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American Equity

blog.samaltman.com

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Re: American Equity

#411

Post by tptacek »

geofft wrote: post #410
tptacek wrote: post #408

Earlier quoted context omitted.

Wait, why are interest-free loans the only kind of economically rational loans? Commercial debt contracts include interest, and are executed exclusively between sophisticated buyers and sellers of debt.

I think I put too many negatives in that sentence. I am claiming that interest-bearing loans are the only economically rational ones (because otherwise you're taking on nonzero risk for definitely zero reward), and interest-free loans used to be widely acknowledged as the only morally justifiable ones.

Ah, you're right. It's just the sentence structure that confused me.

(I asked another question here but decided I'm having a hard time reading or composing standard written English today so, some other time!)

Re: American Equity

#412

Post by rtpg »

geofft wrote: post #387
derefr wrote: post #176

Earlier quoted context omitted.

From the perspective of trying to get the budget balanced, taxing wealth is probably the single most efficient way to do it. From the perspective of the tax code as an incentive system , taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy, and thereby causes fewer GDP-building things to happen! (This is also, for a similar reason, why economists don't like corporate taxes or trade…

> taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy If we're talking about how people feel about their tax system, I think we need to talk about how a huge portion of the US misunderstands "tax brackets", and seems to think that paying more taxes when they're "bumped to a higher tax bracket" is a thing, and that there's some strategy in avoiding getting paid marginally more than…

> I would much rather have $102M in the bank and get taxed on half my savings over $100M than have $99M in the bank and get taxed on half my savings over $100M.

This is the best distillation of how marginal tax rates works I have ever read.

There still are taxes that don't work like this (usually in the form of benefits that cut off at a certain income range) so unfortunately we still have messed up stuff. The feeling isn't completely unfounded

Re: American Equity

#413

Post by geofft »

cryptonector wrote: post #324
justinpaulson wrote: post #228

Earlier quoted context omitted.

I think becoming wealthy is incentive enough to become wealthy. No one is going to stop trying to be wealthy just because they might get taxed for that wealth. If anything, they will just try to hide it in another state. But the argument that a wealth tax would remove any incentive to become wealthy is not very strong.

If a lottery ticket's prices goes up, and the purse goes down and/or the odds get longer, you'll be less inclined to buy a ticket. It's the same with work. If hard work is less likely to pay off, or if you'll have to work harder, or both, you'll be less likely to work harder. Some people will work harder anyways, and many will be discouraged. Marginal effects matter. This is why dynamic analysis is important.

So why doesn't the government pay people who make more money? Won't that incentivize the right things?

(I mean, I think this is obviously silly, but it seems to hold up by exactly the same argument.)

Re: American Equity

#414

Post by cvsh »

cryptonector wrote: post #324
justinpaulson wrote: post #228

Earlier quoted context omitted.

I think becoming wealthy is incentive enough to become wealthy. No one is going to stop trying to be wealthy just because they might get taxed for that wealth. If anything, they will just try to hide it in another state. But the argument that a wealth tax would remove any incentive to become wealthy is not very strong.

If a lottery ticket's prices goes up, and the purse goes down and/or the odds get longer, you'll be less inclined to buy a ticket. It's the same with work. If hard work is less likely to pay off, or if you'll have to work harder, or both, you'll be less likely to work harder. Some people will work harder anyways, and many will be discouraged. Marginal effects matter. This is why dynamic analysis is important.

A lottery ticket is just about the worst example you could use to prove the connection between risk and motivation. It has a low chance of paying off, yet people still buy them all the time.

Re: American Equity

#415

Post by gozur88 »

xapata wrote: post #377
gozur88 wrote: post #201

Earlier quoted context omitted.

>Yes. I purchased several of their products... Which is "no". Buying and building are two different things. So I guess you were right about what I intended.

> buying and building are two different things Consider the way Kickstarter projects describe their "backers". On the "Why Kickstarter?" page they say backers are "helping to create something new". Yet, one could easily consider Kickstarter simply a website for pre-orders, no different from buying in any other method. The line between a buyer and a backer/builder isn't so clear.

I think the line between "customer" and "investor" is actually pretty clear.

Re: American Equity

#416

Post by Animats »

This is an old idea in science fiction. See Mack Reynolds, "The Fracas Factor" (1978), where he lays out the system in some detail.[1] He called it "United States Basic Common Stock". Everyone got some shares of "Inalienable Basic" at birth, providing a basic income. People could buy and sell "Variable Basic" as well. Thus, a welfare state. He outlines how the transition takes place.

