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This comment shouldn’t have been downvoted because it’s completely accurate, and provably so: tax rates for earnings on capital are by and large less than earni

This comment shouldn’t have been downvoted because it’s completely accurate, and provably so: tax rates for earnings on capital are by and large less than earnings on labor. Warren Buffett has complained for years that he is taxed at a lower rate than his secretary. The system we have rewards trust fund babies, and punishes hard working people.

droithomme 7y ago
An alternative view is that it rewards investment in the economy.
- rm_-rf_slash 7y ago
  Work is an investment the economy. Hell, raising kids and taking care of disabled/elderly people is an investment in the economy too. Those folks and their caretakers are consumers just as much as you and me. Why does there need to be a privileged reward to invest? Everyone and their dog knows if you keep your money stuffed in your mattress it’ll lose value over time from inflation, and who doesn’t want to have a nest egg to retire on? Nobody needs an additional incentive to invest their capital beyond the bare bones basics of personal finance.
ridgeguy 7y ago
See also Thomas Piketty's Capital in the Twenty-First Century. TLDR: RoI (capital) > RoI (labor), with the expected consequences.
- ChrisLomont 7y ago
  Plenty of good subsequent research has shown this to be not supported. Go to google scholar and start looking through Econ papers citing Piketty.
  - ridgeguy 7y ago
    Would you give me a link or two to start? I get that Piketty's work isn't without controversy or criticism. Summers and others have criticized it, but their critiques haven't seemed very strong. One article [1] (which discusses Piketty's shortcomings) claims the biggest reaction to Piketty is silence: "But perhaps the greatest rebuke of Piketty to be found among academic economics is not contained in any of these overt or veiled attacks on his scholarship and interpretation, but rather in the deafening silence that greets it, as well as inequality in general, in broad swathes of the field—even to this day." ... "The economics elite, it seems, answered by stonewalling Capital in the Twenty-First Century, so it would not have the impact on economics research agendas that it merits." Anyway, it's not clear to me that Piketty's fundamental thesis is wrong. Happy to follow a link or two, thank you. [1] http://bostonreview.net/class-inequality/marshall-steinbaum-why-are-economists-giving-piketty-cold-shoulder http://bostonreview.net/class-inequality/marshall-steinbaum-... edited for a typo
    - lotsofpulp 7y ago
      Even if it wasn’t wrong in the past, it can certainly be wrong going forward. With all the governments printing money to cause asset prices to inflate, of course ROI of capital will be > ROI of labor, since price increases for labor will always lag price increases of capital.
      - dnautics 7y ago
        > price increases for labor will always lag price increases of capital Let's also keep in mind that that is a policy choice, because it's necessary to dislodge workers off their sticky wages and some sort of mumbo jumbo about the Phillips curve.
      - spinchange 7y ago
        Piketty looked at like ~200 years of econ data (wages, asset values, rents) and allowed for inflation and even depreciation. His thesis is actually that r > g, wherein r = ROI of capital and g = the rate of economic growth (gdp). This has to be true, because rich people exist and we can measure that they get richer and richer faster than others. You can gauge faith in the likelihood that it will continue to work that way given that funds like Y Combinator exist and are successful, and because activities like buying and maintaining rental properties "works" in terms of creating personal wealth faster than the rate of economic growth.

droithomme 7y ago

An alternative view is that it rewards investment in the economy.

rm_-rf_slash 7y ago
Work is an investment the economy. Hell, raising kids and taking care of disabled/elderly people is an investment in the economy too. Those folks and their caretakers are consumers just as much as you and me. Why does there need to be a privileged reward to invest? Everyone and their dog knows if you keep your money stuffed in your mattress it’ll lose value over time from inflation, and who doesn’t want to have a nest egg to retire on? Nobody needs an additional incentive to invest their capital beyond the bare bones basics of personal finance.

ridgeguy 7y ago

See also Thomas Piketty's Capital in the Twenty-First Century. TLDR: RoI (capital) > RoI (labor), with the expected consequences.

ChrisLomont 7y ago
Plenty of good subsequent research has shown this to be not supported. Go to google scholar and start looking through Econ papers citing Piketty.
- ridgeguy 7y ago
  Would you give me a link or two to start? I get that Piketty's work isn't without controversy or criticism. Summers and others have criticized it, but their critiques haven't seemed very strong. One article [1] (which discusses Piketty's shortcomings) claims the biggest reaction to Piketty is silence: "But perhaps the greatest rebuke of Piketty to be found among academic economics is not contained in any of these overt or veiled attacks on his scholarship and interpretation, but rather in the deafening silence that greets it, as well as inequality in general, in broad swathes of the field—even to this day." ... "The economics elite, it seems, answered by stonewalling Capital in the Twenty-First Century, so it would not have the impact on economics research agendas that it merits." Anyway, it's not clear to me that Piketty's fundamental thesis is wrong. Happy to follow a link or two, thank you. [1] http://bostonreview.net/class-inequality/marshall-steinbaum-why-are-economists-giving-piketty-cold-shoulder http://bostonreview.net/class-inequality/marshall-steinbaum-... edited for a typo
  - lotsofpulp 7y ago
    Even if it wasn’t wrong in the past, it can certainly be wrong going forward. With all the governments printing money to cause asset prices to inflate, of course ROI of capital will be > ROI of labor, since price increases for labor will always lag price increases of capital.
    - dnautics 7y ago
      > price increases for labor will always lag price increases of capital Let's also keep in mind that that is a policy choice, because it's necessary to dislodge workers off their sticky wages and some sort of mumbo jumbo about the Phillips curve.
    - spinchange 7y ago
      Piketty looked at like ~200 years of econ data (wages, asset values, rents) and allowed for inflation and even depreciation. His thesis is actually that r > g, wherein r = ROI of capital and g = the rate of economic growth (gdp). This has to be true, because rich people exist and we can measure that they get richer and richer faster than others. You can gauge faith in the likelihood that it will continue to work that way given that funds like Y Combinator exist and are successful, and because activities like buying and maintaining rental properties "works" in terms of creating personal wealth faster than the rate of economic growth.