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Maybe we should stop thinking taxes are the solution to inequality. "Cutting all the high trees so the forest looks even".
by conanbatt 9y ago
Maybe we should stop thinking taxes are the solution to inequality. "Cutting all the high trees so the forest looks even".
- JamesBarney 9y agoTaxation is both effective, and far less invasive to markets than many other solutions.(like minimum wages, enforced labor unions, changing the way companies pick or compensate CEOs). So that's why it's brought up so often. What are some solutions you're aware of that are equally effective and less invasive?
- microcolonel 9y ago> Taxation ... minimum wages, enforced labor unions, changing the way companies pick or compensate CEOs None of these are solutions to inequality. Tax-backed redistribution efforts (think new deal) have had no measurable positive impact on absolute or relative poverty; nor have minimum wage laws. The idea of corrupting the CEO compensation and hiring practice at the national level is about as boneheaded as they come. All of these actions decrease efficiency, and none of them have a significant positive impact on poverty. I just don't see the point of insisting we "do something!" when none of the similar "solutions" we've tried have made for any positive change, and all of them have measurably cost us in efficiency and growth. The "do something!" model of governance is cruel and deficient; if it would be better, all things considered, to do nothing, then do nothing!
- _delirium 9y agoStrong social safety nets of the Scandinavian variety do reduce post-transfer poverty (less so inequality), mostly by truncating the bottom of the income curve with a floor. You can get rid of poverty pretty much by definition if you have sufficient income transfers so that everyone's income is above the povery line. E.g. if your national poverty line is $13k, if you guarantee $13k incomes, no more poverty, at least by that measure. Works a bit better in practice if you also have an integrated social worker system, so you can figure out e.g. if someone is homeless due to purely lack of income or mental health or other illness and direct them appropriately.
- microcolonel 9y ago> Strong social safety nets of the Scandinavian variety do reduce post-transfer poverty (less so inequality) Granted Scandinavian countries, now more just Norway and Denmark, tend to have very low potential for poverty in general. The rate would likely be comparatively low even without the programmes. Norway and Denmark have both considerably reduced entitlements over the years to relieve the enormous stress they put on the economy. Well before any of these programmes became so comprehensive, Norway, Denmark, and Sweden were very productive and comparatively equal.
- JamesBarney 9y agoI think we can agree "when you give poor people money to spend, they don't end up spending more money" is an extraordinary claim. And so should need an extraordinary amount of evidence to back it up. Can you point me in the right direction to some more information about how this could possibly be true?
- yorwba 9y agoI don't see anyone upthread making that claim you are challenging. Could you point me to the comment you meant to respond to?
- JamesBarney 9y agoMany of the comments up thread said redistribution doesn't work. Working is defined as reducing poverty levels which is literally measured by how much money they spend. And redistribution is literally giving poor people money. I.e. giving poor people money doesn't end up with the poor spending more money.
- deleted 9y ago[deleted]
- dlp211 9y agoMaybe I'm misunderstanding you, but are you claiming that SS has had no impact on poverty rates?
- conanbatt 9y ago> Taxation is both effective, and far less invasive to markets than many other solutions. I don't really agree with this. Taxes are distortive and doesn't necesarily help inequality. It might even make it worse. But also, there is taxation as a progressive system of government funding, as there is taxation as in "You will never own more than X, because the government will seize it". In terms of solutions, I'm not a professional economist, but as I read different authors and books, it really seems like we don't understand why we have inequality in the first place. Even Piketty's Capital feels more like explaining that its going on than why. So I'm jitterish about any solution that doesn't help resolve the core cause, for the which there doesn't seem to be consensus The CEO's pays is a small but funny example about that: CEO's pays increased enormously after by a law thought to dimishing their returns, made their salaries public, and increased CEO's ambition and bargaining power. The very idea to dock their pay increased it. But those are small bits at the macro-economic level.
- erentz 9y agoThey don't have to be. A "death tax" for example that takes 100% of a persons estate at death would be both simple, non distortive, and in terms of equality level the playing field every generation.
- esarbe 9y agoWhy does this get down voted? Even if you don't agree with the idea; it has been proposed in a calm and reasonable manner. Care to explain?
