6 ms·

That's a good thing. Taxing wealth more, and income less, helps equalize wealth disparities over time.

logicchains 6y ago
> That's a good thing. Taxing wealth more, and income less, helps equalize wealth disparities over time. It also slows economic growth over time, because most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth.
- ucha 6y ago
  By that line of thinking why not tax the poor to give to the rich, that would accelerate economic growth, wouldn't it?
  - steffan 6y ago
    This is a strawman argument, but the logic actually does hold: If the original premise is true, "taxing the poor to give to the rich" would accelerate economic growth. The problem is of diminishing returns - it would have a disproportionate negative effect on the poor and a minimal impact on accelerating growth, so it would be considered one of the most inefficient ways to achieve the latter.
- ath92 6y ago
  But if the government redistributes the wealth to its citizens, wouldn't that boost consumer demand and thereby boost economic growth on the demand side?
  - dnautics 6y ago
    Since when have governments ever effectively redistributed wealth to citizens over lining the pockets of cronies and favoured industries?
  - nybble41 6y ago
    Consumption is an important part of the process, without which production has no purpose, but you don't become wealthier just by increasing your spending. Consumer demand is an accelerant, not a fuel source. Boosting it gives you short-term growth at the expense of a long-term decline as you consume the capital that makes efficient production possible in the first place.
    - learc83 6y ago
      What do you mean "consume the capital". What do you think happens to the money that consumers spend?
      - mvc 6y ago
        Capital depreciates at varying rates. I assume by "consume the capital" the parent means allow the total amount of capital in the economy decreases over time because the savings/consumption ratio is not high enough to compensate for the depreciation that occurs.
        nybble41 6y ago
        Yes, exactly. "Capital consumption" is a standard term in economics[1]. A common (if somewhat outmoded) example would be farmers eating their seed corn rather than saving it to plant the next year. In practice it usually looks more like what you described: Productive durable goods like machines or buildings simply wear out and aren't properly maintained or replaced. The total amount of capital investment thus decreases over time. [1] https://www.economicshelp.org/blog/glossary/capital-consumption/ https://www.economicshelp.org/blog/glossary/capital-consumpt...
        learc83 6y ago
        Capital consumption just refers to capital depreciation. Reduced capital investment, and more specifically reduced efficient in capital investment doesn't necessarily follow from increased consumer demand. Just stating that it does isn't an argument.
- runako 6y ago
  > most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth If the money redistributed by government is given to poorer people, what do they do with it? Are you suggesting they save it somewhere it cannot be invested in the economy?
  - rswail 6y ago
    All of the tax money is redistributed by the government. What else can it do with it? If it pays off debt, it is redistributing it, if it invests in infrastructure, it is redistributing it, if it sends cash to the population, they'll spend it and it has been redistributed.
- Swenrekcah 6y ago
  This is wrong. The redistributed tax money doesn't magically disappear. Almost 100% goes back into the economy because the people receiving it actually need the money for various things. It is much more likely that the wealthy will use the same money instead to buy another yacht or private jet, which while also providing some jobs is ultimately a net waste for society. Not that yachts should be banned, but economic policy should never encourage such spending.
  - nradov 6y ago
    The US introduced a "luxury tax" on yachts in 1991. It was a disaster and basically killed the domestic boat industry (many jobs lost) because wealthy buyers just went offshore. A general wealth tax may be fine, but targeting particular industries like yachts is a terrible idea. https://en.wikipedia.org/wiki/Luxury_tax#United_States https://en.wikipedia.org/wiki/Luxury_tax#United_States
    - Swenrekcah 6y ago
      Certainly, I just used yachts as an example.
    - rswail 6y ago
      Which is why a wealth tax is a better approach than "penalty" taxes on yachts or jets. Would the high end suppliers of luxury items see a reduction in the very small numbers of people able to buy their top end products? Yes. Is that a bad thing? Probably no in the scheme of the entire economy or even the luxury industry affected. People downgrading from their $100m yacht to a modest $95m yacht isn't going to destroy the yacht industry.
    - rockinghigh 6y ago
      There are a lot of caveats to this observation. The tax was levied during a recession, at a time when yacht sales had already declined sharply (from 16,000 in 1987 to 9,100 in 1990 for $100k+ boats).
    - alexashka 6y ago
      Are you going to bemoan the job loss of pyramid builders if/when some rich schmuck decides to spend half his net worth on building a pyramid too? (A yacht is a modern pyramid) Job loss is a net positive in many cases.
- learc83 6y ago
  Poor people spend money faster than wealthy people. Taxing wealth (up to some unknown limit) and redistributing it increases the income velocity of money--speeding economic growth.
- naravara 6y ago
  > because most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth. Infrastructure, education, healthcare, and other public services count as investments.
- erispoe 6y ago
  It's redistributed to people who spend it, fueling consumption. Switzerland has a higher GDP per capita than the US. The country has a wealth tax, but no tax on capital gains though.
- Droobfest 6y ago
  This is like the ridiculous trickle down economics argument all over again..

