Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Taxing Top Incomes in a World of Ideas [pdf]

www8.gsb.columbia.edu

Post reply on HN
Print view View original

51–60 of 64 posts

Re: Taxing Top Incomes in a World of Ideas [pdf]

#51

Post by darawk »

sooheon wrote: post #17
darawk wrote: post #4

Earlier quoted context omitted.

That is true, but the numbers are probably higher than you think. At least for me, I think wealth at least (as distinct from income) makes a non-trivial difference to me up until I can afford to live the rest of my life comfortably without continuing to work for someone else. Now, above that level, there are actually some other emotionally satisfying wealth strata, such as: - Ability to invest in or personally found/…

> I'm not saying that everyone needs to achieve these things to be happy. But I would say that I think it's easy to look up to say, 2-3x your own income and say "how could anyone ever want more than that", but then when you get there, you find that actually there's a lot of interesting stuff that you might be able to do if you made 5-10x more still, and at least for me, it's mostly not about luxury. It's about being…

Indeed it is. And on a personal level, that can be a tragedy. But on a social/economic level, it's great for raising everyone's living standards, which is the point of this paper.

Re: Taxing Top Incomes in a World of Ideas [pdf]

#52

Post by pariahHN »

jacknews wrote: post #6

"by slowing the creation of the new ideas ... top income taxation ..." Is this proven anywhere? I don't believe high taxation reduces innovation, in fact perhaps the opposite is true overall.

I think it could be reasonably argued that taxation, if not mismanaged, can actually increase net innovation by allowing more people the freedom, security, and education needed in order to be able to spend time innovating instead of surviving.

The whole reason the priesthood (and to an extent nobles too) was the core of education way back in medieval times was because they didn't have to worry about surviving. On the other hand, peasants could barely innovate at all because they spent most if not all of their time in labor.

Re: Taxing Top Incomes in a World of Ideas [pdf]

#53

Post by darawk »

sooheon wrote: post #15
dahfizz wrote: post #12

Earlier quoted context omitted.

That's avoiding the issue. If the tax code were such that capital gains and all other income was captured, your parent's logic holds. The loopholes of the current tax system doesn't affect theoretical considerations.

Regardless, the theoretical considerations are a straw man. No serious progressive tax scheme results in a hard cap of income at something as low as $10m.

Ok, and how does the soft cap change the argument?

Re: Taxing Top Incomes in a World of Ideas [pdf]

#54

Post by sooheon »

darawk wrote: post #53
sooheon wrote: post #15

Earlier quoted context omitted.

Regardless, the theoretical considerations are a straw man. No serious progressive tax scheme results in a hard cap of income at something as low as $10m.

Ok, and how does the soft cap change the argument?

It means the ordering remains monotonic. It means if you’re on top of the world, you remain so with all the psychological trappings, just on a slightly lower mound. The scraps that come from slightly lowering your absolute position (but keeping relative position the same) will go to addressing externalities and common goods.

Re: Taxing Top Incomes in a World of Ideas [pdf]

#55

Post by sooheon »

dahfizz wrote: post #46
sooheon wrote: post #40

Earlier quoted context omitted.

I don't buy this, because we're not proposing to only tax Bezos until he has the exact same net worth as Joe Schmoe who collects POGs--this is a straw man. If we tax all the uber-rich 5% more, everyone would be in the exact same position on the leaderboard, just with slightly deflated numbers. We'd be having the conversation about breaking the $1T barrier 12 months down the line, BFD! It's just numbers to the rich, b…

The problem with these game theory "let's just all work together" solutions is that they are not stable points. It is in everyone's best interest to undercut the cartel. Even if you did get all the peacocks to shorten their tail, if there is some advantage to having a larger tail, it is irrational to expect noone to try and grow it out again.

You don’t solve the prisoners dilemma by saying “fuck it let’s just all stab each other’s backs”. I’m arguing humanity should cooperate to achieve the better state, and punish defectors if needed to balance the incentives. This at least should be our aim.

Re: Taxing Top Incomes in a World of Ideas [pdf]

#56

Post by dahfizz »

sooheon wrote: post #54
darawk wrote: post #53

Earlier quoted context omitted.

Ok, and how does the soft cap change the argument?

It means the ordering remains monotonic. It means if you’re on top of the world, you remain so with all the psychological trappings, just on a slightly lower mound. The scraps that come from slightly lowering your absolute position (but keeping relative position the same) will go to addressing externalities and common goods.

> the ordering remains monotonic

That only holds true if you assume people will act the same exact way and with the same exact outcomes. This is a silly assumption to make when you significantly change both the incentives and the difficulty.

> The scraps ... will go to addressing externalities and common goods.

What world do you live in?

