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> This week, Alexandria Ocasio-Cortez told 60 Minutes that she believes the U.S. should consider taxing incomes above $10 million at a 70 percent rate. Specific

by tjr225 8y ago

> This week, Alexandria Ocasio-Cortez told 60 Minutes that she believes the U.S. should consider taxing incomes above $10 million at a 70 percent rate. Specifically, the congresswoman suggested that taxing the rich at such a rate would be preferable to forgoing major investments in renewable energy, and other technologies necessary for averting catastrophic climate change. Agreed 100%. It will be interesting to see how much traction these ideas can get in today's political climate.

notyourday 8y ago
> Agreed 100%. It will be interesting to see how much traction these ideas can get in today's political climate. Why not have skin in the game: We should tax anything above the federal poverty level at 100%. After all the government knows better how to spend the money.
StavrosK 8y ago
I fully realize I'm saying this because I'm not in that bracket, but if you make more than $10m/yr, do you really need the extra money that much?
- zaroth 8y ago
  This is a common misperception around the economics of taxation. Look at it from the company perspective. There is a skill that is worth a lot of money to them which they want to acquire. If they are willing to pay $1mm more than their competitor for that skil, for that amount of money to actually go to recipient, it will now cost the company $7mm of profit. That skill is no less valuable or essential to the company, it’s just effectively impossible to pay for it now. The extra money paid in taxes in order to acquire that skill comes off the balance sheet — and effectively is being taken away from the same pool of money that is being spent to hire workers at $50k/year. The $50k/year worker can not do the job of the $10mm/year worker. 100 of them cannot do the job either (because so much key labor is not actually divisible). It’s hurting the company balance sheet to effectively pay their most important employees, which hurts the company. Likewise, the employee making $10mm+ per year is a visionary who, like an Elon Musk, is contributing to the economy in ways a lot more profound than a few extra cents in everyone’s welfare checks. “No one needs more than a million dollars a year, just take everything above that to even things out” means you never have people willing to lay it all on the line to try to do something more as well.
  - deleted 8y ago
    [deleted]
  - StavrosK 8y ago
    Your example overlooks a very important step, namely that no matter pays extra for that employee, the employee will have to pay 70% of it in taxes as well. No employee ever says "I have a job now, but if you want me, that will cost you an extra $1MM/yr". We go to the highest bidder, and whether the bid is pre-tax or post-tax makes no difference if the tax rate is the same no matter which company you work for.
    - zaroth 8y ago
      Except the tax rate isn’t the same everywhere or for every kind of dollar earned. And so it’s basically a ceiling on what that company can pay an employee versus what the employee could go make on their own or elsewhere. At $50k-$100k you can assume there are limits to what an employee can do. At $10m plus anything is on the table. So instead of taking a raise, I take a day off per week. Or two.
- giggles_giggles 8y ago
  Do the companies that you're starting or investing in with the $10m/yr you earn need that cash? Do you think Uncle Sam can do a better job of investing it than, say, Warren Buffett or Elon Musk? It's not like rich people just sit around on piles of money like Scrooge McDuck. They put that money to work so that they can earn some interest. The government will happily just spend it, though. So should it be doled out by congresspeople to their friends, or should it be invested by someone shrewd enough to be making $10m/yr in the first place?
  - shadofx 8y ago
    In the latter situation, the government will print the money they need for doling. Then everyone will be making >$10m/yr as the value of the dollar drops to zero.
  - StavrosK 8y ago
    > They put that money to work so that they can earn some interest They put the money in things that will generate the highest return. The government will (hopefully) put the money in things that will benefit people, even if they don't have an especially high ROI in the short term. I am not at all confident in the ability of capitalism to save the environment, for example.
    - cpeterso 8y ago
      For example, how many billionaires have stepped up to fix Flint's water? Elon Musk did offer to send people water filters for their homes, but that doesn't address the root causes or the damage (property and health) already done. https://www.wired.com/story/elon-musk-flint-water-plan/ https://www.wired.com/story/elon-musk-flint-water-plan/
      - DuskStar 8y ago
        And how many billionaires have filled a city's water with lead? "Look at this problem a government caused that those nasty rich people haven't fixed!" is not a fantastic argument for making them give more money to the government.
leothekim 8y ago
I'd be happy to see carried interest tax reform first. Even Trump wanted that. But yeah, didn't happen.
anarchimedes 8y ago
Why should they pay more? I haven't seen data otherwise, and I would be happy to admit that I am wrong, but what additional use of public goods and services that are funded by taxes do people making $10M+ use more than other people at the rate described? If their use of public goods and services are greater that people making less money, is that use at a rate that would justify taking 70% of their income? Sincerely curious....
- tivert 8y ago
  > Why should they pay more? I haven't seen data otherwise, and I would be happy to admit that I am wrong, but what additional use of public goods and services that are funded by taxes do people making $10M+ use more than other people at the rate described? Your mental model of taxes is wrong, or at least unconventional. Taxes aren't a bill for public services personally consumed. For instance, we don't charge poor welfare recipients more tax because they use more services, and to do so would be nonsensical. Taxes typically also serve an economic leveling function.
  - anarchimedes 8y ago
    Thank you for the response - sincerely. I supposed it is unconventional. I'm still struck by a few ideas. The first is that economic leveling needs to be done by force through the state. The second being that any new program needs to be funded by the wealthy - also by force of the state. I would think using incentives would be the better approach? For example, let corporations repatriate overseas cash with a lower penalty and use that money to fund green R&D
    - tivert 8y ago
      > I'm still struck by a few ideas. The first is that economic leveling needs to be done by force through the state. The second being that any new program needs to be funded by the wealthy - also by force of the state. We can't count on noblesse oblige to do it, and involving the state is how we involve democracy in the process. > I would think using incentives would be the better approach? For example, let corporations repatriate overseas cash with a lower penalty and use that money to fund green R&D In some ways that may depend too much on noblesse oblige to work (i.e. that the corporations won't subvert the goals of the incentives to benefit themselves) and in other ways be too much like a command economy (government closely directing private industry).

by tjr225 8y ago

notyourday 8y ago

> Agreed 100%. It will be interesting to see how much traction these ideas can get in today's political climate. Why not have skin in the game: We should tax anything above the federal poverty level at 100%. After all the government knows better how to spend the money.

