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I guess I’m not surprised that a bunch of folks who have made a career out of advising politicians on income inequality….discovered income inequality in their s

I guess I’m not surprised that a bunch of folks who have made a career out of advising politicians on income inequality….discovered income inequality in their study. The two questions in my mind are: 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate?

burntbridge 5y ago
You seem incredibly naive. People who earn $1m+ salaries do not work long hours or make sacrifices. You will never be wealthy if this is what you think. Most CEOs that I've known are out the door well before everyone else.
- gadders 5y ago
  >> Most CEOs that I've known are out the door well before everyone else. But did that hold true for their whole career?
- foverzar 5y ago
  > People who earn $1m+ salaries do not work long hours or make sacrifices Do you have any evidence to support this claim? Especially the sacrifices part -- this seems like an awfully bold assertion, especially if you consider that most people earning millions have spent their entire careers to get there.
aNoob7000 5y ago
We need less government and better taxation policy. I believe the inequality comes from the fact that individuals and companies with large sums of money can shape policies in government better than any individual or group of individuals. I agree you shouldn't pay 90% tax rate but you shouldn't be paying zero either.
redkabbage 5y ago
Politicians and the democratic government have at least a tacit responsibility to serve the people and to not let them starve; billionaires do not. It's no coincidence that open hostility to democratic values has risen along with the number of billionaires.
jkhdigital 5y ago
Whoa, whoa. You’re not supposed to ask these questions. It’s actually quite simple: 1. Wealth inequality is bad. Like, really bad. 2. If we take wealth from those who have it, and give it to those who don’t, then we will reduce this bad thing, which is obviously good.
hnhg 5y ago
What could be the incentive for anyone who earned money to give it away for the same purpose as governments?
fedreserved 5y ago
Suckers work for salary's. The ultra wealthy avoid this through long term capital gains, depreciation, Roth IRA (peter thiel buying 2k worth of PayPal stock options and rolling that to a 5 billion 100 percent tax free personal wealth fund so long as he doesn't touch it until he's 59), and a myriad of other tools. In general there will always be tools to avoid the brunt of the tax burden so long as you are earning through investments not salary. If you earn solely through salary you are destined do to never get off the rat race of high taxes.
Spooky23 5y ago
I’m sure someone would shed a tear for you. Think of how productive thousands of people would be if they weren’t staring down at death or disability daily because some ambitious motherfucker decided to make a cheap commodity like insulin a monopolized product, essential for life at a usurious price.
- syshum 5y ago
  I find this example very ironic, given that the reason an " ambitious motherfucker " can take a cheap commodity like insulin and make it a monopolized product is directly a result of government regulations. The very same government you want to take everyone money and believe will spend it wisely
  - Werewolf255 5y ago
    I mean, you act like businesses are gonna spend the money better and not just pump up shareholder earnings... You know, like they do every time? This line of argument seems suspiciously pro-capital, like, are you personally benefiting from government disfunction?
    - FredPret 5y ago
      You can argue the point but when you say > This line of argument seems suspiciously pro-capital it seems like you think only one side has any moral contribution to make. This isn’t Russia in the 1920’s
    - syshum 5y ago
      It is pro-capitalism... I am pro-capitalism. I think capitalism is awesome Sure business will do what they can to pump shareholder earning, the check on that is market competition. In this instance various government regulations , and laws prohibit or limit that competition that would emerge in a freerer market Insulin in particular was part of a EO package that was going to open up competition (and lower prices), the EO package was rescinded by Biden
  - Spooky23 5y ago
brtkdotse 5y ago
1. ”More wisely” is crazy subjective and it’s hard not to get into a really unproductive conversation about it. The issue is more that money is hoarded rather than spent. 2. This is a similar argument to those claiming that electric cars will never work because “what if I want to drive 12 hours straight without stopping?”. It’s possible but an extreme outlier.
jl6 5y ago
Maybe people shouldn’t be incentivized to work at insane rates, and maybe nobody needs a $1m+ salary?
- jpadkins 5y ago
  of course no one needs $1M salary, but is it morally right to prevent or harm people who want to hustle and earn $1M+ a year? Ambition and competitive spirit are double edged swords. We should be prudent before trying to social engineer these things away.
- FredPret 5y ago
  So the entire earth is supposed to be middle class? Interesting how this would leave 100% of the power to the elite bureaucrats
dontreact 5y ago
1) There are certain issues which are unlikely to receive spending due to well-known economic effects. For example: building highways and public transportation are things unlikely to be funded by individuals because they are public goods. 2) There is little evidence that the high tax rates in the middle of the century led to decreased productivity. Tax rates are marginal, meaning that more effort leads to more reward, still. Lastly inequality as it grows more extreme is a problem in and of itself. Unless you posit that the effort put in by the top 1% has increased a lot, then what we have is a situation that seems unfair. And this is demotivating, and will lead to instability in society even more than it already has. Why would you try to push forward your society if it seems like no matter what you do, wealth inequality is just going to increase, and the top 1% are going to capture most of the rewards? It's true that it's a rising tide that floats all boats, but if some are being floated much more than others then there are issues around power that are concerning. We already see evidence that increasingly the government is less responsive to those without wealth and more responsive to those with wealth. Wealth may be a zero sum game, but power is not. If we allow wealth to concentrate, then power concentrates.
- yorwba 5y ago
  > Tax rates are marginal, meaning that more effort leads to more reward, still. > Why would you try to push forward your society if it seems like no matter what you do, wealth inequality is just going to increase Curious how you seem to flip-flop between understanding marginal gains and not understanding them. The reason you would try to push forward your society is that more effort leads to more reward, still.
  - dontreact 5y ago
