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Taxing capital incentivizes putting it to work. If you only tax gains then people can endlessly horde wealth. Taxing the wealth itself makes hording unappeali

Taxing capital incentivizes putting it to work. If you only tax gains then people can endlessly horde wealth. Taxing the wealth itself makes hording unappealing... I think.

xorfish 7y ago
But hoarding wealth isn't a problem for inequality. It is that capital can be used to generate income. Inflation is the process that incentivizes capital to be put to work.
- maxsilver 7y ago
  > But hoarding wealth isn't a problem for inequality. It absolutely can be, especially for wealth that is finite. (Like land for housing) > Inflation is the process that incentivizes capital to be put to work. Does it though? Inflation mostly just punishes labor alone, labor feels the effects of inflation far more severely than anyone else. With enough capital (the amount anyone 'hoarding wealth' already has), the capital automatically buys itself out of any problem of inflation, because the returns to sit on that cash are routinely higher than inflation itself is. Inflation can't currently incentivize capital to be put to work, because capital just sitting doing nothing already far out-earns any loss from inflation. And for inflation to be strong enough to actually incentivize capital to be used, you'd have to bump it to astronomical heights (like say, 15-25%), at which point you've completely obliterated all wage-earning people's lives. This is why many well-respected people advocate for a wealth tax. In a perfect world, inflation would be exactly 0, and a strong punitive wealth tax would discourage greedy people from hoarding wealth.
  - Matticus_Rex 7y ago
    The market already has a mechanism for incentivizing putting capital to work, though. If something is held off the market ("hoarded", in your terminology), it reduces supply, and the returns in that area go up, making it more attractive to do something with it. For money-wealth, the outlook is even better. If Scrooge McDuck, puts all his money into his basement so he can swim in them, he has removed those from the supply and increases the value of everyone else's money while he holds it off the market.
  - AnimalMuppet 7y ago
    > With enough capital (the amount anyone 'hoarding wealth' already has), the capital automatically buys itself out of any problem of inflation, because the returns to sit on that cash are routinely higher than inflation itself is. I remember the late 1970s, when inflation was 14%, and sitting on cash paid 5%. There have been times when your "just sit on cash" approach meant losing your shirt.
  - ledauphin 7y ago
    I'm not an expert, but what you describe as "capital sitting doing nothing" is, presumably, capital invested in some kind of market index? In which case it's by definition not "sitting doing nothing", right? Unless you were referring to capital in the sense of owned non-market property that appreciates with time? Land/property values are a major topic of discussion throughout this thread for sure. Just trying to make sure I'm following the thread of the argument here.
    - mensetmanusman 7y ago
      You are correct, it isn’t ever ‘doing nothing’ The issue is that the returns to the investor far outweigh the gains in wages etc. to the people actually doing the work to increase prosperity.
Mirioron 7y ago
But taxing capital is not possible and probably a bad idea. This will require you to list everything you own to the government who will then evaluate the worth of it. I really can't think of much else that's a worse violation of privacy. It will also make owning something expensive a bad idea, because you'll have to pay to own it. In fact, can you even say that you own it at that point? Aren't you basically renting it from the government instead? Thinking more about it, I'm surprised that totalitarian systems didn't have a wealth tax.
- ConfuciusSay02 7y ago
  >I'm surprised that totalitarian systems didn't have a wealth tax. In addition to service, a serf was required to pay certain taxes and fees. Taxes were based on the assessed value of his lands and holdings. https://en.wikipedia.org/wiki/Serfdom https://en.wikipedia.org/wiki/Serfdom

Taxing capital incentivizes putting it to work. If you only tax gains then people can endlessly horde wealth. Taxing the wealth itself makes hording unappealing... I think.

xorfish 7y ago

But hoarding wealth isn't a problem for inequality. It is that capital can be used to generate income. Inflation is the process that incentivizes capital to be put to work.

maxsilver 7y ago
> But hoarding wealth isn't a problem for inequality. It absolutely can be, especially for wealth that is finite. (Like land for housing) > Inflation is the process that incentivizes capital to be put to work. Does it though? Inflation mostly just punishes labor alone, labor feels the effects of inflation far more severely than anyone else. With enough capital (the amount anyone 'hoarding wealth' already has), the capital automatically buys itself out of any problem of inflation, because the returns to sit on that cash are routinely higher than inflation itself is. Inflation can't currently incentivize capital to be put to work, because capital just sitting doing nothing already far out-earns any loss from inflation. And for inflation to be strong enough to actually incentivize capital to be used, you'd have to bump it to astronomical heights (like say, 15-25%), at which point you've completely obliterated all wage-earning people's lives. This is why many well-respected people advocate for a wealth tax. In a perfect world, inflation would be exactly 0, and a strong punitive wealth tax would discourage greedy people from hoarding wealth.
- Matticus_Rex 7y ago
  The market already has a mechanism for incentivizing putting capital to work, though. If something is held off the market ("hoarded", in your terminology), it reduces supply, and the returns in that area go up, making it more attractive to do something with it. For money-wealth, the outlook is even better. If Scrooge McDuck, puts all his money into his basement so he can swim in them, he has removed those from the supply and increases the value of everyone else's money while he holds it off the market.
- AnimalMuppet 7y ago
  > With enough capital (the amount anyone 'hoarding wealth' already has), the capital automatically buys itself out of any problem of inflation, because the returns to sit on that cash are routinely higher than inflation itself is. I remember the late 1970s, when inflation was 14%, and sitting on cash paid 5%. There have been times when your "just sit on cash" approach meant losing your shirt.
- ledauphin 7y ago
  I'm not an expert, but what you describe as "capital sitting doing nothing" is, presumably, capital invested in some kind of market index? In which case it's by definition not "sitting doing nothing", right? Unless you were referring to capital in the sense of owned non-market property that appreciates with time? Land/property values are a major topic of discussion throughout this thread for sure. Just trying to make sure I'm following the thread of the argument here.
  - mensetmanusman 7y ago
    You are correct, it isn’t ever ‘doing nothing’ The issue is that the returns to the investor far outweigh the gains in wages etc. to the people actually doing the work to increase prosperity.

Mirioron 7y ago

But taxing capital is not possible and probably a bad idea. This will require you to list everything you own to the government who will then evaluate the worth of it. I really can't think of much else that's a worse violation of privacy. It will also make owning something expensive a bad idea, because you'll have to pay to own it. In fact, can you even say that you own it at that point? Aren't you basically renting it from the government instead? Thinking more about it, I'm surprised that totalitarian systems didn't have a wealth tax.

ConfuciusSay02 7y ago
>I'm surprised that totalitarian systems didn't have a wealth tax. In addition to service, a serf was required to pay certain taxes and fees. Taxes were based on the assessed value of his lands and holdings. https://en.wikipedia.org/wiki/Serfdom https://en.wikipedia.org/wiki/Serfdom