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American Equity

blog.samaltman.com

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Re: American Equity

#431

Post by jacquesm »

sokoloff wrote: post #430
jacquesm wrote: post #424

Earlier quoted context omitted.

A 1% wealthtax is nothing to be scared of (I'm living with it), if you can't make 1% on your capital you are doing something wrong.

It seems it would have the effect of magnifying down markets. (Down 30% in the market? Pay us another 1.2%, please, selling shares if you must; we don't care.) Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)

That's assuming you stop earning, but of course most people will not stop earning. Also, the typical way this works is that the wealth tax gets added to your income, so if you end up not paying income tax by definition you don't pay wealth tax.

Example: Say I'm worth 1M credits today and my wealth tax is 10K (1%), that means my income gets another 10K added to it. Real income is 50K, + 10K so I pay tax as if I earned 60K. 40% of that works out to 24K worth of taxes.

In a bad year I'd earn maybe 10K, add that 10K (I'm still worth that 1M), and that year would pay 40% of 20K, which works out to about 8K.

Progressive tax scales can further improve the situation in years with low income.

The markets don't have much to do with this, it's a fictive income, not what you actually made.

Re: American Equity

#432

Post by AznHisoka »

user5994461 wrote: post #216
shawnee_ wrote: post #198

Earlier quoted context omitted.

> taxing wealth is probably the single most efficient way to do it. It's not taxing wealth so much as taxing the mechanisms that create undue inequality that would work: yes, I'm talking about taxing rental income. The number one driver preventing people from building savings is draining their income through rent. The solution is sort of obvious, but hated by people who love the AirBnB model: https://news.ycombinator…

Pardon me but the solution you claim is already in place, well understood and totally ineffective. Income is already taxable, including rental income. On top of that there are various taxes for owning/occupying a property. It varies with what state/country you live in. Generally speaking, a property is a poor investment if you already have the money, they have poor returns and they don't grow in value outside of a fe…

"Generally speaking, a property is a poor investment if you already have the money, they have poor returns and they don't grow in value outside of a few bubbles."

Real estate is a great investment for the risk averse (probably the best one too). Housing usually grows at the same rate as inflation if not a bit more and people will always need it. It doesnt drop 10% overnight unlike stocks. What other investments did you have in mind that you would recommend over real estate? (in the same risk spectrum)

Re: American Equity

#433

Post by ChuckMcM »

In discussing the basic income stuff offline I realized that there is a naming problem. If you call something basic "income" then it attaches to it all of the mental imagery/modelling around the word income which is something you get in exchange for work, so without work basic "income" creates a cognitive dissonance. This effect seems exactly analogous to home "schooling" which people attaching a mental model and imagery of the word "schooling" to the activity (which is learning).

By calling a basic income system American Equity, Sam shifts the conversation away from the word 'income' because this clearly isn't "income" in the traditional sense, to "shared wealth" which is much closer to the ideas brought along. I think it is a reasonable way to look at it, although I continue to believe that what is the fundamental factor is keeping wealth inequality in check. Extreme wealth inequality is just as unstable a system as extreme wealth equality.

Re: American Equity

#434

Post by njarboe »

kelnos wrote: post #400
shawnee_ wrote: post #360

Earlier quoted context omitted.

"Pardon me" but rental income is deductible more than it is taxable; everything to do with owning a property and generating "investment income" from it is incentivized to be deductible; it's a great and super fast way to make lots of money. I don't know what you do for a living, but I have two graduate degrees in accounting and economics, as well a decade and a half researching and studying this very problem. The sol…

If we remove deductions on rental income, wouldn't that just cause property owners to charge higher rent? If so, then yes, that would of course generate more tax revenue, but at the expense of the renters.

Property owners generally charge as much rent as they can. Only in places where it is easy to build new apartments is there floor on rents. In that case the floor is a combination of constructions costs, interest rates, and the rate of return to investors of other opportunities in the area. So in a place where building is hard, the rents would probably not rise, but in a place with lots of land and easy zoning, the rents probably would.

Re: American Equity

#435

Post by user5994461 »

kelnos wrote: post #400
shawnee_ wrote: post #360

Earlier quoted context omitted.

"Pardon me" but rental income is deductible more than it is taxable; everything to do with owning a property and generating "investment income" from it is incentivized to be deductible; it's a great and super fast way to make lots of money. I don't know what you do for a living, but I have two graduate degrees in accounting and economics, as well a decade and a half researching and studying this very problem. The sol…

If we remove deductions on rental income, wouldn't that just cause property owners to charge higher rent? If so, then yes, that would of course generate more tax revenue, but at the expense of the renters.

It can't increase rent. Rent are capped by what tenants can pay, they are specifically set to "as much as the tenants can afford" because everyone needs a roof. Taxing the landlord doesn't give more moneys to the tenant.

However, what could happen is that the rental income after tax is lower and not enough anymore to cover the mortgage or the maintenance costs, then the property has to be sold.

