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Most suggestions of this nature fail to explain how they will deal with the problem of people just seeing there’s no point in trying for more. On a personal lev

Most suggestions of this nature fail to explain how they will deal with the problem of people just seeing there’s no point in trying for more. On a personal level, I’ve heard people from Norway describe this problem for personal income tax—at some point (notably below a typical US senior software engineer’s earnings) the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating, and you either coast or emigrate. Perhaps that’s not entirely undesirable, but I don’t know if people have contemplated the consequences of the existence of such a de facto ceiling seriously.

BrenBarn 2y ago
> Most suggestions of this nature fail to explain how they will deal with the problem of people just seeing there’s no point in trying for more. On a personal level, I’ve heard people from Norway describe this problem for personal income tax—at some point (notably below a typical US senior software engineer’s earnings) the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating, and you either coast or emigrate. Perhaps that’s not entirely undesirable, but I don’t know if people have contemplated the consequences of the existence of such a de facto ceiling seriously. I think if you look at quality of life and happiness ratings in Norway it's pretty clear it's far from "entirely undesirable". It's good for people to do things for reasons other than money.
- dec0dedab0de 2y ago
  And the middle ground is to only enforce it on corporations in exchange for the protections given to the owners. Want to make more? then take personal risk.
  - ilbeeper 2y ago
    Great, so we only want the real high risk takers, the top gamblers,to play in the big league. Those who are so rich they no way to lose their personal comfort and are blind to the personal risk - and probably are careless about anyone's else just as well
    - mech422 2y ago
      Don't we have that already? Bootstrapped startups with the founders money on the line typically don't play in the 'big league's till way after the founder is at risk..
    - robertlagrant 2y ago
      > Great, so we only want the real high risk takers, the top gamblers,to play in the big league It either takes risk of private capital or future taxpayers' taxes to create big leagues. I'd take the former over the latter.
      - ilbeeper 2y ago
        And I prefer cold committee who measure risk and are committed to some public values. You choose silicone valley, VCs and no public healthcare. I prefer the Norwegian model.
        robertlagrant 2y ago
        It works great when the innovation happens elsewhere and is freely shared.
- buckle8017 2y ago
  Norway is Saudi Arabia with snow. Their entire economy and society are structured around oil extraction. There are no lessons to learn from Norway unless you live somewhere that oil does from the ground.
  - deleted 2y ago
    [deleted]
  - Retric 2y ago
    Hardly per capita they export similar amounts of petroleum products, but Norway’s GDP is 80k/person vs 30k/person in Saudi Arabia. Norway exports slightly more/person but their production costs are significantly higher which offsets it. The difference is Norway’s economy being far less dependent on petroleum which is only 40% of their exports.
sweeter 2y ago
We're talking about corporations here, where are they going to go? If you had a competent government, you would say "fine, then leave. But your wealth and business is staying here" at some point the government has to do its job. These corporations pull in trillions of dollars, its wild to me to suggest that suddenly everyone would stop working and making money because they were taxed at a progressive rate. Its an absurd assumption to begin with. We could literally have high speed rail, healthcare, the best education on the planet and have a high standard of living... and it would be peanuts to them. Instead we have a handful of people with more wealth than 99% of everyone else, while the bottom 75% of those people live in horrifying conditions. The fact that medical bankruptcy is a concept only in the richest country on earth is deeply embarrassing and shameful.
giantg2 2y ago
"the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating" Sounds like the effort needed for bonuses here in the US. Why try if the amount is largely arbitrary and generally lower than your base salary pay rate when you consider all the extra hours. Everything is a sham.
- nradov 2y ago
  Which industry? Bonuses in the tech industry tend to be somewhat arbitrary and thus ineffective for motivating employees. Bonuses in other industries like trading or investment banking tend to be larger (sometimes more than base salary) and directly tied to individual performance and so they're highly effective at motivating ambitious employees. Increasing marginal income tax rates on highly compensated employees might be a good policy overall. But where are we on the Laffer curve? If we go too far then it really hurts the overall economy.
yodsanklai 2y ago
> the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating This is a cliche you hear from right winger in any country that has a progressive tax system. Regarding Norway, taxes aren't in the same ballpark as in some US blue states. Also, it's a very simplistic view to think that people are only motivated by money. Counter examples abound.
- robocat 2y ago
