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> This means that we'd have to stop free trade entirely (catastrophic for developing countries) or implement UBI across all countries at the same time (definite

by hx87 10y ago

> This means that we'd have to stop free trade entirely (catastrophic for developing countries) or implement UBI across all countries at the same time (definitely impossible in the near future). That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union. > You'd have to grow your capital at a rate greater than the tax every year to be successful Since the tax would be about the same as the current (or 1960s, if you're generous) share of the national income from capital captured by wages, capital already grows at at least this rate--otherwise wages alone would be dragging down all economies today, and that's just not happening. > What if your whole economy had a bad decade and assets failed to outgrow your capital tax? We'd do what we do today, and draw down the sovereign wealth fund and/or borrow from the bond markets.

RyanZAG 10y ago
> That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union. For real immigration: that is already happening massively in the form of economic migrants into Europe. If you restrict capital from traveling out of the developed world, you'll turn the developing world into a hellscape that everyone will try to escape. Real immigration of that size would make housing unaffordable, overwhelm all infrastructure, overwhelm local water resources, etc. It's the exact opposite of what we want: we don't want all of humanity in a 100km big city. We really really don't. For "virtual" immigration - you basically mean annexing the sovereignty of citizens of developing countries. Extremely unlikely, no government would allow that without a fight. But assuming they do, you now have a billion new voters living outside of your country. What do they do the next election? They'll vote in their own leader who will promptly redirect all the social grant money overseas. Hell, I know African leaders, they'll redirect all tax money to themselves in massive quantities. We don't want all of the developing world electing leaders for us, we really really really don't. You'll likely end up with a devout religious leader of some kind because of uneducated voters. On the tax stuff - we'd need hard numbers to draw a conclusion. I was just giving some examples of how a capital tax would not necessarily solve the problems faced by an income tax and may have far more unknown problems that would only come up after we face the unintended side effects. There's always unintended side effects.

by hx87 10y ago

RyanZAG 10y ago

> That's a valid and important concern, and one that I don't have any answers to right now. One possibility is keep capital fixed while making people mobile, i.e. very tight capital controls combined with very loose immigration controls. Capital thus cannot escape to low-tax regimes, and people in developing countries can take still advantage of capital by moving to where the capital is. If that's too difficult to handle, there is also the possibility of "virtual" immigration through political union. For real immigration: that is already happening massively in the form of economic migrants into Europe. If you restrict capital from traveling out of the developed world, you'll turn the developing world into a hellscape that everyone will try to escape. Real immigration of that size would make housing unaffordable, overwhelm all infrastructure, overwhelm local water resources, etc. It's the exact opposite of what we want: we don't want all of humanity in a 100km big city. We really really don't. For "virtual" immigration - you basically mean annexing the sovereignty of citizens of developing countries. Extremely unlikely, no government would allow that without a fight. But assuming they do, you now have a billion new voters living outside of your country. What do they do the next election? They'll vote in their own leader who will promptly redirect all the social grant money overseas. Hell, I know African leaders, they'll redirect all tax money to themselves in massive quantities. We don't want all of the developing world electing leaders for us, we really really really don't. You'll likely end up with a devout religious leader of some kind because of uneducated voters. On the tax stuff - we'd need hard numbers to draw a conclusion. I was just giving some examples of how a capital tax would not necessarily solve the problems faced by an income tax and may have far more unknown problems that would only come up after we face the unintended side effects. There's always unintended side effects.