Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea • Hacker News Board

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#211

Post by koolba » Thu, Oct 22, 2020, 6:27 PM UTC

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

> You pay taxes on all of your income. But businesses only pay taxes on their profit. It's a big, big difference that changes the incentives.

It’d be insane to have it any other way for businesses. Whole swathes of low margin businesses would be impossible to operate. For example a super markets average margins are 3-5%.

Corporate tax is (generally) on profits because you can deduct costs. It allows for the flow of money to efficiently find a sub supplier for the parts of a good or service.

The real scam is when things like health insurance premiums are deductible for a company but not for an individual.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#212

Post by senko » Thu, Oct 22, 2020, 6:28 PM UTC

vidanay wrote: post #168

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

This is something that I have not seen very much research about (not saying it doesn't exist.) When taxes are high, then "wealthy" people will search for a method to reduce their tax burden. For business owners and employers, there are two large options for reducing tax burden - increasing employee salary, and increasing re-investment (R&D, infrastructure, etc). Both of which are commonly cited as deficient in modern…

For sufficiently large companies, a third option is to create a global corporate structure that minimizes the tax burden. If lawyers + accountants + other fees is considerably less than the tax (which is probably the case for most mid-sized or larger companies), becomes a no-brainer for them.

See https://en.wikipedia.org/wiki/Double_Irish_arrangement for a historic example.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#213

Post by [deleted] » Thu, Oct 22, 2020, 6:28 PM UTC

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

[deleted]

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#214

Post by coliveira » Thu, Oct 22, 2020, 6:28 PM UTC

bobcostas55 wrote: post #189

coliveira wrote: post #53

Earlier quoted context omitted.

This is so hidden in the debate that it is almost like a "secret". The more taxes you have on corporate income, the higher the incentive for corporations to invest in the company, so they can avoid paying taxes. This is good for the economy. On the other hand, lowering corporate taxes also generates a cascade of tax avoidance, since you have higher profits that generate the need for more complex tax avoidance schemes…

This is obviously fallacious, just consider the extreme case of 100% taxation. At the macro level the only source of investment funds is income that does not go to consumption. Lower the expected rate of return through taxation, and the result is inevitably a shift from investment to consumption. At the individual firm level it's obvious that taxation lowers the NPV of the firm's available projects - they are obvious…

You're mixing corporate income taxes an personal income taxes. Corporate income taxes are good because the business wants to avoid paying taxes so it will devise more ways to invest in the company. This is where investment capital will be coming from.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#215

Post by padseeker » Thu, Oct 22, 2020, 6:28 PM UTC

Is it worse than running up a multi trillion dollar deficit? The tax cut was sold as it would give a boost to the economy and we would make it back with additional revenue due to economic growth.

However the required growth rate to justify the tax cut was estimated by 6.5. Even when the economy was good before the pandemic it never got above 4.5 percent. And now we're not even close.

Maybe a wealth tax is not the best idea but based on the current economic realities and the budget deficit what is a better alternative? Conservatives will say "cut the budget or spending" but which expenditures are you going to cut?

It might be a bad idea but compared to 23 trillion dollar? The super wealthy have benefitted from how many tax cuts and yet we are still running a massive deficit. Many like to say 'its a spending problem' but then ask them where to cut spending and usually its spending that does not affect them. Plus you need to factor in the affects of austerity on the economy, as the UK has tried it and it did not work, which will reduce revenue and make the deficit and economy worse.

Hate it all you want but it should be on the table as an option to stop the bleeding. Bring on the downvotes.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#216

Post by bdangubic » Thu, Oct 22, 2020, 6:28 PM UTC

TheDong wrote: post #101

bdangubic wrote: post #44

Earlier quoted context omitted.

If my wealth comes from owning a percentage of a company (say I own 30% of AMZN) what is the way to tax me other than taking my shares, i.e. the Gov would take certain percentage of my shares? And if we go that route how many years would it go by before Gov owned majority of shares of most companies? Lots of people scream that we should tax the wealthy but I do not follow how you tax someone whose wealth comes from l…

Let's look at jeff bezos for example. He sells over a billion dollars worth of amazon stock each year [0] (those numbers have increased slightly since then actually). Fine, he pays some of that to the government, and maybe sells slightly more. I don't see the problem. If, in fact, your wealth only comes from ownership in a company and you have no other source of wealth, then yes you would be encourages to sell your s…

Why should I be forced to sell shares of my company when no other individual that owns shares of whatever other companies is being forced to sell?! As you said, Bezos sells billion dollars worth of AMZN and pays taxes on that just as you and I would when we do. I am not sure I follow why we are trying to tax owning of shares of companies?! If you buy 100,000 shares of AMZN today, do you hope that IRS will come knocking on your door to take 1,000 or whatever number it is each year? If that is the case no one would ever buy any shares of any company...

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#217

Post by kortilla » Thu, Oct 22, 2020, 6:28 PM UTC

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

But why invest instead of just taking the tax hit unless you’re waiting for a lower tax rate in the future? It seems this scheme of incentives is dependent on some future expectation of taxes dropping.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#218

Post by mmaunder » Thu, Oct 22, 2020, 6:28 PM UTC

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

The problem is when you start making money and want to grow the business without funding. You need to build a war chest. Once you've burnt through any carried loss, which happened pretty quickly in our case, we are taxed on the profit we are retaining in order to build up a cash reserve.

That cash reserve is needed if we're to self fund big projects and in case of down-turn, lawsuit or other unforeseen event if we are to avoid immediately laying people off.

The alternative is to raise money which dilutes founders and employees who own stock or vested options.

You won't encounter this issue if you're early stage or if you are "going for growth" by running at a loss and raising money in successive rounds. But it is a huge problem if you are a self funding small or medium sized business.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#219

Post by maerF0x0 » Thu, Oct 22, 2020, 6:29 PM UTC

davrosthedalek wrote: post #106

maerF0x0 wrote: post #47

Earlier quoted context omitted.

> is deeply self serving To the extent that they do it for themselves alone, which is making an assumption about intent. Many wealthy people honestly believe that low taxes drive economic growth that is good for all.

There are also many who approve of a higher income tax (and capital gains) for the wealthy, but reject a wealth tax.

in the spectrum of taxes I think would rank them in decreasing order of fairness as (Vices, Consumption, Income, Wealth)...

Wealth tax is really rough because you can lose money on an asset AND lose more w/ the taxation on the capital base. At least with an income tax it's, hypothetically, only in the case of profit.

Wealth Tax is kind of like mandatory quotas. Income tax is like sharecropping.

Consumption is like sharing your goods consumption with society (think Potluck)

Vices is actually a disincentives structure for things proven to be societally disastrous or distasteful

And of course the devil is in the details entirely, because loopholes and policy can change it entirely.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#220

Post by MacsHeadroom » Thu, Oct 22, 2020, 6:29 PM UTC

kilroy123 wrote: post #128

tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

I'm convinced the best strategy is a tax system where net worth is capped and heavily taxed based on average net worth of all Americans. There is simply no other way to align interests of the wealthy. https://anacyclosis.org/2020/05/25/how-do-we-save-democracy

I'm in favor of astronomical marginal tax rates. But that post of comically bad at making the argument.

The founding fathers, including a handful of those quoted in the linked post, were highly critical of democracy and even of men who didn't own multiple house like they did.

We just narrowly missed out on having a constitution which only allowed land owners to vote. There were even years long debates on whether votes should be proportional to the amount of land owned.

Using the founding fathers to argue for state enforced equalization of outcomes is plainly absurd.