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But if the rich people and their kids never spend their money, than it might as well not exist, right? Once they spend it they pay the tax otherwise it's just a

But if the rich people and their kids never spend their money, than it might as well not exist, right? Once they spend it they pay the tax otherwise it's just a number that grows with investments and doesn't give them anything else.

chongli 7y ago
Investments aren't just a number on your trading account, they're property. Rich people also invest in property through real estate investment trusts (REITs) which profit when people pay rent in those buildings. By not taxing rich people as effectively as we tax the poor (via sales taxes), we enable rich people to own more of the society we live in and levy rents on poor people.
- CDSlice 7y ago
  Isn't it kind of a tautology that rich people own more of society? I mean they're rich, by definition they own more than most people. If they didn't they wouldn't be rich. And why can't poor people invest? Unless they are being banned from investing because they are poor shouldn't we be working to make the poor wealthier so they can invest instead of dragging down the rich?
  - NeedMoreTea 7y ago
    > why can't poor people invest? That has to be satire, right? On the chance it isn't: Because they are poor. You know, spending all their income on housing, food, clothing and getting to and from work. A simple car repair, or broken cooker could tip a poor family into crisis. There's nothing left in the pot for investing.
    - CDSlice 7y ago
      I know, my point was that since the reason they can't invest is because they don't have enough money why don't we work towards making it so that the poor have enough money to be able to invest instead of dragging down rich people to the level of the poor which is the impression I get from some of the comments here.
danaris 7y ago
To a certain extent, this is true. And thus, the rich are (by their nature, not by intent) siphoning money out of the system, reducing the amount in circulation and preventing the rest of us from having any access to it, no matter how hard we work.
- CDSlice 7y ago
  Wouldn't this only be true if money can't be created? Although you may not be able to get access to a certain person's wealth you can make your own wealth by say starting a business or working hard at your job (assuming that the markets are actually working properly)
  - danaris 7y ago
    You and I can create value, but we can't (legally) create money. The government does that. If the very wealthy are able to take money out of the system faster than the government puts it in, we end up with the pool of money the rest of us have access to shrinking. And to be clear, when I say "access to," I don't mean that we should have the ability to just spend someone else's money. I mean that while they hold that money, and do not spend it, as far as the entire rest of the country/society/system is concerned, it does not exist. The effective pool of dollars is smaller.
    - CDSlice 7y ago
      But doesn't that just make the value of the dollars left higher? If there is more value being created but less dollars to pay for it worth the value of a dollar should go up until the out of circulation dollars come back.
      - danaris 7y ago
        By some theories, yes, it should. I don't know if the reason it doesn't is that a) I'm wrong b) Something else is artificially holding the value of the dollar up c) Those theories are wrong, or d) It just hasn't been long enough yet.
usefulcat 7y ago
Absolutely not. If they don't spend it, they're almost certainly going to invest it, and most of the time (broadly speaking) they will get some amount of positive return on it. That's quite a long way from it "not existing". I'm not arguing that there's anything wrong with incentivizing investment this way, or that there are not risks to such investments, but I do think it's worth pointing out that effectively this is a case of "being paid for being rich", and the richer one is the more one gets paid.
- CDSlice 7y ago
  My point was that at some point the money needs to leave the investment cycle in order to mean anything at which point it will be subject to taxes on whatever is purchased. The only way to avoid ever paying the tax is to never spend your money and at that point it may as well not exist for the rich person. The rich person will have more money left over than the poor person but they still spend more in sales taxes or whatever the equivalent is for what they purchase. I guess I just don't see the problem with rich people having more left over after paying the sales tax than poor people do.
  - chongli 7y ago
    I guess I just don't see the problem with rich people having more left over after paying the sales tax than poor people do. The problem is that they can spend it on capital which then lets them earn more and more wealth. Maybe you also disagree with the claim that inequality is itself a problem? That would put you in the minority in most places. If not, then consider this: sales taxes, due to their regressive nature, increase inequality and funnel more wealth to the top. Taxes on unearned economic rents (such as land value taxes) are progressive, decreasing inequality and spreading wealth more evenly throughout society.
  - afarrell 7y ago
    Money doesn’t need to be spent in order to provide utility. Example: I recently needed to switch both jobs and housing urgently. When I learned this, I had about £13,000 in liquid savings and $7,000 in almost-as-liquid savings. I didn’t end up needing to really touch more than £3,000 of those savings pots. So was my £10,000 of extra savings giving me any utility? Absolutely yes. I was much less worried. Contrast this with someone who has no savings and whose tire blows. How do they acquire $250 in order to be able to keep their job?

chongli 7y ago

Investments aren't just a number on your trading account, they're property. Rich people also invest in property through real estate investment trusts (REITs) which profit when people pay rent in those buildings. By not taxing rich people as effectively as we tax the poor (via sales taxes), we enable rich people to own more of the society we live in and levy rents on poor people.

