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Why Inequality Matters

gatesnotes.com

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Re: Why Inequality Matters

#201

Post by loumf »

rtpg wrote: post #113
brandonmenc wrote: post #95

Earlier quoted context omitted.

> 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…

An estate of 5 million puts you well into the upper echelons of society. I have little sympathy for those who the estate tax hits

An estate of 5 million pays $0 in estate tax. The tax is on the amount (net of deductions) OVER 5.34 million.

A net $6m estate would pay about 4% (264k), not 40%.

Re: Why Inequality Matters

#202

Post by lmm »

noarchy wrote: post #85
crdoconnor wrote: post #83

Earlier quoted context omitted.

>The reason the rich get to choose is because it is their money. This presumes that most, if not all of the money gained by the rich is justly earned. I would take serious issue with this.

>This presumes that most, if not all of the money gained by the rich is justly earned. I would take serious issue with this. Case by case, you may or may not have a point. Is the alternative to have the state take the money and spend as it wishes? In such a case, is the money "justly earned" if it was taken by force?

Everything bottoms out at force; most of us consider taxation as just or more so than the way the rich acquire their money. The state is a bit more legitimate than rich individuals because it's more accountable to the people.

Re: Why Inequality Matters

#203

Post by Omniusaspirer »

JoeAltmaier wrote: post #183
Omniusaspirer wrote: post #174

Earlier quoted context omitted.

You're assuming the estate tax needs to exist in it's current form- ideally it would allow for me to deign money out to specific aspects of government or approved (need to avoid abuse here) charities of my choice. That would still serve to dissuade the multigenerational family/genetic lottery while leaving the individual with some say in how their (now former) assets are used. On your last point- a traditional corpor…

Ooooor... just give it to them before you die. Likewise the stocks. Likewise the 'approved' charities - the Charity Of Bob's Kids would be ideal I think. More Polyanna thinking that anything you can make up in a minute, won't be gamed to death by anybody and everybody. Why? Because almost everybody wants to increase the chances of their children/heirs succeeding. Its built into the species.

Now you're just being deliberately obtuse. The entire reason I explicitly pointed out the potential for abuse was to head off the "Charity of Bob's Kids" comment.

Obviously such a system would need significant safeguards- this is something we're both fully aware of as intelligent human beings. Mentioning them now is just a strawman unless stated as the overall opinion "it's 100% impossible to stop abuse".

On your last point, I find it silly to assert that a belief in humanities ability to overrule animal instincts is somehow "Pollyanna thinking". Everything we've achieved thus far as a species has been based on that belief.

Re: Why Inequality Matters

#204

Post by loumf »

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…

(I said this in response to a comment, but there seems to be a lot of confusion on the estate tax all over this sub-thread -- sorry for the repeat)

An estate of 5 million pays $0 in estate tax. The tax is on the amount (net of deductions) OVER 5.34 million.

A net $6m estate would pay about 4% (264k), not 40%.

Re: Why Inequality Matters

#205

Post by aidenn0 »

m0th87 wrote: post #148
humanrebar wrote: post #120

Earlier quoted context omitted.

> 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. But 10 out of the top ten did not have billionaires for grandparents. The Kochs and Waltons are second-generation billionaires. They're not the product of hundreds of years of steadily accumulating wealth. So there's a flaw in the thes…

Piketty addresses this specifically in pointing out that wealth had to be reconstructed almost from scratch following WW2. If you buy his thesis, then this wealth will be inherited by third- and fourth- generation billionaires next, unless another shock at the scale of WW2 happens.

I buy into that thesis for Europe, but the continental US was largely shielded from the destruction of WW2.

Re: Why Inequality Matters

#206

Post by bsbechtel »

dragonwriter wrote: post #154
bsbechtel wrote: post #136

Earlier quoted context omitted.

That's what one political party wants you to believe, and quite possibly yes, what the other political party is doing these days. However, if you cut taxes across the board, not just for the wealthy, the concentration of wealth does tend to even out. The statement 'Limit the power the government has to control the flow of wealth' in itself does not mean slashing taxes only for the wealthy. It means the government has…

> However, if you cut taxes across the board, not just for the wealthy, the concentration of wealth does tend to even out. I don't see any reason or evidence for this, that is, for the proposition that ceteris paribus and independent of the distribution of tax burden, reducing the level of taxation promotes a more equal distribution of wealth. Certainly, to the extent that a given distribution of taxation itself prom…

(Having a hard time following your argument...)