  > This is a cliche you hear from right winger in any country that has a progressive tax system Not a cliché - a fact. I'll explain to you. The incentive structure of progressive taxation is wrong: it only works for the few percent that are extremely money hungry: the few that are willing to work for lower and lower percentage gains. Normal people say "enough" and they give up once they have the nice house and a few toys (and some retirement money with luck). In New Zealand that is something like USD1.5 million. I'm on a marginal rate of 39% in New Zealand. I am well off but I literally am not motivated to try and earn anything extra because the return is not enough for the extra effort or risk involved. No serial entrepreneurship for me because it only has downside risk. If I invest and win then 39%+ is taken as tax, but even worse is that if I lose then I can't claim my time back. Even financial losses only claw back against future income: and my taxable income could move to $0 due to COVID-level-event and so my financial risk is more than what it might naively appear. Taxation systems do not fairly reward for risk. Especially watch people with no money taking high risks and pay no insurance because the worst that can happen to them is bankruptcy. New Zealand loses because the incentive structure for a founder is broken. We are an island so the incentive structure should revolve around bringing in overseas income (presuming the income is spent within NZ). Every marginal dollar brought into the economy helps all citizens and the government. The incentives were even worse when I was working but was trying to found a company. I needed to invest time, which had the opportunity cost of the wages I wouldn't get as a developer (significant risk that can't be hedged and can't be claimed against tax). 9 times out of 10 a founder wins approximately $0: so expected return needs to be > 10x. A VC fund needs something like > 30x return from the 1 or 2 winning investments. I helped found a successful business but high taxation has meant I haven't reached my 30x yet - chances are I'll be dead before I get a fair return for my risk. I'm not sure I've even reached 10x given I don't know the counterfactual of what my employee income would have become. This is for a business earning good export income. Incentive structures matter - we understand that for employees - however few governments seem to understand that for businesses. Most people are absolutely ignorant of even basic economics. The underlying drive is the wish to take from those that have more than them. We call it the tall poppy syndrome down here. (reëdited to add clarity)
abdullahkhalids 2y ago
Higher taxes is the wrong solution to the very valid problem. We all recognize that a democracy is the correct method for political decision making, even though it's also obvious that theoretically a truly benevolent dictator can make better decisions than an elected parliament but in practice such dictators don't really exist. The same reasoning applies to economic decision making at society level. If you want a society whose economics reflects the will and ethics of the people, and which serves for the benefit of normal people, the obvious thing is the democratize economic decision making. That means that all large corporations must be mostly owned by their workers in roughly 1/N fashion, not by a small class of shareholders. This is the obvious correct solution, because it solves the underlying problem, not paper of the symptoms like taxation. If shareholder owned corporations are extracting wealth from workers or doing unethical things, the obvious solution is to take away their control. Obviously, some workers will still make their own corporations do evil things, but at least it will be collective responsibility, not forced upon them by others.
- robertlagrant 2y ago
  The alternative is to make consumption the will of the people, so people buy things they want, and from vendors they like. I think "this isn't free; you pay with ad views and your data is sold" is something that should be on a price tag on services that operate this way, though. It doesn't work if the price isn't clearly advertised.
robertlagrant 2y ago
> but I don’t know if people have contemplated the consequences of the existence of such a de facto ceiling seriously. One of the second order consequences of progressive taxation is that it increases gross wages for higher earners, as people care about their net pay being larger, not their gross pay. An extreme example, in the UK the tax rate is an effective 60% between £100k and £120k (ish), so people's salaries get driven through that zone quickly. This obviously means there's less money to give to other people.
sfn42 2y ago
Those people are full of shit. I'm Norwegian and a software engineer. Income tax generally tops out at about 46%, if you earn $200k you'll pay around 40%, at $500k you'll pay like 46% or so and it doesnt go much higher than that even if you earn a million dollars (10 million nok). So the difference between earning a decent salary of $80-100k and a great salary north of $150k isn't much tax-percent-wise. If you make another $1000 you take home about $500. Also keep in mind we don't have to pay for health insurance, we don't have to pay for our kids to go to school, if we get sick and can't work we have a social security net that will take care of us indefinitely. Norway is a great place to live. The people who complain about taxes are idiots who don't know how good they have it. If you make $200k+ you're living a fucking great life, if you make $400k it's even better. Hell i used to make like $35k and I got by on that. $50k is perfectly liveable. And those people pay like 20-25%. I'm happy to pay taxes, I'm doing great and I don't even earn that much yet. I expect to nearly double my salary within the next 5ish years. Maybe more than double. Then you have middle class+ Norwegians with a big house, $100k+ car, sweet boat, cabin in the mountains etc complaining about taxes. Man shut up you're literally top .1% in the world you won the damn lottery.

