4 ms·

This is a bad deal. Capital makes the marginal worker more productive, not less. You can tax the worker and she will still be better off than if you had taxed

This is a bad deal. Capital makes the marginal worker more productive, not less. You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity. (This argument also applies to AI, of course. Since AI doesn't just instantly wipe out all jobs, there will be many workers that will benefit from it and will thus be quite able to fund their governments and social systems.) If you wish to tax some forms of "capital", or rather assets, you should focus on pure rent-generating assets like valuable urban land, or local exclusivity rights to parts of the EM spectrum.

robinhoode 11mo ago
> This is a bad deal. Capital makes the marginal worker more productive, not less. Why should workers care about being more productive if they do not reap the rewards in terms of wages? https://en.wikipedia.org/wiki/Decoupling_of_wages_from_productivity https://en.wikipedia.org/wiki/Decoupling_of_wages_from_produ...
- zozbot234 11mo ago
  Total compensation involves more than just wages. Providing benefits such as healthcare coverage is inherently expensive, since productivity gains in healthcare have been limited.
  - sailfast 11mo ago
    At least in the United States we are not getting this benefit. If AI does begin to really crater the job market, only owners of AI (yes including shareholders) will benefit but most folks do not own stock - or at least do not own any significant amount of stock.
  - grigri907 11mo ago
    The point still remains, it's not like I get double the healthcare if I increase productivity.
  - IAmBroom 11mo ago
    A bad-faith argument. Workers do not benefit in increased compensation of any sort when AI increases company productivity.
  - triceratops 11mo ago
    That's not such an ironclad argument lmao. If we are to believe Baumol's cost disease, rising productivity in other sectors is partly responsible for healthcare cost increase. Obviously I don't seriously believe we should depress productivity so that nurses make less money and hospital stays are cheaper. But, you know, it doesn't make it untrue.
- tt24 11mo ago
  This concept has been thoroughly debunked. Wages and productivity track each other very very well.
  - insane_dreamer 11mo ago
    That has not been true since the early 70s. Increases in productivity are multiples of the increase in wages since then. World Economic Forum: https://www.weforum.org/stories/2020/11/productivity-workforce-america-united-states-wages-stagnate/ https://www.weforum.org/stories/2020/11/productivity-workfor...
    - tt24 11mo ago
      This is misinformation and has been debunked at length. The graph compares median wage to mean productivity which is nonsensical.
      - yibg 11mo ago
        Isn't that the whole point? That as total productivity has increased (represented by the mean), the wage increase has gone to the top.
        tt24 11mo ago
        That’s because most of the productivity increases come from the top as well. Compare like to like. Mean productivity increase tracks mean wage increase super well, same for median productivity increase vs median wage increase.
      - Rexxar 11mo ago
        The people you are replying to are trying to have a meaningful discussion by providing references and some basic argumentation. Can you add some link or arguments that explain more strongly your point of view instead of using strong affirmations ('misinformation', 'debunked', 'nonsensical') without any trace of argumentation and no reference at all ?
airstrike 11mo ago
If your argument were true we should set taxes on capital to zero, which is quite obviously a bad idea.
- immibis 11mo ago
  If their argument were true we should set them as far negative as possible - we should tax 100% of labour and give all that money to capital owners. Which is kind of something that's already happening.
- mike_hearn 11mo ago
  No, that's been a common proposal from economists pretty much since people started examining how economies work. Some places do have a capital gains tax of zero. Switzerland is one of them, and Switzerland is economically more successful than the rest of Europe. Tax is one of those issues where there are actually correct and incorrect answers, thanks to many hundreds of years of active experimentation and relatively simple/robust theory. But people ignore the correct answers for social reasons. The correct answer on tax is: 1. Figure out how much money the state needs to supply the services that are in-scope for it to an acceptable level of quality. 2. Aim to raise that much in taxes. 3. Optimize deadweight costs. That is, configure taxes to minimize the level to which the activities being taxed are discouraged and driven either out of existence or abroad. If you do this sort of thing then you get Georgeism, you get zero capital gains, I think you get zero taxes on businesses, and a bunch of other policies I can't remember right now. The results can be economically very efficient i.e. they make everyone better off. However, almost nowhere uses them because there's nothing in the above three items about social engineering, and governments use taxation largely as a tool of social engineering. And in particular to please leftist voters who use the tax system to penalize wealth for its own sake, and to reward groups of client voters. Many governments also have a lot of trouble defining what's in scope for them and then working backwards to needed tax revenues; they prefer to raise as much tax as they can manage without totally crushing their economies and then find ways to spend it.
  - triceratops 11mo ago
    > Some places do have a capital gains tax of zero. Switzerland is one of them, and Switzerland is economically more successful than the rest of Europe. Tax Switzerland is a bad example because they tax capital more directly. In the form of a wealth tax. https://en.wikipedia.org/wiki/Taxation_in_Switzerland#Wealth_tax https://en.wikipedia.org/wiki/Taxation_in_Switzerland#Wealth... GP said setting taxes on capital to zero was a bad idea. Switzerland has only set capital gains taxes to zero. It still taxes capital.
ToucanLoucan 11mo ago
> Capital makes the marginal worker more productive, not less. You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity. Point one: higher productivity is not necessarily our goal. I could think of numerous industries that would make the world better if they did less work. Point two: There's a moral absurdity in taxing the wages earned by labor more heavily than the returns earned by ownership. One is tangible effort, the other is an abstraction backed by law. If anything, taxing capital should be the baseline, because it's the least tied to survival. Historically, when America was at its most broadly prosperous, capital gains and corporate profits were taxed at far higher rates than today. Point three: AI intensifies that calculus. If AI is deployed by capital to further replace or devalue labor, then taxing only the worker is punishing the displaced while rewarding the displacer. That's pure extraction. If we want social systems to survive, the burden has to fall on the owners of the machines, not the people being replaced by them. Genuinely one of the largest and most destructive ills of our society right now is that so tremendously more of our shared prosperity as a system is directed to those who do the least to create it.
- kiba 11mo ago
  It's both. You don't want to tax capital and income. VAT and sale tax are a bad idea too, especially since they're regressive. So, what do you tax? You tax land and land-like things, non-reproducible privileges(like patents and copyright), pollution and other negative externality. Now, there's an argument to be made that we couldn't possibly be able to fund governments on the back of these taxes. Fair enough, but it should mean we minimize those taxes until the economy grows enough to fund government services.
  - triceratops 11mo ago
    You don't want to tax pollution and other negative externalities to raise revenue though.
  - tenuousemphasis 11mo ago
    VAT is not regressive. https://taxfoundation.org/blog/value-added-tax-vat-progressive/ https://taxfoundation.org/blog/value-added-tax-vat-progressi...
grumpymuppet 11mo ago
It's not a matter of a "deal" to be made or agreed to, it's a matter of paying a fair share of the cost to organize a society. When Capital gets to reap dual benefits of revenue from business prospects and lobbying government directly to set the tax rules, then it can't ALSO offload outlaying to the public good that it DEPENDS on to make a profit. Avoiding tax through various loopholes that Capital gets a seat at the table to help craft, while benefitting from externalizing the costs to taxing labor is just corruption.
cced 11mo ago
> You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity. This assumes the worker is the one benefiting from the productivity gains. We're just worked more and we don't get the added value.
navane 11mo ago
Workers make capital productive.

