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But capital gains tax alone doesn't make the entire equation of risk vs reward, unless you're putting capital gains tax all the way to 100%. Even if it was 90%,

But capital gains tax alone doesn't make the entire equation of risk vs reward, unless you're putting capital gains tax all the way to 100%. Even if it was 90%, if the risk was zero, the time investment was near zero and the reward was your assets going up by 4% post-tax, you'd bet people would still invest, regardless of income tax.

chii 4y ago
> if the risk was zero no investment has zero risk. in any case, the 90% tax would discourage the investment for some people - because that investment might not return enough to be worth the opportunity cost of consumption instead. The point is, more investments means more possible productivity in the future, and any consumption->investment switch is good. This is the same calculus as wage tax of course, but since most people don't have a choice but to work for a wage, they don't need to be incentivized to work by lower taxes.
- nybble41 4y ago
  > and any consumption->investment switch is good Not always: It is possible to over-invest and under-consume. Don't forget that the purpose of investment in the present is to enable consumption in the future. In the extreme case, a society which only invested and never consumed would starve to death. There is a natural balance point, and moving away from that point in either direction results in a less efficient allocation of resources.
  - chii 4y ago
    > It is possible to over-invest and under-consume. certainly is, but i would argue that more people under-invest and over-consume! I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources.
    - nybble41 4y ago
      > I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources. If you always prioritize your future over your present then your sacrifices are wasted—you live your entire life just barely keeping yourself alive and never claim any of the proceeds from your investments for yourself. As I said before, there needs to be a balance. Investment is pointless and wasteful without a plan to eventually consume more than you could have without investing.

chii 4y ago

> if the risk was zero no investment has zero risk. in any case, the 90% tax would discourage the investment for some people - because that investment might not return enough to be worth the opportunity cost of consumption instead. The point is, more investments means more possible productivity in the future, and any consumption->investment switch is good. This is the same calculus as wage tax of course, but since most people don't have a choice but to work for a wage, they don't need to be incentivized to work by lower taxes.

nybble41 4y ago
> and any consumption->investment switch is good Not always: It is possible to over-invest and under-consume. Don't forget that the purpose of investment in the present is to enable consumption in the future. In the extreme case, a society which only invested and never consumed would starve to death. There is a natural balance point, and moving away from that point in either direction results in a less efficient allocation of resources.
- chii 4y ago
  > It is possible to over-invest and under-consume. certainly is, but i would argue that more people under-invest and over-consume! I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources.
  - nybble41 4y ago
    > I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources. If you always prioritize your future over your present then your sacrifices are wasted—you live your entire life just barely keeping yourself alive and never claim any of the proceeds from your investments for yourself. As I said before, there needs to be a balance. Investment is pointless and wasteful without a plan to eventually consume more than you could have without investing.