What if incomes grew like GDP? • Hacker News Board

Re: What if incomes grew like GDP?

#71

Post by apta » Wed, Dec 23, 2020, 7:13 AM UTC

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…

The superior model that has proven to work is Islam's Zakat. It's sort-of-but-not-really a wealth tax. 0% income tax, 0% gains tax, and only people who hold commodities over a certain threshold are taxed (meaning the poor are exempted). Gold and silver holdings for example are taxed at 2.5%, with a different percentage for cattle and produce.

As to your example, you won't pay a wealth tax on your car if you increase its value under Zakat. Now if you want to use it as a currency (start flipping cars) then it's different.

Re: What if incomes grew like GDP?

#72

Post by rmrfstar » Wed, Dec 23, 2020, 7:16 AM UTC

imgabe wrote: post #25

rmrfstar wrote: post #16

Earlier quoted context omitted.

Yeah, but they benefited from a system that coerces people to trade their labor for less than it is worth. Zuckerberg is worth >3x the annual income of all surgeons in the US. It is implausible that his net worth reflects his replacement cost. Even PG has said (to Zuckerberg) that if it wasn't him, it would have been someone else.

The amount of value you can obtain by trading something is by definition what it is worth. If nobody is willing to pay you an amount for something, it's not worth that much. > It is implausible that his net worth reflects his replacement cost. Why should it? His net worth reflects the expected value of the portion of Facebook that he owns. Why would it have anything to do with his replacement cost?

> The amount of value you can obtain by trading something is by definition what it is worth.

That is one important definition, but it's just a statement of ideology.

Was Instagram only worth $1bn when they sold to Facebook in 2012. Are we supposed to ignore the fact that Instagram's options were sell for $1bn or face "Zuckerberg destroy mode"?

Re: What if incomes grew like GDP?

#73

Post by usaar333 » Wed, Dec 23, 2020, 7:18 AM UTC

throwaway189262 wrote: post #67

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…

I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment.

What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or any equity improving policy) alter incentives, potentially leaving society worse off if done wrong.

Re: What if incomes grew like GDP?

#74

Post by SwimSwimHungry » Wed, Dec 23, 2020, 7:19 AM UTC

throwaway189262 wrote: post #67

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…

I see this applies even moreso with the cryptocurrency fanboys on HN that feel that their newfound wealth (on paper) makes them paragons of financial wisdom and success, spawning serious Dunning-Kruger effects. I would argue the cryptocurrency crowd is even more driven by stupid luck than anything else.

I wish they saw it primarily as an unregulated online casino and less of a serious replacement for M1 money supply, which it certainly isn't.

Re: What if incomes grew like GDP?

#75

Post by ardy42 » Wed, Dec 23, 2020, 7:20 AM UTC

nine_k wrote: post #13

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?

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…

>>> 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.

>> So basically, some way to prevent wealth from being passed across generations?

> 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.

But, there are others who did. For instance, just off the top of my head: the Koch brothers, who combined inherited wealth with extensive political activism.

Also, the fortunes of most "self-made" meritocrats can be traced to building exponentially on some elite inherited opportunity, then that kneecaps a lot of the moral reasoning used to justify that those people deserve full control of those fortunes (and thus shouldn't be subjected to heavy taxes).

Re: What if incomes grew like GDP?

#76

Post by ardy42 » Wed, Dec 23, 2020, 7:24 AM UTC

imgabe wrote: post #38

sudosysgen wrote: post #33

Earlier quoted context omitted.

Private property exists because it is an organization of things that is useful to society. That's why we heavily limit it using taxation and so forth. We allow people to own capital because it motivates them to do some types of work. If we allow people to concentrate more capital than necessary to motivate them to do that work, we lose.

There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

> There is no "we" allowing or disallowing anything. Who is this "we" and why do use suppose they have some divine insight into the ideal allocation of capital?

You only really own something if enough people in society ("we") agree that you do own it. If enough of "us" change our mind (for instance, if your ownership is no longer useful to us), then you don't really own that thing anymore.

Re: What if incomes grew like GDP?

#77

Post by throwaway189262 » Wed, Dec 23, 2020, 7:27 AM UTC

usaar333 wrote: post #73

throwaway189262 wrote: post #67

Earlier quoted context omitted.

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…

I don't really view the skill vs luck as a "moral" question. In the end, everything is luck - we're a product of our genes and our environment. What you do want to ask is what the proper incentives need to be to have a functional society. Fundamentally, we're just trying to define some social utility function and maximizing it.. but even ignoring political problems, it's hard to understand how wealth transfers (or an…

The socialist "nanny state" democracies in europe have much lower wealth inequality, and much higher social mobility than the US. To me, it's a clear blueprint to follow.

Re: What if incomes grew like GDP?

#78

Post by anchpop » Wed, Dec 23, 2020, 8:04 AM UTC

devdas wrote: post #66

anchpop wrote: post #47

Earlier quoted context omitted.

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.

Wealth doesn't, income does. If I buy a car and work on it to add $1000 to its value, I've increased my wealth but have not changed my income or purchasing power until I realize those gains, at which point my $1000 income is taxed (as it should be)

Re: What if incomes grew like GDP?

#79

Post by lilactown » Wed, Dec 23, 2020, 8:19 AM UTC

chii wrote: post #64

twblalock wrote: post #14

Earlier quoted context omitted.

> 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 natura…

The difference is that we can easily redistribute wealth. It is much more difficult to redistribute "health."

IMO our goal shouldn't be for everyone to be objectively equal in all ways, but rather to be provided enough resources and opportunities to live a good life.

Like on the opposite end of your example, if I was born with a congenital condition, or became injured, I should still be able to live a good life with my needs met and opportunities to do good work. The fact that we don't have that today, due to lack of a social safety net and accessibility, is a problem.

Re: What if incomes grew like GDP?

#80

Post by rualca » Wed, Dec 23, 2020, 9:02 AM UTC

chii wrote: post #64

twblalock wrote: post #14

Earlier quoted context omitted.

> 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 natura…

> what about the children of parents who has good genes?

That's an absurd comparison. Children of parents who are poor and don't have connections can still compete, but simply cannot benefit from their parents trafficking influence.

If you really want to go with a sports metaphor, your example is like barring children from having a fair shot at sports because their parents aren't rubbing elbows with the coaches.