3 ms·

Well, then just Tax Wealth (and set cap gains rates to 0% while you're at it). If the limos and G5 jet that your company bought were inefficient assets, then a

• ajross 15y ago
  That's the libertarian answer, yes. But it doesn't work. In fact this kind of thing is routine in the corporate world. The randian solution here requires that there be a class of corporate executives willing to live comparatively impoverished lives. But they don't exist, because they're chosen by corporate boards populated by people who don't want to see their own perks vanish. And those boards are elected by, overwhelmingly, investment bankers living in the same world who view the inefficiency in their investments as minimal (remember they want to sit on boards some day too, and won't rock the boat). All of those people (the "1%" I guess) would need to simultaneously decide to take a pay cut to produce your hypothetically efficient executive compensation. It won't happen.
  • leot 15y ago
    That's strange, because whenever I propose wealth taxes to self-identified libertarians they complain about "double taxation" or somesuch. This is probably why my answer gets voted up by neither libertarians nor, uh, non-libertarians. The proposal I provided was given in the context of "Let's say I own a corporation ...". Not "Let's say I'm a manager of a large corporation". When the person owns the inefficient corporation, then wealth taxation seems like a viable approach. I think crappy management is a genuine problem at large companies, but I'm not sure that any kind of corporate taxation will fix it.
    • ajross 15y ago
      Then I misunderstood. I thought your earlier answer was sarcasm. A real libertarian could never accept a tax on wealth. All taxes are bad, but the only ones that are acceptable are taxes on economic activity. Taxing wealth is, in the randian sense, punishing success.
      • leot 15y ago
        What would Rand say about taxing wealth instead of income, keeping everything else the same?
  • ppereira 15y ago
    Wealth taxes are actually just as old as income taxes, predating even Hammurabi. To a degree, the two are highly correlated. For example, a flat property tax on a farm is just a wealth tax while a tax on the farm's crop would be an income tax. One of the fundamental principles in taxation is that each person should pay in proportion to their ability. The ability can be interpreted to be proportional to their income, profit (income with deductions), or wealth, which leads to different tax schemes. It just so happens that in this century, much of corporate tax is based on profit and much of personal tax is based on income. I am not quite sure where you are trying to go with your argument based on executive compensation and why that necessitates an income tax over any other type of tax. Perhaps, if the concern is the increasing remuneration of corporate executives, it would be worthwhile considering what factors have changed over the last century that may have led to the current situation.
    • leot 15y ago
      It seems that wealth taxes are a far more sensible kind of taxation. But, strangely, there is little serious discussion of them. I sometimes wonder what it would look like if there were just two kinds of taxes responsible for most government revenue: a VAT and a wealth tax. The problem seems to be that, psychologically, people would rather be taxed via witholdings.