robinhoode 11mo ago

> This is a bad deal. Capital makes the marginal worker more productive, not less. Why should workers care about being more productive if they do not reap the rewards in terms of wages? https://en.wikipedia.org/wiki/Decoupling_of_wages_from_productivity https://en.wikipedia.org/wiki/Decoupling_of_wages_from_produ...

zozbot234 11mo ago
Total compensation involves more than just wages. Providing benefits such as healthcare coverage is inherently expensive, since productivity gains in healthcare have been limited.
- sailfast 11mo ago
  At least in the United States we are not getting this benefit. If AI does begin to really crater the job market, only owners of AI (yes including shareholders) will benefit but most folks do not own stock - or at least do not own any significant amount of stock.
- grigri907 11mo ago
  The point still remains, it's not like I get double the healthcare if I increase productivity.
- IAmBroom 11mo ago
  A bad-faith argument. Workers do not benefit in increased compensation of any sort when AI increases company productivity.
- triceratops 11mo ago
  That's not such an ironclad argument lmao. If we are to believe Baumol's cost disease, rising productivity in other sectors is partly responsible for healthcare cost increase. Obviously I don't seriously believe we should depress productivity so that nurses make less money and hospital stays are cheaper. But, you know, it doesn't make it untrue.
tt24 11mo ago
This concept has been thoroughly debunked. Wages and productivity track each other very very well.
- insane_dreamer 11mo ago
  That has not been true since the early 70s. Increases in productivity are multiples of the increase in wages since then. World Economic Forum: https://www.weforum.org/stories/2020/11/productivity-workforce-america-united-states-wages-stagnate/ https://www.weforum.org/stories/2020/11/productivity-workfor...
  - tt24 11mo ago
    This is misinformation and has been debunked at length. The graph compares median wage to mean productivity which is nonsensical.
    - yibg 11mo ago
      Isn't that the whole point? That as total productivity has increased (represented by the mean), the wage increase has gone to the top.
      - tt24 11mo ago
        That’s because most of the productivity increases come from the top as well. Compare like to like. Mean productivity increase tracks mean wage increase super well, same for median productivity increase vs median wage increase.
    - Rexxar 11mo ago
      The people you are replying to are trying to have a meaningful discussion by providing references and some basic argumentation. Can you add some link or arguments that explain more strongly your point of view instead of using strong affirmations ('misinformation', 'debunked', 'nonsensical') without any trace of argumentation and no reference at all ?

