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Nope. It’s predicated on the observation that the rate of return on capital exceeds the rate of economic growth. Taxing income is perverse and disincentivizes

Nope. It’s predicated on the observation that the rate of return on capital exceeds the rate of economic growth. Taxing income is perverse and disincentivizes work. Taxing capital makes a lot more sense IMO. Income you get by working. Capital you get by inheriting, saving or by having capital, which earns you more. To be clear I think capital is good and necessary but I see no reason why work should be taxed more. Wealth is created by work, not capital.

generalizations 6y ago
And yet people will still look for places to store wealth. All this would do is create more complex forms of money laundering.
- cycomanic 6y ago
  So you actually agree a wealth tax is a good thing, your argument is just, "we can't make it perfect we should not do it at all" That's not a helpful argument because it is so general that we can bring it up against anything. I'm very certain you don't follow this principle in real life either.
  - generalizations 6y ago
    > So you actually agree > I'm very certain you don't follow Don't say what I think for me. It's condescending, makes you look like you're more interested in cheap points, and suggests that you can't actually come up with an intellectual response. I don't think it's a good thing; I think it's better to address the root of the problem rather than the symptom; and it's worth noting when a course of action isn't going to work. Otherwise you fall prey to the classic mockery: "we need to do something! This is something. We should do it."
    - grey-area 6y ago
      Well you’re certainly living up to your username today ;) All taxes are avoided to some extent but assets are actually easier to tax in many ways than income. If you want to have money and things it’s hard to hide that, whereas if you have capital you don’t even need income and can easily avoid taxes on it.
      - generalizations 6y ago
        Hah. Yup. Easier to talk about principles than details. :) It reminds me of the new proposed tax in CA, where anyone over $N net worth has to pay M% of it per year. It'll be interesting to see if it'll help CA stay afloat, or if it contributes to the state's decline. Isn't the whole idea behind making money to build a 'nest egg'? Seems like that counts as the small-scale version of exactly what you're describing.
        grey-area 6y ago
        At the lower end you don’t want to discourage saving of course, but I see nothing wrong with incentivising work a bit more than saving. This is not a radical proposal but a rebalancing. Re the specific tax you mention the devil is in the details but it doesn’t sound great.
        danaris 6y ago
        No one's talking about taxing the amount of wealth that counts as a middle-class family's "nest egg". Every proposal I've heard starts up in the tens of millions, or even higher. Taxing wealth isn't some kind of rigid principle, where if you want to be able to tax Jeff Bezos you also have to tax Jane Millennial the same percent. We can, and should, and at least the vast majority of people talking about it want to, ignore regular people trying to save, and tax mega-wealth higher than moderate wealth.
- tt433 6y ago
  How this is a reaction humans have to problems boggles my mind. You're just giving up because they're trying a little harder to escape the law?
  - beamatronic 6y ago
    The law needs to have no loopholes then. Make a tax law that fits in 1 paragraph.
    - tt433 6y ago
      Care must be taken not just in the composition but also in the execution and judgment of the law. Edit: and therefore I think flattening the issue into a single paragraph misses the point entirely
naveen99 6y ago
Income tax comes out of capital gains... it’s crucial to creating paper trail and removing the principal agent problem in business.
- grey-area 6y ago
  I’m not sure it is crucial; economists have become very good at creating post-hoc justifications for the leviathan they serve.
  - naveen99 6y ago
    Principal agent problem is the only justification I have for supporting taxes and a central government. I haven’t really seen economists argue it...
dragonwriter 6y ago
> Taxing income is perverse and disincentivizes work. No, it isn't. OTOH, taxing labor income at higher rates than generic income (because payroll taxes) which in turn is taxed at higher rates than long-term capital gains (because preferential rates for the latter) and non-earned income through inheritances and gifts up through very large amounts (because of the large exemptions amounts in the inheritance and gift tax system) is, OTOH, perverse and disincentivizes offering employment (not work so much, because in either case people who need to work do if they can and people who can afford not to are less likely to; but by driving up the cost of employment at any given post-tax wage it reduces the quantity of work that it is profitable for employers to purchase in the market and thereby depresses employment.) Fairer and simpler to tax income as income (and thus, make all of it qualifying for the kind of programs currently funded by payroll taxes, too), with perhaps much smaller inheritance and gift exemptions and the ability to freely recognize income for tax purposes in advance of realization and also to defer tax recognition of windfall income over a period of years to deal with irregular, norepeatable income like the long term gains for most of the working and middle class (but also certain patterns of other income like income from creative works that take an extended period of time but then payoff disproportionately shortly after completion.)
- slowmovintarget 6y ago
  Right. This is how the tax code used to work. Capital gains taxation occurred at the same rate as income taxation, because both are income. The current structure of lower capital gains taxes incentivizes stock market speculation (which is the real mover behind the 2008 crisis) and has spurred the financialization of the economy (we don't make things, we just trade on debt). "Starve the beast" has failed. Time to leave it behind.

