ago
      That the methods proposed for valuing are good enough. https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment.2Fappraisal https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment.2F... In particular, the "Value can be computed by capitalizing rental streams." (Is someone renting the land, or are they renting the office skyscraper that's on the land?) "Further, valuators in the home-and-contents insurance industry do so in order to calculate an insurance premium, separating the value of the home from the value of the land." My experience is that's done in a straight-line percentage method ("the land is 20% of the purchase price in this area"), which doesn't distinguish adequately enough for taxation valuation purposes, IMO, but does provide some basis for insurance company purposes. "Another approach is the residual method: the value of the site is the property's total value minus the depreciated value of buildings and other structures." So, the land I own under a rental property gets more and more valuable each year (as I depreciate the buildings and structures)? Then, I sell it to another investor and the land value drops again to a low baseline and starts to rise as THEY depreciate the buildings? That doesn't make any sense to me. The article admits that the whole valuation topic is a hard problem and I agree with that.
- jqm 11y ago
  Tax land use and tax raw material use. (i.e. aluminum in a can). Eliminate just about all other taxes. Don't tax "capital" in the form of money, certainly don't tax labor. Why punish productive effort? Punish use of resources. This will make people strive for efficiency and go a long ways towards eliminating problems like pollution, encourage recycling etc.
jnordwick 11y ago
Let's say you could double the wealth of everybody in the country in 20 years, but the top 1% (or 0.1% or choose your most hated percentile) would have their wealth in crease 10x. I don't really see wealth accretion as a problem. If that incredibly wealthy person goes and spends his money ostentatiously -- basically why we generally hate the rich in the first place because of the social stratification caused by them have bigger and better things -- then a sales tax with luxury tax or high profile items would quickly bring them back into the category of those most taxed. If that incredibly wealth person didn't spend a lot of money and lived well below his means, then why do we care? He is basically producing for free for the rest of use to consume. If he invests his money or just puts it in a bank account, he is helping to increase capital formation and drive society forward. Even if he just burns his money or buries it, he is basically giving everybody else in the world more purchasing power -- and in this case he literally is working for free. I never understood this who argument about the rich sitting on their money: it means they are working without consuming and that means they really aren't being paid. Income taxes are okay to an extent too. But they are just so much more difficult to get right. Defining income is difficult, and some people have very volatile income streams earning $200k one year and $50k the next. Should they really be taxes more (and a great deal more) than the guy who make $125 in two years? A sales tax or VAT is just easier from an implementation point of view. And there is nothing stopping you from excluding items like food and medical bills and nothing stopping luxury taxes either.
- m0th87 11y ago
  The assumption there is that a regressive tax policy "lifts all ships." Piketty (and plenty others) have demonstrated that this does not happen.
- id 11y ago
  > we generally hate the rich in the first place because of the social stratification caused by them have bigger and better things The rich aren't hated because they drive nicer cars, they are hated because it's their greed that causes a lot of suffering. > it means they are working without consuming and that means they really aren't being paid Our economy relies on consuming. And even if they never consume their assets, they do consume the interest it generates. Sometimes for generations.

How do you then prevent a regressive tax policy, given capital is almost the exclusive form of wealth accretion for the 1%?

by m0th87 11y ago

How do you then prevent a regressive tax policy, given capital is almost the exclusive form of wealth accretion for the 1%?

ZenoArrow 11y ago

You could tax assets, e.g. land-value tax.

jnordwick 11y ago
That is still a tax on capital and like to cause a lot of social issues. Property taxes tend to drive people out of their homes and out of business too easily. Plus then you taxing inflationary effects probably more than anything else. Real estate for example is very inflation sensitive and your tax bill would be all over the place if you taxed the capital gain on that. Then what do you do when the land falls in value? Do you really think the government would give a rebate? And then when it rises again, hopefully they wouldn't tax it again (the basis for the last taxation should have been raised), but I wouldn't put it past legislators grabbing for money by saying you can only back back 5 years or something to determine the tax basis.
- ZenoArrow 11y ago
  > "That is still a tax on capital" What's your definition of capital? "and like to cause a lot of social issues." Which parts of this article on land-value tax do you disagree with? https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
  - sokoloff 11y ago
    That the methods proposed for valuing are good enough. https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment.2Fappraisal https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment.2F... In particular, the "Value can be computed by capitalizing rental streams." (Is someone renting the land, or are they renting the office skyscraper that's on the land?) "Further, valuators in the home-and-contents insurance industry do so in order to calculate an insurance premium, separating the value of the home from the value of the land." My experience is that's done in a straight-line percentage method ("the land is 20% of the purchase price in this area"), which doesn't distinguish adequately enough for taxation valuation purposes, IMO, but does provide some basis for insurance company purposes. "Another approach is the residual method: the value of the site is the property's total value minus the depreciated value of buildings and other structures." So, the land I own under a rental property gets more and more valuable each year (as I depreciate the buildings and structures)? Then, I sell it to another investor and the land value drops again to a low baseline and starts to rise as THEY depreciate the buildings? That doesn't make any sense to me. The article admits that the whole valuation topic is a hard problem and I agree with that.
jqm 11y ago
Tax land use and tax raw material use. (i.e. aluminum in a can). Eliminate just about all other taxes. Don't tax "capital" in the form of money, certainly don't tax labor. Why punish productive effort? Punish use of resources. This will make people strive for efficiency and go a long ways towards eliminating problems like pollution, encourage recycling etc.

jnordwick 11y ago

Let's say you could double the wealth of everybody in the country in 20 years, but the top 1% (or 0.1% or choose your most hated percentile) would have their wealth in crease 10x. I don't really see wealth accretion as a problem. If that incredibly wealthy person goes and spends his money ostentatiously -- basically why we generally hate the rich in the first place because of the social stratification caused by them have bigger and better things -- then a sales tax with luxury tax or high profile items would quickly bring them back into the category of those most taxed. If that incredibly wealth person didn't spend a lot of money and lived well below his means, then why do we care? He is basically producing for free for the rest of use to consume. If he invests his money or just puts it in a bank account, he is helping to increase capital formation and drive society forward. Even if he just burns his money or buries it, he is basically giving everybody else in the world more purchasing power -- and in this case he literally is working for free. I never understood this who argument about the rich sitting on their money: it means they are working without consuming and that means they really aren't being paid. Income taxes are okay to an extent too. But they are just so much more difficult to get right. Defining income is difficult, and some people have very volatile income streams earning $200k one year and $50k the next. Should they really be taxes more (and a great deal more) than the guy who make $125 in two years? A sales tax or VAT is just easier from an implementation point of view. And there is nothing stopping you from excluding items like food and medical bills and nothing stopping luxury taxes either.

m0th87 11y ago
The assumption there is that a regressive tax policy "lifts all ships." Piketty (and plenty others) have demonstrated that this does not happen.
id 11y ago
> we generally hate the rich in the first place because of the social stratification caused by them have bigger and better things The rich aren't hated because they drive nicer cars, they are hated because it's their greed that causes a lot of suffering. > it means they are working without consuming and that means they really aren't being paid Our economy relies on consuming. And even if they never consume their assets, they do consume the interest it generates. Sometimes for generations.