2 ms·

> I thought it was free money because it doesn't put a disincentive on productive work There are 2 major and unrelated effects to taxes that are discussed in

by stale2002 3y ago

> I thought it was free money because it doesn't put a disincentive on productive work There are 2 major and unrelated effects to taxes that are discussed in any basic economics 101 theory that I am happen to explain to you. Sorry, I take a lot of basic econ theory for granted, even though I am sure most people haven't taken an introductory economics class. Thus leading to confusion. effect 1: Changes to behavior/Disincentives on work. IE deadweight loss. effect 2: the redistributionary effects of the taxes. IE does it harm poor people or not. These are unrelated effects and are separate effects/downsides/benefits. Do you understand how there can be 2 effects to a thing that happens, effect 1 which is bad, and that there can be a different effect 2 which is also bad in a different way? You saying "Well what about this policy B that doesn't have downside number 1?!? Are you saying that there is nothing bad to policy B?!? Because you said that policy A was fine because it doesn't have downside 1? Therefore it must be that policy B is good because it also doesn't have downside 1." The completely obvious counter response to this bad point is that policy B, which is different than policy A, has an additional downside which is downside number 2. And policy A is good because it has neither downside 1 or downside 2. Does that explain the misunderstanding that is apparent from your comment? The fact that you brought up a head tax also betrays the point. Because you know that a head tax is bad, otherwise you wouldn't have used it as an example. You know that it isn't the same. Although it still confuses me that you would bring it up, because you didn't jump to step 2 which is to explain the difference between the 2 policies. And the next question, that actually matters, is the clear different between a head tax and a land tax. Which is explainable via basic economic theory.

AnthonyMouse 3y ago
> effect 2: the redistributionary effects of the taxes. IE does it harm poor people or not. The error you're making is in limiting this cost to redistribution between income levels. Taxes don't redistribute money from the rich to the poor or vice versa. They redistribute money from the public to the government. The government might then use the money to benefit the poor -- or they might not. They could just set the money on fire without changing how much they collect in taxes or from who. They could collect 90% of taxes from the rich and 10% from the poor and then give 100% of the money to the rich. The reason taxing the poor is worse than taxing the rich is that it causes more harm. The money means more to the poor because it affects whether they starve or can afford rent instead of whether they can invest in some new business venture. That's why I used that example -- it makes the cost much more clear, because you immediately realize that by doing it you're going to cause someone to go without. But that doesn't mean the cost of taxing the rich is zero. New business ventures have value too -- sometimes quite significant value. So you still don't want to just tax them for no reason, or raise their taxes by an arbitrary amount regardless of whether the government's use for the money is less productive than their own.
- stale2002 3y ago
  > The error you're making is in limiting this cost to redistribution between income levels. You are ignoring the fact that we have taxes already. Even if you think that there is other redistributionary harm to taxes, if we found some magic tax that didn't have any dead weight loss, and also only effects rich people, then we could at a minimum replace all existing taxes with that magic new better tax. (Perhaps total taxes could even be reduced! Because there is now extra room and value created because of the zero dead weight loss!) Therefore the point stands that if this is the case, then it would still be a massive win to find such a magic tax.

AnthonyMouse 3y ago

> effect 2: the redistributionary effects of the taxes. IE does it harm poor people or not. The error you're making is in limiting this cost to redistribution between income levels. Taxes don't redistribute money from the rich to the poor or vice versa. They redistribute money from the public to the government. The government might then use the money to benefit the poor -- or they might not. They could just set the money on fire without changing how much they collect in taxes or from who. They could collect 90% of taxes from the rich and 10% from the poor and then give 100% of the money to the rich. The reason taxing the poor is worse than taxing the rich is that it causes more harm. The money means more to the poor because it affects whether they starve or can afford rent instead of whether they can invest in some new business venture. That's why I used that example -- it makes the cost much more clear, because you immediately realize that by doing it you're going to cause someone to go without. But that doesn't mean the cost of taxing the rich is zero. New business ventures have value too -- sometimes quite significant value. So you still don't want to just tax them for no reason, or raise their taxes by an arbitrary amount regardless of whether the government's use for the money is less productive than their own.

stale2002 3y ago
> The error you're making is in limiting this cost to redistribution between income levels. You are ignoring the fact that we have taxes already. Even if you think that there is other redistributionary harm to taxes, if we found some magic tax that didn't have any dead weight loss, and also only effects rich people, then we could at a minimum replace all existing taxes with that magic new better tax. (Perhaps total taxes could even be reduced! Because there is now extra room and value created because of the zero dead weight loss!) Therefore the point stands that if this is the case, then it would still be a massive win to find such a magic tax.