5 ms·

The latter makes sense. We also don't let steam engines and carts pay taxes just because they 'replace' (=displace) human labor. Don't tax tools or income, tax

The latter makes sense. We also don't let steam engines and carts pay taxes just because they 'replace' (=displace) human labor. Don't tax tools or income, tax the accumulation of it: wealth.

Terr_ 10mo ago
Taxing wealth is much harder on a practical and algorithmic level than taxing income. But either way, taxing the tool is micromanaging the problem, and some powerful people cynically promote that because they can aim the details away from themselves.
- smikhanov 10mo ago
  I need to think about this more, but the first thing that comes to my mind is not that this looks like “taxing the tool”, but that this can (ought to?) be similar to an alcohol or a fuel duty. Nobody calls alcohol duty “micromanagement”. For products like petrol, it’s widely known that from money paid for a liter when it’s sold, say, in the UK, more money stays in the UK’s government pocket via a complex web of taxes and duties, than profits the oil production company that supplied crude oil for that petrol. Maybe taxing a kWh of the AI data center energy consumption should be a thing? I don’t know.
  - nextaccountic 10mo ago
    > Maybe taxing a kWh of the AI data center energy consumption should be a thing? That sounds excellent. Also water usage. Really, AI has externalities and it should pay for it.
    - nairboon 10mo ago
      That would be a highly bureaucratic solution with significant overheads. Would everyone pay extra tax per kWh or just AI computers? Tax it on the producer or consumer side? How would you verify that a particular data center is "bad computation" and needs a different tax rate on its energy usage. Should an AI data center from pharmaceuticals or biotech startup be taxed extra per kWh, even if the AI is purely used for medical research?
      - nextaccountic 10mo ago
        Just big AI datacenters. If this encourages people to run local AI, all the better. > Should an AI data center from pharmaceuticals or biotech startup be taxed extra per kWh, even if the AI is purely used for medical research? That's not a gotcha.. those are all policy choices. My personal preference is, yes, of course - medical research today is taxed just fine. If there's lobbying to specifically grant tax benefits to medical research, I can see an exception being carved.
        delaminator 10mo ago
        You think multiple localised heat centres are more efficient than centralised managed heat centres. Why don't we all just have a coal-fired power station in our back garden?
  - blitzar 10mo ago
    Alcohol duty, levies on cigarettes, gambling, sugar taxes etc are considered "sin taxes" and are certainly micromanagement. “taxing the tool” makes me think of transaction taxes, like a tobin tax https://en.wikipedia.org/wiki/Tobin_tax https://en.wikipedia.org/wiki/Tobin_tax
    - smikhanov 10mo ago
      Well, fuel duty is a better example then
  - pjc50 10mo ago
    > Nobody calls alcohol duty “micromanagement”. They don't, but it really is! There's different rates for different specific gravity and different processes. Re: petrol, I note that the UK government is trying to replace this as part of the EV transition with a milage tax, which is proving controversial and fiddly. Energy tax is a hugely fraught political issue. The "poster child" for cheap energy is a little old lady huddled over a 1kW one bar electric heater. Energy bills are a big "fixed" cost for households. Many small businesses have been affected by energy price rises - e.g. restaurants. And yet at the other end AI represents such a huge deployment of capital expenditure that it's distorting prices for everything else - energy, RAM, and so on. I think I'd favor a "personal allowance" model similar to income tax, where you get the first X units of energy tax free and then have to pay VAT, carbon taxes etc. on the rest of it.
    - ben_w 10mo ago
