Never mind the 1 percent Let's talk about the 0.01 percent (2017) • Hacker News Board

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#111

Post by ghouse » Sat, Nov 30, 2019, 5:58 PM UTC

jogjayr wrote: post #109

ghouse wrote: post #96

The tax code enables and reinforces outlier wealth using tired arguments like "encouraging investment" and "double taxation." United States centric observations: For example, charging lower tax rates on capital gains than ordinary income promotes a concentration of wealth to people with wealth. Suggesting this is purposeful policy for society to encourage investment is comical -- what else would wealthy people do wit…

> charging lower tax rates on capital gains than ordinary income I don't have a problem with the idea. It recognizes that income derived from investments is riskier than income from a paycheck, and applies a discount. The problem is with the execution. Why is the top rate for cap gains only 20% - even if you earn $10b, but 37% for a mere $510k in ordinary income? Surely there should be some amount of cap gains that c…

> It recognizes that income derived from investments is riskier and applies a discount.

It's unclear why as a matter of tax policy we want to discount taxes because risk is taken. If an investment results in a loss, that loss is permitted to offset gains elsewhere.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#112

Post by thomasahle » Sat, Nov 30, 2019, 6:00 PM UTC

georgeburdell wrote: post #88

As the article notes, an increasingly common path to the 1% is through skilled labor. I think this type of earner would have more in common with a 50%er than a 0.1%er. My family has been in the 1% for a few years and we’re just bottom-rung individual contributors at FAANGs. 50% of our net worth is in our house. We don’t run or have stakes in any private businesses. No investment properties. The only thing that sets u…

There is an interesting podcast about this on the Ezra Klein show: https://www.stitcher.com/podcast/the-ezra-klein-show/e/64086...

Roughly the point is that while "the working elite" is much harder to be repelled by; it is still a problem that many tasks in society that could before be done by a medium educated middle class, is now done by a few highly educated people plus a swath of people with no education.

This causes the second group to have less part and prestige in their work, while the first group gets alienated from their own work, by being forced into the few fields that allow one to reach the 1%.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#113

Post by take_a_breath » Sat, Nov 30, 2019, 6:00 PM UTC

jogjayr wrote: post #109

ghouse wrote: post #96

The tax code enables and reinforces outlier wealth using tired arguments like "encouraging investment" and "double taxation." United States centric observations: For example, charging lower tax rates on capital gains than ordinary income promotes a concentration of wealth to people with wealth. Suggesting this is purposeful policy for society to encourage investment is comical -- what else would wealthy people do wit…

> charging lower tax rates on capital gains than ordinary income I don't have a problem with the idea. It recognizes that income derived from investments is riskier than income from a paycheck, and applies a discount. The problem is with the execution. Why is the top rate for cap gains only 20% - even if you earn $10b, but 37% for a mere $510k in ordinary income? Surely there should be some amount of cap gains that c…

== Simply put, why aren't there more tax brackets for cap gains and other investment income?==

Because the people who make large capital gains are the ones funding political campaigns and helping to write the laws.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#114

Post by crooked-v » Sat, Nov 30, 2019, 6:01 PM UTC

3fe9a03ccd14ca5 wrote: post #90

crooked-v wrote: post #12

Earlier quoted context omitted.

When it comes to taxes, "evenly" and "fairly" are not the same thing. That's the whole reason we have tax brackets in the first place.

Why is it impossible to be both even and fair?

Taking 30% of a yearly income of $14,000 has a much greater negative effect on standard of living than taking 30% of a yearly income of $14,000,000.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#115

Post by sandoooo » Sat, Nov 30, 2019, 6:03 PM UTC

1. somehow the hate against the 0.01% always turns into policies that tax the upper 20%, or 10%, or 5%. why is that? Is there a way to formulate the arguments / policies so that it doesn't do this?

2. the wealth of the 0.01% are numbers stored in computers. They are claims on future production, yes, but the whole system only works because 99.99% of these claims never gets cashed out, because there are physical limits to what a handful of billionaires can consume, no matter how opulent their lifestyles. If you try to distribute this virtual wealth, people will try to turn it into physical consumables, only to find there really isn't enough for everybody, and the whole system will go to shit.

3. at some point, a guy I know made the observation that revolutions don't really redistribute much, mostly they just take the wealth from the wealthy and burn it. Well maybe how it works is the most important and expensive physical good - land - gets redistributed, most other physical goods are destroyed, and the virtual wealth is zeroed in a very expensive accounting exercise.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#116

Post by rklaehn » Sat, Nov 30, 2019, 6:03 PM UTC

tomaskafka wrote: post #103

rklaehn wrote: post #41

Earlier quoted context omitted.

On the contrary: you always target exactly "the guy earning 250k/y". Because people earning a lot of money but still earning through work are the easiest to target, since they can not just move somewhere else easily.