    What you are saying is correct in the dimension of income but not in the dimension of power. The power of those with more wealth is steadily increasing, and the power of those without wealth is steadily decreasing. To many it seems like the game is rigged and no amount of effort is going to be able to give them a say in what direction our society heads in.
    - 5y ago
usrusr 5y ago
You write that as if "long hours and sacrifices" in bullshit jobs were a good thing.
brabel 5y ago
Once you've made 100 million dollars or more, there's literally no justification for you to be allowed to keep piling up money in your safe. I absolutely support taxing 90% on any earnings above a ridiculous threshold like that, that no one really deserves, not matter how smart or hard working, while people who happened to be born under different circumstances and might work their ass off for their whole life won't get even a tiny percentage of that no matter how hard they try. Do you think Elon Musk or Jeff Bezos deserve wealth literally thousands of times bigger than anyone you've probably ever known personally (and I am assuming HN readers tend to know a lot of smart, incredibly hard-working people - but even they won't make a tiny fraction of a billion in their whole lives)? If you think there needs to be an incentive for people to put in hard work into something, I would say that you just need to look at open source. People will put insane amounts of work with basically zero chance of getting anything back in return monetarily. All they want is some respect and acknowledgement of their abilities - it's enough for most of the really smart people (who can make enough money on other activities without having to amass billions to be happy).
ZeroGravitas 5y ago
It depends, are you actually progressing any of societies goals with all that effort? If not then not only do I want to tax you your fair share in progressive taxes, I want to fine you to stop you doing destructive things.
forinti 5y ago
Long before we get to something like a 90% tax bracket, we could have the very wealthy pay the same rates as regular folks. Anyway, I don't see why a billionaire shouldn't have a 90% bracket.
- sleepysysadmin 5y ago
  >Long before we get to something like a 90% tax bracket, we could have the very wealthy pay the same rates as regular folks. Flat tax for all! >Anyway, I don't see why a billionaire shouldn't have a 90% bracket. Lets ignore the economics and how going off the gold standard removed the government's ability to tax and taxation will trend toward 0% for everyone until we figure out a new standard. However, let me tell you about 3 brothers. They all live on the same culdesac, they all have the same education, same type of job. The only difference is hours worked. The first brother works 20 hours, middle brother works 40 hours, and final brother works 60 hour/weeks. They come together and agree they want to contract a landscaping/flower place to put flowers on their culdesac. The flat cost is $10,000/each but the brother who only works 20 hours cant afford that. He wants his brothers to pay for it. They protest that he should pay his cut. The middle brother however devises a plan. The poor brother will pay very little if not nothing. The middle brother pays less than $10,000. The final brother has to pay for most of it. They vote and 2 to 1 they win. What happens? The brother working 60 hour weeks is now incentivized to reduce his hours so he gets less penalized.
  - imtringued 5y ago
    What happens? Everyone works 40 hours.
    - sleepysysadmin 5y ago
      >What happens? Everyone works 40 hours. The people who work 20 hour weeks are upset and certainly dont work any additional amount. Daycare probably booms as a business. Productivity plummets to tremendously low levels, economies collapse, massive numbers of people die, etc. Less than half of doctors work 40 hours or less. Pretty significant number above 60 hours/week. Same for nursing and much of the medical field. Firefighters have very long hours. Truck driving and logistics pretty much depends on truck drivers maxing their hours at around 70 hour weeks. Lawyers pretty much cant work 40 hour weeks without the legal system collapsing. So right away, we are going to have people working different amounts of hours per week. It's unavoidable. This alone means you can never have 'equal outcome' A doctor who works 60 hours a week and still paying off med school loans cannot have the same outcome as a part time mcjobber. That's the failure of the progressive tax. The progressive tax is some wierd attempt to make the rich less rich but instead generates significantly more income inequality as a consequence.
andrekandre 5y ago
> 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? govt could be corrupt regardless of the spending levels (industry deals, favorable laws, other bribes etc)... maybe corruption and spending are orthogonal concern? > Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? i dunno, but there are lots of working poor that work insane hours (and multiple jobs) too who wouldn't get a much more even if tax was set to zero.... probably for them, a more fair distribution (a.k.a whatever the opposite of trickle-down would be) might be more favorable choice...?
pydry 5y ago
>the folks who earned It's quaint that there are people out there who believe that income at the top strata of society is primarily earned. Those dividend payments, rents and capital gains (realized) that make up the bulk of top earner incomes happen while they sleep. A minimum wage is earned. A doctor's wage is earned. A golden parachute after a CEO ruins a company? Somebody with a trust fund? A person living off dividend income? Not so much. It's one in a series of ways the .1% try to rhetorically conceal themselves. Another is that article the other day that complained about an overproduction of "elites" (referring to college degreed starbucks baristas).
- syshum 5y ago
  So if I worked as a doctor for 20 years, invested most of my income in that 20 years in to dividend paying stocks, then at age 45 or so retire to live off my dividends that my hard work paid of, I did not earn any of that?
  - pydry 5y ago
    A lot of people have retired on a large S&P nest egg, spent relatively frugally relative to their wealth and ended up even wealthier after 5 years. It's not that uncommon. How would you say that money used to support them and grow their wealth was "earned" if they didnt work? The truth is it was earned. Just not by them. It's glaringly obvious if you think about it for just one second but we maintain a polite fiction all the same.
  - Werewolf255 5y ago
    I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offering company, and after 20 years, the doctor is just living off others work because he 'earned it'. Plus, of course, in this perfect market scenario, no crashes or corrections can ever occur.
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Emma_Goldman 5y ago
