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Not to nitpick, but "taxing the 1% will solve our country's financial problems" comes off as a bit of a strawman. "Tax the rich" is a common sentiment, but I do

Not to nitpick, but "taxing the 1% will solve our country's financial problems" comes off as a bit of a strawman. "Tax the rich" is a common sentiment, but I don't often hear people saying the rest of it. There are plenty of plausible reasons one may want to tax the rich even if you don't believe it is a total solution. For one, you may be concerned about the power imbalance created when a handful of people have more wealth than half the country combined [0]. Recent developments have brought that concern into even sharper focus for many. 0. https://www.bloomberg.com/news/articles/2020-10-08/top-50-richest-people-in-the-us-are-worth-as-much-as-poorest-165-million https://www.bloomberg.com/news/articles/2020-10-08/top-50-ri...

silotis 2y ago
It's usually not stated so explicitly, but often implied by people who advocate for expansive entitlement programs. When pressed on how to pay for such programs, "tax the rich" is often their only answer.
- LPisGood 2y ago
  I think you’re misusing the word “entitlement” as it is used with respect to US government spending. Can you elaborate what you think the connection is?
- neilwilson 2y ago
  When the real answer is, you pay for it by spending the money. Because money is a circuit, tax is a percentage and money doesn’t stop at its first use.
  - willturman 2y ago
    The technical term for the number of times a dollar is spent in a given time period is the velocity of money [1]. The velocity of money in the United States has dropped sharply over the past 30 years [2] as inflation on inelastic goods like housing, education, healthcare, and food have far outstripped the consumer price index and people opt to spend their money buying things from large corporations instead of small businesses in their communities. The velocity of money is about as good a high-level measure of where the balance between “Wall Street and Main Street” lies as you’ll find - and there’s not much juice left to wring out from your typical American when a typical dollar is spent 1.2 times before it winds up accumulating interest in a billionaire’s bank account all over again (and that’s with the Federal government spending at unforeseen levels running an all time high and increasing deficit). [1] https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money [2] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
    - neilwilson 2y ago
      Nobody can measure the 'velocity of money', since that is determined by what you divide GDP by. And nobody knows what that is. Anybody decomposing GDP into "MV" first needs to explain what M is, and they can't.
    - littlestymaar 2y ago
      “Velocity of money” is an abstract theoretical concept from the monetarist book which is defined tautologically and has nothing to do with what it claims to be (which is annoyingly common in economics, “productivity” is the same)
riku_iki 2y ago
Rich in fact are not taxed much. High income people are taxed.
neilwilson 2y ago
Unfortunately that requires that the tax you apply to the rich has incidence on the rich. And of course it doesn’t because they have the power to pass the cost on and they do. Therefore “tax the rich” logically means “give the rich the power to choose who actually pays the tax” As it turns out the best way to “tax the rich” is to increase the number of competitors (Including, if necessary, publicly funded competitors. ) in their markets and squeeze the profit share down towards the zero theoretical minimum. Or “euthanise the rentiers” as somebody once said.
- achierius 2y ago
  This seems unfounded. How exactly would e.g. a hedge fund manager "pass along" their income tax? It feels like you're confusing this with corporate taxes.
  - neilwilson 2y ago
    They put their wages up, and then the firm demands greater returns from their investments to pay those wages and those investments then sack a load of people to increase the returns.
- littlestymaar 2y ago
  The Western world used to tax the rich much more than what we do now (check out income tax level under Nixon for instance, and it's not just about income tax). And as a results, they were much less powerful (the robber barons had disappeared for multiple decades before making a come back during the modern days gilded age).
  - neilwilson 2y ago
    It wasn't because of the tax levels. It was because there was tight immigration rules that were enforced and plenty of job opportunities. When you have a system that deliberately uses unemployment as its escape valve, then the costs just get passed on until somebody loses their job and can't do anything about it because there are not enough jobs to go around.
deleted 2y ago
[deleted]
concordDance 2y ago
> Not to nitpick, but "taxing the 1% will solve our country's financial problems" comes off as a bit of a strawman. I've seen it at least three times on hackernews and countless times on reddit.
tourmalinetaco 2y ago
Considering it was a heavily repeated slogan of Bernie Sanders in 2016, and a common sentiment from his vocal minority, it’s hardly a “strawman” (whatever that means in this context). You can see his focus on the “1%”/“0.1%” (which interestingly, the latter excludes millionaires like himself and would be the percentage taxed) on his website here: https://berniesanders.com/issues/tax-extreme-wealth/ https://berniesanders.com/issues/tax-extreme-wealth/
- istjohn 2y ago
  The very first words on the page you linked: "In order to reduce the outrageous level of inequality that exists in America today..." Nowhere does it say that this alone would solve our financial problems.
tristramb 2y ago
The history of very wealthy people bringing down democracies goes back to Julia Caesar and Pompey bringing down the Roman Republic, and probably even further. The question is, how to make democracy stable against interference by very wealthy people? One idea that occurred to me was to have non-linear money that becomes proportionately less valuable as it is accumulated into larger and larger amounts. Add $100 to $1000 and you increase that value by approximately $100, but add $100 to $1000000 and you only increase that value by say only $1. Of course this is impractical in this form, but this is in effect what progressive taxation does. So maybe a democracy could be made stable against billionaires by having progressive taxation which prevents people from accumulating more than a certain proportion of GDP, say. This would lead to a sort of capitalism in the small but communism in the large. The revenue from this progressive taxation wouldn't even need to fed into the governments fund's, if its purpose was to supress billionaires then it could just be destroyed or 'burnt' and still achieve its purpose. Another possibility would be to distribute it to the citizens of the country as a sort of 'divident to shareholders', but you would have to be careful with this because some would-be billionaires might use this as a lever to build their popularity. So a stable democracy would be a voting system plus an army (to prevent takeover from outside) plus progressive taxation (to prevent takeover from inside) plus a few other things to deal with things like citizenship and immigration.
- cutemonster 2y ago
  A rich person can then let their money stay in companies they own, and avoid taxation? Control the company by owning most shares, and make the company act on one's own behalf. Or move the money abroad and hide it, no one knows how much they have.
- cutemonster 2y ago
  > The question is, how to make democracy stable against interference ... from other nation states - an even harder question, in that they have even more money and tools like Twitter, TikTok, Facebook.

