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> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality. While this is essentially tautological

by aidenn0 10mo ago

> Any tax reform that fails to reduce luxury consumption by the rich will completely fail to reduce economic inequality. While this is essentially tautological, I'm not sure you can practically tax the majority of luxury consumption. Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager)[1]. All of those differences are luxuries, and many of them are informal and thus hard to tax. If we were to successfully tax all the formal luxuries (which in and of itself becomes legislative whack-a-mole), the wealthy will have a strong incentive to shift much of their luxury consumption to informal luxuries. Plus, I find all of the focusing on "wealth tax" and "luxury tax" and such rather mystifying when we have an extremely regressive income tax in the US. The low tax rate for long-term unearned income in the US, combined with the fact that borrowing against assets does not realize any of the gains, makes effective tax rates for the 99.9 percentile much lower than the 90th percentile. It is possible to eliminate dynastic wealth just by ensuring the losses due to inflation and taxes exceeds investment returns at the top tax bracket. 1: Or the difference in your kid applying to a college with your name on one of the buildings versus someone else's kid applying to that school

zozbot234 10mo ago
> Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager). All of those differences are luxuries, and many of them are informal and thus hard to tax. But businesses are incented to remove the most expensive disparities, lest they impact the company's market performance. Or maybe they keep the different treatment but expect to pay the CEO less as compensation. Either way it's win-win. > It is possible to eliminate dynastic wealth ... Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place (except that every once in a while quite a bit of it gets donated to charity in exchange for a very, very expensive name placard on a building, or something). To the extent that this reflects a spreading of good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place.
- aidenn0 10mo ago
  > Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place. To the extent that this reflects good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place. Wealth generates income that is used to grow more wealth and spend the balance on luxuries. Reduce the ability for it to do that and you reduce luxury consumption!
  - zozbot234 10mo ago
    Why assume that luxury consumption is the only possible use of that income? That just doesn't seem to reflect the facts. It's not like many old-money folks have billion-dollar yachts or private aircraft, or the other kinds of luxury spending that seem to be the focus here. Many of them are used to leading incredibly modest lives. Also, it takes meaningful skill or an appetite for risky ventures (or a combination of both) to generate substantial income from that accumulated wealth - passive return rates are extremely low. That reflects socially productive endeavors we don't want to tax.

by aidenn0 10mo ago

zozbot234 10mo ago

> Think of all the small differences when a CEO shows up to work vs a temp worker (or even a middle-manager). All of those differences are luxuries, and many of them are informal and thus hard to tax. But businesses are incented to remove the most expensive disparities, lest they impact the company's market performance. Or maybe they keep the different treatment but expect to pay the CEO less as compensation. Either way it's win-win. > It is possible to eliminate dynastic wealth ... Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place (except that every once in a while quite a bit of it gets donated to charity in exchange for a very, very expensive name placard on a building, or something). To the extent that this reflects a spreading of good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place.

aidenn0 10mo ago
> Dynastic wealth is wealth that has provably sat unspent and unconsumed for generations. It's effectively frozen in place. To the extent that this reflects good social norms around the stewarding of those assets, there's not much of a reason to want to get rid of it in the first place. Wealth generates income that is used to grow more wealth and spend the balance on luxuries. Reduce the ability for it to do that and you reduce luxury consumption!
- zozbot234 10mo ago
  Why assume that luxury consumption is the only possible use of that income? That just doesn't seem to reflect the facts. It's not like many old-money folks have billion-dollar yachts or private aircraft, or the other kinds of luxury spending that seem to be the focus here. Many of them are used to leading incredibly modest lives. Also, it takes meaningful skill or an appetite for risky ventures (or a combination of both) to generate substantial income from that accumulated wealth - passive return rates are extremely low. That reflects socially productive endeavors we don't want to tax.