6 ms·

This whole tax the billionaires is misguided and won't solve anything. - US Population 2000: 280 Million - US Population 2020: 320 Million - +15% increase in p

by raiyu 6y ago

This whole tax the billionaires is misguided and won't solve anything. - US Population 2000: 280 Million - US Population 2020: 320 Million - +15% increase in population - Tax revenues 2000: $2.03 trillion - Tax revenues 2019: $3.50 trillion - +75% increase in tax revenue Population grew 15% and tax revenue grew 75% and yet we still can't solve any of the real problems we had since 2000. So what is increasing taxes going to do if we already collect 75% more and can't make a dent. Now let's say you tax the billionaires: - Jeff - $200B - Larry & Sergey - $130B - Bill Gates - $120B - Zuck - $100B - Warren Buffet - $80B - Larry Ellison - 71B - Elon Musk - $70B That's $770 Billion - let's say we double this for the remainder of billionaires to $1.5 trillion and add in a 70% tax. $1.5 trillion in wealth = $1.05 trillion in year 1 Now what about the following year? Well you reduced their wealth substantially so now you only have $500B and that would only yield $350B in tax revenue the following year. $350B in tax revenue year 2. And there after it basically trickles down to nothing. So you end up with a total of $1.5 trillion and then nothing. Well that $1.5 trillion is 42% increase over what we have today, but remember that tax revenue already increased 75% and we still couldn't get anything right. So while it may sound good to say tax the billionaires the reality is if we couldn't figure out how to spend the additional $1.5 trillion from taxes between 2000 and 2020 a one-time 2 year increase of $1.5 trillion won't do much because the underlying system is broken.

