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The drawback of taxing wealth is that it distorts markets, it discourages saving. EDIT: Can't comment ("You're posting too fast, blah blah blah"). Here are som

The drawback of taxing wealth is that it distorts markets, it discourages saving. EDIT: Can't comment ("You're posting too fast, blah blah blah"). Here are some replies to the comments bellow: > It's encouraging people to make their money be productive instead of stashing it under a mattress. When you have money in the bank, you're effectively lending most of it to other people. Your money is "productive", which is encouraged by the interest. > Everything distorts markets. The question is how to distort markets into providing the best outcome. Neutral tax (https://en.wikipedia.org/wiki/Optimal_tax https://en.wikipedia.org/wiki/Optimal_tax) doesn't. But of course, market distortion is not the only or primary factor in policy decision-making.

cperciva 9y ago
Indeed. And saving/investing is important! It's not a coincidence that the industrial revolution happened in a country with a secure established rule of law such that people could make investments without worrying about losing them at the whim of a dictator. Much better to tax consumption.
- toomuchtodo 9y ago
  Taxing consumption is regressive; as your wealth increases, the amount of dollars spent relative to your wealth continues to decrease.
  - cperciva 9y ago
    In the long run, every dollar of wealth gets spent. As a practical matter, consumption taxes can be made progressive by combining them with a low-income tax credit or a universal basic income.
    - toomuchtodo 9y ago
      > In the long run, every dollar of wealth gets spent. Not necessarily. "Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Cisco Systems (CSCO) and Oracle (ORCL) are sitting on $504 billion, or 30%, of the $1.7 trillion in cash and cash equivalents held by U.S. non-financial companies in 2015, according to an analysis released Friday by ratings agency Moody's Investors Service. That's even more cash concentration than in previous years, as these five companies held 27% of cash in 2014 and 25% in 2013. Apple alone is holding more cash and investments than eight of the 10 entire industry sectors." [1] Also, the top 1 percent owns 90 percent of wealth in the US [2]. "First, economic inequality has worsened significantly in the United States and some other countries. The richest 1 percent in the United States now own more wealth than the bottom 90 percent. Oxfam estimates that the richest 85 people in the world own as much wealth as the bottom half of humanity. The situation might be tolerable if a rising tide were lifting all boats. But it’s lifting mostly the yachts. In 2010, 93 percent of the additional income created in America went to the top 1 percent." > As a practical matter, consumption taxes can be made progressive by combining them with a low-income tax credit or a universal basic income. I agree that a consumption tax can be combined with other policy to prevent the regressive nature of a consumption tax alone. This requires wealth be taxed in various forms (ownership of investments, land, etc). [1] https://www.usatoday.com/story/money/markets/2016/05/20/third-cash-owned-5-us-companies/84640704/ https://www.usatoday.com/story/money/markets/2016/05/20/thir... [2] https://www.nytimes.com/2014/07/24/opinion/nicholas-kristof-idiots-guide-to-inequality-piketty-capital.html https://www.nytimes.com/2014/07/24/opinion/nicholas-kristof-...
      - cperciva 9y ago
        Those dollars are going to get spent eventually; you just haven't waited long enough. But the foreign assets issue is a peculiarly US problem, resulting from the US being almost unique in the world in the extent to which it imposes taxes on income earned in other countries. (The other such country is Eritrea, and the US voted in favour of a UN security council resolution condemning the Eritrean tax regime.)
        toomuchtodo 9y ago
        > Those dollars are going to get spent eventually; you just haven't waited long enough. I'm unwilling to wait until the end of civilization while citizens of the richest country in the world go hungry [1], go without shelter [2], and die due to not being able to put $50 together for their insulin [3]. [1] https://www.worldhunger.org/hunger-in-america-2016-united-states-hunger-poverty-facts/ https://www.worldhunger.org/hunger-in-america-2016-united-st... [2] https://en.wikipedia.org/wiki/Homelessness_in_the_United_States https://en.wikipedia.org/wiki/Homelessness_in_the_United_Sta... [3] https://tonic.vice.com/en_us/article/ezwwze/the-high-price-of-insulin-is-literally-killing-people https://tonic.vice.com/en_us/article/ezwwze/the-high-price-o...
      - WalterBright 9y ago
        > Not necessarily Nobody has a Scrooge McDuck cash vault, not Apple, Microsoft, nor anyone else. It's all invested - even money in a checking account isn't actually there, it's loaned out to someone who spends it. > the top 1 percent owns 90 percent of wealth in the US No, the government owns/controls most of it.
        heylook 9y ago
        Not to be a dick, but the above cited sources and you made assertions without anything pointing to anything to back them up. What reason do any of us have to put any stock in what you've written?
