5 ms·

Are those millions taxed once or every year. How many times can you tax the same dollar bank note.

notacoward 7y ago
> How many times can you tax the same dollar bank note. As fast as it can be used for transactions that are subject to tax - sales, payroll, inheritance, etc. In a world where High Frequency Trading exists, that number's almost infinite. The whole "double taxation" argument has always been stupid because every dollar already gets taxed many times throughout it's lifetime. I'd love to hear an argument for why taxing money at rest is worse than taxing it in motion, considering the principle of "tax bads not goods" and the fact that hoarded money is worse for the economy. Want to try and make one?
- EGreg 7y ago
  Taxing money at rest is called inflation. (Not literally) It mostly hurts people who are currently invested i assets denominated in that currency — which happens to be most regular folks. And issuing more money is probably the fairest way for governments to pay for things. Decouple monetary policy from fiscal.
  - notacoward 7y ago
    Two different things. Taxes raise revenue, increasing the government's ability to pay for things. Inflation erodes the government's ability to pay for things. You as a consumer/taxpayer might experience the two similarly, but to say they're the same (and therefore that having one reduces need for the other) is ridiculous. [ETA after parent ninja-edited instead of responding properly. Above is a response to the original flippant one-sentence version.] It's a bit strange to point out that inflation mostly hurts "regular folks" and then advocate the inflationary tactic of issuing more money in lieu of taxes. Is that really so fair, or good, or practical? I'm not totally against deficit spending, but it's a bit like a shotgun where a readily-available scalpel might be a better choice.
    - EGreg 7y ago
      That is why I said “not literally”. Literally inflation is defined as an increase in the Consumer Price Index. Colloquially, however, inflation is the word used to mean the government printing money and spending it into the local economy. That by definition increases the government’s ability to pay for things. Meanwhile taxes are simply there to remove money from the economy. Imagine if the government took all the collected tax revenues and burned it in a giant hole, then issued fresh crisp bills to pay for things. It would pretty much clear things up what the relationship is. The idea that our federal taxes are what is used to pay for federal spending is outdated ever since we got off the gold standard: https://en.wikipedia.org/wiki/The_Grace_Commission https://en.wikipedia.org/wiki/The_Grace_Commission Their conclusion back then was: With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government Let me summarize my own position: 1. A generally accepted unit of currency (most often fiat, but can also be M2, M3 money, credit cards, bitcoins, etc) represents a high-probability chance that if something (eg food) is available then that amount of it will be available to you. 2. The job of an economy is to distribute resources. We have a constraint that we want humans to have their basic needs met. So far, wages have worked reasonably well but we have had to introduce disability, social security and other welfare schemes for poor people. As automation increases, demand shocks for human labor may appear in various sectors, making wages a far less reliable way to get money to the people. 3. Thus, we must gradually move towards simply printing money an giving it to people (Universal Basic Income or a series of Single Payer systems for various necessities). We must have it in place so we can ramp it up as wages become worse and worse for a growing underemployed class. 4. Then we either have to deal with rising prices OR tax someone. Tax who? The most obvious would be pigovian taxes and fines, to finally stop destroying the environment and polluting rivers and CO2. But after this, we will have to tax the most RESILIENT sources of accumulating capital, namely the rich and corporations. So you see, you are thinking backwards. The 21st century economy will be built by thinking “how will everyone eat” and working backwards from there. Money in the hands of person X doesnt disappear when she spends it. It just moves one hop. Taxes are there to either punish certain behavior or fight accumulation of money in one particular sector without everyone in that sector quit and walk away or stop building better robots. That is a sustainable economy and proper description of the role of taxes and money.
- lucozade 7y ago
  > I'd love to hear an argument for why taxing money at rest is worse than taxing it in motion One argument is that money in motion has a reasonably high level of liquidity, more or less by definition, and, in many cases, a reasonably high level of divisibility. If the wealth that you're taxing has similar attributes then fine. But a significant amount of wealth doesn't have those attributes. Wealth taxes that affect illiquid and/or indivisible assets can have an effect well beyond what they intend. You see this in inheritance taxes. The tax may be reasonable but may also lead to the forced selling of family homes if sufficient disposable assets aren't available.
  - notacoward 7y ago
    > One argument is that money in motion has a reasonably high level of liquidity Fair enough. I believe that's outweighed by other concerns, but it's a reasonable argument made in good faith. Thank you.
  - antisthenes 7y ago
    > You see this in inheritance taxes. The tax may be reasonable but may also lead to the forced selling of family homes if sufficient disposable assets aren't available. This is a benefit, not a drawback. If the million dollar house is just sitting there, unmaintained, and occupying a large plot of land, it's most certainly being underused. Nor are the inheritors entitled to live in the family house in perpetuity. Society may well find a better use for this house, and inheritors will almost certainly be better off with smaller houses that they can afford.
- 6gvONxR4sf7o 7y ago
  It's not double taxation, it's exponential taxation. For N years of wealth, you lose (1-k)^N. Double taxation is just a higher rate of taxes, but this accumulates. There's some element of being unable to just check out, maybe. If you Rip Van Winkled, being totally out of the system for a while (say you moved abroad), then when you returned, you would owe nothing under money-in-motion taxes in most places, but you'd owe an exponentially large share of your money under a wealth tax. I honestly can't articulate why I think that's bad, but can't shake the opinion that it is. That said, I'm certainly fine with a wealth tax for people at the level of "OMG holy shit you have so much money," which Warren is proposing (and Sanders, sorta). I'm fine because the harm of having your stuff taken isn't real harm since it's designed to never take enough that you aren't still super rich. The harm of losing your gold toilet isn't harm in the same sense as a poor person losing their home, though it's the same act. It's difficult to articulate concisely.