ndespres 6y ago
Putting a very high tax on wealth would have the benefits of a one-time infusion of tax revenues, AND a future disincentive for the ultrawealthy to seek to enrich themselves infinitely using business practices that take money from everyone else. The problem isn't just that the ultrarich have too much money. It's that they get this money by doing things that make the lives of everyone else measurably worse. Selling us poor-quality products, paying low wages to work in stores selling those products, treating real estate like an investment instead of a human need, overcharging for healthcare, invading our privacy to find ways to more efficiently get us to buy their garbage, etc. Without the incentive for the ultrarich to rip us off coming and going, we have a chance to improve our quality of life and change the things that are wrong in society, without leaving it to the rich to "fix".
- raiyu 6y ago
  The things that affect me most directly in life are education, health and housing. Neither one of these is getting fixed by simply increasing tax revenue alone. When I goto the hospital and get an MRI and get billed through insurance and the cost is $2,000 and out of pocket I can pay $200 for the same procedure that looks like legalized fraud. The same can be said for education. When the majority of student loans are given in such a way that a student can't default out of it, it reduces the risk on the lending party and so they give out a ton of cash and prefer the interest payments later on which raises the price of education. Property taxes are also inherently low and should be raised and redistributed to lower income neighborhoods especially when so much property is already in the hands of the wealthy. I would love to see higher property taxes because I have more faith in local governments than the larger bureaucracy.
  - ndespres 6y ago
    Some people and corporations are getting obscenely, criminally wealthy by profiting from education, healthcare, and housing. I'm theorizing that if taxes were high enough such that it was impossible to accumulate obscene amounts of wealth in these sectors (and others) we could focus our efforts to provide these things to members of our society without interference by profiteers.
    - raiyu 6y ago
      I think that's where regulation comes in rather than taxes. Think of it like this if I'm in an industry and polluting the river. Do you want to raise taxes on me so that I stop polluting, or do you want to just make that illegal? When there are things that completely don't make sense I don't think taxes are the solution. If I can buy a house which costs more than education in a lot of cases with a mortgage and then declare bankruptcy and not have the mortgage follow me for the rest of my life why can't I do the same with a student loan? Taxing the student loan companies won't solve that. Similarly for the large disparity in prices for healthcare for out of pocket vs through insurance.
      - 6y ago
tziki 6y ago
1 USD in 2000 = 1.51 USD in 2019. This combined with population growth accounts for almost all of the 'increased' tax revenue.
- hajile 6y ago
  Hauser's Law says that revenue vs GDP in the US is basically static regardless of marginal tax rates. This implies that any increase aside from inflation would be unexpected. https://en.wikipedia.org/wiki/Hauser%27s_law https://en.wikipedia.org/wiki/Hauser%27s_law
temporalparts 6y ago
I think you need to account for inflation, which from 2000 to 2020 is 50% [0]. So 175%/150% => 116%, or 16% increase in tax revenue for a 15% increase in population. Which means inflation adjusted tax revenue/capita has not meaningfully changed from 2000 to 2020. [0] https://www.in2013dollars.com/us/inflation/2000?amount=1#:~:text=The%20U.S.%20dollar%20experienced%20an,2000%20inflation%20rate%20was%203.36%25 https://www.in2013dollars.com/us/inflation/2000?amount=1#:~:....
kkotak 6y ago
You're using the net worth based on their stock holdings, which is not taxable unless they sell all/part of it.
- AjithAntony 6y ago
  There are proposals for a "wealth tax"
deleted 6y ago
[deleted]
mrnobody_67 6y ago
The government is an incredibly poor & wasteful allocator of capital. Full stop. The founders of the country would shudder at at the size, scope and over-reach of the government... Also remember, income tax was introduced as a "temporary" measure... the country had roads, hospitals, and orphanages before that.
- RichEO 6y ago
  > The government is an incredibly poor & wasteful allocator of capital. Full stop. Which government? What is the threshold for “poor allocation”? Seems like the free market misallocates a lot of capital to me. WeWork was allocated over a billion dollars of investment, and $47 billion in value, that could be easily argued would have be better used elsewhere.
  - mrnobody_67 6y ago
    At least that money can get counted for properly... and venture capital as an asset class still generates double-digit IRRs, and LPs stop funding investors with poor returns. The Pentagon has spent 20 years and hundreds of millions of dollars in building systems to just try to account for its waste, highly recommend this long read from Rolling Stone: https://www.rollingstone.com/politics/politics-features/pentagon-budget-mystery-807276/ https://www.rollingstone.com/politics/politics-features/pent... and http://nebraskansforpeace.org/pentagon_accounting_fraud http://nebraskansforpeace.org/pentagon_accounting_fraud The stuff about government people spending 15 year careers entering phony numbers is just insane: https://www.businessinsider.com/pentagon-accounting-conceals-epic-waste-2013-11 https://www.businessinsider.com/pentagon-accounting-conceals...
- gremlinsinc 6y ago
  > The founders of the country would shudder at at the size, scope and over-reach of the government... I don't think they would (not all of them). Jefferson would for sure, but this is basically Alexander Hamilton's utopian dream. The world he wanted to create. Congrats Alex, you won, everybody else lost. I agree w/ you that the govt is wasteful. I wish we had where states provide all the citizen benefits and also received the majority of tax revenues, and the fed was a lot smaller and even states managed their own armies and the fed just borrowed soldiers from states for international purposes. Basically their own countries just unionized over interstate commerce and such.
m0zg 6y ago
IMO it's a sure sign of a smooth brain to think that these people will just sit and wait for their wealth to be taxed to such an extent. They're only here because the tax regime is favorable. They can leave, and while they will lose some wealth, it's unlikely to be anywhere near 75%.
daralthus 6y ago
There's a slight misunderstanding here: the main purpose of tax is not revenue for government spending, but to impose a policy on the actors in the economy. It's a way to take out the excess money from circulation that central and retail banks printed, effectively controlling inflation.
solidsnack9000 6y ago
Yeah, targeting billionaires shows a deep misunderstanding of the problem. It's like when leftists talk about raising the inheritance tax. Almost no one with money lets their money go through probate! The wealth is held in trusts and common property. When two people own a bank account, and one passes away, the other person gains full ownership but there's no inheritance and no taxation. Trusts are more or less a sophisticated version of the same thing. What we have seen over the past few decades is increasing productivity without increasing wages, and that's because returns to equity are so high. That is what is imbalanced in our economy.
- dlubarov 6y ago
  > When two people own a bank account, and one passes away, the other person gains full ownership but there's no inheritance and no taxation. It wouldn't go through probate, but it would still subject to estate tax. Similarly, any withdrawals before death would be subject to gift tax. Other forms of common property would just be subject to gift tax immediately upon naming the co-owner. Relevant bits of §25.2511-1(h): > If A creates a joint bank account for himself and B (or a similar type of ownership by which A can regain the entire fund without B's consent), there is a gift to B when B draws upon the account for his own benefit, to the extent of the amount drawn without any obligation to account for a part of the proceeds to A. > If A with his own funds purchases property and has the title conveyed to himself and B as joint owners, with rights of survivorship (other than a joint ownership described in example (4) but which rights may be defeated by either party severing his interest, there is a gift to B in the amount of half the value of the property.
  - solidsnack9000 6y ago
    I'm concerned you're overlooking something here. When a husband and wife have a joint account, are withdrawals before death by either party usually taxed? §25.2511-1(h) of what? It's better to include full references; not everyone on HN is in the USA.
    - dlubarov 6y ago

