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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?

#151

Post by neilwilson »

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…

Or alternatively realise that there isn't a fixed amount of money and therefore if 'rich people' want to count their coins let them do so.

(i) it solves the capital accumulation problem (ii) you can accommodate the hoarding by guaranteeing people a job at the living wage, which then injects the right amount of new money, both temporally and spatially, to offset the hoarding.

Tax has nothing to do with raising money. Tax is about reducing the capacity of the private sector to hire people so the public sector can hire them instead. If there is unemployment then the public sector hasn't hired enough people or taxes are too high/ineffective.

It's never about money. It's always about stuff.

Here's how it works[1]

[1]: https://new-wayland.com/blog/how-the-job-guarantee-fixes-mai...

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

#152

Post by maccard »

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…

> you need to sell and get your local currency in exchange.

This isn't exactly true. For things like bread, yes it _is_ true, nobody will let you take out an asset backed loan. For someone with significant assets, large purchases can be funded by asset backed loan. These are available from high street banks, e.g. [0].

> That can be considered income

No, here's where you're wrong. It's considered capital gains and you're taxed on the difference between what you liquated the asset for, and the value of the asset when you were given it. Here in the UK, capital gains rates are tied to your income level, so if you make under £50,000/year you will pay 10% capital gains, or 20% if you make more. In the US the bands are similar (0, 15, 20%), but I'm not sure how they're calculated sorry.

If we ignore the lowest band of income tax for comparison purposes, someone who makes 1 million in salary here in the UK will pay 45% roughly of that in tax. Someone who makes it all in capital gains will pay 10%

[0] https://www.wellsfargo.com/cib/institutional-investing/asset...

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

#153

Post by harriet1 »

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…

[dead]

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

#154

Post by rightbyte »

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…

Accumulated spending should be a better measurement than current wealth. Otherwise those with debt has negative wealth.

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

#155

Post by mschuster91 »

anovikov wrote: post #84

What's wrong about it? Unless you also "defund the police", that is. If law enforcement is well-funded and works well - which isn't all that expensive or hard on a national scale - than what's the problem about extreme inequality?

> If law enforcement is well-funded and works well - which isn't all that expensive or hard on a national scale - than what's the problem about extreme inequality?

Law enforcement in the US is insanely well funded. The NYPD, for example, has 5 billion dollars of budget for 50k employees and serves about 8.8 million citizens. In contrast, in the German state of Bavaria, a budget of 3.8 billion euros [1] supports 45.000 employees and 13 million people.

And yet, Bavaria has extremely low crime rates (the lowest in Germany with ~3700/100k people [2]), and the police stats could be even better if cops weren't forced to waste time on marijuana bullshit... while in New York, headlines referring to a lack of safety are more or less the norm [3].

The most interesting thing to me is: in absolute numbers, Bavaria had 508.000 crime reports filed in 2021 (cleaned up for cases of being in Germany unlawfully). New York reports 95.000 crimes in 2021... a sixth of the Bavarian absolute case count. What is the cause of this difference, and why is public perception of safety so immensely different?

[1] https://www.stmfh.bayern.de/haushalt/staatshaushalt_2019/hau... (page 5, table E, line "Polizei")

[2] https://www.tvmainfranken.de/auch-dank-wuerzburg-und-aschaff...

[3] https://www.bloomberg.com/graphics/2022-is-nyc-safe-crime-st...

[4] https://www.newsweek.com/new-york-city-most-dangerous-year-c...

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

#156

Post by maccard »

sam_lowry_ wrote: post #144
creakingstairs wrote: post #121

Earlier quoted context omitted.

> 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.

>But how are those debts paid back? They do not have to be. For instance, it is common to never completely pay off the mortgage in Switzerland to avoid one-off taxation. Instead, the eventual taxes are included in the cost of the debt.

There's a difference between never paying it back fully, and never paying it back _at all_.

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

#157

Post by bmitc »

WalterBright wrote: post #81
bmitc wrote: post #25

Earlier quoted context omitted.

It isn't difficult at all. This is an oft repeated excuse. The rich use their wealth as collateral to purchase things, like homes, companies, investments, etc. and transfer wealth to inheritors with basically no tax. So stop worrying about trying to figure out how to tax unrealized wealth and start taxing the things that unrealized wealth helps secure and purchases. This is one way to force realization of that wealth…

> transfer wealth to inheritors with basically no tax. Other than 40% federal estate tax and 20% Washington state tax, which is right next to zero.

Except there are abuses of Roth IRAs and other cases where tax can be completely avoided. I think it was only recent that some limitations of Roth IRAs were put in place for heirs, but such investment vehicles do exist that do not get hit by the normal estate taxation processes.

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

#158

Post by FiberBundle »

bawolff wrote: post #47
smilekzs wrote: post #21

Earlier quoted context omitted.

One thing I've noticed consistently, is when politicians talk about "taxing the wealthy", they almost always follow that with "earning more than $xxxk a year". This is conflating wealth with income. Being within this tax bracket myself, I do not deny that I am biased, but I do hope this bullshit gets called out hard whenever someone brings up yet another underhanded measure to milk us (typical SFBay SWE) above and be…

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…

I agree. Taxing unrealized capital gains is just not a good idea at all. What's more problematic than people having huge sums of unrealized book value, is that in the current system they're allowed to live a lavish lifestyle by taking out loans against those assets (which effectively is an income for them) without paying any taxes at all. That is what should be taxed in some form.

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

#159

Post by TheOtherHobbes »

neilwilson wrote: post #151
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…

Or alternatively realise that there isn't a fixed amount of money and therefore if 'rich people' want to count their coins let them do so. (i) it solves the capital accumulation problem (ii) you can accommodate the hoarding by guaranteeing people a job at the living wage, which then injects the right amount of new money, both temporally and spatially, to offset the hoarding. Tax has nothing to do with raising money.…

There isn't a fixed amount of money. And taxes are only incidentally about public sector hiring.

There is (more or less) a fixed amount of power.

Taxes doesn't raise money, but they do redistribute and decentralise power, making it harder for the very rich to dominate economic and social strategy for their own ends.

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

#160

Post by ben_w »

bmitc wrote: post #79
dismantlethesun wrote: post #73

Earlier quoted context omitted.

If you are wealthy and refuse to earn an income, then your savings will eventually deplete and you’ll become bankrupt. Additionally they wealth already taxed in a previous era, and is currently taxed in this era any time they spend it via sales tax. If of course you are spending all your money on personal groceries as a billionaire, then I’m 100% fine with not taxing you.

I don't think any individual should be a billionaire. There's no conceivable reason for a single person to need or have the right to be a billionaire.

> should

OK, but does that include Rowling's Harry Potter sales, or Persson selling Minecraft to Microsoft?

> There's no conceivable reason

How about "someone is offering me a billion to take over the company I founded regardless of if I actually agree to sell"? Or worse, "someone wants to offer me a million for 0.1% of my shares, but if I sold all my shares the market price would crash by 95%, therefore I get all the blame for being rich with only a handful of the benefits"?

I appreciate there are other economic systems besides one-dollar-one-vote, and we may wish to make mega corporations more democratic and less plutocratic-authoritarian, but that kind of change deserves a book rather than a single comment.

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