      > I think I'd favor a "personal allowance" model similar to income tax, where you get the first X units of energy tax free and then have to pay VAT, carbon taxes etc. on the rest of it. I can see why this is tempting, but I think there's a better way to legislate with this, especially with that poster child. I'm a landlord of a flat. I used to live in it before I left the UK. The EPC rating is D, so despite the double glazing it's still pretty cold in winter. I am now living in a fancy new-build in Berlin which, despite being 3 times the size of that flat, can be kept warm for 10 months of the year just by body heat and waste energy from the white goods — even with higher electricity costs in Germany, it costs less to be comfortable in this building in a T-shirt all year round (even while snow is falling outside), than to be wearing fleeces and sleeping with hot water bottles and still not be completely comfortable in that flat in the UK. A few years back there was a proposal for legislation that would increase the requirements for all rental property to be at minimum C-rated by 2030, as I understand it this was dropped and the current minimum is F or something ridiculous like that. My agent's advice is to not do anything until the legislation is actually sorted, even though I'm happy to spend whatever to upgrade the place, because until you know what the legislation demands there's always a risk of doing the wrong work beforehand, having to rip it out and put something else in. IMO, government should push for this kind of boost, as it has with other energy-saving and insulation-boosting measures. My first rental after graduation was a Welsh solid stone wall construction; like the example you gave, I couldn't keep warm there even with the electric bar heater a meter from me.
  - baobun 10mo ago
    The issue I have with your proposal is that it discloses too much metadata to tax authorities in order to enforce compliance. They'll have an almost perfect map of the legal compute in their jurisdiction. Access to compute should be free to all and not gated by taxes. Tax on electricity is already a thing. That can be adjusted and even be made progressive. Extra for fossils and so on.
- mcny 10mo ago
  I think the simplest explanation is also the best one. Like you said, it is very difficult to tax wealth. I think we have no option other than taxing loans and other money movements like that in sufficiently large scale as ordinary income. If I get a loan for USD 200k for a house once a year, I think it isn't income but if ElMo gets loans worth USD 20M a year, every year, he should pay income tax on all of that as if it was ordinary income. How he pays it? I don't care. Sell some assets. Oh and that sale is also taxable.
  - snovv_crash 10mo ago
    Tax physical assets. Someone has to pay otherwise it gets confiscated by the government. Then exact ownership doesn't matter.
    - Terr_ 10mo ago
      How do you determine the "value" or an original painting which the current holder acquired 40 years ago in for $X francs?
      - snovv_crash 10mo ago
        By offering to buy it.
- graemep 10mo ago
  > Taxing wealth is much harder on a practical and algorithmic level than taxing income. Depends on the tax. It is a lot easier to move move profits to a low tax jurisdiction than it is to move land or machinery. > But either way, taxing the tool is micromanaging the problem, and some powerful people cynically promote that because they can aim the details away from themselves. I definitely agree with that. There are all sorts of problems. Do you tax this notional "income" where the work is done or where the AI runs or where the company that owns it is incorporated?
- nairboon 10mo ago
  > Taxing wealth is much harder on a practical and algorithmic level than taxing income. I find this argument somewhat unconvincing. Where is most of the wealth? In hard assets, such as real estate and financial assets, such as stocks and bonds. The former are very difficult to hide, for obvious reasons. As for the latter, the ownership of every single share is recorded in large databases (e.g. DTCC, Clearstream and Euroclear). In that sense, the "physical location" of most of the wealth is well known, so in theory it should really not be difficult to tax it.
  - darkwater 10mo ago
    But financial assets do not need physical space, so they can be tied to smaller countries which will be very happy to tax them at a lower rate so they can "steal them" from the original country where they were generated.
    - gunalx 10mo ago
      You can still tax based on the persons residence or citizenship. In the end someone can be attributed to wealth, and if they want to stay where they are physically, they should also tax like it.
    - dns_snek 10mo ago
      You can take your financial assets with you but they're ultimately worthless, they're just a construct that represents something which has real value, like shares of a company: its real estate, inventory, employees, institutional knowledge, and future productive output have real value, your piece of paper doesn't. Distribution of wealth is about the distribution of real resources, especially control over human labor. And that underlying thing can always be taxed, optimized, or even repurposed to better serve the needs of society.