>'Should we trust the government to spend the money more wisely than the folks who earned it' This is a false opposition. Taxed money does not have to be spent at the point of the state. A sovereign wealth fund could raise funds from wealth taxes and assign a share to every citizen in the country. It could then use its interest-bearing assets to pay out a dividend to all shareholders every year. It could be run by an independent but publicly supervised body - like the Norwegian wealth fund - and the money would be disbursed straight into the bank accounts of citizens. In any case we live in democratic societies in which legislated changes to the structure and distribution of wealth would then bind politicians via the rule of law. We do not have to depend on the individual virtue of politicians. On the margin I would generally prefer states whose remit includes the public interest to spend another dollar than I would private entities ruled by financial profit.
- foverzar 5y ago
  > A sovereign wealth fund could raise funds from wealth taxes and assign a share to every citizen in the country. It could then use its interest-bearing assets to pay out a dividend to all shareholders every year This assumes responsible spending, which is not the case IRL. And what about shared infrastructure projects?
  - Emma_Goldman 5y ago
    No it doesn't, the case for such a scheme depends on two kinds of arguments: (1) intrinsic arguments that people have a right to a portion of collective wealth, to the means of life, or to the means of being able to freely spend their time as they see fit; (2) and instrumental arguments that it would rebalance the power of capital over labour, lead to various positive social outcomes, and tame the plutocracy that is ruining Western democracies. If your standard is 'responsible spending', the counterfactual baseline is keeping this money in the hands of the wealthy. For obvious reasons - diminishing marginal utility, the breakdown of the social compact, the corruption of politics - I don't think they would spend a dollar on the margin any more 'responsibly'. What about shared infrastructure projects? I'm not suggesting this ought to replace the state, simply that global wealth can be equalised without reallocating that wealth to the state to spend.
throw0101a 5y ago
> 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? The folks that have a lot of money don't spend it. Out of all of Buffett's, Gates', and Bezos' fortunes how much is being spent 'productively' and how much is just sitting around collecting interest on interest. The velocity of money hasn't been doing much in recent decades, which seems to indicate it's just sitting in accounts: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V 'Coïncidentally' wealth inequality has been rising in the same time period. Perhaps the link of stagnant money and a lack of activity are linked? There's plenty of old bridges, dams, locks, transit, airports, etc, that need to be repaired and that money could be used for those upgrades providing good pay jobs. "Bezos’s ex-wife MacKenzie Scott can’t give her billions away fast enough", and she is worth 'only' US$ 60B (21st richest person): * https://www.thetimes.co.uk/article/bezoss-ex-wife-mackenzie-scott-cant-give-her-billions-away-fast-enough-wfk2x6tg7 https://www.thetimes.co.uk/article/bezoss-ex-wife-mackenzie-... * https://archive.md/ZzeMI https://archive.md/ZzeMI Further, this is not (or does not have to be) an either-or situation: it's not like all the money goes to the government or stay with the wealthy. If (e.g.) 2-5% of someone's wealth over (say) $10B is taxed annually, they still have 98-95% to do whatever with. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? What motivates someone with $1B to work more? Is it really to make another $10M? Is Bezos working the hours he is because of money? Is Buffett? Musk? I think the people who get to this level work because of of intrinsic motivation rather than extrinsic rewards. > Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? Do you understand how marginal tax brackets work? When someone makes $1M + 1 dollars, the government does not take $900K in this hypothetical 90% margin rate: they take 90¢ of the last $1. The rest of the money is taxed at lower rates: * https://www.vox.com/policy-and-politics/2019/1/7/18171975/tax-bracket-marginal-cartoon-ocasio-cortez-70-percent https://www.vox.com/policy-and-politics/2019/1/7/18171975/ta... And a 70% top tax rate isn't unheard of in the US: it's what it used to be during the 1950s and 1960s, and economic growth was just fine. 70% isn't a bad rate to start looking at: * https://www.vox.com/policy-and-politics/2019/1/4/18168431/alexandria-ocasio-cortez-70-percent https://www.vox.com/policy-and-politics/2019/1/4/18168431/al... And perhaps by having ridiculously high top tax brackets will send a signal to people that instead of send money to the top, perhaps the 'little people' should get some of it too: * https://www.vox.com/2014/4/18/5620702/case-for-confiscatory-taxation https://www.vox.com/2014/4/18/5620702/case-for-confiscatory-...
esarbe 5y ago
Sure sounds like you swallowed the neo-liberal arguments bait, hook and sinker. Let me guess; you probably find 'Atlas Shrugged' to be a profound work of reason? > 1. Should we trust the government to spend the money more wisely than the folks who earned it? Ah, the neo-liberal myth of the maker, the builder, the job creator. Let me tell you this; our economy/ies are built on the back of low-wage workers that are always, always, always getting only a share of their value addition. A fraction. So, unfortunately, the people "earning" the money already don't get it. So we could at least increase the taxes on the moochers that keep them subservient and make sure that the actual makers and builders don't get bankrupted just because of an unexpected illness. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? I guess that would be hunger and the need to pay for a roof over the head. Because that's what it is like for the vast, suffocatingly overwhelming majority of people. They work at insane rates because they are paid a starving wage and don't have to luxury. Far too many are forced to work insane hours, far too many are even doing multiple jobs at the same time because pay is so bad. > long hours and sacrifices Haha, that was a good one. I'm terribly sorry, but the way you write makes it sound as if you would learn a lot from working a few months in a low-wage environment while having to pay your living expenses exclusively from that low-income wage. Without the option of going back home to your parents and cry. It might give you some perspective! That's what did it for me at least.
tzs 5y ago
> What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? There are at least three kinds of people working insane rates. First, there are people working insane rates because they need the money for essentials. They are in low hourly rate jobs, and have to put in insane hours to get enough money for basic things like food and shelter for their families. Second, there are people working insane rates because they like what they are doing. These are the people that if what they liked was painting would be your classic "starving artist" types, but if they happen to like doing something that people will actually pay a lot for like programming they can end up doing great financially as a welcome side effect. Third, there are people working insane rates because they want to accumulate vast wealth. My guess is that the vast majority of people working insane rates are in the first two groups, and that much of those in the third group are working at things for which it would be an improvement if we had less people doing them.