by raiyu 6y ago

ndespres 6y ago

Putting a very high tax on wealth would have the benefits of a one-time infusion of tax revenues, AND a future disincentive for the ultrawealthy to seek to enrich themselves infinitely using business practices that take money from everyone else. The problem isn't just that the ultrarich have too much money. It's that they get this money by doing things that make the lives of everyone else measurably worse. Selling us poor-quality products, paying low wages to work in stores selling those products, treating real estate like an investment instead of a human need, overcharging for healthcare, invading our privacy to find ways to more efficiently get us to buy their garbage, etc. Without the incentive for the ultrarich to rip us off coming and going, we have a chance to improve our quality of life and change the things that are wrong in society, without leaving it to the rich to "fix".

raiyu 6y ago
The things that affect me most directly in life are education, health and housing. Neither one of these is getting fixed by simply increasing tax revenue alone. When I goto the hospital and get an MRI and get billed through insurance and the cost is $2,000 and out of pocket I can pay $200 for the same procedure that looks like legalized fraud. The same can be said for education. When the majority of student loans are given in such a way that a student can't default out of it, it reduces the risk on the lending party and so they give out a ton of cash and prefer the interest payments later on which raises the price of education. Property taxes are also inherently low and should be raised and redistributed to lower income neighborhoods especially when so much property is already in the hands of the wealthy. I would love to see higher property taxes because I have more faith in local governments than the larger bureaucracy.
- ndespres 6y ago
  Some people and corporations are getting obscenely, criminally wealthy by profiting from education, healthcare, and housing. I'm theorizing that if taxes were high enough such that it was impossible to accumulate obscene amounts of wealth in these sectors (and others) we could focus our efforts to provide these things to members of our society without interference by profiteers.
  - raiyu 6y ago
    I think that's where regulation comes in rather than taxes. Think of it like this if I'm in an industry and polluting the river. Do you want to raise taxes on me so that I stop polluting, or do you want to just make that illegal? When there are things that completely don't make sense I don't think taxes are the solution. If I can buy a house which costs more than education in a lot of cases with a mortgage and then declare bankruptcy and not have the mortgage follow me for the rest of my life why can't I do the same with a student loan? Taxing the student loan companies won't solve that. Similarly for the large disparity in prices for healthcare for out of pocket vs through insurance.
    - 6y ago

tziki 6y ago

1 USD in 2000 = 1.51 USD in 2019. This combined with population growth accounts for almost all of the 'increased' tax revenue.

hajile 6y ago
Hauser's Law says that revenue vs GDP in the US is basically static regardless of marginal tax rates. This implies that any increase aside from inflation would be unexpected. https://en.wikipedia.org/wiki/Hauser%27s_law https://en.wikipedia.org/wiki/Hauser%27s_law

temporalparts 6y ago

I think you need to account for inflation, which from 2000 to 2020 is 50% [0]. So 175%/150% => 116%, or 16% increase in tax revenue for a 15% increase in population. Which means inflation adjusted tax revenue/capita has not meaningfully changed from 2000 to 2020. [0] https://www.in2013dollars.com/us/inflation/2000?amount=1#:~:text=The%20U.S.%20dollar%20experienced%20an,2000%20inflation%20rate%20was%203.36%25 https://www.in2013dollars.com/us/inflation/2000?amount=1#:~:....

kkotak 6y ago

You're using the net worth based on their stock holdings, which is not taxable unless they sell all/part of it.