BrenBarn 2y ago

> Most suggestions of this nature fail to explain how they will deal with the problem of people just seeing there’s no point in trying for more. On a personal level, I’ve heard people from Norway describe this problem for personal income tax—at some point (notably below a typical US senior software engineer’s earnings) the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating, and you either coast or emigrate. Perhaps that’s not entirely undesirable, but I don’t know if people have contemplated the consequences of the existence of such a de facto ceiling seriously. I think if you look at quality of life and happiness ratings in Norway it's pretty clear it's far from "entirely undesirable". It's good for people to do things for reasons other than money.

dec0dedab0de 2y ago
And the middle ground is to only enforce it on corporations in exchange for the protections given to the owners. Want to make more? then take personal risk.
- ilbeeper 2y ago
  Great, so we only want the real high risk takers, the top gamblers,to play in the big league. Those who are so rich they no way to lose their personal comfort and are blind to the personal risk - and probably are careless about anyone's else just as well
  - mech422 2y ago
    Don't we have that already? Bootstrapped startups with the founders money on the line typically don't play in the 'big league's till way after the founder is at risk..
  - robertlagrant 2y ago
    > Great, so we only want the real high risk takers, the top gamblers,to play in the big league It either takes risk of private capital or future taxpayers' taxes to create big leagues. I'd take the former over the latter.
    - ilbeeper 2y ago
      And I prefer cold committee who measure risk and are committed to some public values. You choose silicone valley, VCs and no public healthcare. I prefer the Norwegian model.
      - robertlagrant 2y ago
        It works great when the innovation happens elsewhere and is freely shared.
buckle8017 2y ago
Norway is Saudi Arabia with snow. Their entire economy and society are structured around oil extraction. There are no lessons to learn from Norway unless you live somewhere that oil does from the ground.
- deleted 2y ago
  [deleted]
- Retric 2y ago
  Hardly per capita they export similar amounts of petroleum products, but Norway’s GDP is 80k/person vs 30k/person in Saudi Arabia. Norway exports slightly more/person but their production costs are significantly higher which offsets it. The difference is Norway’s economy being far less dependent on petroleum which is only 40% of their exports.

sweeter 2y ago

We're talking about corporations here, where are they going to go? If you had a competent government, you would say "fine, then leave. But your wealth and business is staying here" at some point the government has to do its job. These corporations pull in trillions of dollars, its wild to me to suggest that suddenly everyone would stop working and making money because they were taxed at a progressive rate. Its an absurd assumption to begin with. We could literally have high speed rail, healthcare, the best education on the planet and have a high standard of living... and it would be peanuts to them. Instead we have a handful of people with more wealth than 99% of everyone else, while the bottom 75% of those people live in horrifying conditions. The fact that medical bankruptcy is a concept only in the richest country on earth is deeply embarrassing and shameful.

giantg2 2y ago

"the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating" Sounds like the effort needed for bonuses here in the US. Why try if the amount is largely arbitrary and generally lower than your base salary pay rate when you consider all the extra hours. Everything is a sham.

nradov 2y ago
Which industry? Bonuses in the tech industry tend to be somewhat arbitrary and thus ineffective for motivating employees. Bonuses in other industries like trading or investment banking tend to be larger (sometimes more than base salary) and directly tied to individual performance and so they're highly effective at motivating ambitious employees. Increasing marginal income tax rates on highly compensated employees might be a good policy overall. But where are we on the Laffer curve? If we go too far then it really hurts the overall economy.

yodsanklai 2y ago

> the amount of work you need to put in for the marginal post-tax krone is so high it’s just demotivating This is a cliche you hear from right winger in any country that has a progressive tax system. Regarding Norway, taxes aren't in the same ballpark as in some US blue states. Also, it's a very simplistic view to think that people are only motivated by money. Counter examples abound.

