Economists Are Rethinking the Numbers on Inequality • Hacker News Board

Re: Economists Are Rethinking the Numbers on Inequality

#231

Post by beerandt » Wed, Dec 04, 2019, 9:29 PM UTC

FeloniousHam wrote: post #159

ianleeclark wrote: post #128

Earlier quoted context omitted.

> People starving, having no health care, low life expectancy, that sort of thing, are problems. Their neighbor having more money in the bank is not really a problem. Most people, when they critique wealth inequality, aren't critiquing their neighbors because most people in the same zip code are going to be at similar levels. When people critique wealth inequality, they're talking about the Koch brothers, or other pa…

> I, too, am in favor of a 100% wealth tax upon death. No more freeloading failsons. I am very far from an economic leftist, but the elimination of inheritance seems to me the fastest, fairest, path to equality of opportunity (the disposition of the confiscated assets is a separate argument). Tax the dead guy.

That's one of the top defining characteristics of "economic leftist" type systems.

Either you don't fully grasp the implications of such a policy, or you may want to re-evaluate your economic self-identity.

I'll add- it's not just the rich that this hits. This means taking a family's home when parents die, unless they pay for it again.

Which means it's basically an incentive for people to rent everything and own nothing. A Subscription based economy for everything. And companies will love it, since they'll provide the subscriptions and corporations never die, so it won't affect corporate wealth.

This is just the tip of the iceberg, but it's not difficult to see a floodgate of unintended consequences. And only the rich will be able to afford the accountants and lawyers to double-Irish/ Dutch-sandwich loopholes.

Re: Economists Are Rethinking the Numbers on Inequality

#232

Post by shajhansbx » Wed, Dec 04, 2019, 9:30 PM UTC

harryh wrote: post #162

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Hmm, I wonder if this is the first good argument for the mortgage interest deduction.

Re: Economists Are Rethinking the Numbers on Inequality

#233

Post by dangerlibrary » Wed, Dec 04, 2019, 9:34 PM UTC

rayiner wrote: post #176

CharlesColeman wrote: post #151

Earlier quoted context omitted.

> I'm fairly well acquainted with the literature on this topic How so, exactly? > and I think the opposite; the fact that most people don't understand why these "nitpicks" actually seriously undermine the premise and totally butcher the prescriptive suggestions Personally, I'm inclined to withhold judgement until the dust settles, yay or nay. The topic is technically difficult, and there are a lot of actors with poli…

My biggest problem with Piketty & Saez's work is that it made pretty major economic policy prescriptions based on a model that was so simplistic that the result was borderline click-bait. And the end-result is that assertions have entered the political discourse ("the middle class's standard of living has been stagnant since the 1970s") that just aren't true. Let's unpack that. If you want to quantify the middle clas…

You are mixing up correlation and causation re: married couples.

Re: Economists Are Rethinking the Numbers on Inequality

#234

Post by Domenic_S » Wed, Dec 04, 2019, 9:43 PM UTC

JimboOmega wrote: post #230

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Except in California we had proposition 13, so that property taxes are severely hamstrung; I wonder how much impact that alone has on the overall analysis given the size of California as part of the US economy. I really think we should bring them back but it's anathema. The usual argument has something to do with a little grandma living on a fixed income who suddenly can't afford taxes on the home she's owned for 40…

I'd have to do the math but to me it seems like ridiculous housing prices make up for prop 13, while also pushing the tax burden to those best equipped to handle it (people in the position to afford to buy expensive houses)

So while grandma's only paying taxes on a tax-appraised value of $200k for a home worth $1mm on the open market, people who buy today are paying tax on $1mm+ for homes that "should be" (or would be in other states) worth $200k.

Re: Economists Are Rethinking the Numbers on Inequality

#235

Post by keenmaster » Wed, Dec 04, 2019, 9:45 PM UTC

StacyRoberts wrote: post #187

StacyRoberts wrote: post #140

I read Piketty's capital. It's very long. My current best solution to the problem of capitalism is this: once a year the richest n people must divest themselves of all assets minus the median annual salary and start over.

Explanations for the down votes are appreciated. I've put a lot of thought into this.

