4 ms·

Some observations: 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? 2. A much greater cause of el

by rsj_hn 5y ago

Some observations: 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? 2. A much greater cause of elite wealth accumulation is running deficits. Deficits are when you want to spend on social welfare but don't have the courage to pay for it with taxes. So you make both sides happy and increase spending while running up deficits. The reason we've seen this astronomical increase in top incomes is because of massive deficit spending. 3. Any tax bill targeting billionaires is going to fail since they can give up US citizenship and offshore whatever they want. If you are serious about soaking the rich, you need controls on capital flight. But that goes against the neoliberal project of globalization. Commitment to that project is going to make any soak-the-rich effort not work. It will end up hitting the upper middle class that can't offshore -- they are the real targets. 4. Envy-based politics don't work. There is a dangerous game being played here. You want to inculcate solidarity and national purpose, but again that goes against the liberal project that only tells us who we are supposed to hate based on their race and/or class. 5. If you have a low interest rate policy, then you are going to make a lot of billionaires much richer via capital appreciation. That's not the fault of the billionaires. If you want to reduce that, then raise interest rates. All these billionaires will become much poorer. Because this is all just paper wealth. 6. The Original Sin of the left is trying to mess with prices instead of incomes. Tax incomes, not repricing of wealth.

nmfisher 5y ago
> Any tax bill targeting billionaires is going to fail since they can give up US citizenship and offshore whatever they want. But they'll also get taxed out the wazoo when they do so, so it won't really avoid the problem causing them to leave in the first place.
DennisP 5y ago
I agree with a lot of that but regarding (3), there's already an exit tax, which is the same as the capital gains tax if you sold everything. This is less of an issue for those who inherited wealth, since a lot of it might already be in offshore trusts. Company founders don't have an easy out.
- rsj_hn 5y ago
  That's a valid point. Short term, you'll soak some founders, but future founders can set up the offshore trust, or just start their business elsewhere.
Ericson2314 5y ago
That's no true with deficits. The way we have historically choosen to do monetary policy has some bad distributional effects, but regular fiscal policy or a UBI does not. This is, frankly, an extremely dangerous misunderstanding because it's austerity and slack labor markets markets that have immiserated the non-rich. Deficits themselves are never the problem. Look mo further than the pandemic checks causing us to live in a time of renewed labor unrest rather than a second great depression. Also debt financing is a charade. Read https://www.jstor.org/stable/40981939 https://www.jstor.org/stable/40981939 which spells it out clearly.
- rsj_hn 5y ago
  > That's no true with deficits. Honestly, that's not much of a rebuttal. If you believe in Ricardian Equivalence, then sure, the future deficits are matched by private savings to offset future tax liabilities. Well, what do you think an increase in networth is other than an increase in private savings? But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy. So there is really no way around it. Merely calling this "wrong" and "dangerous" is not an argument -- when a government wants to pay benefits but refuses to fund them with taxes, then given that taxes are disproportionately paid for by the wealthy, you are going to have distributional effects. This is just the flip-side of the old Keynesian saw about balanced budget multipliers. I really don't see how this is controversial except for the crowd that wants more spending but knows there is not the political will to fund it with taxes. Then this is an unpleasant side effect that they don't want to think about, but that doesn't make it "not true".
  - Ericson2314 5y ago
    Well I certainly do not agree with Ricardian equivalence. For it to hold, one must assume lump sun taxes which one cannot avoid by being poor. That's a ridiculous assumption. > But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy. My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that? Even if a UBI eventually trickles up, we must not conflate solvency and liquidity. The boss has power because the worker's consumption is more time sensative than the production. A good UBI takes away that coercive power not (just) by increasing worker savings, but by making an income floor. (Stock vs flow). That's like giving people the ability to go longer without food and water so long as their nutritional needs are still met on a (longer term) average.
over_bridge 5y ago
Why would a billionaire leave the US? There they are like gods with services to cater to their every whim. Nowhere else in the world will roll out the carpet for big money like the US does (excluding maybe Monaco and other small states). I just see 3 as a false assumption, as any country they 'flee' to will have higher taxes anyway. I live in New Zealand and a billionaire here can have a lot of land but otherwise we just don't have the infrastructure to support that ultra high end lifestyle. They would basically be average people with nice toys and a big house here.
- dannyw 5y ago
  Do all billionaires want the big carpet? What about those that want a lot of land and houses, complete financial irrelevance for their family's lifestyles, and perhaps meaningful work by directing a large company or endowment.
- Dracophoenix 5y ago
  Warren Buffet lives in a 6000 sq ft (~600 sqm) house, drives a 2014 Cadillac, and has McDonald's for breakfast. Despite owning one of the most valuable companies in the world at most one could say he lives like a single-digit millionaire. If your characterization of the "average people" of New Zealand is true, then it seems like he would have no problem fitting right in.
  - BigJono 5y ago