  - TheOtherHobbes 10mo ago
    Financial assets are extremely easy to hide. Set up an international chain of shell companies, foundations, and trusts, install a fake beneficial owner or trustee or two at various points, carve out deductibles for IP and "services", and the ownership becomes completely opaque. And that's just the legal version. I know someone who used to work as a business lawyer. She spent years trying to track down the true owners in various cases. At the very least it's an expensive business. And sometimes it just couldn't be done. Of course governments can cut the knot with physical assets, walk into a building with troops and/or police, and say "This is ours now." Or they can order banks to hand over the money in accounts. But before they can do that, there has to be some certainty about the owner. And even getting part way there can take a while and cost a lot.
- dgb23 10mo ago
  Switzerland taxes wealth instead of capital gains (except for professional investors). In some ways taxing wealth is quite simple, because wealth is already meticulously recorded via contracts and owners go out of their way to estimate the magnitude of their wealth for example to borrow money or for other financial and economic obligations. Another approach would be to tax capital gains at the same rate as income and introduce additional top brackets. I have a hard time to find a good faith reason for capital gains to be taxed less than labor.
  - lingrush4 10mo ago
    Capital gains are risky to generate. Many investments completely fail and when that happens, investors get very little tax relief. If you increase capital gains tax, the more risky ideas will no longer be viable investment vehicles even though some of them would have been successful. Across the entire economy, the net effect will be less innovation, stagnation, and loss of power relative to foreign countries. Tax rates are carefully tuned to maximize tax revenue without unduly disincentivizing production. To change them purely based on vibes would be catastrophically stupid. Please don't vote.
    - Orygin 10mo ago
      > Many investments completely fail and when that happens, investors get very little tax relief I don't really believe it. Investment is always incentivized by tax breaks and other political gifts. But once things turn bad it's the citizen's turn to pay for it. Fire all staff? We pay for unemployment. Pollute the soil? We pay for cleanup. Empty the water table? Guess who's gonna depend on the state for clean water... > To change them purely based on vibes would be catastrophically stupid. Please tell that to every neo liberal in my country. Reducing taxes on the rich seems to be their passtime, while every time some kind of capital gain is mentioned, everyone and their dogs become experts in economics and can tell you it's folly. > Please don't vote. Please don't look down on others.
    - dgb23 10mo ago
      > Capital gains are risky to generate. Many investments completely fail and when that happens, investors get very little tax relief. You seem to conflate and misunderstand a few things here. For one, capital gains are paid out from profits, so they leave the company's budget and are not part of investment. Secondly, holding stock and stock trading has been immensely profitable, relatively low risk and require little if done reasonably and over long periods. More and more studies are affirming that simply buying index funds and holding them over long periods is _less_ risky than buying bonds. > Tax rates are carefully tuned to maximize tax revenue without unduly disincentivizing production. They reflect power relations and tax competition more than anything. > To change them purely based on vibes would be catastrophically stupid. Not based on "vibes". The people who actually generate wealth are workers and consumers, not stock holders. > Please don't vote. We should mutually respect our rights to vote even if we disagree.
- iso1631 10mo ago
  Raising money through taxing wealth is far easier than raising money through taxing income when nobody has jobs.
woile 10mo ago
We actually have "juridical person" in most countries. I think AI would be ideal for that
amelius 10mo ago
> We also don't let steam engines and carts pay taxes just because they 'replace' (=displace) human labor. It is funny because in the copyright debate, AI is often treated as human. Like "we didn't steal your data, the AI just learned from it!"
- kranke155 10mo ago
  They will use the analogy that’s most advantageous to them at any point.
estearum 10mo ago
Just tax land. Problem solved.

