Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

fair.org

Post reply on HN
Print view View original

431–440 of 488 posts

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#431

Post by failuser »

ceejayoz wrote: post #388
failuser wrote: post #164

Earlier quoted context omitted.

Middle class is not median. I’d agree that $400k is barely enough to get to the comparable middle class living in NYC. Earning below $100k will get you subsidized college, right?

Per https://statisticalatlas.com/place/New-York/New-York/Househo... , $123k puts you in top 20%; $250k puts you in top 5%. "95%+ of NYC are lower-class" is simply an unsupportable assertion. > Earning below $100k will get you subsidized college, right? That's more reflective of the insane inflation in college costs (and our typical "socialize things, but in the silliest possible way" approach in the States) than what…

Throughout history 99% were lower class. This is coming back. Not being secure about housing, education and healthcare puts you into the lower class. The middle class is almost dead.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#432

Post by manigandham »

coliveira wrote: post #53
tonystubblebine wrote: post #6

As a business owner, when taxes are low, I see that as an incentive to pocket profits. But when taxes are high, I see that as an incentive to hide the profits by investing in the future. I know this isn't always the case with everyone. And especially investors have a case that higher corporate taxes reduce the value of their investments, possibly to the point of not making them. But this incentive is so blatantly obv…

This is so hidden in the debate that it is almost like a "secret". The more taxes you have on corporate income, the higher the incentive for corporations to invest in the company, so they can avoid paying taxes. This is good for the economy. On the other hand, lowering corporate taxes also generates a cascade of tax avoidance, since you have higher profits that generate the need for more complex tax avoidance schemes…

Most of that is financial engineering, not actually investing in the company to many any progress.

A better option would be to remove corporate incomes taxes entirely. Only tax the outflow instead, which would be simpler to implement and easier to deal with at all levels.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#433

Post by missedthecue »

Djvacto wrote: post #403
missedthecue wrote: post #346

Earlier quoted context omitted.

Why is investing in mostly flat or negative return projects assumed to be a net-good?

It's generally assumed a corporation would be more interested in positive returns on it's investments. Seems like if a company stops investing in positive ROI projects, it won't grow, and then won't survive as long? I haven't thought about it much, but I think on a macro scale even a negative return project still circulates that money back out, in the form of salaries or materials or something, but that may be a naiv…

But you're operating on the assumption that companies always have positive investment opportunities available.

This is not the case, and in the event such an opportunity is available, companies would pursue it regardless of the tax environment, because making some money net of tax is better than no money whatsoever.

What such a policy would actually do is incentivize a massive mis-allocation of capital while simultaneously resulting in lower tax revenues. I fail to see how this makes anyone better off.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#434

Post by opo »

gamblor956 wrote: post #318
SilasX wrote: post #260

Earlier quoted context omitted.

>The more taxes you have on corporate income, the higher the incentive for corporations to invest in the company, so they can avoid paying taxes. And the lower the incentive to make new investments. And the higher the incentive to engage in socially wasteful tax-avoidance accounting.

Actually, history bears out that higher tax rates result in corporations re-investing more of their profits in the company and less in tax-avoidance accounting. The difference being that the former is low risk and can grow the business, while the other has a good chance of triggering penalties that wipe out the savings and could even result in jail time for one or more executives. Consider that the historically highe…

>...Actually, history bears out that higher tax rates result in corporations re-investing more of their profits in the company and less in tax-avoidance accounting.

Can't speak for all companies, but higher tax rates generally means more money invested in tax avoidance. If for example, your tax rate was 95% of your income it would be rational for you to put a lot more effort into finding ways to avoid those taxes than if the taxes were 1%.

>...The difference being that the former is low risk and can grow the business,

Low risk? Investing in your business can grow the business or it can be money that could have just as well be thrown away. Lots of businesses have failed because they did bad investments, tried to over-expand, etc.

>...while the other has a good chance of triggering penalties that wipe out the savings and could even result in jail time for one or more executives.

There are no penalties or jail time associated with tax-avoidance - you probably mean tax evasion which is a crime.

>...Consider that the historically highest rates of tax fraud are during the current administration, despite historically low levels of tax on corporate income.