        WalterBright 9y ago
- vkou 9y ago
  More importantly, it happened in a country which forced people off their land at gunpoint, into urban poverty, where they provided a huge supply of cheap, fungible, and utterly disposable factory labor. But that would run counter to the neo-liberal narrative... After all, the rule of law serves to protect investments, not the peasant forced off his land. Where was the rule of law to protect said peasants? Perhaps the rule of law isn't actually necessary for industrialization - as long as capital is protected, everything is all well and good. Unless you're a peasant. [1] https://en.wikipedia.org/wiki/Inclosure_Acts https://en.wikipedia.org/wiki/Inclosure_Acts
  - ticviking 9y ago
    This is an underappreciated factor in the industrial revolution.
  - cperciva 9y ago
    Urbanization was certainly important in the development of industrialization, in that urbanization is essential for all forms of specialization; but I would dispute the notion that having a large supply of cheap labour was important. To the contrary, since industrialization is the process whereby capital is invested in order to increase worker productivity, it is less useful where there is a cheap workforce, not more useful. I agree that the rule of law didn't protect peasants who were forced off their hereditary lands. You'll note that it wasn't the peasants who led the industrial revolution.
    - ubernostrum 9y ago
      Remember also that at the time, breach of employment contract by the employer was a civil matter the employee would have to pursue out of his or her own pocket. Breach by the employee was a criminal matter (see the Master and Servant acts, which essentially perpetuated feudal norms into the industrial age). It was also illegal for workers to "combine" -- band together to say that either all of them would get a higher wage, or none of them would work -- and organizing such a "combination" was also a criminal offense. Like several major sectors of the US economy at the time (and later), Britain's "revolution" was utterly dependent on coerced labor, viciously enforced by the power of the government. But some people still like to think of those times as the good old days of "laissez-faire" and government "staying out of the market". Now, you can argue that this was a "rule of law", just a brutally repressive one which systematically granted special rights to certain classes of people, but then you're on much shakier ground.
1_2__4 9y ago
Perhaps that kind of distortion is a good thing. Perhaps the market isn’t an all-seeing all-knowingly omnipotent entity independent of the humans that created and participate in it. IOW you should explain why “market distortions” are inherently a bad thing.
huac 9y ago
There are plenty of analogous policies in America. For example, universities are required to spend 10% (or some other percent?) of their total endowment each year in order to keep their tax-free status. This is why Harvard & Co. need to continue fundraising each year despite their massive endowments - they're massively discouraged from just 'saving' as well. Everything distorts markets. The question is how to distort markets into providing the best outcome.
- dangerlibrary 9y ago
  Other non-profit entities (such as private foundations) are required to spend a certain fraction of their money each year or pay taxes. Universities are exempted from that requirement. from [0]: "Harvard targets an annual endowment payout rate of 5.0 to 5.5 percent of market value. The University's actual payout rate has fluctuated over the past 10 years, from a low of 4.2 percent in fiscal year 2006 to a high of 6.1 percent in fiscal year 2010." [0] https://www.harvard.edu/about-harvard/harvard-glance/endowment https://www.harvard.edu/about-harvard/harvard-glance/endowme... [1] https://www.irs.gov/charities-non-profits/private-foundations/taxes-on-failure-to-distribute-income-private-foundations https://www.irs.gov/charities-non-profits/private-foundation...
  - huac 9y ago
    Woah, I did not know that universities were exempt! The head of my alma mater's investment fund definitely did not mention that...
deleted 9y ago
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deleted 9y ago
[deleted]
conductr 9y ago
It's encouraging people to make their money be productive instead of stashing it under a mattress. That doesn't sound like a bad thing to me.
- benmanns 9y ago
  Inflation does that. Cash in your mattress loses 2% a year. A wealth tax would presumably tax productive wealth as much as unproductive wealth.
- newmanships 9y ago
  The rich aren't stashing most of their money under a mattress. Gates, Bezos, etc are worth billions, but that wealth is almost all based off of the stock prices in the companies they own percentagess of.
  - toomuchtodo 9y ago
