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Who Rules America: An Investment Manager's View on the Top 1%

sociology.ucsc.edu

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Re: Who Rules America: An Investment Manager's View on the Top 1%

#41

Post by rkalla »

lionhearted wrote: post #35
arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

Let's think about secondary effects. What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that? Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment cap…

Good point, but could you argue that those Americans that would renounce their citizen ship are already hiding that income in untaxable locations already?

I wonder if it would be a wash, you suddenly up the tax, and everyone that was ducking anyway leaves and the rest get taxed and fill the void.

All speculation of course, none of us would have numbers to know.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#42

Post by potatolicious »

lionhearted wrote: post #35
arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

Let's think about secondary effects. What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that? Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment cap…

Echoing what rayiner said - where are the rich going to go?

Europe is less friendly to the rich - extremely so in the most pleasant of places. China? India? Neither are very pleasant places, and even with truckloads of cash has a hard time competing with the quality of life enjoyed in the US even under onerous taxation.

I think you're not giving enough credit to the American quality of life - it's why my family immigrated here from Asia. While developing Asian countries have seem dramatic improvements in the last two decades, the QOL in most of these countries still pales in comparison.

Just about anywhere someone used to the Western quality of life would want to go would have higher taxes.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#43

Post by Astrohacker »

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes the distribution of the purchasing power of the money away from most people who have the money and to the people who get the new money. This is where the wealth of the top 0.1% comes from. Freshly printed money. It is a terrible system. The people with the highest wealth are not contributing in proportion to their wealth. Rather, they are stealing their wealth from the bottom 99.9% by stealing their purchasing power by printing new money.

If you would like to read a thorough argument about how fractional reserve banks and the Federal Reserve are scams, read "The Mystery of Banking" by Murray Rothbard. Google it and you will see it is available for free at mises.org.

For some reason this subject is very polarized and I get downvoted whenever I explain this. Don't downvote me just because you are uncomfortable with what I'm saying. Note that I am not ignorant. I have learned about economics. It just so happens that when trying to understand the issues myself, I have arrived conclusions that are not mainstream. But they are the correct conclusions in so far as I presently understand.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#45

Post by Astrohacker »

arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

You also need to end the Federal Reserve and make fractional reserve banking illegal so no one can create new money and give it to themselves. Allow the market to handle the distribution of purchasing power. Not the government banking cartel.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#46

Post by jwhitlark »

lionhearted wrote: post #35
arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

Let's think about secondary effects. What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that? Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment cap…

Renouncing your citizenship for tax reasons triggers secondary tax laws that offset any benefits. (It's been a few years since I reviewed any tax law, but I've not heard of any changes in this area.)

Re: Who Rules America: An Investment Manager's View on the Top 1%

#47

Post by rubashov »

civilian wrote: post #14
cstross wrote: post #9

Earlier quoted context omitted.

Tax avoidance. (The marginal rate of tax on capital gains is generally much lower than the marginal rate of tax on an equivalent earned income. The investment professionals who strike it big do so by engineering their income to arrive in the shape of capital. Tax it as income and suddenly a whole lot more tax revenue shows up ... and the Gini coefficient in the society in question drops a little bit.)

Taking advantage of capital gains might be tax avoidance from a certain point of view, but it's also a useful for helping grow wealth and the economy in general. Having large sums of private capital helps the economy-- how does it help it? By making it easy to borrow money, like the VC that so many HNers are seeking.

Another problem with taxing capital gains heavily is that it distorts investment by discouraging dividends and buybacks in favor of risky attempts at growth. Companies irrationally choose to grow and make high risk acquisitions rather than simply pay out big dividends. This contributes to business cycle instability, as well as inefficient allocation of capital; the incentive is to keep capital locked up in a conglomerate.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#48

Post by lefstathiou »

potatolicious wrote: post #42
lionhearted wrote: post #35

Earlier quoted context omitted.

Let's think about secondary effects. What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that? Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment cap…

Echoing what rayiner said - where are the rich going to go? Europe is less friendly to the rich - extremely so in the most pleasant of places. China? India? Neither are very pleasant places, and even with truckloads of cash has a hard time competing with the quality of life enjoyed in the US even under onerous taxation. I think you're not giving enough credit to the American quality of life - it's why my family immig…

That's not true. How about Hong Kong or Singapore where you certainly get a western style life with extra benefits: safer, cleaner, live-in maid service, better access to healthcare and a 15-20% all in tax rate. Have you been to Thailand or Indonesia? Sounds ridiculous but this is happening right now. I'm in banking and I hear my clients talk about it all the time. They're doing it as we speak (slowly migrating their business operations and key personell)

The thing about entrepreneurs is that they are an irrational bunch. I could introduce you to a couple of people who would rather put all their money into a boat and sink it than pay it as additional tax. Sounds crazy but from a growing number of people's perspectives, the problem isnt excess taxation, its excess taxation coupled with gross mismanagement. Nobody likes seeing their money go to waste, especially to causes they dont agree with (ie union pensions for government employees that retire after 20 years of service).

Re: Who Rules America: An Investment Manager's View on the Top 1%

#49

Post by danenania »

Astrohacker wrote: post #43

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes th…

Yep, fiat money systems are at the core of modern wealth inequality. Regulations and other measures will have little impact until we address this. Bailouts, taxes, budgets, deficits, regulations: none of it has much relative quantitative significance when the Fed is doling out many trillions behind the scenes. This money directly benefits the very wealthiest and regressively dilutes the rest on a scale that vastly exceeds the effects of any other policies. Abuse of fiat money is the ultimate economic elephant in the room.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#50

Post by auganov »

A typical article spreading hate towards the rich portraying them as people that have insight into secret evil money making techniques unavailable to other people.

Any ways that hate has always been there and I don't think it's going anywhere. Just delete it from HN, no need for it here.

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