- foverzar 5y ago
  It is not clear, why the second group is supposed to be "hungry" In my experience all of the highly payed specialists are exactly those who have the passion for what they are doing. IMO, it is often easier to monetize your passions as you often end up being able to do things that others can't.
bottled_poe 5y ago
> Should we trust the government to spend the money more wisely than the folks who earned it? Yes. > Or said another way, how do you combat the almost inevitable corruption you see with large government spending? Transparent auditing of taxpayer funds. Presumably this exists to some degree in your country. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? This is a loaded question, as it implies that incentives beyond survival/comfort exist under the incumbent model of operation. > Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? To what end? The proposal is an alternative model of living which lifts the baseline quality of life, thus reducing this incorrect perceived need for an extreme financial safety net.
- throwaway98797 5y ago
  Not all people aiming for $1m+ in earnings are doing it for a safety net. Some people like to compete for the heck of it.
  - deleted 5y ago
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  - bottled_poe 5y ago
    sadly true. It’s a lot easier to think like an individual than as a member of a community.
deleted 5y ago
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AnIdiotOnTheNet 5y ago
> Should we trust the government to spend the money more wisely than the folks who earned it? When the aristocracy watched as the new-born communist Russia brutally executed its royal family, in their hearts they knew their narrative of birthright and nobility would no longer be accepted. They needed a new reasoning to justify their positions of power, to convince the peasantry that their lords were just and inevitable. Thus was the narrative of 'meritocracy' born in a world where there is obviously no possibility of such a thing.
- foverzar 5y ago
  > Thus was the narrative of 'meritocracy' born in a world where there is obviously no possibility of such a thing. How is it "obviously"? All the business relations between people are inherently meritocratic. Not only relations, the whole principle of "you reap what you sow" is inherently meritocratic: you have to put in some merit to generate value in return.
  - UncleMeat 5y ago
    > All the business relations between people are inherently meritocratic. That is why there are precisely zero complaints about broken hiring processes and promotion schemes.
    - maccolgan 5y ago
      That's in fact why we can have a discussion about hiring processes and promotion schemes in the private sector. In the public sector that simply doesn't exist as it's all a monopoly (obviously enough), there's no alternatives to point to to say which one is a better model. That's what meritocracy is, meritocracy isn't that meritless things don't exist.
  - AnIdiotOnTheNet 5y ago
    Because people have children who benefit from their resources without having done anything to earn it, because those in power (having wealth of one kind or another) can leverage that power to suppress the ability of others to attain it, because no one is free of biases, etc. Honestly if you can't see how the ideal of a meritocracy is impossible you're just not trying. Surely, some elements of meritocratic ideas are useful, but it is folly to believe that people with wealth have 'earned' it purely on merit.
UncleMeat 5y ago
> Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? I'm paid more than ten times what the local movers are paid. I'm very confident that they work harder, with fewer breaks, and less control over their hours than I do. My wife is a professor. In the evening she is consistently grading papers while I am messing around on the internet. Her salary is like 15% of my income. I have not observed a correlation between harder work and higher pay.
socialdemocrat 5y ago
The question is more on whether you want to pay government to give you health care, police, fire protection, education, child care etc. Or would you want to pay somebody who primarily wants to profit from you. Who will look after your health better? The one profiting from your bad health or the one who looses money if your health is bad? For-profit health care profits from your bad health. Government loose money when your health is bad if they finance health care. It is pretty easy to see the health outcomes. Americans have for-profit health care and they have some of the worst health outcomes in the western world. Scandinavians all have socialized health care and some of the best health outcomes. There is no natural law that says government must be corrupt. Corruption varies immensely between countries. Nordic countries have some of the largest governments and lowest level of corruption. But regardless, you don't necessarily need to reduce inequality through higher taxes. You can also push legislation benefitting regular people more: Stronger unions to give workers better bargaining power. Worker representation or corporate boards so they can better influence how companies are run. In Norway where I live, we have worker participation in company decision making as part of the constitution. The idea that only shareholders should make decision about how a company is run is just a political decision. In Germanic countries there is a long tradition of seeing companies as part of a community and having a wider responsibility to that community beyond maximizing value for shareholders. We have a choice. The way an economy operates and is optimized is a choice. It is not a law of nature.
cycomanic 5y ago
Do you seriously believe that income or wealth is strongly correlated with the amount of hours one puts in? In fact one of the clearest things shown by the pandemic is that many of the most crucial workers in society, which often put in insane ours, and without whom much of society would stop working are also the most underpaid. I can tell you nobody would notice if wall street investment bankers would stop working for a couple of months, but everyone would notice if the rubbish collectors would stop working. Research shows that inequality is largely due to starting conditions and some luck. In fact some research shows that if we don't work against it (i.e. tell people how they spend their money) inequality just grows [1]. Also it's funny, how many say we should not take the money from the rich and "tell them how to spend the money", but at the same time are quite happy with a large buerocratic apparatus dictating every aspect of live for poor people.