>Certainly, to the extent that a given distribution of taxation itself promotes inequality, reducing the level of taxation in with that distribution will mitigate that effect, but your proposition is equivalent to the proposition that every distribution of taxation promotes inequality compared to the absence of taxation, which I don't see any reason to believe.

I think you are saying taxes cause inequality, and the way we tax everyone can make inequality better or worse, but my argument is that the complete absence of taxation will always improve inequality. In another thread here I pointed out that inequality only became an issue in the 20th century around the same time the US government began taxing everyone directly through personal income taxes. This does not imply causation, but it is certainly a correlation. Yes, there are correlations as well that certain tax structures do reduce inequality, but a host of other macro-economic problems tend to correlate with timing of those same tax structures too.

Let's not forget the common risk that the government decides to do something else with that money it takes from the rich through taxes besides distribute it to the poor....such as start a war somewhere :-/

Re: Why Inequality Matters

#207

Post by alukima »

michaelvkpdx wrote: post #198

I appreciate Gates' analysis of Piketty, but Gates is still blind to an important point- he came from a middle-class background and therefore had enough capital to gain a footing in the world and to be able to write his initial code without worrying about the basic needs of survival. 40% of youth in the USA today do not even have that, and as such, have virtually no chance at all of being able to even play in the cap…

I try to explain this to people all the time. Most of my childhood friends/family worked much harder than any I know now and are just barely making it, some not at all.

I watch friends in the Bay Area spend everything-save nothing and then call the homeless kids in the Haight lazy bums. I have a savings but if the tech bubble did burst there's a very real chance I could end up home. My family doesn't have wealth and some of my siblings are already homeless.

Re: Why Inequality Matters

#208

Post by paulhauggis »

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.

I think we should start something called "time philanthropy".

Here is how it works:

Since many people have more time than money, they should be required to donate a certain amount of time towards volunteering at working on public projects for the government. This could include: construction, cleaning up trash on the highway, fix roads, etc.

An elected government would get to figure out where the volunteers get to allocate their time. I think this would be a great benefit to our society.

Re: Why Inequality Matters

#209

Post by icebraining »

loumf wrote: post #171
marcosdumay wrote: post #82

Earlier quoted context omitted.

The elephant that everybody pretends that isn't in the room is that what you just called weapons is the ability to create wealth. Do we really need to take it away from everybody? Recently, capitalists aren't the ones disrupting the economy in the US, here in Brazil, in the PIIGS, or any other place that I looked. That position is always held by people with power, but little capacity of creating wealth themselves. At…

It's not evident in Gates's review, but one of Piketty's arguments for a wealth tax is just so we can get a better picture of wealth. He goes through great lengths to try to get data on it -- if there was a tax, even a small one, we'd have far greater transparency. He then thinks that this would lead to changes -- because his data, no matter how good you think it is, is arguable and possibly wrong.

Does he make it clear why would the tax be needed? After all, you can impose the same information transparency requirements needed to levy the tax without actually levying it, no?

Re: Why Inequality Matters

#210

Post by netcan »

123testaccount wrote: post #108
netcan wrote: post #57

Bill gates is impressive. It's a hard subject to stay objective with. The validity of the data has some level of uncertainty (by its nature). The interpretation of the data too. I have yet to find an explanation (by Pickety or others) that made me understand the mechanics of the "Snowball Effect" at the centre of it all: 'r > g.' Once you get into the soup of morality and policy, well… I like how he starts with the t…

With regard to the mechanics of the "Snowball Effect", my understanding is that the flat tax on capital gains vs the progressive tax on income is one cause in the US. I would speculate that one other mechanic has to do with time. For the vast majority of people there is a hard cap on wage income based on the hours they can possibly work in a day. People who have money to invest can put that to work for them offline,…

r = return on capital. g = overall economic growth. If capital returns 6% this year and the economy grows b 4%, it means that capital + this year's return grew by more than the economy did overall. This leaves a smaller share for labour.

But I'd like to have a better understanding of the year over year mechanics. Anyone have a good explanation. I'm willing to put in some effort.

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