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The Rich Can't Get Richer Forever

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Re: The Rich Can't Get Richer Forever

#31

Post by opportune »

throwawaysea wrote: post #23

The problem with inheritance taxes, property taxes, etc. is that they erode the meaning of ownership and permanence. For example, if I as a parent want to save up and give up my immediate gratification from spending that money so my children have a head start or even a luxurious cushion, what’s wrong with that? That’s me spending my utility the way I want. With property taxes, ownership turns into renting - you never…

If people were less focused on acquiring wealth (such as property), or their estate needed to sell much of it when someone passed, it would probably bring the prices down as a whole - demand would be less and there would be much more liquidity. For things like housing, that would be good for everybody. All those houses wouldn't magically disappear, they would just be cheaper, because a lot of the investment/speculation demand would fall.

Re: The Rich Can't Get Richer Forever

#32

Post by aledalgrande »

As much as in theory inheritance tax is a solution for the problem, I don't think in practice it works well. The ultra rich will always have avenues to escape tax. The middle class instead, trying to secure a better future for the family, will get hit the hardest.

I am conflicted about this way of trying to solve the problem.

Also, this is assuming the tax money gets used efficiently and not to the advantage of the top earners.

Re: The Rich Can't Get Richer Forever

#33

Post by nugget »

lastofus wrote: post #13
nugget wrote: post #8

Earlier quoted context omitted.

I believe lower taxes stimulate productive investment of both human and financial capital so I'd prefer to lower income and investment taxes. But this only seems fair and sustainable if you raise the inheritance tax to a very high level. The problem isn't wealth so much as dynastic wealth. Land value tax I support 100%.

Isn’t this a restatement of trickle down economic theory (sans raising inheritance tax), which has not really panned out when attempted?

My understanding of trickle down economics is that you get more economic activity by putting a dollar in the hands of the bottom 10% than the top 10%, which makes sense since the propensity to consumer is higher at the bottom. By investing, the top % supports invention and innovation. By consuming, the bottom % validates those inventions and innovations that are worthwhile, versus those that are worthless. Both functions are required in order to keep the economy humming along producing and consuming new goods and services at a rapid pace. There would seem to be some function which maximizes the utility of each group in their respective roles. That's what I would want tax policy to reinforce.

Re: The Rich Can't Get Richer Forever

#34

Post by Iv »

quietthrow wrote: post #25

I see people throwing ideas and most of these ideas rely on politicians and/or govt doing something. Is there a non govt or non politician dependent way of solving inequality? facebook connected the world not govt or politicians. Google made knowledge and information available to the whole world not a politician or a govt. (I understand there are down sides to these companies products but so is there to govts/politic…

> Is there a non govt or non politician dependent way of solving inequality?

The guillotine?

No, I mean seriously, if you rule out the political process, you just leave violence as a way to change things. It is to prevent that that government and then democracy were invented. If you consider this process broken, you are screwed and need to revolt.

Concentration of wealth is a well-known and well-accepted side effect of market economies. This is supposed to be offset by income taxes and wealth taxes.

The economics does not have incentive laid out to smoothen inequalities. If you rule out the political process, what do you have left?

Re: The Rich Can't Get Richer Forever

#36

Post by [deleted] »

nugget wrote: post #8
toomuchtodo wrote: post #6

Earlier quoted context omitted.

Also raise taxes on investment income and implement a land value tax.

I believe lower taxes stimulate productive investment of both human and financial capital so I'd prefer to lower income and investment taxes. But this only seems fair and sustainable if you raise the inheritance tax to a very high level. The problem isn't wealth so much as dynastic wealth. Land value tax I support 100%.

[deleted]

Re: The Rich Can't Get Richer Forever

#37

Post by nine_k »

Scoundreller wrote: post #12
toomuchtodo wrote: post #6

Earlier quoted context omitted.

Also raise taxes on investment income and implement a land value tax.

I like the idea of progressive property tax rates. Figure out the median property value, make the first 50% of that tax free. Then the next 50% is taxed at the previous rates. Then tax values above that enough to make up for it. Could apply the same idea to land value taxes too.

That "figure out the median property value" is the hard bit.

The value is determined in a voluntary exchange, such as a sale, and results of sales of similar property serve only as approximations.

Same problem is with the land value tax. It's like trying to buy / sell your property every time you do taxes.

There is a known mechanism to limit attempts do show an excessively low value. Back in the day, the British Empire's customs reserved the right to immediately buy the entire freight of a merchant ship for the value declared at customs. That could work with land and even realty, too, but would be much more disruptive.

Re: The Rich Can't Get Richer Forever

#38

Post by throwawaysea »

gerbilly wrote: post #27
throwawaysea wrote: post #23

The problem with inheritance taxes, property taxes, etc. is that they erode the meaning of ownership and permanence. For example, if I as a parent want to save up and give up my immediate gratification from spending that money so my children have a head start or even a luxurious cushion, what’s wrong with that? That’s me spending my utility the way I want. With property taxes, ownership turns into renting - you never…

> The problem with inheritance taxes, property taxes, etc. is that they erode the meaning of ownership and permanence. That's just it, we never really own anything anyway. If the rich are richer than us, it's because we gave our wealth to them, or rather let them take it. To he who has much, more will be given...

> it's because we gave their riches to them.

This seems disconnected from reality. It is more accurate to say that they earned it through voluntary two party transactions.

Re: The Rich Can't Get Richer Forever

#39

Post by isostatic »

nugget wrote: post #8
toomuchtodo wrote: post #6

Earlier quoted context omitted.

Also raise taxes on investment income and implement a land value tax.

I believe lower taxes stimulate productive investment of both human and financial capital so I'd prefer to lower income and investment taxes. But this only seems fair and sustainable if you raise the inheritance tax to a very high level. The problem isn't wealth so much as dynastic wealth. Land value tax I support 100%.

Taxes on income and taxes on investment gains should be the same. In the UK, a 20 year old contributing to society by doing £45k worth of work every year keeps 69% (£30,737)

Meanwhile a 70 year old seeing their BTL property appreciate by £45k a year due to crossrail (paid for out of income tax the 20 year old is paying) keeps 87% (£39,060)

Re: The Rich Can't Get Richer Forever

#40

Post by advisedwang »

6gvONxR4sf7o wrote: post #20
nugget wrote: post #4

Implementation may be politically difficult, but the solution isn't rocket science: substantially raise the inheritance tax and abolish all trust loopholes.

The primary metric in OP is income inequality, which is historically high. You're primarily addressing wealth, which is connected, but not the same. Taxing inheritance will do very little towards income inequality.

The very essence of capitalism is using wealth (ie capital) to gain income. A wealth tax very much would reduce inequality, both in wealth and income.
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