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Tax cuts for the wealthy only benefit the rich (2023)

lse.ac.uk

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Re: Tax cuts for the wealthy only benefit the rich (2023)

#121

Earlier quoted context omitted.

I always like to approach this conversation with a question: Should business that actually do create jobs in practice get bigger tax breaks? For example, if I by some miracle create a 1 man company that makes $100 million / year profit and somebody else creates a company that makes $100 million / year profit but has 2,000 employees...should the two companies be taxed differently? Walmart employees 1.6 million people…

It would incentivize the wrong things: All else being equal, you want to produce more with less labor and other inputs. It’s a good thing farming needs an order of magnitude fewer farmers than a century ago.

But this is precisely how you get these large wealth gaps in society. Not like the 1% vs the bottom 50%, but the bottom 50% vs the top 30%.

That "high efficiency" is actually "less humans in the loop".

Compare something like money managing to car manufacturing. A team of money managers might clear $1B+ in revenue for a year with a team of 200. To clear $1B a yr selling cars, you need workers and supply chains that are tens of thousands of workers deep. It's the very inefficiency of manufacturing goods that makes it so attractive to workers.

This problem is inherent and intractable, but the natural order is to whither away the inefficient parts and only keep the most functional ones.

For those reading closely, this is also how you get a begrudged "coastal elite" and populist presidents like Trump (tariffs, anti-immigrants, state backed industry) elected. They want suffering for the offices of 200 people bringing in billions, and a return of the massive factories and supply chains with tens of thousands being the ones brining in billions.

Re: Tax cuts for the wealthy only benefit the rich (2023)

#122

Earlier quoted context omitted.

The question I have is that at some point X taxes are collected and the economy is growing at Y, then the policies change and now X-5 taxes are collected and the economy grows at Y. What was the function of the 5 under the first regime?

Slowing the growth of the country’s debt. Some would argue this gives flexibility to expand that debt during crises like wars, economic events, or pandemics; by “keeping powder dry” in terms of debt to GDP.

Are you thinking specifically of the US or you thinking of all the countries that were part of the data they reviewed? Also, how does leaving the wealth in the hands of citizens prevent it from being taxed in the future if needs be?

Re: Tax cuts for the wealthy only benefit the rich (2023)

#123

Earlier quoted context omitted.

Can you describe the defensible policies of supply-side economics? That's as vague a term as trickle-down economics to me. Supply-side economics is based on a flawed premise of looking at only the Laffer curve and saying if taxes are too high the economy suffers, therefore we must make the tax rate arbitrarily low. In reality though there are more nuances to making the tax rate arbitrarily low (e.g. high inflation an…

Sure. I think supply-side economics deserves more nuance than simply thinking we need to make the tax rate arbitrarily low. The Laffer curve isn't the only thing you should look at, since where you tax can be just as important as how much you tax. Take corporate taxes for example. If one were to advocate to get rid of corporate taxes, you might think that person unabashedly biased. What kind of person would want to g…

You can't do that, because the Walton family and others are really, really good at avoiding getting taxed. Even small business owners like my uncles do whatever they can to avoid any sort of taxes. I never paid VAT on sport equipments or DIY equipment, which are what they sold, but we also managed for my whole school life to avoid paying VAT on school supplies, and it's probably the same for my 22 cousins. Tax avoidance is a really good hobby for those people.

Re: Tax cuts for the wealthy only benefit the rich (2023)

#124

The thing I don't like about this is that it treats trickle-down economics as if it's something that needs to be debunked. Trickle-down economics has never been a real economic policy, and never been seriously advocated by federal policy-makers. It is an entirely pejorative term created by detractors of supply-side economics. The policies of supply-side economics, however, are much more defensible, but it seems peopl…

I always like to approach this conversation with a question: Should business that actually do create jobs in practice get bigger tax breaks? For example, if I by some miracle create a 1 man company that makes $100 million / year profit and somebody else creates a company that makes $100 million / year profit but has 2,000 employees...should the two companies be taxed differently? Walmart employees 1.6 million people…

I would say a corporation's taxes should, at the very least, cover the tax burden generated from not paying their employees enough to make a living wage.

So if their employees are on government assistance, the cost to provide that assistance is inherently their burden. One way or another, every employee they employ will be earning a living wage from them.

I don't even care about overlap. If both Target and Walmart have to pay the difference between the full cost of government assistance for the same person, that's fine. Build a fucking library or something.

Re: Tax cuts for the wealthy only benefit the rich (2023)

#125
post #71

Earlier quoted context omitted.

One is a policy. The other is not a policy. I can name you differences, but it's like comparing apples and oranges.

