Are super-rich people just better at making money? • Hacker News Board

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

#211

Post by roenxi » Thu, Dec 22, 2022, 10:52 AM UTC

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…

What if, while grappling with these complex issues, we institute a land tax as the obvious easy part? That is easy, hard to dodge and all but breaks inter-generational wealth transfers as a matter of practice. It is hard to get wealth from grandparent to grandchild in anything other than land; everything decays and you just need one idiot in the chain to lose everything with no chance to recover. The way the market intended.

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

#212

Post by gjulianm » Thu, Dec 22, 2022, 10:53 AM UTC

imgabe wrote: post #91

gjulianm wrote: post #43

Earlier quoted context omitted.

Some counterpoint thoughts: > - consensual trades are win win (you want a sandwich, I want $5 let’s trade! And we both win) Not all trades are exactly "consensual". The sandwich seller can probably live without selling a sandwich, I can't live without food, so the seller has far more power to set the price. Existing power imbalances make trades less fair, specially with essential goods (and that includes jobs, which…

In the real world, there is more than one sandwich seller and they compete with each other. When was the last time you non-consensually bought a sandwich? Even homeless people on the street will sometimes refuse free food, so the idea that sandwich-sellers can set any arbitrary price they want or people will starve is just not something that happens in practice. Indeed, sandwiches are abundant and affordable.

> In the real world, there is more than one sandwich seller and they compete with each other. When was the last time you non-consensually bought a sandwich?

But that competition isn't perfect. Right now, for example, there are very clear indications of price gouging with the excuse of inflation.

And it isn't even just with food. See the renting market for an example. People who had enough money to buy a house to rent it earn more money, and people who didn't spend more money because they need a house to live (and moving is a very high barrier for a lot of people).

But I think the most important example is jobs, mainly jobs with a low barrier of entry, which are mostly taken by poor people. People that don't have enough savings/time to get better education or to find for better jobs have to get whatever they can, so their employers have a lot of power to set low salaries: the employer can deal with an employee leaving or taking more time to fill a position, the employee probably needs a job quickly to pay the bills.

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

#213

Post by creakingstairs » Thu, Dec 22, 2022, 10:56 AM UTC

sam_lowry_ wrote: post #191

creakingstairs wrote: post #184

Earlier quoted context omitted.

So we get to pay 40%+ tax on our income on a yearly basis while they get to pay a mystery amount that may or may not be factored into debt costs that can also be deferred for a while? Yeah that sounds fair.

Why misery amount? The government can choose whatever tax it deems appropriate. Also, where I live options on shares are taxed at 10%. The government does not have to wait until they are exercised to take a cut.

Because you said:

> debt costs will adjust accordingly and pass on to wealthy still

Let’s think about some the factors that may influence this imaginary debt cost:

- whether asset is an appreciating asset - risk management strategy of the bank - whether account manager wants to have competitive terms so that the wealthy customer won’t find a better deal And so on.

How is this not a mystery cost? Sure the bank in some distant future might some tax when it decides to liquidate it. But by that time, the assets would have been in pools for such a long time that we’d never know exactly how much “tax” was paid.

I’m not going to say I know the solution to this problem because I honestly don’t think there is a way to fix this. Tax avoidance will always be there.

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

#214

Post by mschuster91 » Thu, Dec 22, 2022, 10:56 AM UTC

anovikov wrote: post #181

mschuster91 wrote: post #155

Earlier quoted context omitted.

> 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 45.00…

Something is wrong here, 500M for 45K people means ~850 euros per month per employee which is less than German minimum wage (1584 eur per month). Plain mistake. $100K per year per employee in NYC sounds about right: around half are probably salaries plus payroll tax on them, resulting in just-over-poverty wage for low level employees and barely-middle-class for the higher ups; and the other half for supplies, buildin…

> Something is wrong here, 500M for 45K people means ~850 euros per month per employee which is less than German minimum wage (1584 eur per month). Plain mistake.

Indeed. I don't know what our precious Interior Minister has been talking about, chances are he simply once again blasted bullshit towards the press and no one called him out as well... I dug a bit in the government's budget plan and updated the figures. Still, we spend ~1.2 billion (assuming 1:1 exchange rate) less than the US, with five million more citizens that are served by the cops - so there is still a marked difference.

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

#215

Post by Yizahi » Thu, Dec 22, 2022, 10:58 AM UTC

robertlagrant wrote: post #185

Yizahi wrote: post #145

Earlier quoted context omitted.

If any single country will try this alone - devastating. For the country :) . If USA alone will try it - maybe it will work, idk. If USA plus EU plus major Asian economies will do it collectively - it will work.

Sorry, I wasn't clear. Assuming you get what you want, what will be the downsides?

For independent financial auditor - none that I can think of.

For offshore restrictions - you as a country lose all existing assets already there. A lot of people will move their business to a better countries, providing less restrictions and eventually taxes for them. Probably election loss and further dismantling of all these laws by disgrunted businessmen using their pocket political forces. If will hugely depend on the collective size of economies doing the ban.

For housing - its tourists plus rent seekers vs. regular citizens. You hurt one group and you benefit another and vice versa. There is no win win scenario here, balance must be found. I personally vote for regular citizens, even if tourism industry will be hurt a little bit.