AjithAntony 6y ago
There are proposals for a "wealth tax"

deleted 6y ago

[deleted]

mrnobody_67 6y ago

The government is an incredibly poor & wasteful allocator of capital. Full stop. The founders of the country would shudder at at the size, scope and over-reach of the government... Also remember, income tax was introduced as a "temporary" measure... the country had roads, hospitals, and orphanages before that.

RichEO 6y ago
> The government is an incredibly poor & wasteful allocator of capital. Full stop. Which government? What is the threshold for “poor allocation”? Seems like the free market misallocates a lot of capital to me. WeWork was allocated over a billion dollars of investment, and $47 billion in value, that could be easily argued would have be better used elsewhere.
- mrnobody_67 6y ago
  At least that money can get counted for properly... and venture capital as an asset class still generates double-digit IRRs, and LPs stop funding investors with poor returns. The Pentagon has spent 20 years and hundreds of millions of dollars in building systems to just try to account for its waste, highly recommend this long read from Rolling Stone: https://www.rollingstone.com/politics/politics-features/pentagon-budget-mystery-807276/ https://www.rollingstone.com/politics/politics-features/pent... and http://nebraskansforpeace.org/pentagon_accounting_fraud http://nebraskansforpeace.org/pentagon_accounting_fraud The stuff about government people spending 15 year careers entering phony numbers is just insane: https://www.businessinsider.com/pentagon-accounting-conceals-epic-waste-2013-11 https://www.businessinsider.com/pentagon-accounting-conceals...
gremlinsinc 6y ago
> The founders of the country would shudder at at the size, scope and over-reach of the government... I don't think they would (not all of them). Jefferson would for sure, but this is basically Alexander Hamilton's utopian dream. The world he wanted to create. Congrats Alex, you won, everybody else lost. I agree w/ you that the govt is wasteful. I wish we had where states provide all the citizen benefits and also received the majority of tax revenues, and the fed was a lot smaller and even states managed their own armies and the fed just borrowed soldiers from states for international purposes. Basically their own countries just unionized over interstate commerce and such.

m0zg 6y ago

IMO it's a sure sign of a smooth brain to think that these people will just sit and wait for their wealth to be taxed to such an extent. They're only here because the tax regime is favorable. They can leave, and while they will lose some wealth, it's unlikely to be anywhere near 75%.

daralthus 6y ago

There's a slight misunderstanding here: the main purpose of tax is not revenue for government spending, but to impose a policy on the actors in the economy. It's a way to take out the excess money from circulation that central and retail banks printed, effectively controlling inflation.

solidsnack9000 6y ago

Yeah, targeting billionaires shows a deep misunderstanding of the problem. It's like when leftists talk about raising the inheritance tax. Almost no one with money lets their money go through probate! The wealth is held in trusts and common property. When two people own a bank account, and one passes away, the other person gains full ownership but there's no inheritance and no taxation. Trusts are more or less a sophisticated version of the same thing. What we have seen over the past few decades is increasing productivity without increasing wages, and that's because returns to equity are so high. That is what is imbalanced in our economy.

dlubarov 6y ago
> When two people own a bank account, and one passes away, the other person gains full ownership but there's no inheritance and no taxation. It wouldn't go through probate, but it would still subject to estate tax. Similarly, any withdrawals before death would be subject to gift tax. Other forms of common property would just be subject to gift tax immediately upon naming the co-owner. Relevant bits of §25.2511-1(h): > If A creates a joint bank account for himself and B (or a similar type of ownership by which A can regain the entire fund without B's consent), there is a gift to B when B draws upon the account for his own benefit, to the extent of the amount drawn without any obligation to account for a part of the proceeds to A. > If A with his own funds purchases property and has the title conveyed to himself and B as joint owners, with rights of survivorship (other than a joint ownership described in example (4) but which rights may be defeated by either party severing his interest, there is a gift to B in the amount of half the value of the property.
- solidsnack9000 6y ago
  I'm concerned you're overlooking something here. When a husband and wife have a joint account, are withdrawals before death by either party usually taxed? §25.2511-1(h) of what? It's better to include full references; not everyone on HN is in the USA.
  - dlubarov 6y ago