burntbridge 5y ago

You seem incredibly naive. People who earn $1m+ salaries do not work long hours or make sacrifices. You will never be wealthy if this is what you think. Most CEOs that I've known are out the door well before everyone else.

gadders 5y ago
>> Most CEOs that I've known are out the door well before everyone else. But did that hold true for their whole career?
foverzar 5y ago
> People who earn $1m+ salaries do not work long hours or make sacrifices Do you have any evidence to support this claim? Especially the sacrifices part -- this seems like an awfully bold assertion, especially if you consider that most people earning millions have spent their entire careers to get there.

aNoob7000 5y ago

We need less government and better taxation policy. I believe the inequality comes from the fact that individuals and companies with large sums of money can shape policies in government better than any individual or group of individuals. I agree you shouldn't pay 90% tax rate but you shouldn't be paying zero either.

redkabbage 5y ago

Politicians and the democratic government have at least a tacit responsibility to serve the people and to not let them starve; billionaires do not. It's no coincidence that open hostility to democratic values has risen along with the number of billionaires.

jkhdigital 5y ago

Whoa, whoa. You’re not supposed to ask these questions. It’s actually quite simple: 1. Wealth inequality is bad. Like, really bad. 2. If we take wealth from those who have it, and give it to those who don’t, then we will reduce this bad thing, which is obviously good.

hnhg 5y ago

What could be the incentive for anyone who earned money to give it away for the same purpose as governments?

fedreserved 5y ago

Suckers work for salary's. The ultra wealthy avoid this through long term capital gains, depreciation, Roth IRA (peter thiel buying 2k worth of PayPal stock options and rolling that to a 5 billion 100 percent tax free personal wealth fund so long as he doesn't touch it until he's 59), and a myriad of other tools. In general there will always be tools to avoid the brunt of the tax burden so long as you are earning through investments not salary. If you earn solely through salary you are destined do to never get off the rat race of high taxes.

Spooky23 5y ago

I’m sure someone would shed a tear for you. Think of how productive thousands of people would be if they weren’t staring down at death or disability daily because some ambitious motherfucker decided to make a cheap commodity like insulin a monopolized product, essential for life at a usurious price.

syshum 5y ago
I find this example very ironic, given that the reason an " ambitious motherfucker " can take a cheap commodity like insulin and make it a monopolized product is directly a result of government regulations. The very same government you want to take everyone money and believe will spend it wisely
- Werewolf255 5y ago
  I mean, you act like businesses are gonna spend the money better and not just pump up shareholder earnings... You know, like they do every time? This line of argument seems suspiciously pro-capital, like, are you personally benefiting from government disfunction?
  - FredPret 5y ago
    You can argue the point but when you say > This line of argument seems suspiciously pro-capital it seems like you think only one side has any moral contribution to make. This isn’t Russia in the 1920’s
  - syshum 5y ago
    It is pro-capitalism... I am pro-capitalism. I think capitalism is awesome Sure business will do what they can to pump shareholder earning, the check on that is market competition. In this instance various government regulations , and laws prohibit or limit that competition that would emerge in a freerer market Insulin in particular was part of a EO package that was going to open up competition (and lower prices), the EO package was rescinded by Biden
- Spooky23 5y ago

brtkdotse 5y ago

1. ”More wisely” is crazy subjective and it’s hard not to get into a really unproductive conversation about it. The issue is more that money is hoarded rather than spent. 2. This is a similar argument to those claiming that electric cars will never work because “what if I want to drive 12 hours straight without stopping?”. It’s possible but an extreme outlier.

jl6 5y ago

Maybe people shouldn’t be incentivized to work at insane rates, and maybe nobody needs a $1m+ salary?

jpadkins 5y ago
of course no one needs $1M salary, but is it morally right to prevent or harm people who want to hustle and earn $1M+ a year? Ambition and competitive spirit are double edged swords. We should be prudent before trying to social engineer these things away.
FredPret 5y ago
So the entire earth is supposed to be middle class? Interesting how this would leave 100% of the power to the elite bureaucrats

dontreact 5y ago

1) There are certain issues which are unlikely to receive spending due to well-known economic effects. For example: building highways and public transportation are things unlikely to be funded by individuals because they are public goods. 2) There is little evidence that the high tax rates in the middle of the century led to decreased productivity. Tax rates are marginal, meaning that more effort leads to more reward, still. Lastly inequality as it grows more extreme is a problem in and of itself. Unless you posit that the effort put in by the top 1% has increased a lot, then what we have is a situation that seems unfair. And this is demotivating, and will lead to instability in society even more than it already has. Why would you try to push forward your society if it seems like no matter what you do, wealth inequality is just going to increase, and the top 1% are going to capture most of the rewards? It's true that it's a rising tide that floats all boats, but if some are being floated much more than others then there are issues around power that are concerning. We already see evidence that increasingly the government is less responsive to those without wealth and more responsive to those with wealth. Wealth may be a zero sum game, but power is not. If we allow wealth to concentrate, then power concentrates.

yorwba 5y ago
> Tax rates are marginal, meaning that more effort leads to more reward, still. > Why would you try to push forward your society if it seems like no matter what you do, wealth inequality is just going to increase Curious how you seem to flip-flop between understanding marginal gains and not understanding them. The reason you would try to push forward your society is that more effort leads to more reward, still.
- dontreact 5y ago
  What you are saying is correct in the dimension of income but not in the dimension of power. The power of those with more wealth is steadily increasing, and the power of those without wealth is steadily decreasing. To many it seems like the game is rigged and no amount of effort is going to be able to give them a say in what direction our society heads in.
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usrusr 5y ago

