How to convert between wealth and income tax • Hacker News Board

Re: How to convert between wealth and income tax

#231

Post by gruez » Fri, May 22, 2026, 7:02 PM UTC

notahacker wrote: post #172

tengbretson wrote: post #125

Earlier quoted context omitted.

I'm not disputing the claim that few people are able to save and invest into having a stake in the means of production. However, if your goal is to increase stakeholdership, how would a policy that explicitly disincentivizes that behavior fix anything?

Well for a start it pressurises asset holders to sell their assets. But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low effective tax bills relative to mere workers, which means that there's a lot less cause for concern about those workers not owning their means of production

>Well for a start it pressurises asset holders to sell their assets.

Even assuming this is true, then what? Do you think the average joe is going to suddenly buy alphabet or meta stocks because bill ackman or ken griffin sold their shares to buy bigger yachts?

Re: How to convert between wealth and income tax

#232

Post by outside1234 » Fri, May 22, 2026, 7:02 PM UTC

You need to understand the "Buy/Build, Borrow, Die" cycle that the ultra rich use to avoid basically any taxes.

Explained here: https://gemini.google.com/share/e230bcecaaeb

Re: How to convert between wealth and income tax

#233

Post by thrance » Fri, May 22, 2026, 7:03 PM UTC

tengbretson wrote: post #104

ryandrake wrote: post #8

> To convert between wealth and income tax rates, you have to divide by the rate of return on capital. The conversion rate of 20 comes from assuming that the risk-free rate of return is 5%. This seems to only be true for people whose income entirely comes from their wealth, rather than their labor. The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtai…

> The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtains all his income from labor: To him, a N% wealth tax = 0% income tax for all N. Those with -some- savings are somewhere in the middle. Productivity comes from labor AND assets though. You need the farmer and the tractor. Why would we create a tax system that encourages people to divorce themselve…

Regular people have less and less savings to buy "stakes in the means of production". Capital is getting more and more concentrated in fewer and fewer hands: the top 10% of the country owns almost 80% of it all. Wealth needs to be taxed and redistributed.

Re: How to convert between wealth and income tax

#234

Post by warkdarrior » Fri, May 22, 2026, 7:03 PM UTC

juancn wrote: post #134

There's a secondary side effect of wealth taxes: they redirect investments (I'm Argentinian and we have wealth taxes). Investments shift to things whose tax value updates slowly, for example property which typically adjusted more slowly than other financial assets. This tends to rise property prices and concentrate ownership. It causes other distortions in allocation depending on the tax details, but wealthy people t…

> This tends to rise property prices and concentrate ownership.

We are already there in US. Real estate is already controlled by companies, and rental costs are through the roof.

Re: How to convert between wealth and income tax

#235

Post by outside1234 » Fri, May 22, 2026, 7:04 PM UTC

colinmarc wrote: post #164

ryandrake wrote: post #8

> To convert between wealth and income tax rates, you have to divide by the rate of return on capital. The conversion rate of 20 comes from assuming that the risk-free rate of return is 5%. This seems to only be true for people whose income entirely comes from their wealth, rather than their labor. The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtai…

I can't tell what's worse: intentionally obscuring the fact that the vast majority of people would pay ~no wealth tax or unintentionally forgetting that the vast majority of people would pay ~no wealth tax.

The ultra rich are desperate to maintain their exclusive access to essentially pay no taxes through their "Buy, Borrow, Die" strategy (if you don't understand what that is you should stop and read this: https://gemini.google.com/share/e230bcecaaeb) and so they are using scare tactics / gaslighting around wealth taxes because a wealth tax would disrupt this essentially zero tax strategy.

Re: How to convert between wealth and income tax

#236

Post by mlsu » Fri, May 22, 2026, 7:05 PM UTC

I would love, LOVE to pay 20% in taxes! Goes without saying, I work for a living and have far less wealth and power compared to PG.

I think there is kind of a breakdown in social order here. If society allows you to become the chief, it ought to also impose upon you a burden, an obligation, to wield your power over the tribe fairly, generously. To care for the weak, to make sure that everyone benefits, to ensure that things stay stable and safe under your leadership... The standard is higher, not lower. The sacrifice is greater, not lesser.

It is absolutely bizarre and you can see exactly thew way PG, and other like him, are thinking. They all want to have this immense power (and it truly is immense, more immense than ever in modern history!) but they want none of the obligation, none of the responsibility.

Even asking for 20 percent is too much, apparently.

It's really sick.

Re: How to convert between wealth and income tax

#237

Post by outside1234 » Fri, May 22, 2026, 7:06 PM UTC

ximm wrote: post #155

ryandrake wrote: post #8

> To convert between wealth and income tax rates, you have to divide by the rate of return on capital. The conversion rate of 20 comes from assuming that the risk-free rate of return is 5%. This seems to only be true for people whose income entirely comes from their wealth, rather than their labor. The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtai…

Corrected version: A wealth tax of 1% is equivalent to an income tax of 20% on capital gains .

It isn't, because the ultra rich have no capital gains. They get ultra low interest rate loans against assets so they never have to sell assets and trigger capital gains. Google "Buy, Borrow, Die" if you don't understand this strategy.

Re: How to convert between wealth and income tax

#238

Post by koliber » Fri, May 22, 2026, 7:07 PM UTC

You don’t need to teach anyone about this. The wealth tax should apply to extremely wealthy people, not everyone.

If you accumulated a fortune, there was some skill at play. There was also considerable luck and some exploitation. The wealth tax is a way of paying back for the luck and exploitation.

You will still be extremely wealthy.

Paul wants to play the fairness card. Life is not fair and those who accumulated massive fortunes won the lottery. Don’t let the massively rich conflate issues. Don’t get fooled.

Re: How to convert between wealth and income tax

#239

Post by gruez » Fri, May 22, 2026, 7:07 PM UTC

superfrank wrote: post #216

I'm not an expert in this, but I thought one of the biggest arguments for why a wealth tax is needed the whole "buy, borrow, die" thing where the ultra rich can use their assets as collateral to take out a never ending series of ultra low interest loans until they die and then have most of the tax burden of selling assets to pay off those loans wiped out because the tax code is much more favorable to selling assets t…

>why a wealth tax is needed the whole "buy, borrow, die" thing [...]

see: https://news.ycombinator.com/item?id=48239802

Moreover if the bug is that income isn't tax at death, why not just fix that bug? Otherwise it's like arguing: "wow there are people in poverty? Better have a communist revolution to fix that!"

Re: How to convert between wealth and income tax

#240

Post by meta_gunslinger » Fri, May 22, 2026, 7:07 PM UTC

mrguyorama wrote: post #162

meta_gunslinger wrote: post #59

Earlier quoted context omitted.

Easily solved, remove the power centers and then the billionaires will have no power to buy or influence with their money.

There's no such thing as "Power centers". Money is that power. You cannot have billionaires and them not be immensely, structurally powerful. That's the entire point of capitalism, that resources, including labor, be directed by those with capital. Believing you can have a single human being in control of a non-negligible percentage of all resources of a country, and they wont somehow be actually powerful or influent…

“Money is that power.”

That’s the stupidest thing I’ve ever read. Power is power. Members of the Communist Party in the USSR were as wealthy as their subjects, their power differential was enormous.