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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 we

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.
sosuke 11y ago
If you double the wealth of everyone in 20 years, and the 0.1% have their wealth increase 10x then the problem has gotten worse. I make $1 today and they make $10, in 20 years I make $2 and they make $100.
usrusr 11y ago
> If that incredibly wealthy person didn't spend a lot of money and lived well below his means, then why do we care? Because wealth is many different things. Too the poor, wealth is food. This can be increased, within reasonable limits. Too the middle class, wealth is access to inherently limited resources, like properties with a non-atrocious commute. Too the rich, wealth is power and that, by nature, happens at the expense of others. Capital accretion is power accretion, even more so when the rich lives like a monk. And the power you give one person is freedom you take from another. Once they have used their power to own all nice spots of land and use the food to run their boats and jets on "green" fuel, it turns out that all the supposed wealth you have given the lower classes was just money. Taxing capital suddenly looks dead easy when you compare it to taxing power.
- stale2002 11y ago
  Dollars are just green pieces of paper.... If you don't actually use those green pieces of paper for anything then they remain green pieces of paper. There is no shortage of dollars. The government can create more of them whenever it wants, if it feels like the wealthy are hoarding them
Retric 11y ago
Recent history shows zero net gain for most Americans there is no lifting all boats just ever more money at the top.
Ericson2314 11y ago
> If that incredibly wealth person didn't spend a lot of money and lived well below his means, then why do we care? If they truly never use it---spending it or using its mere existence for leverage---they might as well be burning it. Literally the economy is being shrunk for nobody's gain.
- bluecalm 11y ago
  Friendly aliens arrived for 10 years, built a lot of houses, produced a lot of smartphones, cleaned a lot of cities. They took a fee for all of that and then flied back to their planet taking all the money to be never seen again. The economy literally got a lot of free stuff and obviously people are much richer than before. Money is a promise, if someone is forgetting the promises others made to them (burning money) others benefit as they just got free stuff.
  - Ericson2314 11y ago
    Um no? A really simple model of a healthy economy is that money sloshes back and fork and yet value is created. A more realistic variant is that the money supply also increases (loans & interest). The point is in either of these the money supply isn't going down. I'm no economist but all that money just disappearing sounds really bad. I doubt the gains to the economy from the "free stuff" would offset it.
    - jnordwick 11y ago
      A sign of a health economy is production. Consumption is a secondary effect. It arises from production: you cannot consume without it being produced first, and you never really need to induce consumption. I know they say it a lot, but it is crazy. The human desire for stuff in unquenchable, but getting somebody to produce is always the hard part. The Veil of Money was used to describe the question of whether money was important to the real economy, and it brings up how money can confuse and hide. Money is just an accounting mechanism, literally an IOU -- a claim on future production. Remove the money and see what happens: The chef and I down the clean exchange services and we agree on an equal exchange, one hour of her time for one hour of my time. She cooks for me for 5 hours, but she doesn't have any need for my help yet, so I write her an IOU saying I'll help her with her stock portfolio when she needs me. She decide to die in a horrible fire, taking with her the house and IOUs. Now I have 5 hours of free cooking and the world is no worse off for her not consuming. In fact it is much better. If somebody worked and produced so much more than anybody else in the entire world and produced half or everything but never spent a penny and one day burned everything, yes, the dollar would double in value overnight -- fewer dollars chasing the same amount of good, deflation. All the government would need to do is produce the little green pieces of paper or double everybody's bank accounts overnight, and the world would now have all that stuff for free.
netcan 11y ago
You are making a rather big assumption. Orthodox economic theory has a lot of (well argued) focus on economic "efficiency." But, even positive sum games can have negative impact on a specific party. IE, I agree with the orthodox position (EG Milton Friedman) that taxing person A to provide services to person A is generally a bad deal for person A. If there was a policy whereby tax is raised and groceries are provided by central buying organisation and distributed back proportionally to their contribution, almost everyone would loose. The production of groceries would be worse. etc. But, that doesn't mean a progressive redistribution would harm everyone. In my groceries example the reality is that the vast majority would be far worse off. It's a very bad policy. My point is that the argument for progressive taxation is in my opinion very hard to dismiss from an economics perspective. A dollar is not of equal consumption value in different hands to the same extent that it is not of equal productive value in all hands. Consumption does not have the same market forces funnelling it to its highest value use, a consumption equivalent of Coase theorom or somesuch. The advantage of redistribution of wealth at point of consumption is (again, IMO) real and it grows bigger as wealth becomes more unevenly distributed.
- jnordwick 11y ago
  I'm not saying you shouldn't redistribute. I don't have a problem with that actually. I'm arguing that if you are going to (and let me reiterate, I think we should), there are much better ways to do it than a tax on capital. Capital gains taxes make up about 4% of total revenue. For that 4%, we pay almost half of that on enforcement. So, for 2% of our revenue, we do some pretty nasty damage. There definitely are better ways.
deciplex 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. The way our politics are structured for the time being (and have been structured for basically all our history), under your hypothetical those getting the 10x increase would see their influence in government increase roughly five-fold or so. The current wealth disparities in most of the developed world are already stretching the legitimacy of democracy to its limits - if what you suggest came to pass what is left of it would evaporate.
andrepd 11y ago
The rich are hated because their accumulating wealth leaves less for the rest of us. As often this wealth is not even the product of merit, it's even more infuriating.