Re: Taxing Top Incomes in a World of Ideas [pdf]

#57

Post by darawk »

sooheon wrote: post #54
darawk wrote: post #53

Earlier quoted context omitted.

Ok, and how does the soft cap change the argument?

It means the ordering remains monotonic. It means if you’re on top of the world, you remain so with all the psychological trappings, just on a slightly lower mound. The scraps that come from slightly lowering your absolute position (but keeping relative position the same) will go to addressing externalities and common goods.

> It means the ordering remains monotonic

Are you willing to work as hard for $1 as for $1000, even if your relative status remains unchanged?

> The scraps that come from slightly lowering your absolute position (but keeping relative position the same) will go to addressing externalities and common goods.

Yes, but the entire point of this paper is that those 'scraps' are actually worth less than the economic gains produced by the ideas that receive these high top incomes.

Re: Taxing Top Incomes in a World of Ideas [pdf]

#58

Post by darawk »

ForHackernews wrote: post #21
darawk wrote: post #7

Earlier quoted context omitted.

Totally, but the point of this paper isn't the people who already have $10mm. It's the people who want to get there , and what they're willing to sacrifice to do it. Building a massive business like say, Amazon, takes enormous personal sacrifice and risk. The high incomes that result from it incentivize that sacrifice/risk. They cause the person who currently has relatively little, to risk what they do have to produc…

> He threw that away to take a massive personal risk to build Amazon. Would he have done that if you capped his potential reward at $10mm? The unexamined premise of this question is that society at large benefits from the existence of Amazon and should want to encourage the creation of similar Amazon-like enterprises.

> The unexamined premise of this question is that society at large benefits from the existence of Amazon

It's not actually a premise, though. The point is that there are good ideas that take large personal risk and investment to build. Swap in Google if you prefer, or any other successful company.

That being said, Amazon is pretty clearly enormously beneficial. AWS alone has enabled thousands of companies that never would otherwise have been able to exist, and saved other companies millions of dollars on hardware, not to mention saving electricity (by better utilization), etc.

Every time a company gets big people whine and then vote with their dollars by shopping there anyway. Why do they do that? Because it benefits them. People buy things from Amazon because it's better. Amazon makes a profit that is smaller than that value delta - the residual is the consumer surplus, aka the net benefit to you and me.

Re: Taxing Top Incomes in a World of Ideas [pdf]

#59

Post by ForHackernews »

darawk wrote: post #58
ForHackernews wrote: post #21

Earlier quoted context omitted.

> He threw that away to take a massive personal risk to build Amazon. Would he have done that if you capped his potential reward at $10mm? The unexamined premise of this question is that society at large benefits from the existence of Amazon and should want to encourage the creation of similar Amazon-like enterprises.

> The unexamined premise of this question is that society at large benefits from the existence of Amazon It's not actually a premise, though. The point is that there are good ideas that take large personal risk and investment to build. Swap in Google if you prefer, or any other successful company. That being said, Amazon is pretty clearly enormously beneficial. AWS alone has enabled thousands of companies that never…

> Swap in Google if you prefer, or any other successful company.

The unexamined assumption in this statement is that giant multinational megacorporations are good and we should encourage them.

I reject the assumption in your last paragraph that individuals making their own self-interested choices always maximizes positive outcomes for society at large: https://en.wikipedia.org/wiki/Tyranny_of_small_decisions

Re: Taxing Top Incomes in a World of Ideas [pdf]

#60

Post by darawk »

ForHackernews wrote: post #59
darawk wrote: post #58

Earlier quoted context omitted.

> The unexamined premise of this question is that society at large benefits from the existence of Amazon It's not actually a premise, though. The point is that there are good ideas that take large personal risk and investment to build. Swap in Google if you prefer, or any other successful company. That being said, Amazon is pretty clearly enormously beneficial. AWS alone has enabled thousands of companies that never…

> Swap in Google if you prefer, or any other successful company. The unexamined assumption in this statement is that giant multinational megacorporations are good and we should encourage them. I reject the assumption in your last paragraph that individuals making their own self-interested choices always maximizes positive outcomes for society at large: https://en.wikipedia.org/wiki/Tyranny_of_small_decisions

> The unexamined assumption in this statement is that giant multinational megacorporations are good and we should encourage them.

There is no unexamined assumption. Swap in whatever you want.

> I reject the assumption in your last paragraph that individuals making their own self-interested choices always maximizes positive outcomes for society at large: https://en.wikipedia.org/wiki/Tyranny_of_small_decisions

I don't disagree. But the default assumption always ought to be that it indeed does maximize utility, because it usually does, or approximately does. If you want to make the case that there's some better pareto-optimal equilibrium that Google and Amazon are disrupting, i'm more than happy to listen, but I think you're going to find that case a lot harder to make than you think.

Post reply on HN