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

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

#41

Post by pigsty » Thu, Dec 22, 2022, 9:27 AM UTC

hackerman123469 wrote: post #12

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…

But tell me, how are you going to tax the super rich? It's incredibly difficult to tax someone who's actually poor on paper. Most super rich people actually don't seem to have much wealth officially declared, all of their wealth is sort of like "pseudo" in that it's all tied up in assets, and sometimes assets that aren't directly owned by them but their companies etc. and they have a lot of shortcuts for tax breaks o…

It’s a problem of choosing not to enforce it.

Some rich person says “teehee, I actually have no money! It’s all in (some country)!” and the US gov says “oops! Guess you really are poor!”

They take a letter of the law instead of a spirit of the law approach with taxes. If they start seizing mansions because clearly they have no money and the only way they could afford it is through ill-gotten means, people will start paying. Police already take cash from the wallets of random people because they assume it’s illegal—meanwhile the IRS knows full well where your money comes from but they pretend to believe the tricks of the mega rich.

Plus the IRS literally have access to banks around the world. You’re required to give them proof of foreign bank accounts or face imprisonment and other countries comply with IRS requests. They can literally seize wealth and know it’s yours. They choose not to.

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

#42

Post by [deleted] » Thu, Dec 22, 2022, 9:27 AM UTC

hackerman123469 wrote: post #12

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…

But tell me, how are you going to tax the super rich? It's incredibly difficult to tax someone who's actually poor on paper. Most super rich people actually don't seem to have much wealth officially declared, all of their wealth is sort of like "pseudo" in that it's all tied up in assets, and sometimes assets that aren't directly owned by them but their companies etc. and they have a lot of shortcuts for tax breaks o…

[deleted]

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

#43

Post by gjulianm » Thu, Dec 22, 2022, 9:27 AM UTC

dhruval wrote: post #11

This smells misleading / overly simplistic but I can’t quite quite put my finger on precisely why? Some thoughts - consensual trades are win win (you want a sandwich, I want $5 let’s trade! And we both win) - something about the model is overly simplistic, like it produces a statistical distribution that looks like extreme inequality from randomness, but lots of different sorts of distributions can emerge from aggreg…

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 is why a lot of poor people end up massively underpaid).

> - something about the model is overly simplistic, like it produces a statistical distribution that looks like extreme inequality from randomness, but lots of different sorts of distributions can emerge from aggregating random (for eg a normal distribution several dice and looking at their totals).

HPSquared said this in another comment [1] and I agree: what matters on this model is that every step is not additive but multiplicative, which is what leads to the inequality.

1: https://news.ycombinator.com/item?id=34091339

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

#44

Post by chousuke » Thu, Dec 22, 2022, 9:27 AM UTC

bamboozled wrote: post #23

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…

"To solve all this, it's pretty simple," I feel if it was simple it would be fixed?

Things can be simple to fix but actually getting people to implement the fix won't be there are incentives against it.

They are two different problems.

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

#45

Post by oli5679 » Thu, Dec 22, 2022, 9:28 AM UTC

The model is zero-sum, there are no gains from trade, the people just speculate. In this context, trading is harmful and this type of activity should be banned, or at least heavily taxed.

If economic activity is valuable, but leads to inequality, then you need some framework to trade off the value created vs. the social benefits of greater equality.

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

#46

Post by bmitc » Thu, Dec 22, 2022, 9:28 AM UTC

blfr wrote: post #14

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…

The US is only very loosely constrained by its tax base. It does not lack funds. It has also been spending much more on education over the past decades[1]. With very little to show for it. [1] https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.a...

I'm not for sure I agree, but that's a separate issue than de-concentrating wealth. What to do with tax funds, how to appropriately distribute them, etc. is another discussion. Just because those problems exist, we should allow more and more wealth to be concentrated?

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

#47

Post by bawolff » Thu, Dec 22, 2022, 9:28 AM UTC

smilekzs wrote: post #21

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…

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 the groups most likely to be "paper millionaires" and hence screwed by such a system.

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

#48

Post by lozenge » Thu, Dec 22, 2022, 9:29 AM UTC

strstr wrote: post #27

dhruval wrote: post #11

This smells misleading / overly simplistic but I can’t quite quite put my finger on precisely why? Some thoughts - consensual trades are win win (you want a sandwich, I want $5 let’s trade! And we both win) - something about the model is overly simplistic, like it produces a statistical distribution that looks like extreme inequality from randomness, but lots of different sorts of distributions can emerge from aggreg…

Zero-sum assumption and lack of returns on bets seem suspicious. Betting is a bad deal for everyone in this model (even the rich person) since each coin flip is variance for no expected gain. Kelly betting implies you should bet nothing in this game.

If you increase the payoff of the bet, it might prevent the poorest from becoming destitute, but the relative effect (where wealth concentrates in a few people) intuitively would still be present.

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

#49

Post by foldr » Thu, Dec 22, 2022, 9:30 AM UTC

smilekzs wrote: post #21

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…

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…

Only the super-rich in America feel wealthy. Everyone else is trapped in an unwinnable game of keeping up with the Jonses. I can almost guarantee that if you actually listed the concrete reasons that you don’t think of yourself as wealthy, they would seem ridiculous to the majority of middle class Americans. (Although obviously I don’t know your personal circumstances. I am thinking of the general case of a seniorish software engineer working for a big tech company in SF.)

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

#50

Post by bmitc » Thu, Dec 22, 2022, 9:30 AM UTC

nemo44x wrote: post #39

bmitc wrote: post #25

Earlier quoted context omitted.

It isn't difficult at all. This is an oft repeated excuse. The rich use their wealth as collateral to purchase things, like homes, companies, investments, etc. and transfer wealth to inheritors with basically no tax. So stop worrying about trying to figure out how to tax unrealized wealth and start taxing the things that unrealized wealth helps secure and purchases. This is one way to force realization of that wealth…

All the money they’ve made has been taxed. When they sell assets they pay taxes. Yes there are sone areas to address but wealthy people pay the majority of taxes.

None of that matters if your concern is to redistribute wealth. It's all excuses to keep it concentrated.