airstrike 11mo ago

If your argument were true we should set taxes on capital to zero, which is quite obviously a bad idea.

immibis 11mo ago
If their argument were true we should set them as far negative as possible - we should tax 100% of labour and give all that money to capital owners. Which is kind of something that's already happening.
mike_hearn 11mo ago
No, that's been a common proposal from economists pretty much since people started examining how economies work. Some places do have a capital gains tax of zero. Switzerland is one of them, and Switzerland is economically more successful than the rest of Europe. Tax is one of those issues where there are actually correct and incorrect answers, thanks to many hundreds of years of active experimentation and relatively simple/robust theory. But people ignore the correct answers for social reasons. The correct answer on tax is: 1. Figure out how much money the state needs to supply the services that are in-scope for it to an acceptable level of quality. 2. Aim to raise that much in taxes. 3. Optimize deadweight costs. That is, configure taxes to minimize the level to which the activities being taxed are discouraged and driven either out of existence or abroad. If you do this sort of thing then you get Georgeism, you get zero capital gains, I think you get zero taxes on businesses, and a bunch of other policies I can't remember right now. The results can be economically very efficient i.e. they make everyone better off. However, almost nowhere uses them because there's nothing in the above three items about social engineering, and governments use taxation largely as a tool of social engineering. And in particular to please leftist voters who use the tax system to penalize wealth for its own sake, and to reward groups of client voters. Many governments also have a lot of trouble defining what's in scope for them and then working backwards to needed tax revenues; they prefer to raise as much tax as they can manage without totally crushing their economies and then find ways to spend it.
- triceratops 11mo ago
  > Some places do have a capital gains tax of zero. Switzerland is one of them, and Switzerland is economically more successful than the rest of Europe. Tax Switzerland is a bad example because they tax capital more directly. In the form of a wealth tax. https://en.wikipedia.org/wiki/Taxation_in_Switzerland#Wealth_tax https://en.wikipedia.org/wiki/Taxation_in_Switzerland#Wealth... GP said setting taxes on capital to zero was a bad idea. Switzerland has only set capital gains taxes to zero. It still taxes capital.

ToucanLoucan 11mo ago

> Capital makes the marginal worker more productive, not less. You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity. Point one: higher productivity is not necessarily our goal. I could think of numerous industries that would make the world better if they did less work. Point two: There's a moral absurdity in taxing the wages earned by labor more heavily than the returns earned by ownership. One is tangible effort, the other is an abstraction backed by law. If anything, taxing capital should be the baseline, because it's the least tied to survival. Historically, when America was at its most broadly prosperous, capital gains and corporate profits were taxed at far higher rates than today. Point three: AI intensifies that calculus. If AI is deployed by capital to further replace or devalue labor, then taxing only the worker is punishing the displaced while rewarding the displacer. That's pure extraction. If we want social systems to survive, the burden has to fall on the owners of the machines, not the people being replaced by them. Genuinely one of the largest and most destructive ills of our society right now is that so tremendously more of our shared prosperity as a system is directed to those who do the least to create it.

kiba 11mo ago
It's both. You don't want to tax capital and income. VAT and sale tax are a bad idea too, especially since they're regressive. So, what do you tax? You tax land and land-like things, non-reproducible privileges(like patents and copyright), pollution and other negative externality. Now, there's an argument to be made that we couldn't possibly be able to fund governments on the back of these taxes. Fair enough, but it should mean we minimize those taxes until the economy grows enough to fund government services.
- triceratops 11mo ago
  You don't want to tax pollution and other negative externalities to raise revenue though.
- tenuousemphasis 11mo ago
  VAT is not regressive. https://taxfoundation.org/blog/value-added-tax-vat-progressive/ https://taxfoundation.org/blog/value-added-tax-vat-progressi...

grumpymuppet 11mo ago

It's not a matter of a "deal" to be made or agreed to, it's a matter of paying a fair share of the cost to organize a society. When Capital gets to reap dual benefits of revenue from business prospects and lobbying government directly to set the tax rules, then it can't ALSO offload outlaying to the public good that it DEPENDS on to make a profit. Avoiding tax through various loopholes that Capital gets a seat at the table to help craft, while benefitting from externalizing the costs to taxing labor is just corruption.

cced 11mo ago

> You can tax the worker and she will still be better off than if you had taxed the capital, due to greater productivity. This assumes the worker is the one benefiting from the productivity gains. We're just worked more and we don't get the added value.

navane 11mo ago

Workers make capital productive.