For inheritance taxes - no downsides.

For token ban - no downsides.

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

#216

Post by Yizahi » Thu, Dec 22, 2022, 10:59 AM UTC

sam_lowry_ wrote: post #194

Yizahi wrote: post #183

Earlier quoted context omitted.

I should have clarified - I don't propose to "ban" half the planet because they the not optimal with their laws or prosecution. Offshore usually means tax heavens, usually the tiny island countries with small native population and incredibly lax financial regulation or none at all. Those are the primary targets.

Start with Delaware.

Exactly this. How can such arrangement exist in the USA is strange for me.

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

#217

Post by bawolff » Thu, Dec 22, 2022, 10:59 AM UTC

robertlagrant wrote: post #128

Yizahi wrote: post #109

Earlier quoted context omitted.

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?

Well the obvious ones:

Some people have legitiment business interests in tax-haven type countries that are not about avoiding taxes. No country is just purely a tax haven with no other ecconomic activity after all.

In theory a blanket ban on crypto could harm innovation. This was much easier to believe at the beggining of the hype cycle when it seemed like someone might actually do something useful with blockchain tech. Kind of hard to believe at this stage.

I feel like inheritence tax is kind of pointless by itself. Most people dont just suddenly die and have time to distribute their assets pre-death.

Limiting housing investment might make cost of living go up. Its not like houses just appear out of nowhere. lots of people cant afford to just buy/build a house. Rich people buying houses and renting them out helps fill that gap. It doesn't always work out as ideally at that, but the other extreme of severely restricting real estate ownership would probably screw over poor people too who do not have sufficient resources to get a mortgage. They still need somewhere to live.

I dont really know what independent auditors means precisely. IRS/CRA/etc are already pretty independent. They could be better funded though.

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

#218

Post by sega_sai » Thu, Dec 22, 2022, 11:00 AM UTC

wtcactus wrote: post #210

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…

Your assumption is that the state will apply that money optimally (or at least more optimally than the super rich - also, notice you didn’t define what super rich are). Looking at historical and present data, I can be absolutely sure that the state will mismanage that money in almost every country. I’m Portuguese, my government is collecting more ~ 25% taxes than it collected 6 years ago when the current ruling party…

To be honest I think this is strawman argument. I think it is absolutely true that the government will mismanage some of that money. The question is whether that money used with not 100% efficiency is better than a billionaire who may spend that money on anything. I certainly agree there are rich people who donate their money effectively but even then they decide what to spend the money on. So in my opinion some government mismanagement is not the reason to have some redistribution, but rather a reason to ensure that governments are properly accountable etc. And even if that is a government spending it can be still tendered to private companies depending on what's being done.

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

#219

Post by gjulianm » Thu, Dec 22, 2022, 11:00 AM UTC

abigail95 wrote: post #74

gjulianm wrote: post #24

Earlier quoted context omitted.

No, but it's a decent approximation. Even in the case of "creating wealth", the person with more money usually gets a bigger share of the money simply because they had more money. This being Hacker News, I think we all are too close to the tech startup model, which is certainly far more equitable than others; but a lot of companies do not share fairly the value created between workers and owners.

If this was true about wealth creation, intergenerational wealth would eventually outcompete everything else, while it looks like the opposite is true. Unless the people with money are the ones that made it themselves, they will keep buying bad watches like everyone else. The what they invest it in, is the whole point. If you spend your life and wealth playing 20% of your bankroll with zero expected value - you shoul…

> If this was true about wealth creation, intergenerational wealth would eventually outcompete everything else, while it looks like the opposite is true.

Not outcompete, but intergenerational wealth does play a huge part in class mobility [1].

> The what they invest it in, is the whole point. If you spend your life and wealth playing 20% of your bankroll with zero expected value - you should completely expect not to be wealthy, and if you do become wealthy it will be completely by chance, against the odds.

The amount of money you have is a very important factor in your options. The more money you have, the more options you have to invest with more expected value. For example, what options does a family that manages to save $500 a year to invest that money in something that brings them a lot of expected value?

1: https://www.pewtrusts.org/~/media/legacy/uploadedfiles/wwwpe... Page 6, figure 3

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

#220

Post by Yizahi » Thu, Dec 22, 2022, 11:01 AM UTC

raverbashing wrote: post #205

Yizahi wrote: post #162

Earlier quoted context omitted.

Offshore is common term. Its collectively all those small countries which have minuscule corporate tax, zero financial rules and refusal to cooperate with big countries about financial tax evasion. Basically everyone from Ireland, Switzerland (sorry guys, just business) to Bahamas and Panama (and ban flags of convenience while we are at it). Definitely all countries refusing to disclose financial records for internat…

> Definitely all countries refusing to disclose financial records for international law enforcement. Since you apparently never heard of FATCA and OECD CRS I'll leave it at that Oh yeah and several US States don't require financial/personal information in a lot of cases (including real estate transactions).

I'm aware that there are a lot of legal frameworks about this issue. So what? In the end they are either impotent or not sufficient. The problem is global and doesn't show any signs of abating.