You write that as if "long hours and sacrifices" in bullshit jobs were a good thing.

brabel 5y ago

Once you've made 100 million dollars or more, there's literally no justification for you to be allowed to keep piling up money in your safe. I absolutely support taxing 90% on any earnings above a ridiculous threshold like that, that no one really deserves, not matter how smart or hard working, while people who happened to be born under different circumstances and might work their ass off for their whole life won't get even a tiny percentage of that no matter how hard they try. Do you think Elon Musk or Jeff Bezos deserve wealth literally thousands of times bigger than anyone you've probably ever known personally (and I am assuming HN readers tend to know a lot of smart, incredibly hard-working people - but even they won't make a tiny fraction of a billion in their whole lives)? If you think there needs to be an incentive for people to put in hard work into something, I would say that you just need to look at open source. People will put insane amounts of work with basically zero chance of getting anything back in return monetarily. All they want is some respect and acknowledgement of their abilities - it's enough for most of the really smart people (who can make enough money on other activities without having to amass billions to be happy).

ZeroGravitas 5y ago

It depends, are you actually progressing any of societies goals with all that effort? If not then not only do I want to tax you your fair share in progressive taxes, I want to fine you to stop you doing destructive things.

forinti 5y ago

Long before we get to something like a 90% tax bracket, we could have the very wealthy pay the same rates as regular folks. Anyway, I don't see why a billionaire shouldn't have a 90% bracket.

sleepysysadmin 5y ago
>Long before we get to something like a 90% tax bracket, we could have the very wealthy pay the same rates as regular folks. Flat tax for all! >Anyway, I don't see why a billionaire shouldn't have a 90% bracket. Lets ignore the economics and how going off the gold standard removed the government's ability to tax and taxation will trend toward 0% for everyone until we figure out a new standard. However, let me tell you about 3 brothers. They all live on the same culdesac, they all have the same education, same type of job. The only difference is hours worked. The first brother works 20 hours, middle brother works 40 hours, and final brother works 60 hour/weeks. They come together and agree they want to contract a landscaping/flower place to put flowers on their culdesac. The flat cost is $10,000/each but the brother who only works 20 hours cant afford that. He wants his brothers to pay for it. They protest that he should pay his cut. The middle brother however devises a plan. The poor brother will pay very little if not nothing. The middle brother pays less than $10,000. The final brother has to pay for most of it. They vote and 2 to 1 they win. What happens? The brother working 60 hour weeks is now incentivized to reduce his hours so he gets less penalized.
- imtringued 5y ago
  What happens? Everyone works 40 hours.
  - sleepysysadmin 5y ago
    >What happens? Everyone works 40 hours. The people who work 20 hour weeks are upset and certainly dont work any additional amount. Daycare probably booms as a business. Productivity plummets to tremendously low levels, economies collapse, massive numbers of people die, etc. Less than half of doctors work 40 hours or less. Pretty significant number above 60 hours/week. Same for nursing and much of the medical field. Firefighters have very long hours. Truck driving and logistics pretty much depends on truck drivers maxing their hours at around 70 hour weeks. Lawyers pretty much cant work 40 hour weeks without the legal system collapsing. So right away, we are going to have people working different amounts of hours per week. It's unavoidable. This alone means you can never have 'equal outcome' A doctor who works 60 hours a week and still paying off med school loans cannot have the same outcome as a part time mcjobber. That's the failure of the progressive tax. The progressive tax is some wierd attempt to make the rich less rich but instead generates significantly more income inequality as a consequence.

andrekandre 5y ago

> 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? govt could be corrupt regardless of the spending levels (industry deals, favorable laws, other bribes etc)... maybe corruption and spending are orthogonal concern? > Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? i dunno, but there are lots of working poor that work insane hours (and multiple jobs) too who wouldn't get a much more even if tax was set to zero.... probably for them, a more fair distribution (a.k.a whatever the opposite of trickle-down would be) might be more favorable choice...?

pydry 5y ago

>the folks who earned It's quaint that there are people out there who believe that income at the top strata of society is primarily earned. Those dividend payments, rents and capital gains (realized) that make up the bulk of top earner incomes happen while they sleep. A minimum wage is earned. A doctor's wage is earned. A golden parachute after a CEO ruins a company? Somebody with a trust fund? A person living off dividend income? Not so much. It's one in a series of ways the .1% try to rhetorically conceal themselves. Another is that article the other day that complained about an overproduction of "elites" (referring to college degreed starbucks baristas).

syshum 5y ago
So if I worked as a doctor for 20 years, invested most of my income in that 20 years in to dividend paying stocks, then at age 45 or so retire to live off my dividends that my hard work paid of, I did not earn any of that?
- pydry 5y ago
  A lot of people have retired on a large S&P nest egg, spent relatively frugally relative to their wealth and ended up even wealthier after 5 years. It's not that uncommon. How would you say that money used to support them and grow their wealth was "earned" if they didnt work? The truth is it was earned. Just not by them. It's glaringly obvious if you think about it for just one second but we maintain a polite fiction all the same.
- Werewolf255 5y ago
  I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offering company, and after 20 years, the doctor is just living off others work because he 'earned it'. Plus, of course, in this perfect market scenario, no crashes or corrections can ever occur.
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Emma_Goldman 5y ago