You can't call "trickle-down economics" a strawman without actually naming what is different between it and "supply-side economics". Otherwise I have to assume that people are just calling the same policy by two different names. Like how proponents of DRM call it "Digital Rights Management" and critics call it "Digital Restrictions Management" but both people are referring to the same technology. tl;dr: If you could…

My above comment helps with the distinction. If you missed it:

"""

I think supply-side economics deserves more nuance than simply thinking we need to make the tax rate arbitrarily low. The Laffer curve isn't the only thing you should look at, since where you tax can be just as important as how much you tax.

Take corporate taxes for example. If one were to advocate to get rid of corporate taxes, you might think that person unabashedly biased. What kind of person would want to give breaks to the richest people (corporations) when everyday people are the most in need of those kind of cuts, right?

But the reality is that when you tax corporations, that is one of the most economically damaging taxes you can do. How about then, rather than taxing corporations, you tax the benefactors of those corporations directly? When you tax Walmart, sure you tax the C-suite, but you also make it so that Walmart can hire less people, and invest less in the economy. Rather than taxing the corporation, what if you just taxed the C-suite directly? Tax the Walton family, or the highest earning employees directly, and you get to have your cake and it too since you get similar amounts of tax revenue without damaging the economy nearly as much.

You'll see this often in the social democracies of Scandinavia, like Sweden or Denmark. These are countries with strong welfare states, and yet, the corporate tax rates are often lower than the U.S., even if you look at the most red states. This is supply side economics at work, and an example of how supply-side economics can be easily misrepresented.

"""

Re: Tax cuts for the wealthy only benefit the rich (2023)

#126

The thing I don't like about this is that it treats trickle-down economics as if it's something that needs to be debunked. Trickle-down economics has never been a real economic policy, and never been seriously advocated by federal policy-makers. It is an entirely pejorative term created by detractors of supply-side economics. The policies of supply-side economics, however, are much more defensible, but it seems peopl…

Can you describe the defensible policies of supply-side economics? That's as vague a term as trickle-down economics to me. Supply-side economics is based on a flawed premise of looking at only the Laffer curve and saying if taxes are too high the economy suffers, therefore we must make the tax rate arbitrarily low. In reality though there are more nuances to making the tax rate arbitrarily low (e.g. high inflation an…

I mean that’s not what Laffer curve says, the only thing it says that the revenue from taxes grows until some tax rate, above which the yield starts decreasing.

This says nothing about the wider economy nor about what the tax rate should be, and on its own it doesn’t seem too controversial to me.

Re: Tax cuts for the wealthy only benefit the rich (2023)

#127

Take the inverse stance: take a country that taxes its citizens to death, like France or Belgium. How are they doing? Very badly. France is concerned that the IMF main jump in and take things under control because the government's public deficit is out of control. With a GDP of about $3.6 trillion (american trillion, not french) and public spending representing, officially, 57.2% of those $3.6 trillion, that's a cool…

Well said. People won’t like to hear it but it’s true. If you seized the wealth of every billionaire in the US you could fund the federal government for about a year. Of course most of it is not liquid so in reality much less. So when people talk about how we need to “tax the rich” and our problems will be solved I assume they're lacking in political knowledge. Or they just see it as a form of punishment for daring to accumulate so much wealth.

Re: Tax cuts for the wealthy only benefit the rich (2023)

#128

The scientists who worked for the cigarette companies couldn't find a link to cancer. Economists who work in academia can't find working economic policies for the same reason. Private sector economists on the other hand...actually place bets and get rewarded or punished for being wrong. Not shockingly, they have very different opinions from the academic economists. PS And you wonder why Mississippi is richer than the…

I thought the scientist who worked for cigarettes companies did find a bunch of links but the companies squashed the results. It’s pretty famously known that they knew cigarettes were bad for you decades ago.

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Re: Tax cuts for the wealthy only benefit the rich (2023)

#129
post #62

Take the inverse stance: take a country that taxes its citizens to death, like France or Belgium. How are they doing? Very badly. France is concerned that the IMF main jump in and take things under control because the government's public deficit is out of control. With a GDP of about $3.6 trillion (american trillion, not french) and public spending representing, officially, 57.2% of those $3.6 trillion, that's a cool…

You should include other countries for reference. The US has approximately 390x that amount of debt (only 5 times the population) and the average person is economically much worse off than all the European countries you just mentioned. We literally spend more government money per person on healthcare than France does while having less public healthcare, precisely because of the "help the rich" policies causing most o…

So the politicians waste money and your conclusion is it’s the private sectors fault??

Re: Tax cuts for the wealthy only benefit the rich (2023)

#130

The scientists who worked for the cigarette companies couldn't find a link to cancer. Economists who work in academia can't find working economic policies for the same reason. Private sector economists on the other hand...actually place bets and get rewarded or punished for being wrong. Not shockingly, they have very different opinions from the academic economists. PS And you wonder why Mississippi is richer than the…

If we're really doing these comparisons, the think tanks that wrote policy pieces for the cigarette companies talking about the evils of regulating tobacco were also particularly passionate about tax cuts for the wealthy benefiting everyone...
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