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Your post belies one of the most harmful stereotypes that many rich and right-leaning people hold, that the poor would simply "rather have just one coconut toda

Your post belies one of the most harmful stereotypes that many rich and right-leaning people hold, that the poor would simply "rather have just one coconut today", and it's due only to their own short-sightedness and lack of impulse control that that they are poor. For many people, it's not a fucking choice. It's eat your last coconut or starve until your next paycheck. The recent story on HN about performance on the "marshmallow test" being predicated on being born rich is relevant: https://www.theatlantic.com/family/archive/2018/06/marshmallow-test/561779/ https://www.theatlantic.com/family/archive/2018/06/marshmall... Your point about "penalizing future consumption in preference to current consumption" makes no sense either. Capital gains tax could be 99% and (modulo inflation) you'd still be ahead by investing, so I don't get your point. God forbid someone who earns their income from investing rather than manual labor should have to pay taxes on it.

bluecalm 8y ago
You wouldn't be ahead because there is risk in investing. The biggest capital gain tax the less sense it makes to invest. That's why the capital gain tax rate is different than income tax. Making capital gain tax progressive is a recipe for not getting any more investment from private citizens.
- colanderman 8y ago
  Since when do you pay taxes on capital losses?
  - briandear 8y ago
    You don’t. But you lose the money. Risking $10 to make $10 is much different that risking $10 to make $0.10. You are more willing to invest at 1:1 odds than you are 100:1. Especially since the odds actually don’t reflect the actual risk of the investment itself. 100:1 on a sure thing is better than 1:1 on something that is very high risk. However, no investment is a sure thing. There is a non-zero level of risk in any investment, so if the payoff doesn’t match the risk, you simply will put the money under your mattress.
- sjwright 8y ago
  Who says we need more investment from private citizens? Perhaps we need less.
  - bluecalm 8y ago
    If you care about people benefiting from economy growth you want them to own part of it. This is accomplished by them investing instead of consuming. If something really crazy like progressive capital gain tax is introduced then a lot of people will rather consume instead of taking bets with a lot of risk attached to it and very little upside. This goes for every high tax: if the upside becomes not very tempting you may just as well settle on what you have and stop trying to improve your situation/produce more as huge part of that surplus will be taken away from you anyway.
savanaly 8y ago
I read the tone of your post as angry disagreement, you seem to be agreeing with me? My point was >I think what we're really upset about when it comes to rich people making a lot of money through investments is not that interest isn't taxed more, but rather that they had such a high (non-investment) income in the first place. And people having different levels of income is definitely at the heart of your objection. Rich people tend to have more flexibility with regard to their ability to choose future consumption over current. The problem we have with that is that they're rich enough to do that, not that they are making that tradeoff. The tradeoff is inherently benign and should not be discouraged through taxation.
briandear 8y ago
Your claim that capital gains taxes could be 99% and you’d still be better off by investing makes no sense. Because why would you risk $1,000,000 — money that you could completely lose, for the chance to earn $10,000 after taxes? That would be an insane thing to do. You would be better off simply burying the money in the backyard.
closeparen 8y ago
Yes, there are people at the extreme ends whose spending vs. saving behavior can't be influenced (much) by the relative favorability of investing. But there are also lots of people who will respond to this incentive, and we should be concerned about what effects that might have. Your post belies an assumption that the new tax revenue would actually be spent on the people for whom "it's not a fucking choice." But that's orthogonal. Congress is perfectly happy to spend new tax revenue on tax cuts for the very rich, on the military-industrial complex, on seniors of all income brackets, on predominately upper-middle-class students, etc. "What are the right ways to raise revenue" is a different question from "what are the right things to spend it on," and having a compelling reason to spend has no bearing on the virtue of any particular method of raising the funds.

bluecalm 8y ago

You wouldn't be ahead because there is risk in investing. The biggest capital gain tax the less sense it makes to invest. That's why the capital gain tax rate is different than income tax. Making capital gain tax progressive is a recipe for not getting any more investment from private citizens.

colanderman 8y ago
Since when do you pay taxes on capital losses?
- briandear 8y ago
  You don’t. But you lose the money. Risking $10 to make $10 is much different that risking $10 to make $0.10. You are more willing to invest at 1:1 odds than you are 100:1. Especially since the odds actually don’t reflect the actual risk of the investment itself. 100:1 on a sure thing is better than 1:1 on something that is very high risk. However, no investment is a sure thing. There is a non-zero level of risk in any investment, so if the payoff doesn’t match the risk, you simply will put the money under your mattress.
sjwright 8y ago
Who says we need more investment from private citizens? Perhaps we need less.
- bluecalm 8y ago
  If you care about people benefiting from economy growth you want them to own part of it. This is accomplished by them investing instead of consuming. If something really crazy like progressive capital gain tax is introduced then a lot of people will rather consume instead of taking bets with a lot of risk attached to it and very little upside. This goes for every high tax: if the upside becomes not very tempting you may just as well settle on what you have and stop trying to improve your situation/produce more as huge part of that surplus will be taken away from you anyway.

savanaly 8y ago

I read the tone of your post as angry disagreement, you seem to be agreeing with me? My point was >I think what we're really upset about when it comes to rich people making a lot of money through investments is not that interest isn't taxed more, but rather that they had such a high (non-investment) income in the first place. And people having different levels of income is definitely at the heart of your objection. Rich people tend to have more flexibility with regard to their ability to choose future consumption over current. The problem we have with that is that they're rich enough to do that, not that they are making that tradeoff. The tradeoff is inherently benign and should not be discouraged through taxation.

briandear 8y ago

Your claim that capital gains taxes could be 99% and you’d still be better off by investing makes no sense. Because why would you risk $1,000,000 — money that you could completely lose, for the chance to earn $10,000 after taxes? That would be an insane thing to do. You would be better off simply burying the money in the backyard.

closeparen 8y ago

Yes, there are people at the extreme ends whose spending vs. saving behavior can't be influenced (much) by the relative favorability of investing. But there are also lots of people who will respond to this incentive, and we should be concerned about what effects that might have. Your post belies an assumption that the new tax revenue would actually be spent on the people for whom "it's not a fucking choice." But that's orthogonal. Congress is perfectly happy to spend new tax revenue on tax cuts for the very rich, on the military-industrial complex, on seniors of all income brackets, on predominately upper-middle-class students, etc. "What are the right ways to raise revenue" is a different question from "what are the right things to spend it on," and having a compelling reason to spend has no bearing on the virtue of any particular method of raising the funds.