5 ms·

If the interest rate in the loan was pegged to track inflation, it should be roughly zero-practical-gain. But it's still clunky. There's no reason we can't sa

by hakfoo 8y ago

If the interest rate in the loan was pegged to track inflation, it should be roughly zero-practical-gain. But it's still clunky. There's no reason we can't say "people earning more than a few million dollars a year can afford to pay a 97% tax rate." We just need to have it wired together into a comprehensive plan. Hold passports if you have outstanding tax debt. Orchestrate "regime change" in Carribean tax shelters and Luxembourg instead of the Middle East for a change.

RhysU 8y ago
> There's no reason we can't say "people earning more than a few million dollars a year can afford to pay a 97% tax rate." Sure there is. They won't bother creating any value if their marginal take is effectively zero. How hard would you work if someone said you couldn't take home more than $10K?
- prolikewh0a 8y ago
  Ideally there would be tax brackets so people making $150,000/year aren't taking home poverty wages, but people making $1,000,000,000/year are taking home maybe a couple tens of millions, which is still perfectly comfortable to live on for an entire lifetime.
  - darawk 8y ago
    I think you're missing his point. Say your hypothetical person is making $10,000,000/year already. He has the opportunity to work 40% harder to 10x his income up to $100M/year. However, at this point, his marginal tax rate under your scheme is already 97%, which means that on that extra $90M in theoretical income, he will only take home an extra $2.7M. Now, it's not worth it for him to make that extra effort, to only increase his realized income by 27%. The next question is: Why should you, someone presumably not making $10m/year, care? We care because when someone increases their earnings from $10M to $100M, in theory, they are doing so by creating value for society. In fact the people at the highest ends of the income distribution should be the ones creating the most value. So we really do want them to be incentivized to earn more. To ensure that they are, we need a top marginal rate that strikes a balance between unnecessary super wealth, and incentivizing the value creation that drives the tremendous prosperity of the modern economy. This is a delicate balancing act, to be sure. But it is extremely important to understand that it is a balancing act.
    - foxhop 8y ago
      You don't 10x by working harder. You do other things but likely not work.
      - darawk 8y ago
        That's pretty empirically false.
        nostrademons 8y ago
        Empirical with what data? The rich people I know get there not through working harder, but through making better decisions than ordinary people, in particular in figuring out what to work on. You certainly can't just work 10x harder to go from making $1M - $10M - you have to do qualitatively different stuff. Similarly in going from $10M - $100M.
        darawk 8y ago
        Of course. Subsumed in working harder is making an effort to work smarter, taking larger risks, etc.
    - notahacker 8y ago
      The standard answer would be that if someone already making $10m/year considers increasing their work ethic by 40%, they are almost certainly doing so for reasons other than need more spendable cash...
      - darawk 8y ago
        First of all, that's pretty clearly not actually true, if you bother to think about it. And secondly, even if it were true, I don't see how it's relevant.
        notahacker 8y ago
        If you're already earning far more than you are ever likely to consume and considering putting in 40% extra workload, as the person in your example is doing, you are almost certainly doing so because you deeply believe in a mission or hypothesis, because you want to beat someone to something or because you like the status of being the person to transform the fortunes of $company or found $newcompany, not because you have the instrumental objective of receiving a set percentage of the target $100m pa profit in your personal bank account. If the money's more for keeping score, gross earnings do the trick. You might even struggle to see how the tax rate on your personal income stream is relevant. Work incentives look very different at the extreme ends of the income spectrum (as does the relationship between work ethic and earnings). Someone considering putting in 40% extra workload because their lifestyle is insufficient on $10m a year[1], would be fairly unusual, even for a multimillionaire. It's much lower down the income scale where people work to fulfil their [future] consumption needs rather than despite having already met them that the work disincentive effects of higher taxes kick in. There are other arguments against high super taxes like how easily they're circumvented and how they deter millionaires from parking their money in a particular country in an era of high capital mobility, and in some cases how they dilute efficient owner control, but the idea that the likes of Buffet, Gates and Bezos or even mere movie stars would have lost interest in working hard if their resulting disposable income stream were to be reduced by a [punitively] high tax rate is a little difficult to credit. [1]there's even less you can't buy on $10m a year when overpriced luxuries for conspicuous consumers are depressed by high income tax on the superrich...
- throw2016 8y ago
  The idea that people who 'create value' are motivated by money does not stand scrutiny. The bulk of major discoveries have been by people motivated by curiosity, some so obsessed not even caring about their own lives, so its unlikely money was the motivating factor. The open source movement has probably created hundreds of billions of dollars of value, yet it is not motivated by money. And value is not created by individuals, you need an entire society with infrastructure, education, teachers, technology, stability, science, funding, wealth, markets to create value.
prolikewh0a 8y ago
>There's no reason we can't say "people earning more than a few million dollars a year can afford to pay a 97% tax rate." We have people "fox news" deluded into thinking the elite deserve all of it -- hundreds of lifetimes worth of money -- because all of their hard work went into making it (their workers made it), while their own wealth and security declines at the same time. In 1944 we had a tax rate of 94% on people earning over what in today's money would be $2.8 million [1], and it was the beginning of some of the lowest income inequality in USA's history [2]. Jeff Bezos would still be left with $9,000,000,000 on a 94% tax rate (I realize most of his net worth is stock, I have a hard time finding what it is without his stock, this is just an example). I would love to see it too, but people continuously vote against their own interests. [1] https://www.tax-brackets.org/federaltaxtable/1944 https://www.tax-brackets.org/federaltaxtable/1944 [2] https://www.epi.org/news/union-membership-declines-inequality-rises/ https://www.epi.org/news/union-membership-declines-inequalit... (unions + income tax)
foobarian 8y ago
I suspect it wouldn't be as simple as that. The elites have many ways to make their earnings appear as zero on paper, or in fact don't have any earnings.

