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I'm confused as to the motivation here; taxing wealth as opposed to taxing income seems to disincentivize saving and investment as opposed to consumption. Some
by gameman144 6y ago
I'm confused as to the motivation here; taxing wealth as opposed to taxing income seems to disincentivize saving and investment as opposed to consumption. Some consumption is definitely necessary, but I'd argue that savings and investment are also extremely important to an efficient economy.
From the practical perspective, if one has the same lifetime earnings as another, they will have paid the same amount of tax over their lifetime. Why should they be taxed again for choosing to save or invest that money?
I'm all for taxing any gain once it's actually converted into income (and while I understand the motivation behind different capital gains rates, I'm not super opposed to taxing capital gains as income.) Taxing wealth always seems to me to be explicitly taxing the choice to invest in the future or build something, though.
- Viliam1234 6y agoAll taxes have an impact on something. Taxing income disincentivizes circulation of money within community. When A does some work for B, B does some work for C, C does some work for D, and each of them pays a fraction of the income to the govenment, after a few steps the money effectively disappears from the community. The only way to get it back is to do some work for someone outside the community. But maybe the people A, B, C, D are effective at helping each other locally, but not really competitive at providing work outside the community. With no income tax, they could trade with each other. With income tax, their choices are either gray market or poverty. Wealth tax hurts the startups. Income tax hurts the local communities. Land tax hurts the rent seekers. The rent seekers and startups have greater lobbying power than poor communities, and our laws reflect that.