    Tax the ownership interest in equities, just as we have property taxes for land ownership. We could also take the route of the Federal Reserve purchasing up equities (The Bank Of Japan does this [1]), issuing deposit accounts to citizens directly (trivial for the Federal Reserve to support this [disclaimer: I work in the financial services industry, and feel qualified to make this statement]), and providing UBI to those accounts using the Federal Reserve as an intermediary/conduit (lookout Blackrock and Vanguard! there's a new index fund manager on the block!). Voilà, Citizen's Dividend. EDIT: The Federal Reserve operates independently of the US government, and does not require Congressional or Presidential approval to perform this "monetary policy". [2] "Although an instrument of the U.S. Government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms." [1] https://www.bloomberg.com/news/articles/2017-07-18/boj-s-etf-buying-is-said-to-raise-concern-among-some-officials https://www.bloomberg.com/news/articles/2017-07-18/boj-s-etf... [2] https://en.wikipedia.org/wiki/Federal_Reserve_System https://en.wikipedia.org/wiki/Federal_Reserve_System
dv_dt 9y ago
The fallacy here is that there is a pure form of market that isn't inherently distorted by the man-made rules required bring it into existence at all against wilderness of nature's 'rules' of the wild.
ThomPete 9y ago
Discouraging savings is actually the point. We should tax money that sits idle and provides tax benefits to money invested. If you can build wealth around being active rather than just reaping the benefit of interest of interests then that should be encouraged rather than just grabbing and keeping.
- kgwgk 9y ago
  Money in a savings account is money invested.
  - Retric 9y ago
    > money invested Only in the most inefficient way possible. The 'problem' is banks are limited in what they can do with this money which ends up creating investment bubbles and other market distortions which hurt the economy overall. If you slowly transitioned banks so they could not invest this money over say 100 years the net result would not be harmful. In the end money is not actual wealth, it's simply a representation of wealth. Anything that turns money into more money needs an intermediary where some cash flow is generated. And those intermediary's are often harmful see in excess like pay day loans.
    - kgwgk 9y ago
      You want to forbid loans?
      - Retric 9y ago
        No, you can still make a loan by buying a bond etc. I simply feel banks have conflicting goals as they need to be 'good at' customer service and making loans. This creates a lot of poor incentives and economic distortions.
        kgwgk 9y ago
        Yes, it will be very convenient for people to issue bonds when they need a loan to buy a house or start a business...
hvo 9y ago
Frankly,the trickle-down economics is not working.Plain and simple. Giving the rich lower tax and expecting them to invest the money back to the economy has been proved not to be working. And we know now that the ultra-rich folks tend to take the money,windfall from lower tax, and hide it in Virgin-Island, Panama,Cayman Island and other offshore tax havens.
- eru 9y ago
  To have this discussion properly, we would need to talk about tax incidence. (https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence) It's a relatively well known fact that eg it doesn't really matter too much whether officially the employer or the employee is required to pay the employees income tax---the money comes out of the same pot. Similar things happen for other taxes. Eg VAT in European countries seems to be paid for by the shops, but it wouldn't make a difference (apart from convenience in collection) if you'd levied it directly on the shoppers. Any discussions about 'trickle-down economics' is incomplete without tax-incidence.
- Frondo 9y ago
  I liked the older term they used to use for "trickle down". They used to call it "horse and sparrow" economics: https://en.wikipedia.org/wiki/Trickle-down_economics#Criticisms https://en.wikipedia.org/wiki/Trickle-down_economics#Critici... "Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: 'If you feed the horse enough oats, some will pass through to the road for the sparrows.'" It feels more honest that way.
saas_co_de 9y ago
> it discourages saving. Taxing wealth encourages investment because you have to turn a yearly return in excess of the wealth tax to not have your wealth shrink. The incentives to be wealthy will never disappear. Taxing wealth just makes it harder and makes sure that those who are wealthy work for it.
natrius 9y ago
The economy does not care whether you put your money in a bank or under your mattress. The central bank will influence interest rates in response to your actions. What matters is the amount of money that's actually chasing goods and services. If the central bank wants banks to have more reserves for loans, it buys assets from banks in exchange for newly created reserves. Money markets are a command economy.
- eru 9y ago
  You are right about monetary offset, if the central bank is well-run. (Which eg the Fed wasn't during the last recession.) Of course, someone still has to decide whether to consume now or invest. Or whether to invest in economically efficient ways, or in ways that are only economically efficient because of weird tax arrangements (but are actually less productive).
eru 9y ago
That Wikipedia page links to a interesting piece: "Taxing Land is Better Than Neutral: Land Taxes, Land Speculation and the Timing of Development" (https://books.google.co.uk/books/about/Taxing_Land_is_Better_Than_Neutral.html?id=vfwlHQAACAAJ&redir_esc=y https://books.google.co.uk/books/about/Taxing_Land_is_Better...)