I didn't downvote, but while I see the value in a moderate wealth tax, I think cutting the rich down to median salary would destroy a lot of value. Our capitalist system is undergirded by pecuniary incentives to innovate, improve, and produce. If you take those incentives away, the most productive members of society will not produce as much.

Some people are saying that billionaires shouldn't exist. I'm not so sure. If we create a high marginal wealth tax at each 5 or 10 billion dollar bracket, and someone still manages to retain tens of billions of dollars, then they're producing a massive amount of value that should only be celebrated.

Re: Economists Are Rethinking the Numbers on Inequality

#236

Post by Domenic_S » Wed, Dec 04, 2019, 9:48 PM UTC

harryh wrote: post #162

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Say you and I each buy a house. Yours is new construction and cost $1mm, mine was built in 1970, never remodeled, and is perhaps located somewhere more expensive and also cost $1mm. Common scenario in the SFBA.

Is one year of your consumption equivalent to one year of my consumption? Like a car, the longer you use it the higher the likelihood that something expensive goes wrong. But unlike a car, our homes are probably appreciating at close to the same rate.

Re: Economists Are Rethinking the Numbers on Inequality

#237

Post by rad88 » Wed, Dec 04, 2019, 9:49 PM UTC

harryh wrote: post #162

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

The wealth difference is not as great as it seems, it's just the interest on the mortgage minus tax incentives and the opportunity cost of paying it off.

Re: Economists Are Rethinking the Numbers on Inequality

#238

Post by harryh » Wed, Dec 04, 2019, 9:55 PM UTC

Domenic_S wrote: post #236

harryh wrote: post #162

Earlier quoted context omitted.

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

Say you and I each buy a house. Yours is new construction and cost $1mm, mine was built in 1970, never remodeled, and is perhaps located somewhere more expensive and also cost $1mm. Common scenario in the SFBA. Is one year of your consumption equivalent to one year of my consumption? Like a car, the longer you use it the higher the likelihood that something expensive goes wrong. But unlike a car, our homes are probab…

Is one year of your consumption equivalent to one year of my consumption?

Yes. That's why both houses cost the same.

Re: Economists Are Rethinking the Numbers on Inequality

#239

Post by hueving » Wed, Dec 04, 2019, 9:57 PM UTC

harryh wrote: post #162

js2 wrote: post #98

Earlier quoted context omitted.

Housing is already taxed. In the U.S., property taxes are about 17% of government revenue. https://www.economist.com/finance-and-economics/2013/06/29/l...

Property taxes are not wealth taxes, they are consumption taxes. You can easily tell this because a person who owns a home outright pays the same tax as someone who owns a similar home but has a large mortgage. These two people have different levels of wealth but pay the same tax. This is because their consumption is the same.

That's not how consumption taxes work: https://en.wikipedia.org/wiki/Consumption_tax

A property tax takes effect without sales occurring, without the property being used, etc. There is no act of consumption to tax, other than simply existing. And before anyone argues that the use of the land is the consumption, that would only make sense if the value of the house wasn't taken into account as part of the property tax.

If property taxes were only levied at the time of sale (e.g. stamp duty in Australia), then it would be fair to call it a consumption tax.

Re: Economists Are Rethinking the Numbers on Inequality

#240

Post by nwah1 » Wed, Dec 04, 2019, 9:59 PM UTC

_qwfv wrote: post #30

Isn't this one of the thesis of Marx's Capital? That there's a loop in the flow of commodities, money, and labor that generally results in capital extracting more capital from the economy. (Typically from wage labor.) It seems to me that without someone applying the brakes to that loop and changing the way distribution or production is done, we're just going to keep riding this positive feedback loop.

Failure to distinguish land from capital is an enormous possible pitfall for those trying to fight poverty.

Land titles, and all other types of access rights to natural opportunities, are means by which "rent-seeking" occurs. Rent=seeking is any type of of zero-sum extractive activity that adds nothing to the economy, and simply serves to make the rich richer.

Examples include: holding a prime piece of real estate idle, while waiting for others to add value to that land. Or acquiring a patent just to sue anyone who unknowingly violates it. Or manipulating the rules to your favor through lobbying.

Productive activity, however, must be rewarded since that is the engine of wealth. We can't have a high standard of living if production isn't rewarded. Solving inequality by making everyone poor is not going to get you very far.

This distinction is essential.