by hakfoo 8y ago

RhysU 8y ago

> There's no reason we can't say "people earning more than a few million dollars a year can afford to pay a 97% tax rate." Sure there is. They won't bother creating any value if their marginal take is effectively zero. How hard would you work if someone said you couldn't take home more than $10K?

prolikewh0a 8y ago
Ideally there would be tax brackets so people making $150,000/year aren't taking home poverty wages, but people making $1,000,000,000/year are taking home maybe a couple tens of millions, which is still perfectly comfortable to live on for an entire lifetime.
- darawk 8y ago
  I think you're missing his point. Say your hypothetical person is making $10,000,000/year already. He has the opportunity to work 40% harder to 10x his income up to $100M/year. However, at this point, his marginal tax rate under your scheme is already 97%, which means that on that extra $90M in theoretical income, he will only take home an extra $2.7M. Now, it's not worth it for him to make that extra effort, to only increase his realized income by 27%. The next question is: Why should you, someone presumably not making $10m/year, care? We care because when someone increases their earnings from $10M to $100M, in theory, they are doing so by creating value for society. In fact the people at the highest ends of the income distribution should be the ones creating the most value. So we really do want them to be incentivized to earn more. To ensure that they are, we need a top marginal rate that strikes a balance between unnecessary super wealth, and incentivizing the value creation that drives the tremendous prosperity of the modern economy. This is a delicate balancing act, to be sure. But it is extremely important to understand that it is a balancing act.
  - foxhop 8y ago
    You don't 10x by working harder. You do other things but likely not work.
    - darawk 8y ago
      That's pretty empirically false.
      - nostrademons 8y ago
        Empirical with what data? The rich people I know get there not through working harder, but through making better decisions than ordinary people, in particular in figuring out what to work on. You certainly can't just work 10x harder to go from making $1M - $10M - you have to do qualitatively different stuff. Similarly in going from $10M - $100M.
        darawk 8y ago
        Of course. Subsumed in working harder is making an effort to work smarter, taking larger risks, etc.
  - notahacker 8y ago
    The standard answer would be that if someone already making $10m/year considers increasing their work ethic by 40%, they are almost certainly doing so for reasons other than need more spendable cash...
    - darawk 8y ago
      First of all, that's pretty clearly not actually true, if you bother to think about it. And secondly, even if it were true, I don't see how it's relevant.
      - notahacker 8y ago
        If you're already earning far more than you are ever likely to consume and considering putting in 40% extra workload, as the person in your example is doing, you are almost certainly doing so because you deeply believe in a mission or hypothesis, because you want to beat someone to something or because you like the status of being the person to transform the fortunes of $company or found $newcompany, not because you have the instrumental objective of receiving a set percentage of the target $100m pa profit in your personal bank account. If the money's more for keeping score, gross earnings do the trick. You might even struggle to see how the tax rate on your personal income stream is relevant. Work incentives look very different at the extreme ends of the income spectrum (as does the relationship between work ethic and earnings). Someone considering putting in 40% extra workload because their lifestyle is insufficient on $10m a year[1], would be fairly unusual, even for a multimillionaire. It's much lower down the income scale where people work to fulfil their [future] consumption needs rather than despite having already met them that the work disincentive effects of higher taxes kick in. There are other arguments against high super taxes like how easily they're circumvented and how they deter millionaires from parking their money in a particular country in an era of high capital mobility, and in some cases how they dilute efficient owner control, but the idea that the likes of Buffet, Gates and Bezos or even mere movie stars would have lost interest in working hard if their resulting disposable income stream were to be reduced by a [punitively] high tax rate is a little difficult to credit. [1]there's even less you can't buy on $10m a year when overpriced luxuries for conspicuous consumers are depressed by high income tax on the superrich...
throw2016 8y ago
The idea that people who 'create value' are motivated by money does not stand scrutiny. The bulk of major discoveries have been by people motivated by curiosity, some so obsessed not even caring about their own lives, so its unlikely money was the motivating factor. The open source movement has probably created hundreds of billions of dollars of value, yet it is not motivated by money. And value is not created by individuals, you need an entire society with infrastructure, education, teachers, technology, stability, science, funding, wealth, markets to create value.

prolikewh0a 8y ago

>There's no reason we can't say "people earning more than a few million dollars a year can afford to pay a 97% tax rate." We have people "fox news" deluded into thinking the elite deserve all of it -- hundreds of lifetimes worth of money -- because all of their hard work went into making it (their workers made it), while their own wealth and security declines at the same time. In 1944 we had a tax rate of 94% on people earning over what in today's money would be $2.8 million [1], and it was the beginning of some of the lowest income inequality in USA's history [2]. Jeff Bezos would still be left with $9,000,000,000 on a 94% tax rate (I realize most of his net worth is stock, I have a hard time finding what it is without his stock, this is just an example). I would love to see it too, but people continuously vote against their own interests. [1] https://www.tax-brackets.org/federaltaxtable/1944 https://www.tax-brackets.org/federaltaxtable/1944 [2] https://www.epi.org/news/union-membership-declines-inequality-rises/ https://www.epi.org/news/union-membership-declines-inequalit... (unions + income tax)

foobarian 8y ago

I suspect it wouldn't be as simple as that. The elites have many ways to make their earnings appear as zero on paper, or in fact don't have any earnings.