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While I agree with you that the idea there is fundamentally flawed, it does seem like the greatest increases in GDP and growth have occurred when the pareto dis

While I agree with you that the idea there is fundamentally flawed, it does seem like the greatest increases in GDP and growth have occurred when the pareto distribution of wealth was the least skewed in favor of the wealthy. To an extent, this makes sense to me from a free market perspective... The less concentrated the wealth and power is, the more we can expect competition and innovation. So even though their reasoning may be flawed, its possible the result would make sense anyway.

tsimionescu 6y ago
But that is exactly their reasoning - not some fantasy of balancing the budget by taxing the rich, but a rationally supported (in history and economic theory) belief that reducing the wealth gap increases economic productivity. Wealth taxes (if they can be enforced, which is a significant problem) are especially powerful in this area, as they reduce the incentive for rent seeking behavior - it stops people from simply sitting on their accumulated wealth, at least when it's producing less than the taxed amount for them.
- amscanne 6y ago
  No billionaire is just sitting on their money. It’s certainly tied up in assets or being actively managed. I don’t see in what universe a wealth tax could be effective, given that people can simply move. Wouldn’t it just cause large-scale capital flight, as it did in France?
  - tsimionescu 6y ago
    > No billionaire is just sitting on their money. It’s certainly tied up in assets or being actively managed. Not literally sitting on them, but they are certainly not spending anywhere near as much of their money as someone who makes ~1M$ a year. A large part of their wealth is usually tied up in long term investments such as property or bonds, where it is safe but not productive. And as I said, enforcement is a real problem, capital flight being a possible consequence. I don't know exactly what the solution is, but surely there is some better balance to be struck than today. Especially if the US government wanted to - they have enough financial and diplomatic power to enforce this type of tax almost world wide, even if California or France don't.
  - pashamur 6y ago
    The U.S. has the world's police force, if they wanted to find you, they could. And for renunciation of citizenship, there's a one time liquidation tax where you pay taxes on all of your gains (so Bezos would have to pay a flat ~20% on his Amazon holdings to renounce). So the U.S. is the only country in the world that could get away with a global wealth tax on their citizens (they already tax Americans' incomes irrespective of country).
  - Can_Not 6y ago
    > capital flight Move somewhere with even higher taxes or move somewhere with no infrastructure?

tsimionescu 6y ago

But that is exactly their reasoning - not some fantasy of balancing the budget by taxing the rich, but a rationally supported (in history and economic theory) belief that reducing the wealth gap increases economic productivity. Wealth taxes (if they can be enforced, which is a significant problem) are especially powerful in this area, as they reduce the incentive for rent seeking behavior - it stops people from simply sitting on their accumulated wealth, at least when it's producing less than the taxed amount for them.

amscanne 6y ago
No billionaire is just sitting on their money. It’s certainly tied up in assets or being actively managed. I don’t see in what universe a wealth tax could be effective, given that people can simply move. Wouldn’t it just cause large-scale capital flight, as it did in France?
- tsimionescu 6y ago
  > No billionaire is just sitting on their money. It’s certainly tied up in assets or being actively managed. Not literally sitting on them, but they are certainly not spending anywhere near as much of their money as someone who makes ~1M$ a year. A large part of their wealth is usually tied up in long term investments such as property or bonds, where it is safe but not productive. And as I said, enforcement is a real problem, capital flight being a possible consequence. I don't know exactly what the solution is, but surely there is some better balance to be struck than today. Especially if the US government wanted to - they have enough financial and diplomatic power to enforce this type of tax almost world wide, even if California or France don't.
- pashamur 6y ago
  The U.S. has the world's police force, if they wanted to find you, they could. And for renunciation of citizenship, there's a one time liquidation tax where you pay taxes on all of your gains (so Bezos would have to pay a flat ~20% on his Amazon holdings to renounce). So the U.S. is the only country in the world that could get away with a global wealth tax on their citizens (they already tax Americans' incomes irrespective of country).
- Can_Not 6y ago
  > capital flight Move somewhere with even higher taxes or move somewhere with no infrastructure?