How much tax fraud is there with corporations? According to the IRS:

>...The Internal Revenue Service (IRS) has identified small business and sole proprietorship employees as the largest contributors to the tax gap between what Americans owe in federal taxes and what the federal government receives. Small business and sole proprietorship employees contribute to the tax gap because there are few ways for the government to know about skimming or non-reporting of income without mounting more significant investigations.

https://en.wikipedia.org/wiki/Tax_evasion_in_the_United_Stat...

Another source says:

>... Even though corporate misdeeds grab a lot of press, corporate underreporting accounts for only $67 billion of the tax gap, or 14.8 percent.

https://money.howstuffworks.com/personal-finance/personal-in...

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#435

Post by TheDong »

davrosthedalek wrote: post #398
TheDong wrote: post #280

Earlier quoted context omitted.

> If you buy 100,000 shares of AMZN today, do you hope that IRS will come knocking on your door to take 1,000 or whatever number it is each year? Yes, I would expect that if I had 100k shares of amzn (300 million dollars of net worth), and we implemented a wealth tax, the IRS would tell me "You have to pay us $300k or so" each year on that wealth. If that means I sell some stock, then sure. That means, btw, if I live…

That's a wealth tax of 0.1%. On that level, it's probably a net-loss to the government just from the bureaucracy. I think we are talking here about order a couple percent, so >10 times more.

The parent example was of "100,000 shares of AMZN... taxed 1,000", which matches 0.1%.

I used that number since that was the number the parent comment saw as being obviously too much already, so I didn't need to use a higher number.

I do think 0.1% would already be pretty appreciable. That's already several 10s of billions a year. The current budget for all of the IRS is on the order of 10s of billions now, so I really doubt adding that new tax would be a net-loss.

And, of course, once you have a wealth tax and the sky doesn't fall, tweaking the number up over time is easier.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#436

Post by AnthonyMouse »

gamblor956 wrote: post #423
AnthonyMouse wrote: post #419

Earlier quoted context omitted.

> The higher the tax rate, the more businesses invest in actual business activities, because they get more expenses they can use to offset income they may earn The purchase price of real estate is ultimately deductible as depreciation, as is mortgage interest, and any profits from rents get reinvested into buying more real estate which becomes deductible as depreciation again. Also, real estate speculation is commonl…

Land doesn't depreciate, only structures and improvements to the land. Mortgage interest is not included in the basis of real property or in depreciation. It's just another deductible expense. Most real estate companies are partnerships or REITs due to special tax provisions. But most of their investors are corporate entities. Generally, profits from rent are not reinvested in buying more real estate because they sim…

> Land doesn't depreciate, only structures and improvements to the land.

The structures are generally the majority of the value of the property.

> Mortgage interest is not included in the basis of real property or in depreciation. It's just another deductible expense.

Nonetheless it's a major expense and fully deductible. They also get to deduct property maintenance etc.

> Most real estate companies are partnerships or REITs due to special tax provisions. But most of their investors are corporate entities.

A group of ten individuals who get together to buy an apartment complex are not a corporation. Moreover, if the investors are a corporation, it's still one less layer of indirection -- for a corporate investor, if the real estate holding company were an S Corp you would be paying corporate income tax twice.

> Real estate is a cash flow game: real properties are purchased through commercial mortgages, and rental income services the debt.

This is true until the debt is paid, but then isn't that the point? They get to deduct the interest and depreciation and maintenance, and wipe out their rental income.

> Because of this, real estate investment flourishes in low tax years: as a result of depreciation, the cost basis of the real property has been reduced, so the taxable income from the sale has increased.

That would result in real estate sales in low tax years, i.e. willingness to divest rather than willingness to invest. During the high tax years people would want to buy/hold and continue speculating to continue to defer paying the high taxes on the appreciation.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#437

Post by failuser »

failuser wrote: post #431
ceejayoz wrote: post #388

Earlier quoted context omitted.

