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What if incomes grew like GDP?

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Re: What if incomes grew like GDP?

#61

Post by aeternum »

hliyan wrote: post #17
ntsplnkv2 wrote: post #7

Earlier quoted context omitted.

It doesn't need to be that complicated. Just increase taxes on the ultra wealthy to restore some semblance of equality. it doesn't need to be communist russia. Just a little more money going around.

Question: what do you think about a tax rate determined by wealth, rather than the first derivative of wealth (i.e. income)? When a person whose net worth is $10,000 earns $5,000, should they be taxed the same way a person whose net worth is $1000,000,000 earns $5,000 is taxed?

We already do have such a tax: inflation. The fed increases the monetary supply and uses it to buy treasuries which help fund the government.

The problem is the rich have lots of options so you need to consider second order effects. If you print lots of money (as we are now), people and especially the rich tend to exchange their dollars for assets, such as stocks, art, etc. If you attempt to tax those assets as well, people will purchase other untaxed assets.

I'm also not sure it actually matters as much as people think. It's not like Gates, Bezos, Zuckerberg, or Musk are using their funds to compete with the average person, IE buy up all the beef. Them having less really won't make us more efficient at producing food or increase the amount of housing available in cities.

Re: What if incomes grew like GDP?

#62

Post by Armisael16 »

Rebelgecko wrote: post #27
nine_k wrote: post #13

Earlier quoted context omitted.

Neither Gates, nor Jobs, nor Zuckerberg, nor Bezos, nor Musk inherited their billions. At best they inherited access to the social circles of their parents, and maybe paid-for education (too lazy to check). Knowing the right people is not something you can, or want, to limit or forbid. Should anyone suggest to prevent passing as much as, say, $100k to your child (an approximate price of a university tuition), said an…

It's a lot easier to make billions when you already have millions (like Elon Musk's dad, who joked about how he had too much money in his safe to be able shut the door when his gemstone mine was doing well). It's a lot riskier to be an entrepreneur when you're living paycheck to paycheck and don't have a family fortune to fall back on. Extraordinary people also often have extraordinary childhoods. Most teenagers can'…

Musk’s family probably didn’t own an emerald mine. There’s only one source - Errol Musk - and everyone else who’s willing to talk about it denies it (including Elon) https://www.insidehook.com/article/history/errol-musk-elon-f...

The same is true about that drivel about Tiffany.

Re: What if incomes grew like GDP?

#63

Post by devdas »

coderintherye wrote: post #26
gruez wrote: post #5

Earlier quoted context omitted.

>Perhaps we need a linear meritocratic function. So basically, some way to prevent wealth from being passed across generations?

There's a better perspective to apply. How can we better incentivize those with wealth into investing it productively. Or perhaps, how can we incentivize the wealthy into investing in increasing the rate of growth of the real standard of living for everyone.

A wealth tax.

Re: What if incomes grew like GDP?

#64

Post by chii »

twblalock wrote: post #14
gruez wrote: post #5

Earlier quoted context omitted.

>Perhaps we need a linear meritocratic function. So basically, some way to prevent wealth from being passed across generations?

> So basically, some way to prevent wealth from being passed across generations? That wouldn't help much. The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth. By the time they are in line to receive an inheritance, they have already had more opportunities for success than the general public.

> The children of the wealthy benefit from connections obtained while their parents are still alive. They receive a head start from birth.

what about the children of parents who has good genes? If a child is athletic/healthy/good-looking, because their parents had good genes (and the good luck for a good combination), do you also resent that the child has a head-start?

parents helping the children get ahead is natural, and should be encouraged imho.

Re: What if incomes grew like GDP?

#65

Post by jedberg »

missedthecue wrote: post #55
jedberg wrote: post #52

Earlier quoted context omitted.

Gates, Zuckerberg, Bezos, and Musk were all in the top 1% before they started their companies. Jobs's family was middle class, but well off enough to own a house with an empty garage and enough money to get him started. They also fed, housed, and clothed him while he started his company.

Point is, hundreds of millions of people have access to a garage, food, and clothing, yet cannot mirror the success that these men have achieved.

That's not the point at all. The point is that starting a company was not a risk for these men, because they would be just fine if they failed.

And I think you're way off with that hundreds of millions number. I doubt there are that many people that can fully support their adult children, including footing the bill for all startup costs.

Re: What if incomes grew like GDP?

#66

Post by devdas »

anchpop wrote: post #47
hliyan wrote: post #17

Earlier quoted context omitted.

Question: what do you think about a tax rate determined by wealth, rather than the first derivative of wealth (i.e. income)? When a person whose net worth is $10,000 earns $5,000, should they be taxed the same way a person whose net worth is $1000,000,000 earns $5,000 is taxed?

