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The Middle-Class Squeeze

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Re: The Middle-Class Squeeze

#41

Post by nradov »

themartorana wrote: post #22
djrobstep wrote: post #11

Earlier quoted context omitted.

Absolutely. What would be great is a high land value tax, used to fund a basic income and/or lower income taxes. It would help fix inequality, reward hard work, punish idle land rentiers and punish urban sprawl, all at the same time. What's not to like?

Property taxes? I'm not a fan of the idea that the property I "own" is basically just the right to rent it from the government. There's no true land-ownership anymore. Also, as noted above, property taxes can be a huge burden on those retired/on a fixed income. Not to mention, property taxes fluctuate wildly and are incredibly hard to predict and plan for. "Reassessments" happen randomly, seem to be applied haphazard…

There's nothing special about land ownership. Property taxes help to ensure that valuable land is used for economically valuable purposes that benefit the rest of society. With low or zero property taxes it becomes too easy for property owners to just let the property sit empty on the hope that the value will rise some day. With high property taxes property owners are effectively forced to either find a way to generate revenue off the property, or sell it to someone who can find a better use.

Re: The Middle-Class Squeeze

#42

Post by digikata »

euroclydon wrote: post #5
prostoalex wrote: post #2

A lot of the ails mentioned in the article seem to arise from Western societies' preference on income taxation vs property taxation. Low property taxes force the governments to finance its expenditures mainly through sales and income taxes. The former are optional, the latter happen to penalize those who elect to participate in the workforce (which large property owners can safely sit out).

Property taxes also punish retired people. When your wages disappear after retirement, it's a lot more difficult to pay the taxes on your home.

So exempt the taxation of property up to some threshold. Or one primary residence.

Re: The Middle-Class Squeeze

#43

Post by dwpdwpdwpdwpdwp »

natrius wrote: post #32

The problem with our capitalism is our money. Currency is a means for us to socialize debts so we can make trade more efficient. When you give Steve money, you're saying, "my people, Steve has provided me $30 of value, so please reward him in kind." Instead of having to give Steve $30 of value directly in return, we communicate that $30 debt to the rest of society with our money. The problem with our currency is that…

This might be a bit tangential, but these ideas remind me of the importance of voting with ones dollars (as well as ones time). As an American I find that the freedoms I enjoy to spend my money how I like contribute far more to my sense of participating in a democracy than do my occasional trips to the voting booth.

It's the reason I can't bring myself to follow the often repeated financial advice to stick your money in an index a fund and then leave it there; I refuse to vote for the behavior so many of those companies engage in.

Re: The Middle-Class Squeeze

#44

Post by ghthor »

natrius wrote: post #32

The problem with our capitalism is our money. Currency is a means for us to socialize debts so we can make trade more efficient. When you give Steve money, you're saying, "my people, Steve has provided me $30 of value, so please reward him in kind." Instead of having to give Steve $30 of value directly in return, we communicate that $30 debt to the rest of society with our money. The problem with our currency is that…

This is a really amazing idea AND it's something that is very technically possible.

Is this an idea that you've formulated yourself? I'm very curious about your journey to this idea.

Re: The Middle-Class Squeeze

#45

Post by walterbell »

natrius wrote: post #32

The problem with our capitalism is our money. Currency is a means for us to socialize debts so we can make trade more efficient. When you give Steve money, you're saying, "my people, Steve has provided me $30 of value, so please reward him in kind." Instead of having to give Steve $30 of value directly in return, we communicate that $30 debt to the rest of society with our money. The problem with our currency is that…

How do you deal with the analytics/computation/HFT asymmetry available to those who earned fortunes under the anonymous-currency regime, from overwhelming new generations who must live in a cashless hampster wheel of negative interest rates, no transactional privacy and gamified behavioral nudges?

Re: The Middle-Class Squeeze

#46

Post by natrius »

ghthor wrote: post #44
natrius wrote: post #32

The problem with our capitalism is our money. Currency is a means for us to socialize debts so we can make trade more efficient. When you give Steve money, you're saying, "my people, Steve has provided me $30 of value, so please reward him in kind." Instead of having to give Steve $30 of value directly in return, we communicate that $30 debt to the rest of society with our money. The problem with our currency is that…

This is a really amazing idea AND it's something that is very technically possible. Is this an idea that you've formulated yourself? I'm very curious about your journey to this idea.

I thought this up last week, but I wouldn't be surprised if I'm not the first. It's a combination of a few popular ideas.

The financial crisis got people thinking critically about what money is, especially the people who hopped on the Ron Paul boat back in the 2008 election season. (I hope you'll hear me out even if you consider those folks to be crazy people.) That's when I first understood that money is debt.

Bitcoin gave us blockchains: the ability to create ledgers that we can agree on without authority. You send transactions to move amounts in the ledger. Ethereum allows us to create arbitrary transaction types that modify the state that transaction type controls.

The Clojure and React communities got me thinking more about different ways to think about state. State is the result of transactions, and if you keep either the transactions or the previous states around, you can control time in your program, among other things.

Apache Kafka, Samza, and related projects introduced me to the concept of a database as a transaction log. One potentially useful application that my coworker pointed out is that we could write events to a Kafka database, then change what they mean later. State is a function of a list of transactions and a transaction processing function. You can change your transaction processing function at any time. Anyone who has the transactions can build their own view of the world with a function they define, so everyone can have their own calculation of merit, for instance.