Per https://statisticalatlas.com/place/New-York/New-York/Househo... , $123k puts you in top 20%; $250k puts you in top 5%. "95%+ of NYC are lower-class" is simply an unsupportable assertion. > Earning below $100k will get you subsidized college, right? That's more reflective of the insane inflation in college costs (and our typical "socialize things, but in the silliest possible way" approach in the States) than what…

Throughout history 99% were lower class. This is coming back. Not being secure about housing, education and healthcare puts you into the lower class. The middle class is almost dead.

Obviously, the «middle class» is a nebulous term defined differently by different authors, but ability to buy a home, having access to good education and childcare, surviving medical bills and set aside enough retirement money to keep the same lifestyle seems pretty reasonable to me.

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#438

Post by gen220 »

koolba wrote: post #370
gen220 wrote: post #307

Earlier quoted context omitted.

> The real scam is when things like health insurance premiums are deductible for a company but not for an individual. To be fair, that this "scam" is still alive today is mostly by accident. It stems from WWII times, when stateside laborers were uniquely low in supply and high in demand, and when labor had ridiculous bargaining power. Laborers couldn't really ask for higher wages, because that was politically impossi…

> Regardless of the interesting history, I agree with you, it should be universally deductible. I’m for it being universally not deductible. Or at least not deductible for corporations. The idea is that it forces everyone onto a common public individual market as there would be no tax or cost advantage of corporations to self-insure or provide insurance. Longer term this gives better mobility to workers and lowers co…

Interesting idea.

If it were not deductible for anybody, fewer people would have health insurance. If you're in that pool, it's good for you, because it would probably be cheaper. But fewer people would be insured, so it's overall bad, right?

Am I'm missing some part of your argument?

The idea of making it universally deductible/subsidized for individuals seems to be the path that we're on right now.

Case 1: If you purchase health insurance on the exchange, and are very poor, you can get fully-subsidized plans. (Not to mention if you qualify for medicare).

Case 2: The most plausible proposals of "Medicare for All" are basically expanding the pool of people who qualify for zero-premium medicare advantage plans. This keeps insurance individualized and operated by private companies to maintain quality improvements driven by capitalistic-competition, although the government is the ultimate payer.

Case 3: the government (yes, even the current administration) has taken several steps to encourage employers to subsidize the costs of employees purchasing insurance individually, rather than as a group [see https://www.takecommandhealth.com/ichra-guide].

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#439

Post by lstmemery »

wrkronmiller wrote: post #91
0xB31B1B wrote: post #49

What frustrates me about this whole argument over wealth taxes is that the arguments aren't grounded in facts. The reality is that we "pay" for inequality with reduced productivity. A great example of this is "single family home neighborhoods" in urban areas. They have no societal benefit, they are essentially subsidized land use patterns for the well off, and it makes it harder for less well of folks to move to area…

> What frustrates me about this whole argument over wealth taxes is that the arguments aren't grounded in facts. You say this, yet you don't provide a single citation for any of your arguments. > There is a very strong case that one reason for sluggish economic growth is the concentration of assets and wealth in so few hands, and the continuing stagnation/decline in wealth/living standards/etc of bottom 40% of the US…

Not the OP, but the most recent meta-analysis suggests that there is a negative correlation between inequality and growth[1]. Wealth inequality is more negatively correlated with growth than income inequality.

[1] https://www.sciencedirect.com/science/article/abs/pii/S03057...

Re: Media Owned by Wealthy Are Quick to Tell You Wealth Taxes Are a Bad Idea

#440

Post by davrosthedalek »

TheDong wrote: post #435
davrosthedalek wrote: post #398

Earlier quoted context omitted.

That's a wealth tax of 0.1%. On that level, it's probably a net-loss to the government just from the bureaucracy. I think we are talking here about order a couple percent, so >10 times more.

The parent example was of "100,000 shares of AMZN... taxed 1,000", which matches 0.1%. I used that number since that was the number the parent comment saw as being obviously too much already, so I didn't need to use a higher number. I do think 0.1% would already be pretty appreciable. That's already several 10s of billions a year. The current budget for all of the IRS is on the order of 10s of billions now, so I real…

I might be parsing the original text wrong, but 1,000 out of 100,000 is 1%. Not 0.1% ?!?
Post reply on HN