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.

sosuke 11y ago

If you double the wealth of everyone in 20 years, and the 0.1% have their wealth increase 10x then the problem has gotten worse. I make $1 today and they make $10, in 20 years I make $2 and they make $100.

usrusr 11y ago

> If that incredibly wealthy person didn't spend a lot of money and lived well below his means, then why do we care? Because wealth is many different things. Too the poor, wealth is food. This can be increased, within reasonable limits. Too the middle class, wealth is access to inherently limited resources, like properties with a non-atrocious commute. Too the rich, wealth is power and that, by nature, happens at the expense of others. Capital accretion is power accretion, even more so when the rich lives like a monk. And the power you give one person is freedom you take from another. Once they have used their power to own all nice spots of land and use the food to run their boats and jets on "green" fuel, it turns out that all the supposed wealth you have given the lower classes was just money. Taxing capital suddenly looks dead easy when you compare it to taxing power.

stale2002 11y ago
Dollars are just green pieces of paper.... If you don't actually use those green pieces of paper for anything then they remain green pieces of paper. There is no shortage of dollars. The government can create more of them whenever it wants, if it feels like the wealthy are hoarding them

Retric 11y ago

Recent history shows zero net gain for most Americans there is no lifting all boats just ever more money at the top.

Ericson2314 11y ago

> If that incredibly wealth person didn't spend a lot of money and lived well below his means, then why do we care? If they truly never use it---spending it or using its mere existence for leverage---they might as well be burning it. Literally the economy is being shrunk for nobody's gain.

bluecalm 11y ago
Friendly aliens arrived for 10 years, built a lot of houses, produced a lot of smartphones, cleaned a lot of cities. They took a fee for all of that and then flied back to their planet taking all the money to be never seen again. The economy literally got a lot of free stuff and obviously people are much richer than before. Money is a promise, if someone is forgetting the promises others made to them (burning money) others benefit as they just got free stuff.
- Ericson2314 11y ago
  Um no? A really simple model of a healthy economy is that money sloshes back and fork and yet value is created. A more realistic variant is that the money supply also increases (loans & interest). The point is in either of these the money supply isn't going down. I'm no economist but all that money just disappearing sounds really bad. I doubt the gains to the economy from the "free stuff" would offset it.
  - jnordwick 11y ago
    A sign of a health economy is production. Consumption is a secondary effect. It arises from production: you cannot consume without it being produced first, and you never really need to induce consumption. I know they say it a lot, but it is crazy. The human desire for stuff in unquenchable, but getting somebody to produce is always the hard part. The Veil of Money was used to describe the question of whether money was important to the real economy, and it brings up how money can confuse and hide. Money is just an accounting mechanism, literally an IOU -- a claim on future production. Remove the money and see what happens: The chef and I down the clean exchange services and we agree on an equal exchange, one hour of her time for one hour of my time. She cooks for me for 5 hours, but she doesn't have any need for my help yet, so I write her an IOU saying I'll help her with her stock portfolio when she needs me. She decide to die in a horrible fire, taking with her the house and IOUs. Now I have 5 hours of free cooking and the world is no worse off for her not consuming. In fact it is much better. If somebody worked and produced so much more than anybody else in the entire world and produced half or everything but never spent a penny and one day burned everything, yes, the dollar would double in value overnight -- fewer dollars chasing the same amount of good, deflation. All the government would need to do is produce the little green pieces of paper or double everybody's bank accounts overnight, and the world would now have all that stuff for free.

netcan 11y ago

You are making a rather big assumption. Orthodox economic theory has a lot of (well argued) focus on economic "efficiency." But, even positive sum games can have negative impact on a specific party. IE, I agree with the orthodox position (EG Milton Friedman) that taxing person A to provide services to person A is generally a bad deal for person A. If there was a policy whereby tax is raised and groceries are provided by central buying organisation and distributed back proportionally to their contribution, almost everyone would loose. The production of groceries would be worse. etc. But, that doesn't mean a progressive redistribution would harm everyone. In my groceries example the reality is that the vast majority would be far worse off. It's a very bad policy. My point is that the argument for progressive taxation is in my opinion very hard to dismiss from an economics perspective. A dollar is not of equal consumption value in different hands to the same extent that it is not of equal productive value in all hands. Consumption does not have the same market forces funnelling it to its highest value use, a consumption equivalent of Coase theorom or somesuch. The advantage of redistribution of wealth at point of consumption is (again, IMO) real and it grows bigger as wealth becomes more unevenly distributed.

jnordwick 11y ago
I'm not saying you shouldn't redistribute. I don't have a problem with that actually. I'm arguing that if you are going to (and let me reiterate, I think we should), there are much better ways to do it than a tax on capital. Capital gains taxes make up about 4% of total revenue. For that 4%, we pay almost half of that on enforcement. So, for 2% of our revenue, we do some pretty nasty damage. There definitely are better ways.

deciplex 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. The way our politics are structured for the time being (and have been structured for basically all our history), under your hypothetical those getting the 10x increase would see their influence in government increase roughly five-fold or so. The current wealth disparities in most of the developed world are already stretching the legitimacy of democracy to its limits - if what you suggest came to pass what is left of it would evaporate.

andrepd 11y ago

The rich are hated because their accumulating wealth leaves less for the rest of us. As often this wealth is not even the product of merit, it's even more infuriating.