cperciva 9y ago

Indeed. And saving/investing is important! It's not a coincidence that the industrial revolution happened in a country with a secure established rule of law such that people could make investments without worrying about losing them at the whim of a dictator. Much better to tax consumption.

toomuchtodo 9y ago
Taxing consumption is regressive; as your wealth increases, the amount of dollars spent relative to your wealth continues to decrease.
- cperciva 9y ago
  In the long run, every dollar of wealth gets spent. As a practical matter, consumption taxes can be made progressive by combining them with a low-income tax credit or a universal basic income.
  - toomuchtodo 9y ago
    > In the long run, every dollar of wealth gets spent. Not necessarily. "Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Cisco Systems (CSCO) and Oracle (ORCL) are sitting on $504 billion, or 30%, of the $1.7 trillion in cash and cash equivalents held by U.S. non-financial companies in 2015, according to an analysis released Friday by ratings agency Moody's Investors Service. That's even more cash concentration than in previous years, as these five companies held 27% of cash in 2014 and 25% in 2013. Apple alone is holding more cash and investments than eight of the 10 entire industry sectors." [1] Also, the top 1 percent owns 90 percent of wealth in the US [2]. "First, economic inequality has worsened significantly in the United States and some other countries. The richest 1 percent in the United States now own more wealth than the bottom 90 percent. Oxfam estimates that the richest 85 people in the world own as much wealth as the bottom half of humanity. The situation might be tolerable if a rising tide were lifting all boats. But it’s lifting mostly the yachts. In 2010, 93 percent of the additional income created in America went to the top 1 percent." > As a practical matter, consumption taxes can be made progressive by combining them with a low-income tax credit or a universal basic income. I agree that a consumption tax can be combined with other policy to prevent the regressive nature of a consumption tax alone. This requires wealth be taxed in various forms (ownership of investments, land, etc). [1] https://www.usatoday.com/story/money/markets/2016/05/20/third-cash-owned-5-us-companies/84640704/ https://www.usatoday.com/story/money/markets/2016/05/20/thir... [2] https://www.nytimes.com/2014/07/24/opinion/nicholas-kristof-idiots-guide-to-inequality-piketty-capital.html https://www.nytimes.com/2014/07/24/opinion/nicholas-kristof-...
    - cperciva 9y ago
      Those dollars are going to get spent eventually; you just haven't waited long enough. But the foreign assets issue is a peculiarly US problem, resulting from the US being almost unique in the world in the extent to which it imposes taxes on income earned in other countries. (The other such country is Eritrea, and the US voted in favour of a UN security council resolution condemning the Eritrean tax regime.)
      - toomuchtodo 9y ago
        > Those dollars are going to get spent eventually; you just haven't waited long enough. I'm unwilling to wait until the end of civilization while citizens of the richest country in the world go hungry [1], go without shelter [2], and die due to not being able to put $50 together for their insulin [3]. [1] https://www.worldhunger.org/hunger-in-america-2016-united-states-hunger-poverty-facts/ https://www.worldhunger.org/hunger-in-america-2016-united-st... [2] https://en.wikipedia.org/wiki/Homelessness_in_the_United_States https://en.wikipedia.org/wiki/Homelessness_in_the_United_Sta... [3] https://tonic.vice.com/en_us/article/ezwwze/the-high-price-of-insulin-is-literally-killing-people https://tonic.vice.com/en_us/article/ezwwze/the-high-price-o...
    - WalterBright 9y ago
      > Not necessarily Nobody has a Scrooge McDuck cash vault, not Apple, Microsoft, nor anyone else. It's all invested - even money in a checking account isn't actually there, it's loaned out to someone who spends it. > the top 1 percent owns 90 percent of wealth in the US No, the government owns/controls most of it.
      - heylook 9y ago
        Not to be a dick, but the above cited sources and you made assertions without anything pointing to anything to back them up. What reason do any of us have to put any stock in what you've written?
        WalterBright 9y ago
vkou 9y ago
More importantly, it happened in a country which forced people off their land at gunpoint, into urban poverty, where they provided a huge supply of cheap, fungible, and utterly disposable factory labor. But that would run counter to the neo-liberal narrative... After all, the rule of law serves to protect investments, not the peasant forced off his land. Where was the rule of law to protect said peasants? Perhaps the rule of law isn't actually necessary for industrialization - as long as capital is protected, everything is all well and good. Unless you're a peasant. [1] https://en.wikipedia.org/wiki/Inclosure_Acts https://en.wikipedia.org/wiki/Inclosure_Acts
- ticviking 9y ago
  This is an underappreciated factor in the industrial revolution.
- cperciva 9y ago
  Urbanization was certainly important in the development of industrialization, in that urbanization is essential for all forms of specialization; but I would dispute the notion that having a large supply of cheap labour was important. To the contrary, since industrialization is the process whereby capital is invested in order to increase worker productivity, it is less useful where there is a cheap workforce, not more useful. I agree that the rule of law didn't protect peasants who were forced off their hereditary lands. You'll note that it wasn't the peasants who led the industrial revolution.
  - ubernostrum 9y ago
    Remember also that at the time, breach of employment contract by the employer was a civil matter the employee would have to pursue out of his or her own pocket. Breach by the employee was a criminal matter (see the Master and Servant acts, which essentially perpetuated feudal norms into the industrial age). It was also illegal for workers to "combine" -- band together to say that either all of them would get a higher wage, or none of them would work -- and organizing such a "combination" was also a criminal offense. Like several major sectors of the US economy at the time (and later), Britain's "revolution" was utterly dependent on coerced labor, viciously enforced by the power of the government. But some people still like to think of those times as the good old days of "laissez-faire" and government "staying out of the market". Now, you can argue that this was a "rule of law", just a brutally repressive one which systematically granted special rights to certain classes of people, but then you're on much shakier ground.