The latter makes sense. We also don't let steam engines and carts pay taxes just because they 'replace' (=displace) human labor. Don't tax tools or income, tax the accumulation of it: wealth.

Terr_ 10mo ago

Taxing wealth is much harder on a practical and algorithmic level than taxing income. But either way, taxing the tool is micromanaging the problem, and some powerful people cynically promote that because they can aim the details away from themselves.

smikhanov 10mo ago
I need to think about this more, but the first thing that comes to my mind is not that this looks like “taxing the tool”, but that this can (ought to?) be similar to an alcohol or a fuel duty. Nobody calls alcohol duty “micromanagement”. For products like petrol, it’s widely known that from money paid for a liter when it’s sold, say, in the UK, more money stays in the UK’s government pocket via a complex web of taxes and duties, than profits the oil production company that supplied crude oil for that petrol. Maybe taxing a kWh of the AI data center energy consumption should be a thing? I don’t know.
- nextaccountic 10mo ago
  > Maybe taxing a kWh of the AI data center energy consumption should be a thing? That sounds excellent. Also water usage. Really, AI has externalities and it should pay for it.
  - nairboon 10mo ago
    That would be a highly bureaucratic solution with significant overheads. Would everyone pay extra tax per kWh or just AI computers? Tax it on the producer or consumer side? How would you verify that a particular data center is "bad computation" and needs a different tax rate on its energy usage. Should an AI data center from pharmaceuticals or biotech startup be taxed extra per kWh, even if the AI is purely used for medical research?
    - nextaccountic 10mo ago
      Just big AI datacenters. If this encourages people to run local AI, all the better. > Should an AI data center from pharmaceuticals or biotech startup be taxed extra per kWh, even if the AI is purely used for medical research? That's not a gotcha.. those are all policy choices. My personal preference is, yes, of course - medical research today is taxed just fine. If there's lobbying to specifically grant tax benefits to medical research, I can see an exception being carved.
      - delaminator 10mo ago
        You think multiple localised heat centres are more efficient than centralised managed heat centres. Why don't we all just have a coal-fired power station in our back garden?
- blitzar 10mo ago
  Alcohol duty, levies on cigarettes, gambling, sugar taxes etc are considered "sin taxes" and are certainly micromanagement. “taxing the tool” makes me think of transaction taxes, like a tobin tax https://en.wikipedia.org/wiki/Tobin_tax https://en.wikipedia.org/wiki/Tobin_tax
  - smikhanov 10mo ago
    Well, fuel duty is a better example then
- pjc50 10mo ago
  > Nobody calls alcohol duty “micromanagement”. They don't, but it really is! There's different rates for different specific gravity and different processes. Re: petrol, I note that the UK government is trying to replace this as part of the EV transition with a milage tax, which is proving controversial and fiddly. Energy tax is a hugely fraught political issue. The "poster child" for cheap energy is a little old lady huddled over a 1kW one bar electric heater. Energy bills are a big "fixed" cost for households. Many small businesses have been affected by energy price rises - e.g. restaurants. And yet at the other end AI represents such a huge deployment of capital expenditure that it's distorting prices for everything else - energy, RAM, and so on. I think I'd favor a "personal allowance" model similar to income tax, where you get the first X units of energy tax free and then have to pay VAT, carbon taxes etc. on the rest of it.
  - ben_w 10mo ago
    > I think I'd favor a "personal allowance" model similar to income tax, where you get the first X units of energy tax free and then have to pay VAT, carbon taxes etc. on the rest of it. I can see why this is tempting, but I think there's a better way to legislate with this, especially with that poster child. I'm a landlord of a flat. I used to live in it before I left the UK. The EPC rating is D, so despite the double glazing it's still pretty cold in winter. I am now living in a fancy new-build in Berlin which, despite being 3 times the size of that flat, can be kept warm for 10 months of the year just by body heat and waste energy from the white goods — even with higher electricity costs in Germany, it costs less to be comfortable in this building in a T-shirt all year round (even while snow is falling outside), than to be wearing fleeces and sleeping with hot water bottles and still not be completely comfortable in that flat in the UK. A few years back there was a proposal for legislation that would increase the requirements for all rental property to be at minimum C-rated by 2030, as I understand it this was dropped and the current minimum is F or something ridiculous like that. My agent's advice is to not do anything until the legislation is actually sorted, even though I'm happy to spend whatever to upgrade the place, because until you know what the legislation demands there's always a risk of doing the wrong work beforehand, having to rip it out and put something else in. IMO, government should push for this kind of boost, as it has with other energy-saving and insulation-boosting measures. My first rental after graduation was a Welsh solid stone wall construction; like the example you gave, I couldn't keep warm there even with the electric bar heater a meter from me.
- baobun 10mo ago
  The issue I have with your proposal is that it discloses too much metadata to tax authorities in order to enforce compliance. They'll have an almost perfect map of the legal compute in their jurisdiction. Access to compute should be free to all and not gated by taxes. Tax on electricity is already a thing. That can be adjusted and even be made progressive. Extra for fossils and so on.
mcny 10mo ago
I think the simplest explanation is also the best one. Like you said, it is very difficult to tax wealth. I think we have no option other than taxing loans and other money movements like that in sufficiently large scale as ordinary income. If I get a loan for USD 200k for a house once a year, I think it isn't income but if ElMo gets loans worth USD 20M a year, every year, he should pay income tax on all of that as if it was ordinary income. How he pays it? I don't care. Sell some assets. Oh and that sale is also taxable.
- snovv_crash 10mo ago
  Tax physical assets. Someone has to pay otherwise it gets confiscated by the government. Then exact ownership doesn't matter.
  - Terr_ 10mo ago
    How do you determine the "value" or an original painting which the current holder acquired 40 years ago in for $X francs?
