5 ms·

If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income

by cco 2y ago

If I've said it once I've said it a thousand times, there is no cogent and respectable argument for why income from labor is taxed at a higher rate than income from capital. I hope we start there, a very simple and straightforward action to take.

xdavidliu 2y ago
my guess is because capital has more options than labor, and the decision makers since time immemorial are more afraid of capital leaving than labor leaving
- Aromasin 2y ago
  This seems backwards to me. Labour can leave; someone can get on a plane in the UK where they get taxed 40%, and arrive in Dubai where they're taxed 0. Their buildings and assets can't come with them however. Capital that's not ethereal assets like stocks, shares, credit, etc, can't be moved. If you want to leave the country you need to become liquid, which means you sell off your assets and whoever is left in the country gets to buy them at cheaper rates. The issue is when we allow people who do not live or pay tax in this country to make profit on assets in said country. A landlord who lives in the Cayman Islands should not be able to collect rent on UK assets while not paying the UK government tax in turn.
  - xdavidliu 2y ago
    > This seems backwards to me. Labour can leave; someone can get on a plane most labor does not individually have the means to leave like that. also, you're talking about capital moving as in already-invested capital, while I'm talking about the people with capital making decisions to invest in the first place.
_1tem 2y ago
Why should income from labor be taxed at all? Income taxes strike me as fundamentally wrong.
- digdugdirk 2y ago
  What is your preferred alternative to fund basic common services required for a modern society? And what are the pros/cons and outcomes of your preferred alternative?
  - _1tem 2y ago
    Do you know what happens to your income tax when you pay it to the government? They destroy it (if it's cash), or simplify nullify electronic values. The government literally prints money, it doesn't need your taxes to "make" money. Income taxes were invented before the creation of fiat (non-gold backed) currency. Lots of countries in the world operate without income taxes.
    - trial3 2y ago
      > Lots of countries in the world operate without income taxes. Okay, but "lots" feels untrue and saying "operate" is borderline deceptive - there are 21 that I can find from a random infographic [0]. Human rights superstars like the UAE, NK, Brunei, and Saudi Arabia; above-board corporate havens like the Cayman Islands; and places I can't come up with a quippy joke about like Monaco or Vatican City. I'm no geopolitics expert, but it looks like one thing that "functional sovereign states meaningfully participating in the world stage without oil money or some clear outside source of capital" all have in common is income taxes. [0] https://www.visualcapitalist.com/charted-a-handy-list-of-countries-with-no-income-taxes/ https://www.visualcapitalist.com/charted-a-handy-list-of-cou...
    - KolmogorovComp 2y ago
      > Lots of countries in the world operate without income taxes. Can you give some examples? Do you think you live better in those countries than those with taxes?
      - _1tem 2y ago
        Monaco is one of the nicest places on earth. Lots of wealthy people go there to retire or just live.
eli_gottlieb 2y ago
The noncogent and unrespectable argument is that labor is less liquid and more difficult to move around for tax-dodging purposes than capital. States have been reduced to opportunists in the realm of taxation and tax enforcement.
adammarples 2y ago
The very often stated argument is that labour is risk free, while putting your own capital up to start a business is risky.
RivieraKid 2y ago
Look up "optimal taxation in theory and practice", where they suggest that capital income should be untaxed, at least in expectation.
mdnahas 2y ago
Economist here. If you’re looking for what to tax instead of income, the best things are: land, pollution and consumption. Land is great because people will not use less of it, no matter how high the tax. Pollution is great to tax, because we want to produce less of it. Consumption (or purchases or spending) is good to tax because economic growth is good and this tax encourages investment rather than spending your wealth. The most common consumption taxes are the sales tax or VAT tax. You may have heard of consumption taxes described as “regressive “, but that comes from looking at only part of the policy. For example, a universal basic income funded by a sales or VAT tax would see the poor better off than the rich.
- cambaceres 2y ago
  I'm no economist, but wouldn't high taxes on consumption hold back economic growth?
  - lurk2 2y ago
    It would likely result in a drop in discretionary consumer spending, but would not necessarily have negative impacts on the economy as a whole. If you tax consumption, investment can become more economically attractive. This destroys consumer surplus in the short run but can lead to economic growth in the long run. Lots of countries in South America are like this; they tax goods like smartphones and video games because they would rather that money be spent or invested domestically.
- casey2 2y ago
  "Pollution" is not great to tax if you want a functioning society. Since apparently Carbon Dioxide is considered pollution now you have somehow defined the very action of living and working as taxable. Not going to end well. Consumption tax leads to LESS investment because it leads to LESS viable companies over all. So unless you goal is More investement into a handful of megacorps you shouldn't do this. Land tax is horrible because it's already our most abundant untapped resource, maybe in dense urban environments it might be justifiable, but that's it. Stop trying all this dumb shit just say "suburban tax" if you want to make a tax that targets suburbanites. People appreciate honesty more than BS! Democracies can't function without it! The entire point of having representatives is to taxes that the people don't want, if they can't do that then American democracy has already failed decades before Trump.