1_2__4 9y ago

Perhaps that kind of distortion is a good thing. Perhaps the market isn’t an all-seeing all-knowingly omnipotent entity independent of the humans that created and participate in it. IOW you should explain why “market distortions” are inherently a bad thing.

huac 9y ago

There are plenty of analogous policies in America. For example, universities are required to spend 10% (or some other percent?) of their total endowment each year in order to keep their tax-free status. This is why Harvard & Co. need to continue fundraising each year despite their massive endowments - they're massively discouraged from just 'saving' as well. Everything distorts markets. The question is how to distort markets into providing the best outcome.

dangerlibrary 9y ago
Other non-profit entities (such as private foundations) are required to spend a certain fraction of their money each year or pay taxes. Universities are exempted from that requirement. from [0]: "Harvard targets an annual endowment payout rate of 5.0 to 5.5 percent of market value. The University's actual payout rate has fluctuated over the past 10 years, from a low of 4.2 percent in fiscal year 2006 to a high of 6.1 percent in fiscal year 2010." [0] https://www.harvard.edu/about-harvard/harvard-glance/endowment https://www.harvard.edu/about-harvard/harvard-glance/endowme... [1] https://www.irs.gov/charities-non-profits/private-foundations/taxes-on-failure-to-distribute-income-private-foundations https://www.irs.gov/charities-non-profits/private-foundation...
- huac 9y ago
  Woah, I did not know that universities were exempt! The head of my alma mater's investment fund definitely did not mention that...

deleted 9y ago

[deleted]

deleted 9y ago

[deleted]

conductr 9y ago

It's encouraging people to make their money be productive instead of stashing it under a mattress. That doesn't sound like a bad thing to me.

benmanns 9y ago
Inflation does that. Cash in your mattress loses 2% a year. A wealth tax would presumably tax productive wealth as much as unproductive wealth.
newmanships 9y ago
The rich aren't stashing most of their money under a mattress. Gates, Bezos, etc are worth billions, but that wealth is almost all based off of the stock prices in the companies they own percentagess of.
- toomuchtodo 9y ago
  Tax the ownership interest in equities, just as we have property taxes for land ownership. We could also take the route of the Federal Reserve purchasing up equities (The Bank Of Japan does this [1]), issuing deposit accounts to citizens directly (trivial for the Federal Reserve to support this [disclaimer: I work in the financial services industry, and feel qualified to make this statement]), and providing UBI to those accounts using the Federal Reserve as an intermediary/conduit (lookout Blackrock and Vanguard! there's a new index fund manager on the block!). Voilà, Citizen's Dividend. EDIT: The Federal Reserve operates independently of the US government, and does not require Congressional or Presidential approval to perform this "monetary policy". [2] "Although an instrument of the U.S. Government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms." [1] https://www.bloomberg.com/news/articles/2017-07-18/boj-s-etf-buying-is-said-to-raise-concern-among-some-officials https://www.bloomberg.com/news/articles/2017-07-18/boj-s-etf... [2] https://en.wikipedia.org/wiki/Federal_Reserve_System https://en.wikipedia.org/wiki/Federal_Reserve_System