CDSlice 7y ago
Isn't it kind of a tautology that rich people own more of society? I mean they're rich, by definition they own more than most people. If they didn't they wouldn't be rich. And why can't poor people invest? Unless they are being banned from investing because they are poor shouldn't we be working to make the poor wealthier so they can invest instead of dragging down the rich?
- NeedMoreTea 7y ago
  > why can't poor people invest? That has to be satire, right? On the chance it isn't: Because they are poor. You know, spending all their income on housing, food, clothing and getting to and from work. A simple car repair, or broken cooker could tip a poor family into crisis. There's nothing left in the pot for investing.
  - CDSlice 7y ago
    I know, my point was that since the reason they can't invest is because they don't have enough money why don't we work towards making it so that the poor have enough money to be able to invest instead of dragging down rich people to the level of the poor which is the impression I get from some of the comments here.

danaris 7y ago

To a certain extent, this is true. And thus, the rich are (by their nature, not by intent) siphoning money out of the system, reducing the amount in circulation and preventing the rest of us from having any access to it, no matter how hard we work.

CDSlice 7y ago
Wouldn't this only be true if money can't be created? Although you may not be able to get access to a certain person's wealth you can make your own wealth by say starting a business or working hard at your job (assuming that the markets are actually working properly)
- danaris 7y ago
  You and I can create value, but we can't (legally) create money. The government does that. If the very wealthy are able to take money out of the system faster than the government puts it in, we end up with the pool of money the rest of us have access to shrinking. And to be clear, when I say "access to," I don't mean that we should have the ability to just spend someone else's money. I mean that while they hold that money, and do not spend it, as far as the entire rest of the country/society/system is concerned, it does not exist. The effective pool of dollars is smaller.
  - CDSlice 7y ago
    But doesn't that just make the value of the dollars left higher? If there is more value being created but less dollars to pay for it worth the value of a dollar should go up until the out of circulation dollars come back.
    - danaris 7y ago
      By some theories, yes, it should. I don't know if the reason it doesn't is that a) I'm wrong b) Something else is artificially holding the value of the dollar up c) Those theories are wrong, or d) It just hasn't been long enough yet.

usefulcat 7y ago

Absolutely not. If they don't spend it, they're almost certainly going to invest it, and most of the time (broadly speaking) they will get some amount of positive return on it. That's quite a long way from it "not existing". I'm not arguing that there's anything wrong with incentivizing investment this way, or that there are not risks to such investments, but I do think it's worth pointing out that effectively this is a case of "being paid for being rich", and the richer one is the more one gets paid.

CDSlice 7y ago
My point was that at some point the money needs to leave the investment cycle in order to mean anything at which point it will be subject to taxes on whatever is purchased. The only way to avoid ever paying the tax is to never spend your money and at that point it may as well not exist for the rich person. The rich person will have more money left over than the poor person but they still spend more in sales taxes or whatever the equivalent is for what they purchase. I guess I just don't see the problem with rich people having more left over after paying the sales tax than poor people do.
- chongli 7y ago
  I guess I just don't see the problem with rich people having more left over after paying the sales tax than poor people do. The problem is that they can spend it on capital which then lets them earn more and more wealth. Maybe you also disagree with the claim that inequality is itself a problem? That would put you in the minority in most places. If not, then consider this: sales taxes, due to their regressive nature, increase inequality and funnel more wealth to the top. Taxes on unearned economic rents (such as land value taxes) are progressive, decreasing inequality and spreading wealth more evenly throughout society.
- afarrell 7y ago
  Money doesn’t need to be spent in order to provide utility. Example: I recently needed to switch both jobs and housing urgently. When I learned this, I had about £13,000 in liquid savings and $7,000 in almost-as-liquid savings. I didn’t end up needing to really touch more than £3,000 of those savings pots. So was my £10,000 of extra savings giving me any utility? Absolutely yes. I was much less worried. Contrast this with someone who has no savings and whose tire blows. How do they acquire $250 in order to be able to keep their job?