by cco 2y ago

xdavidliu 2y ago

my guess is because capital has more options than labor, and the decision makers since time immemorial are more afraid of capital leaving than labor leaving

Aromasin 2y ago
This seems backwards to me. Labour can leave; someone can get on a plane in the UK where they get taxed 40%, and arrive in Dubai where they're taxed 0. Their buildings and assets can't come with them however. Capital that's not ethereal assets like stocks, shares, credit, etc, can't be moved. If you want to leave the country you need to become liquid, which means you sell off your assets and whoever is left in the country gets to buy them at cheaper rates. The issue is when we allow people who do not live or pay tax in this country to make profit on assets in said country. A landlord who lives in the Cayman Islands should not be able to collect rent on UK assets while not paying the UK government tax in turn.
- xdavidliu 2y ago
  > This seems backwards to me. Labour can leave; someone can get on a plane most labor does not individually have the means to leave like that. also, you're talking about capital moving as in already-invested capital, while I'm talking about the people with capital making decisions to invest in the first place.

_1tem 2y ago

Why should income from labor be taxed at all? Income taxes strike me as fundamentally wrong.

digdugdirk 2y ago
What is your preferred alternative to fund basic common services required for a modern society? And what are the pros/cons and outcomes of your preferred alternative?
- _1tem 2y ago
  Do you know what happens to your income tax when you pay it to the government? They destroy it (if it's cash), or simplify nullify electronic values. The government literally prints money, it doesn't need your taxes to "make" money. Income taxes were invented before the creation of fiat (non-gold backed) currency. Lots of countries in the world operate without income taxes.
  - trial3 2y ago
    > Lots of countries in the world operate without income taxes. Okay, but "lots" feels untrue and saying "operate" is borderline deceptive - there are 21 that I can find from a random infographic [0]. Human rights superstars like the UAE, NK, Brunei, and Saudi Arabia; above-board corporate havens like the Cayman Islands; and places I can't come up with a quippy joke about like Monaco or Vatican City. I'm no geopolitics expert, but it looks like one thing that "functional sovereign states meaningfully participating in the world stage without oil money or some clear outside source of capital" all have in common is income taxes. [0] https://www.visualcapitalist.com/charted-a-handy-list-of-countries-with-no-income-taxes/ https://www.visualcapitalist.com/charted-a-handy-list-of-cou...
  - KolmogorovComp 2y ago
    > Lots of countries in the world operate without income taxes. Can you give some examples? Do you think you live better in those countries than those with taxes?
    - _1tem 2y ago
      Monaco is one of the nicest places on earth. Lots of wealthy people go there to retire or just live.

eli_gottlieb 2y ago

The noncogent and unrespectable argument is that labor is less liquid and more difficult to move around for tax-dodging purposes than capital. States have been reduced to opportunists in the realm of taxation and tax enforcement.

adammarples 2y ago

The very often stated argument is that labour is risk free, while putting your own capital up to start a business is risky.

RivieraKid 2y ago

Look up "optimal taxation in theory and practice", where they suggest that capital income should be untaxed, at least in expectation.

mdnahas 2y ago

Economist here. If you’re looking for what to tax instead of income, the best things are: land, pollution and consumption. Land is great because people will not use less of it, no matter how high the tax. Pollution is great to tax, because we want to produce less of it. Consumption (or purchases or spending) is good to tax because economic growth is good and this tax encourages investment rather than spending your wealth. The most common consumption taxes are the sales tax or VAT tax. You may have heard of consumption taxes described as “regressive “, but that comes from looking at only part of the policy. For example, a universal basic income funded by a sales or VAT tax would see the poor better off than the rich.

cambaceres 2y ago
I'm no economist, but wouldn't high taxes on consumption hold back economic growth?
- lurk2 2y ago
  It would likely result in a drop in discretionary consumer spending, but would not necessarily have negative impacts on the economy as a whole. If you tax consumption, investment can become more economically attractive. This destroys consumer surplus in the short run but can lead to economic growth in the long run. Lots of countries in South America are like this; they tax goods like smartphones and video games because they would rather that money be spent or invested domestically.
casey2 2y ago
"Pollution" is not great to tax if you want a functioning society. Since apparently Carbon Dioxide is considered pollution now you have somehow defined the very action of living and working as taxable. Not going to end well. Consumption tax leads to LESS investment because it leads to LESS viable companies over all. So unless you goal is More investement into a handful of megacorps you shouldn't do this. Land tax is horrible because it's already our most abundant untapped resource, maybe in dense urban environments it might be justifiable, but that's it. Stop trying all this dumb shit just say "suburban tax" if you want to make a tax that targets suburbanites. People appreciate honesty more than BS! Democracies can't function without it! The entire point of having representatives is to taxes that the people don't want, if they can't do that then American democracy has already failed decades before Trump.