Reynold's old books from the 1960s and 1970s explore a world where manufacturing produces more than enough stuff and there's a huge excess population. It's not dystopian; he outlines how such a world could work. His world is capitalistic but government plays a very strong role.

This model comes from an era when corporations were about equity and dividends, not debt. Altman may see the world that way because he comes from venture capital, which is an equity world, not a debt world. Larger corporations today tend to be heavily debt financed, because interest payments are deductible while dividends are not. That interest paid is a deductible expense powers the debt-heavy corporate structures of today.

Also, if all of your income comes from dividends, you have to be able to handle considerable volatility, even across the whole market. At least 2x. That's not acceptable as a basic income scheme. People will starve.

[1] https://books.google.com/books?id=NOg1AgAAQBAJ&pg=PT43

Re: American Equity

#417

Post by bensonn »

pnathan wrote: post #310
koolba wrote: post #20

Earlier quoted context omitted.

> Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale. That will have a lot more effect than some fiction where you get to do a bunch of make-believe bookkeeping. Or go a step further do what nobody has the balls to do: tax wealth That's what all the…

I'm persuaded that wealth taxes and maximum income are the appropriate solution: after X million per year, you don't get more money, and after you and your family heap up Y million of _fluidly defined_ assets, you get taxed on what you hold/control/manage-via-tax-shelter. Obliterate the tax shelters, obliterate the tax havens, bring the money back home under threat of criminal law. I'm not saying you can't be a fat c…

Everybody tends to put that certain point above where they are at. I realize, as limited to a US discussion, it is easy to say Bezos and Gates are rich, I am not. But if this was expanded, simply as a thought experiment, to the entire world would you be fine classified as a "fat cat"?

Assuming (perhaps incorrectly) you are in the US, you are also reading Hacker News, so you are probably the top 1% of the worlds wealthiest. Again, just a thought experiment, but would you be fine with your government saying that as a 1 percenter in world wealth you can no longer earn anymore, you have hit that certain point, are a fat cat and can grow no more wealth, under threat of criminal law?

Re: American Equity

#418

Post by peacetreefrog »

dragonwriter wrote: post #367
peacetreefrog wrote: post #359

Earlier quoted context omitted.

Not sure what evidence you're basing that off of. An alternative explanation would be people calling for taxes on the rich to be "raised" aren't really sure what they currently are.

It's literally what the question asks. It asks what rate high earners should pay: “should pay” is effective not nominal, because it asks what should be actually paid ; “high-earners”, without limitation to some subset of their income, is total, not marginal. Of course, this is reinforced by the fact that people don't even generally understand marginal tax rates all that well, but that's secondary.

No, the question asking about specific rates is talking about what the top marginal income tax rate should be (I can't see the actual question, but it's clear that's what thehill.com, who commissioned the poll, is referring to when discussing it).

You could argue that when people say the rich should pay "more", they're talking about effective rates, but a lower marginal income tax rate would be a funny way to raise top earners' effective tax rates.

Re: American Equity

#419

Post by bensonn »

duderific wrote: post #207
beebmam wrote: post #33

Earlier quoted context omitted.

Without a doubt, a global wealth tax would significantly improve the quality of life for every human on this planet; even those with the large amounts of wealth being taxed.

Only if the tax revenues are spent wisely. In the US, some 42% - 57% of the tax base goes to defense spending [1]. It's extremely arguable if that is a good way to spend such a large quantity of tax dollars. One could argue "we should elect representatives who make better spending decisions," however the defense lobby makes sure to get involved with all lawmakers. Once again it comes back to campaign finance reform a…

Just to clarify, it is 42-57% of discretionary. When compared to non-discretionary spending like Social Security defense spending is pretty small.

Re: American Equity

#420

Post by jeff18 »

maxxxxx wrote: post #11

He could start with his companies giving out a much larger share of equity to their employees. I always find it fascinating when VCs advocate for things like UBI or this American Equity plan while at the same time being a major contributor to income equality. They could do a lot right now bit instead they make some vague proposals while keeping their money.

Not sure if you read this essay, but Sam advocates for startups to be significantly more generous on employee equity: https://blog.samaltman.com/employee-equity

(at least compared to other VCs, you may still disagree with his absolute numbers)

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