    So why would he uproot his entire life that he's happy with to move somewhere with a slightly lower tax rate when he can still support his relatively modest lifestyle a thousand times over?
    - Dracophoenix 5y ago
      If the United States accepts a federal wealth tax, moving to a low tax state like South Dakota or Alaska won't help. And despite what you imply in your last statement, owning a successful business isn't just limited to how much money it makes. Few people just give up the sum of their life's work or accept others' taking away from it. Just because others believe that the Warren Buffets of the world have achieved "enough" does not make it so.
flurben 5y ago
Taxing incomes and not wealth is fundamentally unfair to people without wealth.
- rsj_hn 5y ago
  The thing is, it is really foolish to make economic policy based on what, as the economist Brad deLong likes to call our East African Plain Ape brain, thinks of as fair. That's just atavistic sentiment. If you run an economy based on these types of emotions, you will end up with a terrible economy in which people are worse off. Instead, we want to make economic policy based on what will do the most good, not what we think of as being "fair" or "equitable". The idea of "fairness" says you should shut down gifted programs because they don't support "equity" -- another name for fairness. The smart policy is to have gifted programs even if the result does not seem fair to you. Because that improves living standards for everyone. Having those people drive innovation in the economy is a good thing, even if they are not racially balanced according to whatever bucket system you are using. Constantly worrying that someone else might have more than you is a great way to create an impoverished society, even though that is what the Plains Ape brain worries about. Now we already disproportionately tax people -- quite a bit. There is no need to disincentivize entrepreneurship in order to satisfy our base instincts for "fairness". If you want to raise marginal rates -- fine, do that. If you want to eliminate the preferential tax treatment for long term capital gains, fine, do that. I'm happy treating all income the same and taxing it according to a single progressive rate. But I would not support taxing paper wealth or unrealized gains merely as a result of repricing of assets. There are other tax reforms that are less harmful to capital formation.
  - flurben 5y ago
    Modern societies are not capital constrained, so capital formation is superfluous. The world is awash in excess capital among the rich, so providing government subsidies to facilitate further capital formation among the rich will not improve living standards. What you're describing is the failed mentality of the early 1980's : the idea that the wealthy are "better" at capital allocation than everyone else. What it leads to is not some utopia, but simply bigger yachts, and more expensive sports teams, and more expensive land, while the human capital of the poor goes neglected and untapped. What does the most good for living standards is the government investing in humans and households without capital. More broadly distributed capital, in other words.
emodendroket 5y ago
> 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? I got tired of reading the daily play-by-plays, but something to do with appeasing Kirsten Sinema's objection to a more straightforward tax hike. Very few people are going to give up US citizenship. A lot of these guys can't even stand living in Florida; they're not going to hang out in the Caribbean for the rest of their lives.
ajsnigrutin 5y ago
> 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? I live in one of those countries,... I used to live in another country, that had a red star in the flag, I haven't moved, but I now live in another country... which again has new parties with red star flags. Every time I hear "tax the rich", the same thing happens... the poor already pay almost zero tax, so nothing happens to them. The rich open a company two countries away in one direction, and register their car two countries away in a different direction, and in the end, pay very little tax. And me? Earning an above-national-average engineering pay, but way below "rich" enough to make such manipulations worth it? I get fucked with new taxes. In an ideal world, both people like me and people like bezos would pay a same amount (percentage) of tax for every dollar/euro going from our workplace to the crap we both buy, but somehow i get taxed as fuck, and Bezos doesnt ( https://www.businessinsider.com/jeff-bezos-did-not-pay-income-taxes-2-years-report-2021-6 https://www.businessinsider.com/jeff-bezos-did-not-pay-incom... ). So how about we first tax Amazon and Bezos at the same rate we tax the local mom and pop bookstore, and their owners paychecks, and then continue from there.
Accujack 5y ago
1) They're trying to create a billionaire tax that will somehow pass the corrupt mess in the US Federal government and also not permit loopholes for tax evasion. I think it might be just a dog and pony show since there's little chance of anything passing the Senate at the moment and because it's a non starter for Republicans. 2) I don't agree with your reasoning here. 3) The US is pushing extraterritoriality pretty well, and the nations of the world have agreed to try to eliminate tax havens. Pretty soon there won't be an "overseas" to go to. 4) I don't accept the terms "liberal" or "conservative" to mean what most of the people who use them mean. As labels, they promote sloppy thinking. I consider the authors of this tax to be the Democratic party, who have already proven they are far too establishment to be allowed to continue to exist. 5) Not really possible, because raising those interest rates has other effects. Rather than taxing theoretical company values, tax purchases, VAT- style. 6) You're treating "the left" here as if it's a hard and fast definition of a group of people. Politics in the US is far more complicated than that. There may be some truth to what you say here if you are talking about specific groups of people, but just equating Democrats/the authors of this bill to "the left" isn't accurate, and that sort of inaccuracy perpetuates political partisanship and extremist thinking.