StavrosK 8y ago

I fully realize I'm saying this because I'm not in that bracket, but if you make more than $10m/yr, do you really need the extra money that much?

zaroth 8y ago
This is a common misperception around the economics of taxation. Look at it from the company perspective. There is a skill that is worth a lot of money to them which they want to acquire. If they are willing to pay $1mm more than their competitor for that skil, for that amount of money to actually go to recipient, it will now cost the company $7mm of profit. That skill is no less valuable or essential to the company, it’s just effectively impossible to pay for it now. The extra money paid in taxes in order to acquire that skill comes off the balance sheet — and effectively is being taken away from the same pool of money that is being spent to hire workers at $50k/year. The $50k/year worker can not do the job of the $10mm/year worker. 100 of them cannot do the job either (because so much key labor is not actually divisible). It’s hurting the company balance sheet to effectively pay their most important employees, which hurts the company. Likewise, the employee making $10mm+ per year is a visionary who, like an Elon Musk, is contributing to the economy in ways a lot more profound than a few extra cents in everyone’s welfare checks. “No one needs more than a million dollars a year, just take everything above that to even things out” means you never have people willing to lay it all on the line to try to do something more as well.
- deleted 8y ago
  [deleted]
- StavrosK 8y ago
  Your example overlooks a very important step, namely that no matter pays extra for that employee, the employee will have to pay 70% of it in taxes as well. No employee ever says "I have a job now, but if you want me, that will cost you an extra $1MM/yr". We go to the highest bidder, and whether the bid is pre-tax or post-tax makes no difference if the tax rate is the same no matter which company you work for.
  - zaroth 8y ago
    Except the tax rate isn’t the same everywhere or for every kind of dollar earned. And so it’s basically a ceiling on what that company can pay an employee versus what the employee could go make on their own or elsewhere. At $50k-$100k you can assume there are limits to what an employee can do. At $10m plus anything is on the table. So instead of taking a raise, I take a day off per week. Or two.
giggles_giggles 8y ago
Do the companies that you're starting or investing in with the $10m/yr you earn need that cash? Do you think Uncle Sam can do a better job of investing it than, say, Warren Buffett or Elon Musk? It's not like rich people just sit around on piles of money like Scrooge McDuck. They put that money to work so that they can earn some interest. The government will happily just spend it, though. So should it be doled out by congresspeople to their friends, or should it be invested by someone shrewd enough to be making $10m/yr in the first place?
- shadofx 8y ago
  In the latter situation, the government will print the money they need for doling. Then everyone will be making >$10m/yr as the value of the dollar drops to zero.
- StavrosK 8y ago
  > They put that money to work so that they can earn some interest They put the money in things that will generate the highest return. The government will (hopefully) put the money in things that will benefit people, even if they don't have an especially high ROI in the short term. I am not at all confident in the ability of capitalism to save the environment, for example.
  - cpeterso 8y ago
    For example, how many billionaires have stepped up to fix Flint's water? Elon Musk did offer to send people water filters for their homes, but that doesn't address the root causes or the damage (property and health) already done. https://www.wired.com/story/elon-musk-flint-water-plan/ https://www.wired.com/story/elon-musk-flint-water-plan/
    - DuskStar 8y ago
      And how many billionaires have filled a city's water with lead? "Look at this problem a government caused that those nasty rich people haven't fixed!" is not a fantastic argument for making them give more money to the government.

leothekim 8y ago

I'd be happy to see carried interest tax reform first. Even Trump wanted that. But yeah, didn't happen.

anarchimedes 8y ago

Why should they pay more? I haven't seen data otherwise, and I would be happy to admit that I am wrong, but what additional use of public goods and services that are funded by taxes do people making $10M+ use more than other people at the rate described? If their use of public goods and services are greater that people making less money, is that use at a rate that would justify taking 70% of their income? Sincerely curious....

tivert 8y ago
> Why should they pay more? I haven't seen data otherwise, and I would be happy to admit that I am wrong, but what additional use of public goods and services that are funded by taxes do people making $10M+ use more than other people at the rate described? Your mental model of taxes is wrong, or at least unconventional. Taxes aren't a bill for public services personally consumed. For instance, we don't charge poor welfare recipients more tax because they use more services, and to do so would be nonsensical. Taxes typically also serve an economic leveling function.
- anarchimedes 8y ago
  Thank you for the response - sincerely. I supposed it is unconventional. I'm still struck by a few ideas. The first is that economic leveling needs to be done by force through the state. The second being that any new program needs to be funded by the wealthy - also by force of the state. I would think using incentives would be the better approach? For example, let corporations repatriate overseas cash with a lower penalty and use that money to fund green R&D
  - tivert 8y ago
    > I'm still struck by a few ideas. The first is that economic leveling needs to be done by force through the state. The second being that any new program needs to be funded by the wealthy - also by force of the state. We can't count on noblesse oblige to do it, and involving the state is how we involve democracy in the process. > I would think using incentives would be the better approach? For example, let corporations repatriate overseas cash with a lower penalty and use that money to fund green R&D In some ways that may depend too much on noblesse oblige to work (i.e. that the corporations won't subvert the goals of the incentives to benefit themselves) and in other ways be too much like a command economy (government closely directing private industry).