robocat 2y ago
> This is a cliche you hear from right winger in any country that has a progressive tax system Not a cliché - a fact. I'll explain to you. The incentive structure of progressive taxation is wrong: it only works for the few percent that are extremely money hungry: the few that are willing to work for lower and lower percentage gains. Normal people say "enough" and they give up once they have the nice house and a few toys (and some retirement money with luck). In New Zealand that is something like USD1.5 million. I'm on a marginal rate of 39% in New Zealand. I am well off but I literally am not motivated to try and earn anything extra because the return is not enough for the extra effort or risk involved. No serial entrepreneurship for me because it only has downside risk. If I invest and win then 39%+ is taken as tax, but even worse is that if I lose then I can't claim my time back. Even financial losses only claw back against future income: and my taxable income could move to $0 due to COVID-level-event and so my financial risk is more than what it might naively appear. Taxation systems do not fairly reward for risk. Especially watch people with no money taking high risks and pay no insurance because the worst that can happen to them is bankruptcy. New Zealand loses because the incentive structure for a founder is broken. We are an island so the incentive structure should revolve around bringing in overseas income (presuming the income is spent within NZ). Every marginal dollar brought into the economy helps all citizens and the government. The incentives were even worse when I was working but was trying to found a company. I needed to invest time, which had the opportunity cost of the wages I wouldn't get as a developer (significant risk that can't be hedged and can't be claimed against tax). 9 times out of 10 a founder wins approximately $0: so expected return needs to be > 10x. A VC fund needs something like > 30x return from the 1 or 2 winning investments. I helped found a successful business but high taxation has meant I haven't reached my 30x yet - chances are I'll be dead before I get a fair return for my risk. I'm not sure I've even reached 10x given I don't know the counterfactual of what my employee income would have become. This is for a business earning good export income. Incentive structures matter - we understand that for employees - however few governments seem to understand that for businesses. Most people are absolutely ignorant of even basic economics. The underlying drive is the wish to take from those that have more than them. We call it the tall poppy syndrome down here. (reëdited to add clarity)

abdullahkhalids 2y ago

Higher taxes is the wrong solution to the very valid problem. We all recognize that a democracy is the correct method for political decision making, even though it's also obvious that theoretically a truly benevolent dictator can make better decisions than an elected parliament but in practice such dictators don't really exist. The same reasoning applies to economic decision making at society level. If you want a society whose economics reflects the will and ethics of the people, and which serves for the benefit of normal people, the obvious thing is the democratize economic decision making. That means that all large corporations must be mostly owned by their workers in roughly 1/N fashion, not by a small class of shareholders. This is the obvious correct solution, because it solves the underlying problem, not paper of the symptoms like taxation. If shareholder owned corporations are extracting wealth from workers or doing unethical things, the obvious solution is to take away their control. Obviously, some workers will still make their own corporations do evil things, but at least it will be collective responsibility, not forced upon them by others.

robertlagrant 2y ago
The alternative is to make consumption the will of the people, so people buy things they want, and from vendors they like. I think "this isn't free; you pay with ad views and your data is sold" is something that should be on a price tag on services that operate this way, though. It doesn't work if the price isn't clearly advertised.

robertlagrant 2y ago

> but I don’t know if people have contemplated the consequences of the existence of such a de facto ceiling seriously. One of the second order consequences of progressive taxation is that it increases gross wages for higher earners, as people care about their net pay being larger, not their gross pay. An extreme example, in the UK the tax rate is an effective 60% between £100k and £120k (ish), so people's salaries get driven through that zone quickly. This obviously means there's less money to give to other people.

sfn42 2y ago

Those people are full of shit. I'm Norwegian and a software engineer. Income tax generally tops out at about 46%, if you earn $200k you'll pay around 40%, at $500k you'll pay like 46% or so and it doesnt go much higher than that even if you earn a million dollars (10 million nok). So the difference between earning a decent salary of $80-100k and a great salary north of $150k isn't much tax-percent-wise. If you make another $1000 you take home about $500. Also keep in mind we don't have to pay for health insurance, we don't have to pay for our kids to go to school, if we get sick and can't work we have a social security net that will take care of us indefinitely. Norway is a great place to live. The people who complain about taxes are idiots who don't know how good they have it. If you make $200k+ you're living a fucking great life, if you make $400k it's even better. Hell i used to make like $35k and I got by on that. $50k is perfectly liveable. And those people pay like 20-25%. I'm happy to pay taxes, I'm doing great and I don't even earn that much yet. I expect to nearly double my salary within the next 5ish years. Maybe more than double. Then you have middle class+ Norwegians with a big house, $100k+ car, sweet boat, cabin in the mountains etc complaining about taxes. Man shut up you're literally top .1% in the world you won the damn lottery.