> That's a good thing. Taxing wealth more, and income less, helps equalize wealth disparities over time. It also slows economic growth over time, because most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth.

ucha 6y ago
By that line of thinking why not tax the poor to give to the rich, that would accelerate economic growth, wouldn't it?
- steffan 6y ago
  This is a strawman argument, but the logic actually does hold: If the original premise is true, "taxing the poor to give to the rich" would accelerate economic growth. The problem is of diminishing returns - it would have a disproportionate negative effect on the poor and a minimal impact on accelerating growth, so it would be considered one of the most inefficient ways to achieve the latter.
ath92 6y ago
But if the government redistributes the wealth to its citizens, wouldn't that boost consumer demand and thereby boost economic growth on the demand side?
- dnautics 6y ago
  Since when have governments ever effectively redistributed wealth to citizens over lining the pockets of cronies and favoured industries?
- nybble41 6y ago
  Consumption is an important part of the process, without which production has no purpose, but you don't become wealthier just by increasing your spending. Consumer demand is an accelerant, not a fuel source. Boosting it gives you short-term growth at the expense of a long-term decline as you consume the capital that makes efficient production possible in the first place.
  - learc83 6y ago
    What do you mean "consume the capital". What do you think happens to the money that consumers spend?
    - mvc 6y ago
      Capital depreciates at varying rates. I assume by "consume the capital" the parent means allow the total amount of capital in the economy decreases over time because the savings/consumption ratio is not high enough to compensate for the depreciation that occurs.
      - nybble41 6y ago
        Yes, exactly. "Capital consumption" is a standard term in economics[1]. A common (if somewhat outmoded) example would be farmers eating their seed corn rather than saving it to plant the next year. In practice it usually looks more like what you described: Productive durable goods like machines or buildings simply wear out and aren't properly maintained or replaced. The total amount of capital investment thus decreases over time. [1] https://www.economicshelp.org/blog/glossary/capital-consumption/ https://www.economicshelp.org/blog/glossary/capital-consumpt...
        learc83 6y ago
        Capital consumption just refers to capital depreciation. Reduced capital investment, and more specifically reduced efficient in capital investment doesn't necessarily follow from increased consumer demand. Just stating that it does isn't an argument.
runako 6y ago
> most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth If the money redistributed by government is given to poorer people, what do they do with it? Are you suggesting they save it somewhere it cannot be invested in the economy?
- rswail 6y ago
  All of the tax money is redistributed by the government. What else can it do with it? If it pays off debt, it is redistributing it, if it invests in infrastructure, it is redistributing it, if it sends cash to the population, they'll spend it and it has been redistributed.
Swenrekcah 6y ago
This is wrong. The redistributed tax money doesn't magically disappear. Almost 100% goes back into the economy because the people receiving it actually need the money for various things. It is much more likely that the wealthy will use the same money instead to buy another yacht or private jet, which while also providing some jobs is ultimately a net waste for society. Not that yachts should be banned, but economic policy should never encourage such spending.
- nradov 6y ago
  The US introduced a "luxury tax" on yachts in 1991. It was a disaster and basically killed the domestic boat industry (many jobs lost) because wealthy buyers just went offshore. A general wealth tax may be fine, but targeting particular industries like yachts is a terrible idea. https://en.wikipedia.org/wiki/Luxury_tax#United_States https://en.wikipedia.org/wiki/Luxury_tax#United_States
  - Swenrekcah 6y ago
    Certainly, I just used yachts as an example.
  - rswail 6y ago
    Which is why a wealth tax is a better approach than "penalty" taxes on yachts or jets. Would the high end suppliers of luxury items see a reduction in the very small numbers of people able to buy their top end products? Yes. Is that a bad thing? Probably no in the scheme of the entire economy or even the luxury industry affected. People downgrading from their $100m yacht to a modest $95m yacht isn't going to destroy the yacht industry.
  - rockinghigh 6y ago
    There are a lot of caveats to this observation. The tax was levied during a recession, at a time when yacht sales had already declined sharply (from 16,000 in 1987 to 9,100 in 1990 for $100k+ boats).
  - alexashka 6y ago
    Are you going to bemoan the job loss of pyramid builders if/when some rich schmuck decides to spend half his net worth on building a pyramid too? (A yacht is a modern pyramid) Job loss is a net positive in many cases.
learc83 6y ago
Poor people spend money faster than wealthy people. Taxing wealth (up to some unknown limit) and redistributing it increases the income velocity of money--speeding economic growth.
naravara 6y ago
> because most of the tax money is redistributed by the government, not invested, while the wealthy generally invest their wealth. Infrastructure, education, healthcare, and other public services count as investments.
erispoe 6y ago
It's redistributed to people who spend it, fueling consumption. Switzerland has a higher GDP per capita than the US. The country has a wealth tax, but no tax on capital gains though.
Droobfest 6y ago
This is like the ridiculous trickle down economics argument all over again..