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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?

#171

Post by oblio »

silisili wrote: post #52
blfr wrote: post #14

Earlier quoted context omitted.

The US is only very loosely constrained by its tax base. It does not lack funds. It has also been spending much more on education over the past decades[1]. With very little to show for it. [1] https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.a...

Because spending money on education doesn't equate to better outcomes. It creates more bureaucracy, bigger councils, etc. Teacher pay is still abysmal, especially considering the fact they are expected to act as guardians and even security these days. And you'll never get better outcomes if you can't attract smart people to actually teach, no matter how much you pay the superintendent. US public education should be c…

That's the thing I don't get. Most of those budgets should go to people. Rocks and bricks and concrete don't teach people, people teach people :-)

Similar story for medical staff.

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

#172

Post by firecall »

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…

It's only very difficult within the constraints of western capitalist democracies.

China has seen how Capitalists have overrun government and have moved to quickly re-educate anyone that steps out of line.

I'm not advocating this, I'm just saying...

Corporations and the wealthy play games and have more resources than our tax departments, and so have found strategies to win that are not available to people who earn an income and work for a living.

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

#173

Post by XiphiasX »

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…

As a reaction to this, the super-rich will just implement offshore strategies to move their operations to tax-friendly jurisdictions.

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

#174

Post by wiseowise »

nemo44x wrote: post #32
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…

Is this a new form of NIMBY taxation? “Tax the rich but not rich people like me!”?

Middle class is not rich by definition.

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

#175

Post by jmyeet »

FiberBundle wrote: post #158
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…

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.

We tax property without realizing a gain. We even tax bonds on deferred interest (eg zero coupon bonds). We can and should do this for stocks. The ultra-rich already borrow money to avoid realizing gains (and thus paying taxes). If they want to keep their stocks let them borrow to pay their tax bills.

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

#176

Post by xracy »

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 mean... you could start by taxing realized capital gains at >20%

It's hard for me to give an argument like "this is difficult" credence when we already have a capital gains tax that's lower than most income taxes. I will buy this is difficult when you raise that number to 50% and we still have the same issues.

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

#177

Post by nemo44x »

smilekzs wrote: post #133
nemo44x wrote: post #32

Earlier quoted context omitted.

Is this a new form of NIMBY taxation? “Tax the rich but not rich people like me!”?

You too are conflating wealth ("rich people") and income ("me").

Why should wealth be taxed? It already has been and it is immaterial until it is realized. At that point the profits are taxed.

Lots of income may not make you wealthy but it lets you live a rich lifestyle. Move somewhere cheaper if you aren’t meeting your savings goals.

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

#178

Post by oli5679 »

wizofaus wrote: post #95
oli5679 wrote: post #45

The model is zero-sum, there are no gains from trade, the people just speculate. In this context, trading is harmful and this type of activity should be banned, or at least heavily taxed. If economic activity is valuable, but leads to inequality, then you need some framework to trade off the value created vs. the social benefits of greater equality.

I did think that but even if you extended the model to be one where money could be created via "successful" investments, I suspect much the same result would transpire - wealth would concentrate fairly rapidly if everyone kept re-investing %x of their wealth, such that a certain % of investments would result in wealth creation and others simple loss of funds.

Yes, this is a great extension idea.

If you make a model like this, for different parameters of speculation vs. value creation you can then test what the most socially beneficial rates of tax are.

More tax will lead to smaller but more equal economies and laissez-faire shouldn’t be optimal.

I would just want the model to acknowledge the non-speculation part, because many of the things I buy are from spectacularly rich companies, but that are genuinely useful to me.

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

#179

Post by TheOtherHobbes »

bmitc wrote: post #76
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…

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…

The rich don't buy much stuff relatively to their wealth.

When you're a billionaire all of life's basics are effectively free. And there are only so many houses, private jets, and super yachts you can buy.

In any case your first, second, third, and fourth home will be owned by a corporation based in the Cayman Islands and buried under an opaque list of shell companies, all of which you also own via cut-outs, one or two of which may be actual registered and regulated banks, which mortgage the properties back to you so you can play games with interest rate arbitrage.

And all of this will be handled by a small personal mini-corporation employing tens of tax experts, lawyers, creative accountants, and investment managers, so you probably aren't even interested in the details.

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

#180

Post by imgabe »

spinchange wrote: post #129
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…

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.

It does not demonstrate that at all. It assumes everyone, rich and poor, is exactly equal at allocating capital because they all have a flat 50% chance to make money on every investment.

In reality some poor people are savvy investors and become rich and some rich people are foolish investors and become poor.

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