dv_dt 9y ago

The fallacy here is that there is a pure form of market that isn't inherently distorted by the man-made rules required bring it into existence at all against wilderness of nature's 'rules' of the wild.

ThomPete 9y ago

Discouraging savings is actually the point. We should tax money that sits idle and provides tax benefits to money invested. If you can build wealth around being active rather than just reaping the benefit of interest of interests then that should be encouraged rather than just grabbing and keeping.

kgwgk 9y ago
Money in a savings account is money invested.
- Retric 9y ago
  > money invested Only in the most inefficient way possible. The 'problem' is banks are limited in what they can do with this money which ends up creating investment bubbles and other market distortions which hurt the economy overall. If you slowly transitioned banks so they could not invest this money over say 100 years the net result would not be harmful. In the end money is not actual wealth, it's simply a representation of wealth. Anything that turns money into more money needs an intermediary where some cash flow is generated. And those intermediary's are often harmful see in excess like pay day loans.
  - kgwgk 9y ago
    You want to forbid loans?
    - Retric 9y ago
      No, you can still make a loan by buying a bond etc. I simply feel banks have conflicting goals as they need to be 'good at' customer service and making loans. This creates a lot of poor incentives and economic distortions.
      - kgwgk 9y ago
        Yes, it will be very convenient for people to issue bonds when they need a loan to buy a house or start a business...

hvo 9y ago

Frankly,the trickle-down economics is not working.Plain and simple. Giving the rich lower tax and expecting them to invest the money back to the economy has been proved not to be working. And we know now that the ultra-rich folks tend to take the money,windfall from lower tax, and hide it in Virgin-Island, Panama,Cayman Island and other offshore tax havens.

eru 9y ago
To have this discussion properly, we would need to talk about tax incidence. (https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence) It's a relatively well known fact that eg it doesn't really matter too much whether officially the employer or the employee is required to pay the employees income tax---the money comes out of the same pot. Similar things happen for other taxes. Eg VAT in European countries seems to be paid for by the shops, but it wouldn't make a difference (apart from convenience in collection) if you'd levied it directly on the shoppers. Any discussions about 'trickle-down economics' is incomplete without tax-incidence.
Frondo 9y ago
I liked the older term they used to use for "trickle down". They used to call it "horse and sparrow" economics: https://en.wikipedia.org/wiki/Trickle-down_economics#Criticisms https://en.wikipedia.org/wiki/Trickle-down_economics#Critici... "Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: 'If you feed the horse enough oats, some will pass through to the road for the sparrows.'" It feels more honest that way.

saas_co_de 9y ago

> it discourages saving. Taxing wealth encourages investment because you have to turn a yearly return in excess of the wealth tax to not have your wealth shrink. The incentives to be wealthy will never disappear. Taxing wealth just makes it harder and makes sure that those who are wealthy work for it.

natrius 9y ago

The economy does not care whether you put your money in a bank or under your mattress. The central bank will influence interest rates in response to your actions. What matters is the amount of money that's actually chasing goods and services. If the central bank wants banks to have more reserves for loans, it buys assets from banks in exchange for newly created reserves. Money markets are a command economy.

eru 9y ago
You are right about monetary offset, if the central bank is well-run. (Which eg the Fed wasn't during the last recession.) Of course, someone still has to decide whether to consume now or invest. Or whether to invest in economically efficient ways, or in ways that are only economically efficient because of weird tax arrangements (but are actually less productive).

eru 9y ago

That Wikipedia page links to a interesting piece: "Taxing Land is Better Than Neutral: Land Taxes, Land Speculation and the Timing of Development" (https://books.google.co.uk/books/about/Taxing_Land_is_Better_Than_Neutral.html?id=vfwlHQAACAAJ&redir_esc=y https://books.google.co.uk/books/about/Taxing_Land_is_Better...)