I've thought for some time that while governments are useful, it'd be better if we could find ways to achieve the same ends without giving anyone power over us. I've been exploring ways to use blockchains to give society the power to self-organize and provide the things we currently need governments to provide for us.

Merit capitalism is a combination of those ideas, and probably more parts of the idea soup in my brain.

Re: The Middle-Class Squeeze

#47

Post by pash »

ppereira wrote: post #35
pash wrote: post #18

Earlier quoted context omitted.

> If the poor pay more of a tax than the rich as a percentage of their income or wealth, then the tax is regressive. Otherwise, it is progressive. The word regressive is used to describe the incidence of a tax on a population. Although this is effectively the definition of progressive and regressive taxation today—because that's how the terms are almost always used by the large number of people who have only the most…

This is an interesting generalization of my use of progressive/regressive. However, I would not go so far as to say that my definition is a "popular corruption". My restricted definition is frequently applied in the tax law, tax policy, and tax economics literature. According to the OED, the earliest noted use of "regressive" in the context of taxation is from Richard T. Ely's writings on political economy in 1891. H…

Yes, I recognize that the definition you gave is far and away the most common one, even among policy wonks. The original definition seems still to have currency mostly among economists.

But the definition I gave is indeed the original one, and it is not a generalization. A tax may be progressive in your sense but not in the original sense: a luxury tax on yachts, for instance, is progressive in your sense, but not in the original sense if it is assessed at a fixed rate [0].

The OED's first noted usage is way off, by the way; it is easy to verify that the term progressive in the context of taxation pre-dates the Progressive Era by at least a century. For instance, Thomas Paine proposed progressive taxes on estates (using the term numerous times) in his Rights of Man (1791). (He even drew up tables of suggested taxes, the rates of which rose with the value of the estate.) There are more commonplace examples from the first half of the nineteenth century that you can find on Google Books, including several that disambiguate the two senses in favor of the original definition I provided [1].

A great many of the early mentions of progressive taxes, including of those before the Progressive Era, do come in the course of discussing how to make taxation fairer (in the author's view) or how to disperse inherited wealth. Since the rich own more wealth, buy more goods, and have greater incomes than the poor, progressive rates of taxation—in the original sense—tend to result in progressive taxes—in the other sense. I suppose the shift in meaning was to be expected.

0. Unless perhaps yacht is defined as an expensive boat. But the point stands: so long as there exist goods that the rich spend a higher proportion of their income on than do the poor, then a tax assessed at a fixed rate on those goods is progressive in your sense but not in the other.

1. There are also some examples, mostly in tables of import duties, where the terms progressive and not progressive are used in a sense that appears to distinguish duties that are assessed ad valorem versus those that are assessed as a flat fee; so it seems that progressive sometimes also meant merely that the amount of tax collected increased with the value subject to taxation, which is further distinct from our debate over progressive rates.

Re: The Middle-Class Squeeze

#48

Post by natrius »

walterbell wrote: post #45
natrius wrote: post #32

The problem with our capitalism is our money. Currency is a means for us to socialize debts so we can make trade more efficient. When you give Steve money, you're saying, "my people, Steve has provided me $30 of value, so please reward him in kind." Instead of having to give Steve $30 of value directly in return, we communicate that $30 debt to the rest of society with our money. The problem with our currency is that…

How do you deal with the analytics/computation/HFT asymmetry available to those who earned fortunes under the anonymous-currency regime, from overwhelming new generations who must live in a cashless hampster wheel of negative interest rates, no transactional privacy and gamified behavioral nudges?

How can yesterday's wealthy overwhelm new generations? Yesterday's wealthy don't have anything I need besides maybe land, which we could solve separately if we wanted to. They have money, but if they overwhelm new generations with money, we'll turn their money off.

Most of society lives in a hamster wheel already. It's what we call having to work for a living. Valuing recent work over older work just puts the wealthy back on the hamster wheel with us, and it will make society more wealthy since everyone has to keep contributing to our total wealth.

Transactional privacy is undeserved. When you spend money, you're putting the rest of society on the hook for the goods or services you just bought. We want to know who you are so we can decide whether we want to honor your debt. If you don't want to tell us, you're free to barter.

Re: The Middle-Class Squeeze

#49

Post by sulam »

go1979 wrote: post #21
euroclydon wrote: post #5

Earlier quoted context omitted.

Property taxes also punish retired people. When your wages disappear after retirement, it's a lot more difficult to pay the taxes on your home.

The recent run up in property prices in most major western cities makes me think the home owning class isn't in too bad of a shape. If you own a house in Vancouver, the Bay area, Toronto, London etc. you basically won the lottery. If you are a young adult, well ... hope your parents help you out? My parents were immigrants and not savvy enough to buy a house. I'm wondering how I can ever afford a 200K down payment on…

$200K = $20K / yr over 10 years. An $800K mortgage, depending on interest rates, can easily cost $4000/month, or almost $50K / yr.

If you can't afford to save, you can't afford the mortgage.

Re: The Middle-Class Squeeze

#50

Post by euroclydon »

natrius wrote: post #32

The problem with our capitalism is our money. Currency is a means for us to socialize debts so we can make trade more efficient. When you give Steve money, you're saying, "my people, Steve has provided me $30 of value, so please reward him in kind." Instead of having to give Steve $30 of value directly in return, we communicate that $30 debt to the rest of society with our money. The problem with our currency is that…

This does happen: Drug Dealers, Iran.
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