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Are super-rich people just better at making money?

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Re: Are super-rich people just better at making money?

#121

Post by creakingstairs »

vladvasiliu wrote: post #100
bawolff wrote: post #47

Earlier quoted context omitted.

As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.) I don't think the issue is lack of will but lack of plan that actually works in the face of assets with unclear value and/or difficult to liquidate. And this doesn't just affect the ultra rich but people like SWE too. How much is the stock you have in the non-public company you work at really worth? SWE are probably one of th…

But as far as I understand, the stocks, and other difficult to liquidate assets, as log as you hold them in that form, are worth "nothing". You can't go buy bread with that, not even a house. At some point, you need to sell and get your local currency in exchange. That can be considered income, and taxed at that value. It doesn't matter whether you had 1M which melted to 1000 or if you bought it for peanuts and got l…

> At some point, you need to sell and get your local currency in exchange.

But ultra rich people actually don’t. They can just incur debts using their wealth and use that instead.

Re: Are super-rich people just better at making money?

#122

Post by vladvasiliu »

underdeserver wrote: post #89
WalterBright wrote: post #62

Earlier quoted context omitted.

The top 1% pay 40% of the federal tax revenue. The top 5% pay 60%. California has the highest income tax at 13.3%, the highest federal tax rate is 37%. That makes the top income tax rate 50%.

Top 1% of salary earners. The CEOs, highly paid doctors, engineers. The real capitalists - those who hold the assets and pay for their yachts with stock-backed loans - they don't pay 40% of the federal tax revenue. Their salary is $1/year.

How are stock-backed-loans paid back?

If in cash, they have to get the cash from somewhere, right? Supposedly selling the stocks. That can be taxed then and there.

If they transfer the stocks to the lender, that means the stocks in question are valued at $x, since that's the value of the loan. So tax that value.

Re: Are super-rich people just better at making money?

#123

Post by mschuster91 »

This article has some fascinating visualisations and offers a very compelling theory. However, I think the author lacks two very important points that compound the issue of poverty: the "boots theory" - aka a poor person spends 10$ a year over ten years on new but crap shoes while a rich person spends 100$ once every ten years for a new but good shoe - and the fact that money makes money.

The latter is the elephant in the room, IMO: once you hit 1 million dollars net worth, even a very conservative investment aka government bonds at 1% yields 10.000$ a year, at 5 million dollars it's 50.000$ a year, and at 10 million dollars, it's 100.000$ a year. Basically, once you have reached ~5 million dollars of wealth, you can afford to do whatever the fuck you want (and a bit earlier, if you are willing to risk a bit more and go for stocks). You can choose to not work a day in your life any more and chill out in Costa Rica sipping pina coladas every day, you can go and work for some charity without payment, or you can start up a company and not care how much money you make - as long as you're not actually losing money or spending over the yield of your investments, you literally cannot fail any more. You and your children won't ever experience being poor or homeless.

Super-rich people have it even easier. When you have 100 million dollars or manage to reach billionaire status - why not throw a million or two into some startups each year? Best case, you end up striking a goldmine and making ten times that, worst case you're out of a million dollars but your other conservative investments will make that back in a year.

Re: Are super-rich people just better at making money?

#124

Post by robertlagrant »

danny_codes wrote: post #111
an-allen wrote: post #106

Earlier quoted context omitted.

This all presupposes that the government is an efficient user of capital, when its pretty clear its not. Heavy taxes on the rich, means that capital investments that a rich person might finance, become government programmes and bureaucracies. Theres obviously a sweet spot here - but rich folks are good at creating capital and governments are notorious for wasting it. Now in the US I probably don’t have to tell you wh…

Most of our money does not go to the military. Defense spending is about 700b per year, while the budget is over 4t. The government doesn't need to handle capitol allocation. We can simply shift the tax burden upwards. Poorer people get reduced tax, rich people get more.

> Poorer people get reduced tax, rich people get more.

This already happens. Many people either don't pay tax, or pay less tax than they cost.

> The government doesn't need to handle capitol allocation.

Then who will spend the tax money?

Re: Are super-rich people just better at making money?

#125

Post by bmitc »

sgjohnson wrote: post #33
bmitc wrote: post #18

Earlier quoted context omitted.