>'Should we trust the government to spend the money more wisely than the folks who earned it' This is a false opposition. Taxed money does not have to be spent at the point of the state. A sovereign wealth fund could raise funds from wealth taxes and assign a share to every citizen in the country. It could then use its interest-bearing assets to pay out a dividend to all shareholders every year. It could be run by an independent but publicly supervised body - like the Norwegian wealth fund - and the money would be disbursed straight into the bank accounts of citizens. In any case we live in democratic societies in which legislated changes to the structure and distribution of wealth would then bind politicians via the rule of law. We do not have to depend on the individual virtue of politicians. On the margin I would generally prefer states whose remit includes the public interest to spend another dollar than I would private entities ruled by financial profit.

foverzar 5y ago
> A sovereign wealth fund could raise funds from wealth taxes and assign a share to every citizen in the country. It could then use its interest-bearing assets to pay out a dividend to all shareholders every year This assumes responsible spending, which is not the case IRL. And what about shared infrastructure projects?
- Emma_Goldman 5y ago
  No it doesn't, the case for such a scheme depends on two kinds of arguments: (1) intrinsic arguments that people have a right to a portion of collective wealth, to the means of life, or to the means of being able to freely spend their time as they see fit; (2) and instrumental arguments that it would rebalance the power of capital over labour, lead to various positive social outcomes, and tame the plutocracy that is ruining Western democracies. If your standard is 'responsible spending', the counterfactual baseline is keeping this money in the hands of the wealthy. For obvious reasons - diminishing marginal utility, the breakdown of the social compact, the corruption of politics - I don't think they would spend a dollar on the margin any more 'responsibly'. What about shared infrastructure projects? I'm not suggesting this ought to replace the state, simply that global wealth can be equalised without reallocating that wealth to the state to spend.

throw0101a 5y ago

> 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? The folks that have a lot of money don't spend it. Out of all of Buffett's, Gates', and Bezos' fortunes how much is being spent 'productively' and how much is just sitting around collecting interest on interest. The velocity of money hasn't been doing much in recent decades, which seems to indicate it's just sitting in accounts: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V 'Coïncidentally' wealth inequality has been rising in the same time period. Perhaps the link of stagnant money and a lack of activity are linked? There's plenty of old bridges, dams, locks, transit, airports, etc, that need to be repaired and that money could be used for those upgrades providing good pay jobs. "Bezos’s ex-wife MacKenzie Scott can’t give her billions away fast enough", and she is worth 'only' US$ 60B (21st richest person): * https://www.thetimes.co.uk/article/bezoss-ex-wife-mackenzie-scott-cant-give-her-billions-away-fast-enough-wfk2x6tg7 https://www.thetimes.co.uk/article/bezoss-ex-wife-mackenzie-... * https://archive.md/ZzeMI https://archive.md/ZzeMI Further, this is not (or does not have to be) an either-or situation: it's not like all the money goes to the government or stay with the wealthy. If (e.g.) 2-5% of someone's wealth over (say) $10B is taxed annually, they still have 98-95% to do whatever with. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? What motivates someone with $1B to work more? Is it really to make another $10M? Is Bezos working the hours he is because of money? Is Buffett? Musk? I think the people who get to this level work because of of intrinsic motivation rather than extrinsic rewards. > Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? Do you understand how marginal tax brackets work? When someone makes $1M + 1 dollars, the government does not take $900K in this hypothetical 90% margin rate: they take 90¢ of the last $1. The rest of the money is taxed at lower rates: * https://www.vox.com/policy-and-politics/2019/1/7/18171975/tax-bracket-marginal-cartoon-ocasio-cortez-70-percent https://www.vox.com/policy-and-politics/2019/1/7/18171975/ta... And a 70% top tax rate isn't unheard of in the US: it's what it used to be during the 1950s and 1960s, and economic growth was just fine. 70% isn't a bad rate to start looking at: * https://www.vox.com/policy-and-politics/2019/1/4/18168431/alexandria-ocasio-cortez-70-percent https://www.vox.com/policy-and-politics/2019/1/4/18168431/al... And perhaps by having ridiculously high top tax brackets will send a signal to people that instead of send money to the top, perhaps the 'little people' should get some of it too: * https://www.vox.com/2014/4/18/5620702/case-for-confiscatory-taxation https://www.vox.com/2014/4/18/5620702/case-for-confiscatory-...

esarbe 5y ago

Sure sounds like you swallowed the neo-liberal arguments bait, hook and sinker. Let me guess; you probably find 'Atlas Shrugged' to be a profound work of reason? > 1. Should we trust the government to spend the money more wisely than the folks who earned it? Ah, the neo-liberal myth of the maker, the builder, the job creator. Let me tell you this; our economy/ies are built on the back of low-wage workers that are always, always, always getting only a share of their value addition. A fraction. So, unfortunately, the people "earning" the money already don't get it. So we could at least increase the taxes on the moochers that keep them subservient and make sure that the actual makers and builders don't get bankrupted just because of an unexpected illness. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? I guess that would be hunger and the need to pay for a roof over the head. Because that's what it is like for the vast, suffocatingly overwhelming majority of people. They work at insane rates because they are paid a starving wage and don't have to luxury. Far too many are forced to work insane hours, far too many are even doing multiple jobs at the same time because pay is so bad. > long hours and sacrifices Haha, that was a good one. I'm terribly sorry, but the way you write makes it sound as if you would learn a lot from working a few months in a low-wage environment while having to pay your living expenses exclusively from that low-income wage. Without the option of going back home to your parents and cry. It might give you some perspective! That's what did it for me at least.