The reason your tax rate should be determined by your income, rather than the first integration of your income (i.e. wealth), is because just having wealth isn't hurting anyone. If I spend every evening in my garage fixing up an old car, and increase its value from $1000 to $2000, I've increased my wealth but I haven't negatively (or positively) affected anyone else. It might be useful as a means of generating govern…

Having wealth does influence the ability to spend money and work on things like regulatory capture rather than productive investments.

Re: What if incomes grew like GDP?

#67

Post by throwaway189262 »

hliyan wrote: post #4

I always like to say that we live in an exponential meritocracy , where your accumulated merit enhances your ability to accumulate more merit, eventually resulting in a small minority rapidly pulling ahead of the pack. Goes with the old adage: turning $100 into $120 is work; turning $100 million into $120 million is inevitable. Perhaps we need a linear meritocratic function.

There's way too much wealth worship in the US. Yeah most rich people are smart but not exponentially smarter than everyone else.

A lot of wealth is luck. But wealthy people (like HN audience) don't like to hear that. I can't find a link but there's controlled studies that show the richer someone precieves they are, the more they attribute it to skill. Even in studies where outcomes are completely randomized.

Usually it's something like this: grow up as a citizen of one of the richest countries in the world. Have fairly stable family situation where you did well in school. Family wealthy enough that you went to a good primary school too. Family wealthy enough to fix overbite, scoliosis, speech impediment, and most other things that would handicap you professionally. Money/connections/grades to get into a good college. Skin color, gender, and culture to not be dicriminated against. Enough intelligence to pick a well paying career (maybe top ~25%). "Gifts" from parents early in life where wealth has decades to accumulate. Things like gifted cars, college education, wedding costs, first house. Ability to take arbitrary career risks because you always have family and their gifts to fall back on.

That probably describes more than half of people in well paying professions. And it's all 100% luck. The path to millions when you've already got so much going for you isn't so hard. You've already passed the barriers that stop 99% of people.

Merit isn't wealth. Wealth is mostly luck and we shouldn't worship wealthy people like Gods, hanging on their every word.

There's logical ways to measure class mobility and the US does badly compared to practically every wealthy country besides the UK

Re: What if incomes grew like GDP?

#68

Post by devdas »

jonhohle wrote: post #37

Odd to see no discussion of gold. In 1971 the dollar began to float in relation to gold. For most people operating in the realm of dollars their net worth decreases as the dollar price deviates from gold. For wealthy individuals, most of their wealth is not in dollars but in property and equities. As the value of the dollar decreases, asset prices increase - great if you own assets, bad if you just own dollars. Not t…

The US dollar is backed by oil selling nations only being willing to sell in USD.

Re: What if incomes grew like GDP?

#69

Post by hliyan »

aeternum wrote: post #61
hliyan wrote: post #17

Earlier quoted context omitted.

Question: what do you think about a tax rate determined by wealth, rather than the first derivative of wealth (i.e. income)? When a person whose net worth is $10,000 earns $5,000, should they be taxed the same way a person whose net worth is $1000,000,000 earns $5,000 is taxed?

We already do have such a tax: inflation. The fed increases the monetary supply and uses it to buy treasuries which help fund the government. The problem is the rich have lots of options so you need to consider second order effects. If you print lots of money (as we are now), people and especially the rich tend to exchange their dollars for assets, such as stocks, art, etc. If you attempt to tax those assets as well,…

Yes, but one of those second order effects of inflation is the relentless drive for growth that's burning people out and contributing to climate change: inflation causes those with the most money to demand higher and higher rates of return on their investments (to keep up with inflation), which drives management (through pressure from the board) to drive organizations harder and harder, often to the detriment of long term objectives.

I would argue that drastically cutting inflation might help reduce income inequality over time.

Re: What if incomes grew like GDP?

#70

Post by apta »

dragonwriter wrote: post #54
boh wrote: post #12

Earlier quoted context omitted.

The ultra rich don't pay the current tax rate, why would raising a tax they don't pay have any effect? Until there's an aggressive international agreement on closing tax loopholes, raising the taxes only impacts the barely-rich (doctors, lawyers, etc).

> The ultra rich don't pay the current tax rate, why would raising a tax they don't pay have any effect? The ultra rich don't pay the current nominal income tax rate, because their income isn’t of the kind subject to income taxes, much less the additional taxes levied on labor income. The simple solution to that is to wipe away the distinctions about source of income in taxation policy (for payroll taxes, that means…

> That's only true if you raise taxes on the kind and amount of income that doctors and lawyers typically make.

That's what Biden wants to do, terrible idea.

Removing favorable treatment of long term capital gains is also a terrible idea. Ideally, there should be 0% gains tax (and income tax), but people will settle for favorable treatment compared to income tax.

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