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I really believe that tax dodging and evasion are the biggest source of social inequality. Less budget for the state or government means less redistribution an

by jokoon 5y ago

I really believe that tax dodging and evasion are the biggest source of social inequality. Less budget for the state or government means less redistribution and less public services, meaning the poor becomes poorer. What's crazy is that as a european, would I talk about taxes on hacker news or reddit, I will always encounter libertarians who are arguing that taxes are bad.

SCUSKU 5y ago
"Tax = bad" thinking is basically a core pillar of the American way of thinking, unfortunately.
- danuker 5y ago
  I argue that due to this selfishness, the US has the best local purchasing power in the world: https://www.numbeo.com/cost-of-living/gmaps.jsp?indexToShow=getPurchasingPowerInclRentIndex https://www.numbeo.com/cost-of-living/gmaps.jsp?indexToShow=...
simonh 5y ago
Firstly inequality growth is mainly an American phenomenon, it's not really a factor in the developed world generally. The problem is the Pickety/Zucman analysis didn't fully take into account taxes and transfers, so it overestimated 1%-er incomes and underestimated low wage earner benefits. Within the US, CHIP and Medicaid expansion have made a huge difference. After all it's hard to argue Medicaid expansion has no effect on inequality. Another major area of anomaly is that the P/Z analysis assumed income from pass-through businesses was capital gains. It turns out, this includes a lot of doctors, lawyers, etc whose income comes form these kinds of business structures. That made it look like their income was capital gains from investments in businesses, where in fact it's really labour income. This is not a small discrepancy, there are a lot of these sorts of people and they earn a lot. Correct for these sorts of things and the inequality largely evaporates. Anyway, it's a messy problem with a million details and there are still distortions in the economy that disproportionately benefit the wealthy and always have done. I disagree tax evasion is such a big factor, it's a problem but a relatively constant one. I think the main problems are mostly structural distortions in the tax system that encourage passive incomes. Income from rents and inheritance are significant issues. The drastic rise in property prices across the developed world is a huge problem that disproportionately hurts low income groups.
- yunohn 5y ago
  > inequality growth is mainly an American phenomenon Where do you get this from? It’s quite dismissive, given the large amount of study about wealth inequality increasing globally. This is definitely an issue throughout Europe too and even Asia, in my experience.
  - simonh 5y ago
    The P/Z figures estimate pre-tax income for the top 1% in the US has more than doubled. Pre-tax though, that's always been a gaping hole in their analysis. As I pointed out what really matters is post-tax and transfers. That's one reason the Obama era health care reforms are so significant, it doesn't show up as a headline economic or wealth figure and now it's just become the new normal, but taking health care provision off the table as a critical risk for tens of millions of low income Americans was a huge game changer. More of that please. I don't have figures for the top 1% in Europe, but for the top 10% it's gone up by a few percent (except Eastern Europe which is much higher). The World Inequality Lab at the Paris School or Economics published a report on this in 2020. https://wid.world/document/bcg2019-full-paper/ https://wid.world/document/bcg2019-full-paper/ Inequality in Asia, particularly China is definitely up but then it's just gone through a massive program of industrialisation. There's little point comparing inequality in China now to what it was in the 1970s. What would you even be measuring? Similarly for Eastern Europe, their whole economic system has changed so you're not comparing like for like.
imtringued 5y ago
I think it is a problem but it's not the biggest. A wealth tax on bank deposits would do a lot of good. Before you say they will spend the USD. That's the point. It's like dodging CO2 taxes by not emitting CO2. You haven't cheated the system.

by jokoon 5y ago

SCUSKU 5y ago

"Tax = bad" thinking is basically a core pillar of the American way of thinking, unfortunately.

danuker 5y ago
I argue that due to this selfishness, the US has the best local purchasing power in the world: https://www.numbeo.com/cost-of-living/gmaps.jsp?indexToShow=getPurchasingPowerInclRentIndex https://www.numbeo.com/cost-of-living/gmaps.jsp?indexToShow=...

simonh 5y ago

Firstly inequality growth is mainly an American phenomenon, it's not really a factor in the developed world generally. The problem is the Pickety/Zucman analysis didn't fully take into account taxes and transfers, so it overestimated 1%-er incomes and underestimated low wage earner benefits. Within the US, CHIP and Medicaid expansion have made a huge difference. After all it's hard to argue Medicaid expansion has no effect on inequality. Another major area of anomaly is that the P/Z analysis assumed income from pass-through businesses was capital gains. It turns out, this includes a lot of doctors, lawyers, etc whose income comes form these kinds of business structures. That made it look like their income was capital gains from investments in businesses, where in fact it's really labour income. This is not a small discrepancy, there are a lot of these sorts of people and they earn a lot. Correct for these sorts of things and the inequality largely evaporates. Anyway, it's a messy problem with a million details and there are still distortions in the economy that disproportionately benefit the wealthy and always have done. I disagree tax evasion is such a big factor, it's a problem but a relatively constant one. I think the main problems are mostly structural distortions in the tax system that encourage passive incomes. Income from rents and inheritance are significant issues. The drastic rise in property prices across the developed world is a huge problem that disproportionately hurts low income groups.

yunohn 5y ago
> inequality growth is mainly an American phenomenon Where do you get this from? It’s quite dismissive, given the large amount of study about wealth inequality increasing globally. This is definitely an issue throughout Europe too and even Asia, in my experience.
- simonh 5y ago
  The P/Z figures estimate pre-tax income for the top 1% in the US has more than doubled. Pre-tax though, that's always been a gaping hole in their analysis. As I pointed out what really matters is post-tax and transfers. That's one reason the Obama era health care reforms are so significant, it doesn't show up as a headline economic or wealth figure and now it's just become the new normal, but taking health care provision off the table as a critical risk for tens of millions of low income Americans was a huge game changer. More of that please. I don't have figures for the top 1% in Europe, but for the top 10% it's gone up by a few percent (except Eastern Europe which is much higher). The World Inequality Lab at the Paris School or Economics published a report on this in 2020. https://wid.world/document/bcg2019-full-paper/ https://wid.world/document/bcg2019-full-paper/ Inequality in Asia, particularly China is definitely up but then it's just gone through a massive program of industrialisation. There's little point comparing inequality in China now to what it was in the 1970s. What would you even be measuring? Similarly for Eastern Europe, their whole economic system has changed so you're not comparing like for like.

imtringued 5y ago

I think it is a problem but it's not the biggest. A wealth tax on bank deposits would do a lot of good. Before you say they will spend the USD. That's the point. It's like dodging CO2 taxes by not emitting CO2. You haven't cheated the system.