by rsj_hn 5y ago

nmfisher 5y ago

> Any tax bill targeting billionaires is going to fail since they can give up US citizenship and offshore whatever they want. But they'll also get taxed out the wazoo when they do so, so it won't really avoid the problem causing them to leave in the first place.

DennisP 5y ago

I agree with a lot of that but regarding (3), there's already an exit tax, which is the same as the capital gains tax if you sold everything. This is less of an issue for those who inherited wealth, since a lot of it might already be in offshore trusts. Company founders don't have an easy out.

rsj_hn 5y ago
That's a valid point. Short term, you'll soak some founders, but future founders can set up the offshore trust, or just start their business elsewhere.

Ericson2314 5y ago

That's no true with deficits. The way we have historically choosen to do monetary policy has some bad distributional effects, but regular fiscal policy or a UBI does not. This is, frankly, an extremely dangerous misunderstanding because it's austerity and slack labor markets markets that have immiserated the non-rich. Deficits themselves are never the problem. Look mo further than the pandemic checks causing us to live in a time of renewed labor unrest rather than a second great depression. Also debt financing is a charade. Read https://www.jstor.org/stable/40981939 https://www.jstor.org/stable/40981939 which spells it out clearly.

rsj_hn 5y ago
> That's no true with deficits. Honestly, that's not much of a rebuttal. If you believe in Ricardian Equivalence, then sure, the future deficits are matched by private savings to offset future tax liabilities. Well, what do you think an increase in networth is other than an increase in private savings? But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy. So there is really no way around it. Merely calling this "wrong" and "dangerous" is not an argument -- when a government wants to pay benefits but refuses to fund them with taxes, then given that taxes are disproportionately paid for by the wealthy, you are going to have distributional effects. This is just the flip-side of the old Keynesian saw about balanced budget multipliers. I really don't see how this is controversial except for the crowd that wants more spending but knows there is not the political will to fund it with taxes. Then this is an unpleasant side effect that they don't want to think about, but that doesn't make it "not true".
- Ericson2314 5y ago
  Well I certainly do not agree with Ricardian equivalence. For it to hold, one must assume lump sun taxes which one cannot avoid by being poor. That's a ridiculous assumption. > But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy. My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that? Even if a UBI eventually trickles up, we must not conflate solvency and liquidity. The boss has power because the worker's consumption is more time sensative than the production. A good UBI takes away that coercive power not (just) by increasing worker savings, but by making an income floor. (Stock vs flow). That's like giving people the ability to go longer without food and water so long as their nutritional needs are still met on a (longer term) average.

over_bridge 5y ago

Why would a billionaire leave the US? There they are like gods with services to cater to their every whim. Nowhere else in the world will roll out the carpet for big money like the US does (excluding maybe Monaco and other small states). I just see 3 as a false assumption, as any country they 'flee' to will have higher taxes anyway. I live in New Zealand and a billionaire here can have a lot of land but otherwise we just don't have the infrastructure to support that ultra high end lifestyle. They would basically be average people with nice toys and a big house here.

dannyw 5y ago
Do all billionaires want the big carpet? What about those that want a lot of land and houses, complete financial irrelevance for their family's lifestyles, and perhaps meaningful work by directing a large company or endowment.
Dracophoenix 5y ago
Warren Buffet lives in a 6000 sq ft (~600 sqm) house, drives a 2014 Cadillac, and has McDonald's for breakfast. Despite owning one of the most valuable companies in the world at most one could say he lives like a single-digit millionaire. If your characterization of the "average people" of New Zealand is true, then it seems like he would have no problem fitting right in.
- BigJono 5y ago
  So why would he uproot his entire life that he's happy with to move somewhere with a slightly lower tax rate when he can still support his relatively modest lifestyle a thousand times over?
  - Dracophoenix 5y ago
    If the United States accepts a federal wealth tax, moving to a low tax state like South Dakota or Alaska won't help. And despite what you imply in your last statement, owning a successful business isn't just limited to how much money it makes. Few people just give up the sum of their life's work or accept others' taking away from it. Just because others believe that the Warren Buffets of the world have achieved "enough" does not make it so.