What is "that" that you're referring to? Tax rates have absolutely fallen. If you're referring the article's claim that the rich pay much more taxes in terms of dollar amount, that doesn't necessarily mean anything because the rich are wealthier and more concentrated than every before. For example: > According to investment bank Credit Suisse, the fraction of global household wealth held by the richest 1 percent of t…

Looking at the total world population is completely meaningless. This is because fertility rate in virtually every developed country is below 2, however there are extremely poor countries where the population is exploding with fertility rates above 8. > To put it another way, as of 2010, 388 individuals possessed as much household wealth as the lower half of the world's population combined—about 3.5 billion people; t…

For the U.S. alone, I think the stat is something like out of every 10,000 people, it's something ridiculous like either 40 or even 4 people that own as much wealth as the bottom 6,000 combined. It may honestly be something worse like 1. I remember calculating this from a research paper I read, and I feel like 10,000 was the sample population needed to get a non-fractional rich person or persons. This is absurd.

Re: Are super-rich people just better at making money?

#126

Post by janalsncm »

WalterBright wrote: post #104
underdeserver wrote: post #89

Earlier quoted context omitted.

Top 1% of salary earners. The CEOs, highly paid doctors, engineers. The real capitalists - those who hold the assets and pay for their yachts with stock-backed loans - they don't pay 40% of the federal tax revenue. Their salary is $1/year.

Loans are not income.

There is no law of nature that says only income can be taxed. Loans could be taxed.

Re: Are super-rich people just better at making money?

#127

Post by bmitc »

an-allen wrote: post #106
bmitc wrote: post #3

To solve all this, it's pretty simple, and the U.S. actually used to do it: heavily tax the super rich. Heavy taxation and then appropriate use of those funds for education, R&D funding, infrastructure, etc. is actual trickle-down economics. And mega corporations should be heavily taxed instead of holding the country economically hostage. They jumpstart their companies off of government funding and R&D and then act a…

This all presupposes that the government is an efficient user of capital, when its pretty clear its not. Heavy taxes on the rich, means that capital investments that a rich person might finance, become government programmes and bureaucracies. Theres obviously a sweet spot here - but rich folks are good at creating capital and governments are notorious for wasting it. Now in the US I probably don’t have to tell you wh…

> This all presupposes that the government is an efficient user of capital, when its pretty clear its not.

It's not a presupposition. That's a separate discussion and should also be improved. We shouldn't say, "oh, we're bad at redistribution, so let's not".

Re: Are super-rich people just better at making money?

#128

Post by robertlagrant »

Yizahi wrote: post #109
bawolff wrote: post #47

Earlier quoted context omitted.

As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.) I don't think the issue is lack of will but lack of plan that actually works in the face of assets with unclear value and/or difficult to liquidate. And this doesn't just affect the ultra rich but people like SWE too. How much is the stock you have in the non-public company you work at really worth? SWE are probably one of th…

It is reasonably easy. Step 1. The country creates a law forbidding any financial interactions with "offshore" countries (list is populated manually by lawmakers) and also with companies working with such offshore companies (shell intermediaries) in "good" countries. Step 2. Country forbids its citizens from owning any assets or be incorporated in the same "offshore" countries. Step 3. Blanket ban of cryptotokens. St…

What will be the downsides of these moves?

Re: Are super-rich people just better at making money?

#129

Post by spinchange »

an-allen wrote: post #106
bmitc wrote: post #3

To solve all this, it's pretty simple, and the U.S. actually used to do it: heavily tax the super rich. Heavy taxation and then appropriate use of those funds for education, R&D funding, infrastructure, etc. is actual trickle-down economics. And mega corporations should be heavily taxed instead of holding the country economically hostage. They jumpstart their companies off of government funding and R&D and then act a…

This all presupposes that the government is an efficient user of capital, when its pretty clear its not. Heavy taxes on the rich, means that capital investments that a rich person might finance, become government programmes and bureaucracies. Theres obviously a sweet spot here - but rich folks are good at creating capital and governments are notorious for wasting it. Now in the US I probably don’t have to tell you wh…

The Yard sale model in this post demonstrates that rich people are not necessarily better at allocating capital even if/as they accumulate and compound it faster.

The military is NOT where most spending goes - most spending goes to the entitlement programs: social security and Medicare.

Re: Are super-rich people just better at making money?

#130

Post by [deleted] »

lelag wrote: post #99
bmitc wrote: post #76

Earlier quoted context omitted.

The rich buy stuff, do they not? Tax those things to force realization and thus tax of unrealized wealth. Buying a second, third, fourth home? Here's your increasingly high tax and interest rate penalty. Instead of throwing up our hands with "they don't have cash", force them to realize investments into cash and deincentivize being able to keep everything hidden being investments and purchasing things with unrealized…

> Buying a second, third, fourth home? It's too easy for the ultra-rich to find loopholes in any rules. If there is a tax on homeownership, they will simply not own any home but will own some corporate entity that own the asset. See ? No secondary residence. Just an investment in a corporation that happens to home a bunch of houses.

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