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I’d be curious to see this broken down further. Consumer spending seems to me a better way of measuring wealth, as in wealth inequality for public policy purpos

I’d be curious to see this broken down further. Consumer spending seems to me a better way of measuring wealth, as in wealth inequality for public policy purposes than paper wealth reflected in stock valuations.

gruez 2y ago
In general: consumption inequality < income inequality < wealth inequality https://cepr.org/voxeu/columns/consumption-and-income-inequality-us-1960s https://cepr.org/voxeu/columns/consumption-and-income-inequa...
- ncallaway 2y ago
  Which is why consumption taxes tend to be some of the more regressive forms of taxation we have. If you’re poor, you tend to have to spend a much higher fraction of your wealth on consumption just to survive.
  - BobbyJo 2y ago
    I feel like a sales tax coupled with a 0% rate on the first X$ of spending would be a sweet spot. Could use a card or something to track taxes per person spending at the register. No tax filing, still lower rates for poor people. That'd be nice.
    - cogman10 2y ago
      How would you track it? But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). Sales tax only explicitly favors wealth concentration. The more money you have the more you can defer and invest to accumulate more wealth. If you don't have enough money then it's impossible to ever start accumulating.
      - newAccount2025 2y ago
        Maybe ending inheritance or making money expire would be a good idea? It all feels like aristocracy to me now.
        cogman10 2y ago
        An easy first step is simply raising taxes. They are ridiculously low. But further, I'm partial to the wealth tax (or a property tax). Couple that with social spending which will hyper juice the economy. The more needs we have provided, the more excess wealth can be spent on luxuries which is what encourages capitalism in flourish in the first place. There are ancillary benefits to having a progressive and aggressive tax system. If there's one thing business owners hate, it's giving money to the government. So if they can avoid being taxed by hiring more employees or paying them a higher salary, that's exactly what they'll do. It flips the incentives around revenue and pushes businesses to invest in the business. That was a huge driving factor of the innovations in the 60s, 70, and early 80s. We've been stagnating since mainly because the government has been slowly pulling back on taxation making it much more profitable to horde rather than invest and innovate.
      - JamesBarney 2y ago
        > But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. > For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). What you're describing is a recession do the a drop in aggregate demand. Yeah this is bad and we have monetary and fiscal policy to reverse it. And usually monetary and fiscal policy are better because if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Not to mention we are currently do not have that problem, which is why we have inflation above target. I think there are a lot of good reasons to tax the rich (and upper middle class) more, like our ballooning deficit, but creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them.
    - Cerium 2y ago
      Just assume that the money will be spent and put a $X*tax-rate refundable credit on the tax return.
      - BobbyJo 2y ago
        Income taxes require extra infrastructure. If you can do everything buy-side, it'd cost less to implement I think.
    - daveguy 2y ago
      That sounds rather dystopian to me. Tracking all spending by each person individually. It'd be like forcing the population to use something like Bitcoin, but with every address registered to a citizen. That's a big nope from me. We could just tax higher income more and extreme wealth.

gruez 2y ago

In general: consumption inequality < income inequality < wealth inequality https://cepr.org/voxeu/columns/consumption-and-income-inequality-us-1960s https://cepr.org/voxeu/columns/consumption-and-income-inequa...

ncallaway 2y ago
Which is why consumption taxes tend to be some of the more regressive forms of taxation we have. If you’re poor, you tend to have to spend a much higher fraction of your wealth on consumption just to survive.
- BobbyJo 2y ago
  I feel like a sales tax coupled with a 0% rate on the first X$ of spending would be a sweet spot. Could use a card or something to track taxes per person spending at the register. No tax filing, still lower rates for poor people. That'd be nice.
  - cogman10 2y ago
    How would you track it? But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). Sales tax only explicitly favors wealth concentration. The more money you have the more you can defer and invest to accumulate more wealth. If you don't have enough money then it's impossible to ever start accumulating.
    - newAccount2025 2y ago
      Maybe ending inheritance or making money expire would be a good idea? It all feels like aristocracy to me now.
      - cogman10 2y ago
        An easy first step is simply raising taxes. They are ridiculously low. But further, I'm partial to the wealth tax (or a property tax). Couple that with social spending which will hyper juice the economy. The more needs we have provided, the more excess wealth can be spent on luxuries which is what encourages capitalism in flourish in the first place. There are ancillary benefits to having a progressive and aggressive tax system. If there's one thing business owners hate, it's giving money to the government. So if they can avoid being taxed by hiring more employees or paying them a higher salary, that's exactly what they'll do. It flips the incentives around revenue and pushes businesses to invest in the business. That was a huge driving factor of the innovations in the 60s, 70, and early 80s. We've been stagnating since mainly because the government has been slowly pulling back on taxation making it much more profitable to horde rather than invest and innovate.
    - JamesBarney 2y ago
      > But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. > For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). What you're describing is a recession do the a drop in aggregate demand. Yeah this is bad and we have monetary and fiscal policy to reverse it. And usually monetary and fiscal policy are better because if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Not to mention we are currently do not have that problem, which is why we have inflation above target. I think there are a lot of good reasons to tax the rich (and upper middle class) more, like our ballooning deficit, but creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them.
  - Cerium 2y ago
    Just assume that the money will be spent and put a $X*tax-rate refundable credit on the tax return.
    - BobbyJo 2y ago
      Income taxes require extra infrastructure. If you can do everything buy-side, it'd cost less to implement I think.
  - daveguy 2y ago
    That sounds rather dystopian to me. Tracking all spending by each person individually. It'd be like forcing the population to use something like Bitcoin, but with every address registered to a citizen. That's a big nope from me. We could just tax higher income more and extreme wealth.