tzs 5y ago

> What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? There are at least three kinds of people working insane rates. First, there are people working insane rates because they need the money for essentials. They are in low hourly rate jobs, and have to put in insane hours to get enough money for basic things like food and shelter for their families. Second, there are people working insane rates because they like what they are doing. These are the people that if what they liked was painting would be your classic "starving artist" types, but if they happen to like doing something that people will actually pay a lot for like programming they can end up doing great financially as a welcome side effect. Third, there are people working insane rates because they want to accumulate vast wealth. My guess is that the vast majority of people working insane rates are in the first two groups, and that much of those in the third group are working at things for which it would be an improvement if we had less people doing them.

foverzar 5y ago
It is not clear, why the second group is supposed to be "hungry" In my experience all of the highly payed specialists are exactly those who have the passion for what they are doing. IMO, it is often easier to monetize your passions as you often end up being able to do things that others can't.

bottled_poe 5y ago

> Should we trust the government to spend the money more wisely than the folks who earned it? Yes. > Or said another way, how do you combat the almost inevitable corruption you see with large government spending? Transparent auditing of taxpayer funds. Presumably this exists to some degree in your country. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is taxed? This is a loaded question, as it implies that incentives beyond survival/comfort exist under the incumbent model of operation. > Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? To what end? The proposal is an alternative model of living which lifts the baseline quality of life, thus reducing this incorrect perceived need for an extreme financial safety net.

throwaway98797 5y ago
Not all people aiming for $1m+ in earnings are doing it for a safety net. Some people like to compete for the heck of it.
- deleted 5y ago
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- bottled_poe 5y ago
  sadly true. It’s a lot easier to think like an individual than as a member of a community.

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AnIdiotOnTheNet 5y ago

> Should we trust the government to spend the money more wisely than the folks who earned it? When the aristocracy watched as the new-born communist Russia brutally executed its royal family, in their hearts they knew their narrative of birthright and nobility would no longer be accepted. They needed a new reasoning to justify their positions of power, to convince the peasantry that their lords were just and inevitable. Thus was the narrative of 'meritocracy' born in a world where there is obviously no possibility of such a thing.

foverzar 5y ago
> Thus was the narrative of 'meritocracy' born in a world where there is obviously no possibility of such a thing. How is it "obviously"? All the business relations between people are inherently meritocratic. Not only relations, the whole principle of "you reap what you sow" is inherently meritocratic: you have to put in some merit to generate value in return.
- UncleMeat 5y ago
  > All the business relations between people are inherently meritocratic. That is why there are precisely zero complaints about broken hiring processes and promotion schemes.
  - maccolgan 5y ago
    That's in fact why we can have a discussion about hiring processes and promotion schemes in the private sector. In the public sector that simply doesn't exist as it's all a monopoly (obviously enough), there's no alternatives to point to to say which one is a better model. That's what meritocracy is, meritocracy isn't that meritless things don't exist.
- AnIdiotOnTheNet 5y ago
  Because people have children who benefit from their resources without having done anything to earn it, because those in power (having wealth of one kind or another) can leverage that power to suppress the ability of others to attain it, because no one is free of biases, etc. Honestly if you can't see how the ideal of a meritocracy is impossible you're just not trying. Surely, some elements of meritocratic ideas are useful, but it is folly to believe that people with wealth have 'earned' it purely on merit.

UncleMeat 5y ago

> Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate? I'm paid more than ten times what the local movers are paid. I'm very confident that they work harder, with fewer breaks, and less control over their hours than I do. My wife is a professor. In the evening she is consistently grading papers while I am messing around on the internet. Her salary is like 15% of my income. I have not observed a correlation between harder work and higher pay.

socialdemocrat 5y ago

The question is more on whether you want to pay government to give you health care, police, fire protection, education, child care etc. Or would you want to pay somebody who primarily wants to profit from you. Who will look after your health better? The one profiting from your bad health or the one who looses money if your health is bad? For-profit health care profits from your bad health. Government loose money when your health is bad if they finance health care. It is pretty easy to see the health outcomes. Americans have for-profit health care and they have some of the worst health outcomes in the western world. Scandinavians all have socialized health care and some of the best health outcomes. There is no natural law that says government must be corrupt. Corruption varies immensely between countries. Nordic countries have some of the largest governments and lowest level of corruption. But regardless, you don't necessarily need to reduce inequality through higher taxes. You can also push legislation benefitting regular people more: Stronger unions to give workers better bargaining power. Worker representation or corporate boards so they can better influence how companies are run. In Norway where I live, we have worker participation in company decision making as part of the constitution. The idea that only shareholders should make decision about how a company is run is just a political decision. In Germanic countries there is a long tradition of seeing companies as part of a community and having a wider responsibility to that community beyond maximizing value for shareholders. We have a choice. The way an economy operates and is optimized is a choice. It is not a law of nature.

cycomanic 5y ago

Do you seriously believe that income or wealth is strongly correlated with the amount of hours one puts in? In fact one of the clearest things shown by the pandemic is that many of the most crucial workers in society, which often put in insane ours, and without whom much of society would stop working are also the most underpaid. I can tell you nobody would notice if wall street investment bankers would stop working for a couple of months, but everyone would notice if the rubbish collectors would stop working. Research shows that inequality is largely due to starting conditions and some luck. In fact some research shows that if we don't work against it (i.e. tell people how they spend their money) inequality just grows [1]. Also it's funny, how many say we should not take the money from the rich and "tell them how to spend the money", but at the same time are quite happy with a large buerocratic apparatus dictating every aspect of live for poor people.