silotis 2y ago

It's usually not stated so explicitly, but often implied by people who advocate for expansive entitlement programs. When pressed on how to pay for such programs, "tax the rich" is often their only answer.

LPisGood 2y ago
I think you’re misusing the word “entitlement” as it is used with respect to US government spending. Can you elaborate what you think the connection is?
neilwilson 2y ago
When the real answer is, you pay for it by spending the money. Because money is a circuit, tax is a percentage and money doesn’t stop at its first use.
- willturman 2y ago
  The technical term for the number of times a dollar is spent in a given time period is the velocity of money [1]. The velocity of money in the United States has dropped sharply over the past 30 years [2] as inflation on inelastic goods like housing, education, healthcare, and food have far outstripped the consumer price index and people opt to spend their money buying things from large corporations instead of small businesses in their communities. The velocity of money is about as good a high-level measure of where the balance between “Wall Street and Main Street” lies as you’ll find - and there’s not much juice left to wring out from your typical American when a typical dollar is spent 1.2 times before it winds up accumulating interest in a billionaire’s bank account all over again (and that’s with the Federal government spending at unforeseen levels running an all time high and increasing deficit). [1] https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money [2] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
  - neilwilson 2y ago
    Nobody can measure the 'velocity of money', since that is determined by what you divide GDP by. And nobody knows what that is. Anybody decomposing GDP into "MV" first needs to explain what M is, and they can't.
  - littlestymaar 2y ago
    “Velocity of money” is an abstract theoretical concept from the monetarist book which is defined tautologically and has nothing to do with what it claims to be (which is annoyingly common in economics, “productivity” is the same)

riku_iki 2y ago

Rich in fact are not taxed much. High income people are taxed.