flurben 5y ago

Taxing incomes and not wealth is fundamentally unfair to people without wealth.

rsj_hn 5y ago
The thing is, it is really foolish to make economic policy based on what, as the economist Brad deLong likes to call our East African Plain Ape brain, thinks of as fair. That's just atavistic sentiment. If you run an economy based on these types of emotions, you will end up with a terrible economy in which people are worse off. Instead, we want to make economic policy based on what will do the most good, not what we think of as being "fair" or "equitable". The idea of "fairness" says you should shut down gifted programs because they don't support "equity" -- another name for fairness. The smart policy is to have gifted programs even if the result does not seem fair to you. Because that improves living standards for everyone. Having those people drive innovation in the economy is a good thing, even if they are not racially balanced according to whatever bucket system you are using. Constantly worrying that someone else might have more than you is a great way to create an impoverished society, even though that is what the Plains Ape brain worries about. Now we already disproportionately tax people -- quite a bit. There is no need to disincentivize entrepreneurship in order to satisfy our base instincts for "fairness". If you want to raise marginal rates -- fine, do that. If you want to eliminate the preferential tax treatment for long term capital gains, fine, do that. I'm happy treating all income the same and taxing it according to a single progressive rate. But I would not support taxing paper wealth or unrealized gains merely as a result of repricing of assets. There are other tax reforms that are less harmful to capital formation.
- flurben 5y ago
  Modern societies are not capital constrained, so capital formation is superfluous. The world is awash in excess capital among the rich, so providing government subsidies to facilitate further capital formation among the rich will not improve living standards. What you're describing is the failed mentality of the early 1980's : the idea that the wealthy are "better" at capital allocation than everyone else. What it leads to is not some utopia, but simply bigger yachts, and more expensive sports teams, and more expensive land, while the human capital of the poor goes neglected and untapped. What does the most good for living standards is the government investing in humans and households without capital. More broadly distributed capital, in other words.

emodendroket 5y ago

> 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? I got tired of reading the daily play-by-plays, but something to do with appeasing Kirsten Sinema's objection to a more straightforward tax hike. Very few people are going to give up US citizenship. A lot of these guys can't even stand living in Florida; they're not going to hang out in the Caribbean for the rest of their lives.

ajsnigrutin 5y ago

> 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? I live in one of those countries,... I used to live in another country, that had a red star in the flag, I haven't moved, but I now live in another country... which again has new parties with red star flags. Every time I hear "tax the rich", the same thing happens... the poor already pay almost zero tax, so nothing happens to them. The rich open a company two countries away in one direction, and register their car two countries away in a different direction, and in the end, pay very little tax. And me? Earning an above-national-average engineering pay, but way below "rich" enough to make such manipulations worth it? I get fucked with new taxes. In an ideal world, both people like me and people like bezos would pay a same amount (percentage) of tax for every dollar/euro going from our workplace to the crap we both buy, but somehow i get taxed as fuck, and Bezos doesnt ( https://www.businessinsider.com/jeff-bezos-did-not-pay-income-taxes-2-years-report-2021-6 https://www.businessinsider.com/jeff-bezos-did-not-pay-incom... ). So how about we first tax Amazon and Bezos at the same rate we tax the local mom and pop bookstore, and their owners paychecks, and then continue from there.

Accujack 5y ago

1) They're trying to create a billionaire tax that will somehow pass the corrupt mess in the US Federal government and also not permit loopholes for tax evasion. I think it might be just a dog and pony show since there's little chance of anything passing the Senate at the moment and because it's a non starter for Republicans. 2) I don't agree with your reasoning here. 3) The US is pushing extraterritoriality pretty well, and the nations of the world have agreed to try to eliminate tax havens. Pretty soon there won't be an "overseas" to go to. 4) I don't accept the terms "liberal" or "conservative" to mean what most of the people who use them mean. As labels, they promote sloppy thinking. I consider the authors of this tax to be the Democratic party, who have already proven they are far too establishment to be allowed to continue to exist. 5) Not really possible, because raising those interest rates has other effects. Rather than taxing theoretical company values, tax purchases, VAT- style. 6) You're treating "the left" here as if it's a hard and fast definition of a group of people. Politics in the US is far more complicated than that. There may be some truth to what you say here if you are talking about specific groups of people, but just equating Democrats/the authors of this bill to "the left" isn't accurate, and that sort of inaccuracy perpetuates political partisanship and extremist thinking.