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Why Inequality Matters

gatesnotes.com

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Re: Why Inequality Matters

#121

Post by harmonicon »

I have a lot of respect for Bill Gates because of his philanthropic efforts. However, I am very skeptical of the consumption tax argument. To me that sounds like a sales tax and sales tax is regressive. i.e. Tax on French baguette hits the poor more than the rich, since as a group they consume way more baguette.

Even if it is just a special sales tax that targets the rich only, discouraging spending by people with money can hardly be a good thing; that's how recession happen and the rich will continue to capture a bigger share of the total wealth. For an economy to flourish we need the wealth to flow from individual to individual. If all the water on earth is stuck in the ocean we'd have serious problem. Same with wealth.

Re: Why Inequality Matters

#122

Post by tim333 »

rumcajz wrote: post #63

In what way would consumption tax address capital accumulation? Also, using 1910-1940 period as an example to show that Piketty is wrong doesn't make much sense given that Piketty's data show that inequality have actually lowered in that particular period.

I guess you'd have to combine the consumption tax with a large estate tax or similar to address capital accumulation.

Re: Why Inequality Matters

#123

Post by yequalsx »

brandonmenc wrote: post #95
r0h1n wrote: post #10

I must say Bill Gates, in his post Microsoft avatar, continues to surprise me constantly. This is a refreshingly candid and sanguine review of Piketty's book from someone who was a ruthless capitalist not so long ago. Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions: > Piketty is rig…

> I’m also a big believer in the estate tax As a third-generation American, I find the estate tax, even in its current form, extremely offensive, because it strives to reset every generation to zero instead of letting families establish themselves over time by building on the sacrifice and efforts of the parents. The current level of taxation, even though it's been recently, "graciously" increased, greatly extends th…

There is no such thing as a double tax as you put it. All money is double, triple, quadrupled so on and so forth taxed. The principle for fairness behind taxation is that whenever you get money (or wealth) there is a tax. Regardless of where is comes from. There are exceptions and loopholes to this principle.

If I work very hard and earn $100,000 in a year I get taxed. If someone else dies and I inherit $100,000 (in the U.S.) there is no tax. In case 1 a person works for it and pays tax and in case 2 there is no tax. Consider another case. Suppose I walk down the street and find $100,000. I have to pay tax on it. (At least I'm supposed to pay tax on it.) Estate taxes are too little in this country.

A family can perpetuate a shared set of values over hundreds of years without leaving $x million to the children.

Re: Why Inequality Matters

#124

Post by humanrebar »

Kalium wrote: post #119
Joeboy wrote: post #23

> I think we’d be best off with a progressive tax on consumption In theory I like the idea of a "tax on consumption", because it suggests a penalty on conspicuous consumption and wasteful spending. In practice, taxes on consumption are seen as regressive, ie. they affect the poor more than the rich. Is there a way to tax "bad" consumption, without penalizing people who "consume" a large proportion of their income sim…

This is why a tax on capital is both easier and less regressive. It avoids subjective value judgments on what's "good" or "bad" consumption.

No, it just makes subjective value judgements on what is "good" and "bad" capital. Oversized primary residence? Subsidized. Equivalent amount of money in a retirement account? Subsidized. Equivalent amount of money in a stock? Not subsidized.

Re: Why Inequality Matters

#125

Post by PythonicAlpha »

josefresco wrote: post #102
PythonicAlpha wrote: post #67

Must be some American specialty. At the end, Bill Gates sees Philanthropy as (part of a) solution. This must have something to do with the US-American history and background? I heard that opinion so often and we are in deed in an era of big philanthropists (like Bill himself). But I (no American, and maybe missing some genetics for it) can not see any solution in it. The biggest philanthropists today are in the US, b…

The difference between Gates' wealth now and where he began as a "rich kid" is mind numbingly huge making what he started with almost insignificant. Yes Gates had a "head start" as many in this world do, but that only got him so far. I would also argue that Gates is really a bad (business/financial) example all around due to his massive wealth which really has no comparison.

Gates is a bad example, but many come up with such examples.

The difference between what he owns now and than is not as huge as the difference between somebody whose parents could afford Harvard and somebody who is raised in Harlem, because he has not the same starting condition.

There is a saying: The first million (billion, 100k, ...) is the most difficult one.

Re: Why Inequality Matters

#126

Post by jkscm »

icebraining wrote: post #32
esfandia wrote: post #16

Philanthropy strikes me as anti-democratic. Why should the rich get to choose which causes are more deserving of their generosity? Let the elected government pool the money and make this determination.

The government can choose who is more deserving of their money; it can't choose who is more deserving of their generosity.

Do you live in a democratic country?

Re: Why Inequality Matters

#127

Post by dropit_sphere »

enraged_camel wrote: post #68
bluthru wrote: post #40

Earlier quoted context omitted.

>Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. It certainly helps, but in a well-designed system philanthropy wouldn't be required. Philanthropy is a symptom rather than a cure.

I would posit that it is also a cure, but for the person's conscience. One of the reasons people engage in philanthropy is because it makes them feel good about themselves. This especially holds true for Bill Gates. He was a ruthless capitalist for decades before he realized that's not the kind of legacy he wants to leave behind. (I don't say that to cheapen his efforts -- on the contrary it makes me respect him more…

>You pose a great question though: would philanthropy exist in a well-designed system?

I'm convinced that it is only the good faith of enough actors that allows any system to function at all. Every tax or subsidy fixes one problem while creating another. Not to say we shouldn't have them---externalities should be addressed---but that a system "perfectly designed for outcomes humans like" is equivalent to creating strong AI that happens to run on a market economy.

Re: Why Inequality Matters

#128

Post by Kalium »

humanrebar wrote: post #124
Kalium wrote: post #119

Earlier quoted context omitted.

This is why a tax on capital is both easier and less regressive. It avoids subjective value judgments on what's "good" or "bad" consumption.

No, it just makes subjective value judgements on what is "good" and "bad" capital. Oversized primary residence? Subsidized. Equivalent amount of money in a retirement account? Subsidized. Equivalent amount of money in a stock? Not subsidized.

Or you could just tax capital without judging it. That's also possible.

Re: Why Inequality Matters

#130

Post by SixSigma »

ska wrote: post #87

"I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since." What you do see though, in the same Fortune 400 list is that 6 of the top 10 people on that list didn't build their companies (in the sense that Bill Gates did), they inherited them. I don't know how much the current crop Kochs or Waltons are responsible for t…

Gates had a very silver spoon too.
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