neilwilson 2y ago

Unfortunately that requires that the tax you apply to the rich has incidence on the rich. And of course it doesn’t because they have the power to pass the cost on and they do. Therefore “tax the rich” logically means “give the rich the power to choose who actually pays the tax” As it turns out the best way to “tax the rich” is to increase the number of competitors (Including, if necessary, publicly funded competitors. ) in their markets and squeeze the profit share down towards the zero theoretical minimum. Or “euthanise the rentiers” as somebody once said.

achierius 2y ago
This seems unfounded. How exactly would e.g. a hedge fund manager "pass along" their income tax? It feels like you're confusing this with corporate taxes.
- neilwilson 2y ago
  They put their wages up, and then the firm demands greater returns from their investments to pay those wages and those investments then sack a load of people to increase the returns.
littlestymaar 2y ago
The Western world used to tax the rich much more than what we do now (check out income tax level under Nixon for instance, and it's not just about income tax). And as a results, they were much less powerful (the robber barons had disappeared for multiple decades before making a come back during the modern days gilded age).
- neilwilson 2y ago
  It wasn't because of the tax levels. It was because there was tight immigration rules that were enforced and plenty of job opportunities. When you have a system that deliberately uses unemployment as its escape valve, then the costs just get passed on until somebody loses their job and can't do anything about it because there are not enough jobs to go around.

deleted 2y ago

[deleted]

concordDance 2y ago

> Not to nitpick, but "taxing the 1% will solve our country's financial problems" comes off as a bit of a strawman. I've seen it at least three times on hackernews and countless times on reddit.

tourmalinetaco 2y ago

Considering it was a heavily repeated slogan of Bernie Sanders in 2016, and a common sentiment from his vocal minority, it’s hardly a “strawman” (whatever that means in this context). You can see his focus on the “1%”/“0.1%” (which interestingly, the latter excludes millionaires like himself and would be the percentage taxed) on his website here: https://berniesanders.com/issues/tax-extreme-wealth/ https://berniesanders.com/issues/tax-extreme-wealth/

istjohn 2y ago
The very first words on the page you linked: "In order to reduce the outrageous level of inequality that exists in America today..." Nowhere does it say that this alone would solve our financial problems.

tristramb 2y ago

The history of very wealthy people bringing down democracies goes back to Julia Caesar and Pompey bringing down the Roman Republic, and probably even further. The question is, how to make democracy stable against interference by very wealthy people? One idea that occurred to me was to have non-linear money that becomes proportionately less valuable as it is accumulated into larger and larger amounts. Add $100 to $1000 and you increase that value by approximately $100, but add $100 to $1000000 and you only increase that value by say only $1. Of course this is impractical in this form, but this is in effect what progressive taxation does. So maybe a democracy could be made stable against billionaires by having progressive taxation which prevents people from accumulating more than a certain proportion of GDP, say. This would lead to a sort of capitalism in the small but communism in the large. The revenue from this progressive taxation wouldn't even need to fed into the governments fund's, if its purpose was to supress billionaires then it could just be destroyed or 'burnt' and still achieve its purpose. Another possibility would be to distribute it to the citizens of the country as a sort of 'divident to shareholders', but you would have to be careful with this because some would-be billionaires might use this as a lever to build their popularity. So a stable democracy would be a voting system plus an army (to prevent takeover from outside) plus progressive taxation (to prevent takeover from inside) plus a few other things to deal with things like citizenship and immigration.

cutemonster 2y ago
A rich person can then let their money stay in companies they own, and avoid taxation? Control the company by owning most shares, and make the company act on one's own behalf. Or move the money abroad and hide it, no one knows how much they have.
cutemonster 2y ago
> The question is, how to make democracy stable against interference ... from other nation states - an even harder question, in that they have even more money and tools like Twitter, TikTok, Facebook.