- erentz 9y agoIt's pretty hard to discuss such things without people getting emotional and defensive. I think people look at something like this and say "but that's not fair I earned all my money"[1]. They don't look at it and think about what the world would look like in such a scenario, how they might have lived differently, how they would instead spend their money before death (perhaps making the world a better place), or how they might have less concerns about needing to pass on money to their children because their children would be "just fine" in the society they created under this system. [1] ignoring the whole subject about luck and what it means to earn something when two equivalent folks just have different dice rolls go their way, etc. Or especially in the context what it means to earn something when you just inherited it. (I have a bunch of friends who have inheritance coming their way and just totally expect it, they lead very different lives because of that than those I know who don't have that.)
- choxi 9y agoSure, I should have stated my assumption: there will always be inequality in a capitalist economy. But you can have varying levels of inequality and the extremes are probably not healthy. My suggestion above wouldn't create perfect equality, it just fixes the broken incentives we currently have that reward us for hoarding wealth and penalize us for earning it.
- conanbatt 9y agoI'm all up for reducing any tax, at any point for any reason whatsoever.
- ericd 9y agoI would suggest that we currently don't do nearly enough saving as a nation, on average, and probably shouldn't further disincentivize that.
- dlp211 9y agoThose who can afford to save do, those who can't don't. There isn't someone out there making $50k/yr raising a family saying "if capital gains rates were just a little lower I would save so much of my paycheck". I on the other hand am going to put my money in the markets whether the capital gains rate is 15% or 30% because I have used up all my tax-advantaged account space and still have extra money.
- ericd 9y agoIt's not as simple as "those who can afford to save, do". There are also a huge number of people living well above their means, and the percentage of people with no savings is much, much higher than the percentage of people who don't make enough to save. The F-150 is the best selling vehicle in the US, and they're certainly not all going to people in the construction industry. And $50k/yr is more than enough to save money in most parts of the country. That's a good salary.
- humanrebar 9y ago> ...there will always be inequality in a capitalist economy What economy doesn't have inequality?
- pjmorris 9y agoTaxes are what give fiat currencies their value. No taxes, no fiat currency. If you don't believe me, consider why the US dollar has value at your local store and the Monopoly dollar doesn't.
- conanbatt 9y agoThats a terrible to reason to have or increase taxes. If you eliminated paper currency altogether in one fell swoop, the next day you would have another one replace it, be it bitcoin, gold or cigarettes.
- pjmorris 9y agoSomething underlies the value of bitcoin (proof of work), gold (rarity, utility, beauty, portability), cigarettes (addiction). Think through what underlies the value of fiat currencies like the US dollar. I'm with the chartalists [0]/Modern Monetary Theorists [1], believing that a government's ability to tax is the anchor for the currency's value. [0] https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism [1] https://en.wikipedia.org/wiki/Modern_Monetary_Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory
- conanbatt 9y agoHave barely scanned these articles, but even if I agreed that tax collection is what gives currency most of their circulatory value, thats no reason to have taxes, let alone making them higher.
- pjmorris 9y agoSomething's got to circulate. There's not enough bitcoin+gold+barter-able commodities to go around, so fiat currency is necessary to the economy as it stands. If you agree that taxes give currency most of its circulatory value, you have to figure out what else would give it value if taxes were taken away.
- avasylev 9y agoFunny that comparison with the trees can be applied in a different way - you do need to cut high trees if you want to grow smaller trees in the same place. This spring I cut very high pine because it shadowed my entire backyard and I want to grow more smaller trees on the perimeter.
- sokoloff 9y agoRush, Trees (1978) : https://www.youtube.com/watch?v=8_D0wkLyCXE https://www.youtube.com/watch?v=8_D0wkLyCXE There is unrest in the forest There is trouble with the trees For the maples want more sunlight And the oaks ignore their pleas The trouble with the maples And they're quite convinced they're right They say the oaks are just too lofty And they grab up all the light But the oaks can't help their feelings If they like the way they're made And they wonder why the maples Can't be happy in their shade? There is trouble in the forest And the creatures all have fled As the maples scream 'oppression!' And the oaks, just shake their heads So the maples formed a union And demanded equal rights 'The oaks are just too greedy We will make them give us light' Now there's no more oak oppression For they passed a noble law And the trees are all kept equal By hatchet, axe, and saw
- esarbe 9y agoThis is a very interesting analogy. Because I've learned in ecology that from time to time a forest needs a good fire to allow for new growth.
- deleted 9y ago[deleted]
- conanbatt 9y agoIts a Marxist Forest.
- mikeash 9y agoThat's a terrible analogy. Taxes don't destroy wealth.