> How many times can you tax the same dollar bank note. As fast as it can be used for transactions that are subject to tax - sales, payroll, inheritance, etc. In a world where High Frequency Trading exists, that number's almost infinite. The whole "double taxation" argument has always been stupid because every dollar already gets taxed many times throughout it's lifetime. I'd love to hear an argument for why taxing money at rest is worse than taxing it in motion, considering the principle of "tax bads not goods" and the fact that hoarded money is worse for the economy. Want to try and make one?

EGreg 7y ago
Taxing money at rest is called inflation. (Not literally) It mostly hurts people who are currently invested i assets denominated in that currency — which happens to be most regular folks. And issuing more money is probably the fairest way for governments to pay for things. Decouple monetary policy from fiscal.
- notacoward 7y ago
  Two different things. Taxes raise revenue, increasing the government's ability to pay for things. Inflation erodes the government's ability to pay for things. You as a consumer/taxpayer might experience the two similarly, but to say they're the same (and therefore that having one reduces need for the other) is ridiculous. [ETA after parent ninja-edited instead of responding properly. Above is a response to the original flippant one-sentence version.] It's a bit strange to point out that inflation mostly hurts "regular folks" and then advocate the inflationary tactic of issuing more money in lieu of taxes. Is that really so fair, or good, or practical? I'm not totally against deficit spending, but it's a bit like a shotgun where a readily-available scalpel might be a better choice.
  - EGreg 7y ago
    That is why I said “not literally”. Literally inflation is defined as an increase in the Consumer Price Index. Colloquially, however, inflation is the word used to mean the government printing money and spending it into the local economy. That by definition increases the government’s ability to pay for things. Meanwhile taxes are simply there to remove money from the economy. Imagine if the government took all the collected tax revenues and burned it in a giant hole, then issued fresh crisp bills to pay for things. It would pretty much clear things up what the relationship is. The idea that our federal taxes are what is used to pay for federal spending is outdated ever since we got off the gold standard: https://en.wikipedia.org/wiki/The_Grace_Commission https://en.wikipedia.org/wiki/The_Grace_Commission Their conclusion back then was: With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government Let me summarize my own position: 1. A generally accepted unit of currency (most often fiat, but can also be M2, M3 money, credit cards, bitcoins, etc) represents a high-probability chance that if something (eg food) is available then that amount of it will be available to you. 2. The job of an economy is to distribute resources. We have a constraint that we want humans to have their basic needs met. So far, wages have worked reasonably well but we have had to introduce disability, social security and other welfare schemes for poor people. As automation increases, demand shocks for human labor may appear in various sectors, making wages a far less reliable way to get money to the people. 3. Thus, we must gradually move towards simply printing money an giving it to people (Universal Basic Income or a series of Single Payer systems for various necessities). We must have it in place so we can ramp it up as wages become worse and worse for a growing underemployed class. 4. Then we either have to deal with rising prices OR tax someone. Tax who? The most obvious would be pigovian taxes and fines, to finally stop destroying the environment and polluting rivers and CO2. But after this, we will have to tax the most RESILIENT sources of accumulating capital, namely the rich and corporations. So you see, you are thinking backwards. The 21st century economy will be built by thinking “how will everyone eat” and working backwards from there. Money in the hands of person X doesnt disappear when she spends it. It just moves one hop. Taxes are there to either punish certain behavior or fight accumulation of money in one particular sector without everyone in that sector quit and walk away or stop building better robots. That is a sustainable economy and proper description of the role of taxes and money.
lucozade 7y ago
> I'd love to hear an argument for why taxing money at rest is worse than taxing it in motion One argument is that money in motion has a reasonably high level of liquidity, more or less by definition, and, in many cases, a reasonably high level of divisibility. If the wealth that you're taxing has similar attributes then fine. But a significant amount of wealth doesn't have those attributes. Wealth taxes that affect illiquid and/or indivisible assets can have an effect well beyond what they intend. You see this in inheritance taxes. The tax may be reasonable but may also lead to the forced selling of family homes if sufficient disposable assets aren't available.
- notacoward 7y ago
  > One argument is that money in motion has a reasonably high level of liquidity Fair enough. I believe that's outweighed by other concerns, but it's a reasonable argument made in good faith. Thank you.
- antisthenes 7y ago
  > You see this in inheritance taxes. The tax may be reasonable but may also lead to the forced selling of family homes if sufficient disposable assets aren't available. This is a benefit, not a drawback. If the million dollar house is just sitting there, unmaintained, and occupying a large plot of land, it's most certainly being underused. Nor are the inheritors entitled to live in the family house in perpetuity. Society may well find a better use for this house, and inheritors will almost certainly be better off with smaller houses that they can afford.
6gvONxR4sf7o 7y ago
It's not double taxation, it's exponential taxation. For N years of wealth, you lose (1-k)^N. Double taxation is just a higher rate of taxes, but this accumulates. There's some element of being unable to just check out, maybe. If you Rip Van Winkled, being totally out of the system for a while (say you moved abroad), then when you returned, you would owe nothing under money-in-motion taxes in most places, but you'd owe an exponentially large share of your money under a wealth tax. I honestly can't articulate why I think that's bad, but can't shake the opinion that it is. That said, I'm certainly fine with a wealth tax for people at the level of "OMG holy shit you have so much money," which Warren is proposing (and Sanders, sorta). I'm fine because the harm of having your stuff taken isn't real harm since it's designed to never take enough that you aren't still super rich. The harm of losing your gold toilet isn't harm in the same sense as a poor person losing their home, though it's the same act. It's difficult to articulate concisely.