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Your argument is circular. Essentially, you say that capital should be untaxed because it was already taxed as income. But that's a value judgement that assumes

Your argument is circular. Essentially, you say that capital should be untaxed because it was already taxed as income. But that's a value judgement that assumes your conclusion. There is a good case for taxing capital (savings). See Picketty.

yummyfajitas 12y ago
The actual detailed argument is that only two things can be taxed - consumption and investment. Consumption is the right thing to tax, since it measures the benefits a person receives from society. My argument isn't circular, however - it merely shows that once you have an income tax you don't need a savings tax. Piketty's argument, near as I can tell, is merely that we might live in a world where the best way to create wealth is to allow super smart uber rich people to direct nearly all investment [1]. Further, if we allow wealthy people to do this, they won't actually consume the fruits of their labor - they'll allow the rest of us to. Why that's an argument for taxing capital I have no idea. [1] His book doesn't justify this at all, it merely assumes it. http://www.chrisstucchio.com/blog/2014/piketty_and_inequality.html http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit... But he has a couple of academic papers with models that I haven't fully read yet.
- gamblor956 12y ago
  No, the correct argument is that many things can be taxed: creation, value enhancement, consumption, disposition, investment, wealth, transfers, transfers across borders, etc. (You're also still confusing savings taxes with investment taxes, which are not even remotely the same thing.)Which of these is taxed is a function of political ideology. If you tax consumption, you might also tax wealth, if a large portion of the income of the economy is concentrated in the hands of those who consume very little. Indeed, that is the entire point of having a wealth tax--to force consumption which can then be taxed. You have misstated Piketty's argument, as has Chris Stucchio. Piketty's argument is that allowing wealth to concentrate in the hands of a few is the biggest threat to the stability of modern economic systems because it ultimately means that less money is available to everyone else, which restricts growth. He is very much in favor of wealth taxes to force the distribution of this wealth to a wider range of the economy precisely to keep the cash flowing. He's not arguing for capital gains taxes--indeed, he opposes them, and has argued that capital gains should be taxed no differently from ordinary income.
  - yummyfajitas 12y ago
    The fact that you subdivide investment and consumption into a variety of categories doesn't change the fact that you still need to tax one or the other. Piketty's argument is that allowing wealth to concentrate in the hands of a few is the biggest threat to the stability of modern economic systems because it ultimately means that less money is available to everyone else, which restricts growth. This is incorrect. Piketty doesn't make any claims at all about less money (or less wealth) being available to anyone. He claims merely that the ratio of worker income to capital stock will be lower than it otherwise might be. Please, go read even just the introduction to the book. Further, he hints that that the richest people will have the highest rates of growth of their investments (the book is pretty weak on justifying this, again, academic papers might be better). That means the best way to actually create wealth is to put money into their hands. Note that if the richest people do not have the highest rates of return, then there is no reason to expect wealth concentration. See my blog post which works out the math on this in detail. Note that I'm actually citing the math in Piketty's book, not his mood affiliation.
  - ScottBurson 12y ago
    > He's not arguing for capital gains taxes--indeed, he opposes them, and has argued that capital gains should be taxed no differently from ordinary income. Please clarify. Up to the comma I thought you were saying that he thinks the capital gains tax rate should be zero, but the rest of the sentence says something quite different.
jellicle 12y ago
Correct. Fajitas is making the value judgement that ever-increasing inequality, followed by revolution and war, is better than a stable, long-term society with less inequality. Most people disagree.
walshemj 12y ago
so why invest in risky shares then? - that's the point of having lower taxes on capital gains than income so that companies with workers can get access to capital.
zo1 12y ago
"See Picketty." Really? Have we really dropped to that point? The Picketty Card?

yummyfajitas 12y ago

The actual detailed argument is that only two things can be taxed - consumption and investment. Consumption is the right thing to tax, since it measures the benefits a person receives from society. My argument isn't circular, however - it merely shows that once you have an income tax you don't need a savings tax. Piketty's argument, near as I can tell, is merely that we might live in a world where the best way to create wealth is to allow super smart uber rich people to direct nearly all investment [1]. Further, if we allow wealthy people to do this, they won't actually consume the fruits of their labor - they'll allow the rest of us to. Why that's an argument for taxing capital I have no idea. [1] His book doesn't justify this at all, it merely assumes it. http://www.chrisstucchio.com/blog/2014/piketty_and_inequality.html http://www.chrisstucchio.com/blog/2014/piketty_and_inequalit... But he has a couple of academic papers with models that I haven't fully read yet.

gamblor956 12y ago
No, the correct argument is that many things can be taxed: creation, value enhancement, consumption, disposition, investment, wealth, transfers, transfers across borders, etc. (You're also still confusing savings taxes with investment taxes, which are not even remotely the same thing.)Which of these is taxed is a function of political ideology. If you tax consumption, you might also tax wealth, if a large portion of the income of the economy is concentrated in the hands of those who consume very little. Indeed, that is the entire point of having a wealth tax--to force consumption which can then be taxed. You have misstated Piketty's argument, as has Chris Stucchio. Piketty's argument is that allowing wealth to concentrate in the hands of a few is the biggest threat to the stability of modern economic systems because it ultimately means that less money is available to everyone else, which restricts growth. He is very much in favor of wealth taxes to force the distribution of this wealth to a wider range of the economy precisely to keep the cash flowing. He's not arguing for capital gains taxes--indeed, he opposes them, and has argued that capital gains should be taxed no differently from ordinary income.
- yummyfajitas 12y ago
  The fact that you subdivide investment and consumption into a variety of categories doesn't change the fact that you still need to tax one or the other. Piketty's argument is that allowing wealth to concentrate in the hands of a few is the biggest threat to the stability of modern economic systems because it ultimately means that less money is available to everyone else, which restricts growth. This is incorrect. Piketty doesn't make any claims at all about less money (or less wealth) being available to anyone. He claims merely that the ratio of worker income to capital stock will be lower than it otherwise might be. Please, go read even just the introduction to the book. Further, he hints that that the richest people will have the highest rates of growth of their investments (the book is pretty weak on justifying this, again, academic papers might be better). That means the best way to actually create wealth is to put money into their hands. Note that if the richest people do not have the highest rates of return, then there is no reason to expect wealth concentration. See my blog post which works out the math on this in detail. Note that I'm actually citing the math in Piketty's book, not his mood affiliation.
- ScottBurson 12y ago
  > He's not arguing for capital gains taxes--indeed, he opposes them, and has argued that capital gains should be taxed no differently from ordinary income. Please clarify. Up to the comma I thought you were saying that he thinks the capital gains tax rate should be zero, but the rest of the sentence says something quite different.

jellicle 12y ago

Correct. Fajitas is making the value judgement that ever-increasing inequality, followed by revolution and war, is better than a stable, long-term society with less inequality. Most people disagree.

walshemj 12y ago

so why invest in risky shares then? - that's the point of having lower taxes on capital gains than income so that companies with workers can get access to capital.

zo1 12y ago

"See Picketty." Really? Have we really dropped to that point? The Picketty Card?