Re: American Equity

#436

Post by pdfernhout »

eru wrote: post #388
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 land value is even better: not only does it not punish any economic activity, so doesn't have any dead weight cost; it actively encourages better land use, and thus might even benefit the economy. Also land is hard to hide, and relatively easy to value. So it's really hard to evade the tax. If you are going to tax wealth, and want that to include assets like equity in private companies, you are going to have t…

As I've suggested here: http://www.pdfernhout.net/basic-income-from-a-millionaires-p... "For example, imagine a basic income for everyone was supported by a 6% tax on all wealth that is based on monopoly scarcity. So, this would be an annual tax on real estate equity, bank accounts, cash and gold hoards, copyrights and patents, and so on -- basically anything that requires the government to defend it as a monopoly against someone else taking it in a way that leaves you with less. Anything undeclared would not be subject to legal process for recovery if stolen. It would seem only fair in a sense to support the government with a percentage of what you have, in proportion to the amount you have. (One might also propose a progressive tax on that, like higher rates on large total amounts, but let's just assume it is a flat tax.) Essentially, this could be seen as a protective tax on wealth. If millionaires don't declare wealth, the wealth can be taken by anyone, even by the government. :-) If wealth is declared, it is defensible in a criminal suit, and further, maybe the government might even insure it against theft (maybe even other things like fire or accident or war or natural disaster). Recovery of stolen property would then be a function of the government as a revenue source, after it had reimbursed the person who lost it."

Re: American Equity

#437

Post by mkempe »

Universal Basic Income is not a new idea, no matter what new phrases one uses to promote it. At root, to be honest, it's based on this ideal: "From each according to his ability, to each according to his needs." (Karl Marx)

If we are open about it, this fight is about an ideal of equality. Altman's fundamental motive is egalitarianism (oppose inequality, promote fairness, undermine white privilege, etc.). He should be sincere and explicit about it.

He's not the first, and he won't be the last. It will never work. People are profoundly, inherently unequal. Individuals are different, by nature, by nurture, and by will. Whether it is in terms of beauty, productive ability, height and weight, intellectual prowess, athletic performance, sexual preferences, leadership, fecundity, musical achievement, what have you -- we humans can be and can do so much in so many different ways, and will always be profoundly individual, different, unequal (unless we are oppressed into conformity by statism, or other forms of collectivism).

Behind the tired ability-needs line lies the notion that since somehow the problem of production has been solved, all we should care about is consumption via the distribution of wealth. This is Marxist nonsense, no matter how much capital (machines and robots) is involved.

Re: American Equity

#438

Post by dennis_jeeves »

eru wrote: post #392
dennis_jeeves wrote: post #363

Earlier quoted context omitted.

Let me add to the tirade. Somewhere on the web I saw: Taxing income, is like 9 wolves and 1 lamb deciding what's for dinner. Quote (by probably Winston Churchill )- Any man who is not a socialist at age 20 has no heart. Any man who is still a socialist at age 30 has no brain. Please upvote.

Please refrain from asking for upvotes. (You'll even receive more upvotes this way, if that's really what you are after.)

Eru - did you notice the sarcasm ? We I got what i was looking for - many down votes! Anyway you do seem to have some objective thinking going on with your views on Georgism - I checked some of your posts. Keep it up!

Re: American Equity

#439

Post by sokoloff »

jacquesm wrote: post #431
sokoloff wrote: post #430

Earlier quoted context omitted.

It seems it would have the effect of magnifying down markets. (Down 30% in the market? Pay us another 1.2%, please, selling shares if you must; we don't care.) Over the course of your life, the government will get more of your wealth that you (or those you designate) will. (At 5% CAGR, the government is ahead by year 54. At 3% CAGR, they're ahead at year 56. At 8%, year 52.)

That's assuming you stop earning, but of course most people will not stop earning. Also, the typical way this works is that the wealth tax gets added to your income, so if you end up not paying income tax by definition you don't pay wealth tax. Example: Say I'm worth 1M credits today and my wealth tax is 10K (1%), that means my income gets another 10K added to it. Real income is 50K, + 10K so I pay tax as if I earned…

So your wealth tax is more like 0.4% then?

Re: American Equity

#440

Post by fragmede »

oarsinsync wrote: post #385
majormajor wrote: post #368

Earlier quoted context omitted.

And the marginal effects of having 100M in the bank over 10M in the bank over 1M over 100K are all still huge for any feasible tax scheme I could imagine. What does your world look like where you'd be too taxed to bother wanting to be financially independent?

#define financially independent That phrase means different things to different people. In some parts of the world, $50k could consider you to be financially independent. $500k in others, and in some parts, you'd need $5m - $50m. What if I told you it cost $5/day to rent a luxury hotel room with cleaning, full board, and high speed broadband provided as standard? What if I told you it cost $1500/month for a small stu…

Btw, $1,500 for a studio is about half the going rate in SF.
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