generalizations 6y ago

And yet people will still look for places to store wealth. All this would do is create more complex forms of money laundering.

cycomanic 6y ago
So you actually agree a wealth tax is a good thing, your argument is just, "we can't make it perfect we should not do it at all" That's not a helpful argument because it is so general that we can bring it up against anything. I'm very certain you don't follow this principle in real life either.
- generalizations 6y ago
  > So you actually agree > I'm very certain you don't follow Don't say what I think for me. It's condescending, makes you look like you're more interested in cheap points, and suggests that you can't actually come up with an intellectual response. I don't think it's a good thing; I think it's better to address the root of the problem rather than the symptom; and it's worth noting when a course of action isn't going to work. Otherwise you fall prey to the classic mockery: "we need to do something! This is something. We should do it."
  - grey-area 6y ago
    Well you’re certainly living up to your username today ;) All taxes are avoided to some extent but assets are actually easier to tax in many ways than income. If you want to have money and things it’s hard to hide that, whereas if you have capital you don’t even need income and can easily avoid taxes on it.
    - generalizations 6y ago
      Hah. Yup. Easier to talk about principles than details. :) It reminds me of the new proposed tax in CA, where anyone over $N net worth has to pay M% of it per year. It'll be interesting to see if it'll help CA stay afloat, or if it contributes to the state's decline. Isn't the whole idea behind making money to build a 'nest egg'? Seems like that counts as the small-scale version of exactly what you're describing.
      - grey-area 6y ago
        At the lower end you don’t want to discourage saving of course, but I see nothing wrong with incentivising work a bit more than saving. This is not a radical proposal but a rebalancing. Re the specific tax you mention the devil is in the details but it doesn’t sound great.
      - danaris 6y ago
        No one's talking about taxing the amount of wealth that counts as a middle-class family's "nest egg". Every proposal I've heard starts up in the tens of millions, or even higher. Taxing wealth isn't some kind of rigid principle, where if you want to be able to tax Jeff Bezos you also have to tax Jane Millennial the same percent. We can, and should, and at least the vast majority of people talking about it want to, ignore regular people trying to save, and tax mega-wealth higher than moderate wealth.
tt433 6y ago
How this is a reaction humans have to problems boggles my mind. You're just giving up because they're trying a little harder to escape the law?
- beamatronic 6y ago
  The law needs to have no loopholes then. Make a tax law that fits in 1 paragraph.
  - tt433 6y ago
    Care must be taken not just in the composition but also in the execution and judgment of the law. Edit: and therefore I think flattening the issue into a single paragraph misses the point entirely

naveen99 6y ago

Income tax comes out of capital gains... it’s crucial to creating paper trail and removing the principal agent problem in business.

grey-area 6y ago
I’m not sure it is crucial; economists have become very good at creating post-hoc justifications for the leviathan they serve.
- naveen99 6y ago
  Principal agent problem is the only justification I have for supporting taxes and a central government. I haven’t really seen economists argue it...

dragonwriter 6y ago

> Taxing income is perverse and disincentivizes work. No, it isn't. OTOH, taxing labor income at higher rates than generic income (because payroll taxes) which in turn is taxed at higher rates than long-term capital gains (because preferential rates for the latter) and non-earned income through inheritances and gifts up through very large amounts (because of the large exemptions amounts in the inheritance and gift tax system) is, OTOH, perverse and disincentivizes offering employment (not work so much, because in either case people who need to work do if they can and people who can afford not to are less likely to; but by driving up the cost of employment at any given post-tax wage it reduces the quantity of work that it is profitable for employers to purchase in the market and thereby depresses employment.) Fairer and simpler to tax income as income (and thus, make all of it qualifying for the kind of programs currently funded by payroll taxes, too), with perhaps much smaller inheritance and gift exemptions and the ability to freely recognize income for tax purposes in advance of realization and also to defer tax recognition of windfall income over a period of years to deal with irregular, norepeatable income like the long term gains for most of the working and middle class (but also certain patterns of other income like income from creative works that take an extended period of time but then payoff disproportionately shortly after completion.)

slowmovintarget 6y ago
Right. This is how the tax code used to work. Capital gains taxation occurred at the same rate as income taxation, because both are income. The current structure of lower capital gains taxes incentivizes stock market speculation (which is the real mover behind the 2008 crisis) and has spurred the financialization of the economy (we don't make things, we just trade on debt). "Starve the beast" has failed. Time to leave it behind.