    - snovv_crash 10mo ago
      By offering to buy it.
graemep 10mo ago
> Taxing wealth is much harder on a practical and algorithmic level than taxing income. Depends on the tax. It is a lot easier to move move profits to a low tax jurisdiction than it is to move land or machinery. > But either way, taxing the tool is micromanaging the problem, and some powerful people cynically promote that because they can aim the details away from themselves. I definitely agree with that. There are all sorts of problems. Do you tax this notional "income" where the work is done or where the AI runs or where the company that owns it is incorporated?
nairboon 10mo ago
> Taxing wealth is much harder on a practical and algorithmic level than taxing income. I find this argument somewhat unconvincing. Where is most of the wealth? In hard assets, such as real estate and financial assets, such as stocks and bonds. The former are very difficult to hide, for obvious reasons. As for the latter, the ownership of every single share is recorded in large databases (e.g. DTCC, Clearstream and Euroclear). In that sense, the "physical location" of most of the wealth is well known, so in theory it should really not be difficult to tax it.
- darkwater 10mo ago
  But financial assets do not need physical space, so they can be tied to smaller countries which will be very happy to tax them at a lower rate so they can "steal them" from the original country where they were generated.
  - gunalx 10mo ago
    You can still tax based on the persons residence or citizenship. In the end someone can be attributed to wealth, and if they want to stay where they are physically, they should also tax like it.
  - dns_snek 10mo ago
    You can take your financial assets with you but they're ultimately worthless, they're just a construct that represents something which has real value, like shares of a company: its real estate, inventory, employees, institutional knowledge, and future productive output have real value, your piece of paper doesn't. Distribution of wealth is about the distribution of real resources, especially control over human labor. And that underlying thing can always be taxed, optimized, or even repurposed to better serve the needs of society.
- TheOtherHobbes 10mo ago
  Financial assets are extremely easy to hide. Set up an international chain of shell companies, foundations, and trusts, install a fake beneficial owner or trustee or two at various points, carve out deductibles for IP and "services", and the ownership becomes completely opaque. And that's just the legal version. I know someone who used to work as a business lawyer. She spent years trying to track down the true owners in various cases. At the very least it's an expensive business. And sometimes it just couldn't be done. Of course governments can cut the knot with physical assets, walk into a building with troops and/or police, and say "This is ours now." Or they can order banks to hand over the money in accounts. But before they can do that, there has to be some certainty about the owner. And even getting part way there can take a while and cost a lot.
dgb23 10mo ago
Switzerland taxes wealth instead of capital gains (except for professional investors). In some ways taxing wealth is quite simple, because wealth is already meticulously recorded via contracts and owners go out of their way to estimate the magnitude of their wealth for example to borrow money or for other financial and economic obligations. Another approach would be to tax capital gains at the same rate as income and introduce additional top brackets. I have a hard time to find a good faith reason for capital gains to be taxed less than labor.
- lingrush4 10mo ago
  Capital gains are risky to generate. Many investments completely fail and when that happens, investors get very little tax relief. If you increase capital gains tax, the more risky ideas will no longer be viable investment vehicles even though some of them would have been successful. Across the entire economy, the net effect will be less innovation, stagnation, and loss of power relative to foreign countries. Tax rates are carefully tuned to maximize tax revenue without unduly disincentivizing production. To change them purely based on vibes would be catastrophically stupid. Please don't vote.
  - Orygin 10mo ago
    > Many investments completely fail and when that happens, investors get very little tax relief I don't really believe it. Investment is always incentivized by tax breaks and other political gifts. But once things turn bad it's the citizen's turn to pay for it. Fire all staff? We pay for unemployment. Pollute the soil? We pay for cleanup. Empty the water table? Guess who's gonna depend on the state for clean water... > To change them purely based on vibes would be catastrophically stupid. Please tell that to every neo liberal in my country. Reducing taxes on the rich seems to be their passtime, while every time some kind of capital gain is mentioned, everyone and their dogs become experts in economics and can tell you it's folly. > Please don't vote. Please don't look down on others.
  - dgb23 10mo ago
    > Capital gains are risky to generate. Many investments completely fail and when that happens, investors get very little tax relief. You seem to conflate and misunderstand a few things here. For one, capital gains are paid out from profits, so they leave the company's budget and are not part of investment. Secondly, holding stock and stock trading has been immensely profitable, relatively low risk and require little if done reasonably and over long periods. More and more studies are affirming that simply buying index funds and holding them over long periods is _less_ risky than buying bonds. > Tax rates are carefully tuned to maximize tax revenue without unduly disincentivizing production. They reflect power relations and tax competition more than anything. > To change them purely based on vibes would be catastrophically stupid. Not based on "vibes". The people who actually generate wealth are workers and consumers, not stock holders. > Please don't vote. We should mutually respect our rights to vote even if we disagree.
iso1631 10mo ago
Raising money through taxing wealth is far easier than raising money through taxing income when nobody has jobs.

woile 10mo ago

We actually have "juridical person" in most countries. I think AI would be ideal for that

amelius 10mo ago

> We also don't let steam engines and carts pay taxes just because they 'replace' (=displace) human labor. It is funny because in the copyright debate, AI is often treated as human. Like "we didn't steal your data, the AI just learned from it!"

kranke155 10mo ago
They will use the analogy that’s most advantageous to them at any point.

estearum 10mo ago

Just tax land. Problem solved.