This. I'd love to see a histogram of tax revenue by income bracket.

In germany it is even worse. The tax rate is highly progressive, topping off at 50,5%. But the additional social security and penson payments are capped, so above a certain wage you actually pay less in total for social security, pension and taxes. There is a big hump which you need to overcome to become really wealthy.

Of course once you are so wealthy that the majority of your income is passive income from e.g. stock market gains, the capital gains tax is at 25%.

The situation is so bad that in relation to what your employer pays for you (Arbeitgeberbrutto), you get much less than 50%.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#117

Post by mrep » Sat, Nov 30, 2019, 6:05 PM UTC

algaeontoast wrote: post #25

dijit wrote: post #9

Wasn’t that always the case. Nobody cares about the guy earning 250k/y. It’s the handful of people who control 90% of all wealth. “1%” was a catchy soundbite but it was always the 0.0001%

Yeah, I really don’t understand why the bracket of “extreme wealth” is $250k? I’d be all for adding some bracket for earners over $1MM or over a certain amount of capital gains tax. However, a lot of people rely on capital gains for their retirement, so a tax on that money would negatively affect anyone who puts money in the stock market for retirement... Taxing the super rich is a great idea, but at the end of the d…

> However, a lot of people rely on capital gains for their retirement, so a tax on that money would negatively affect anyone who puts money in the stock market for retirement...

That's pretty much already solved with 401ks and IRAs which are retirement investment accounts with tax advantages.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#118

Post by jogjayr » Sat, Nov 30, 2019, 6:06 PM UTC

ghouse wrote: post #111

jogjayr wrote: post #109

Earlier quoted context omitted.

> charging lower tax rates on capital gains than ordinary income I don't have a problem with the idea. It recognizes that income derived from investments is riskier than income from a paycheck, and applies a discount. The problem is with the execution. Why is the top rate for cap gains only 20% - even if you earn $10b, but 37% for a mere $510k in ordinary income? Surely there should be some amount of cap gains that c…

> It recognizes that income derived from investments is riskier and applies a discount. It's unclear why as a matter of tax policy we want to discount taxes because risk is taken. If an investment results in a loss, that loss is permitted to offset gains elsewhere.

Because the policy doesn't just cover a diversified investment portfolio where a loss on one transaction offsets other gains. Small business owners put a significant chunk of savings and all their time into their business. What gains are they going to write down if their business goes under?

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#119

Post by chongli » Sat, Nov 30, 2019, 6:07 PM UTC

sandoooo wrote: post #115

1. somehow the hate against the 0.01% always turns into policies that tax the upper 20%, or 10%, or 5%. why is that? Is there a way to formulate the arguments / policies so that it doesn't do this? 2. the wealth of the 0.01% are numbers stored in computers. They are claims on future production, yes, but the whole system only works because 99.99% of these claims never gets cashed out, because there are physical limits…

Is there a way to formulate the arguments / policies so that it doesn't do this?

No. The upper .01 percent have tax lawyers and accountants and many other staff members (not to mention lobbyists) working full-time to reduce their taxes. In theory, anyone could do the same. In practice, the tax code is so enormously complex that only people who can afford to hire multiple college grads full time can pull it off.

Re: Never mind the 1 percent Let's talk about the 0.01 percent (2017)

#120

Post by rklaehn » Sat, Nov 30, 2019, 6:10 PM UTC

3fe9a03ccd14ca5 wrote: post #93

rklaehn wrote: post #74

Earlier quoted context omitted.

I was a huge fan of this concept. It has been invented independently by people on the right (Milton Friedman) and the left. But unfortunately that is not how politics works. Politics is selling a particular group an advantage over the majority in exchange for votes. That is true both for the left and the right, the only difference is which groups they target. And a fair tax is just too simple . Politicians wouldn't h…

> And a fair tax is just too simple. Politicians wouldn't have anything to sell anymore. You’re right! Without the ability to carve out exceptions, why would a powerful lobby need to come with a proverbial suitcase a cash?

The sad thing that just the two parameters basic income and flat tax rate are flexible enough for a wide variety of policies.

Want scandinavian style socialism: set the basic income very high and have a high flat tax rate of maybe 50%. Want a more individualist approach: set basic income to the bare necessities and set the flat tax rate to 25%.

Want to borrow to fight against a recession, keynesian style: increase basic income without raising flat tax rate. Want to save for bad times: increase flat tax rate without raising basic income...

I guess this kind of system can only emerge due to some drastic change or historical accident. E.g. the eastern european countries have a flat tax system because after the collapse of the soviet union there was no complex incumbent system in place.

I would love to know if there is a way to get to such a system using the normal democratic process. But if it exists, I don't see it.