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American Equity

blog.samaltman.com

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Re: American Equity

#461

Post by cirgue »

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 think we need to talk about how a huge portion of the US misunderstands "tax brackets"

I know engineers that are guilty of the misunderstanding you describe. How does anyone graduate from a university in the United States without at some point having been exposed to the idea of marginal taxation?

Re: American Equity

#462

Post by heylook »

smallnamespace wrote: post #426
bensonn wrote: post #417

Earlier quoted context omitted.

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 wealt…

This sort of logic is also why it's hard to get this sort of legislation passed nowadays. Media has done a good job of raising awareness of the problems of wealth disparity, and a lot of people nod along. But no matter how wealthy someone is, they can always point to the more-rich and say those people are the problem and should be taxed, not themselves.

> But no matter how wealthy someone is, they can always point to the more-rich and say those people are the problem and should be taxed, not themselves.

This is obviously untrue. There isn't an infinite number of people wealthier than Gates or the Waltons or the Rothschilds. At some point there is no one further up the economic ladder in whatever location you're talking about.

Re: American Equity

#463

Post by geofft »

sheepmullet wrote: post #453
geofft wrote: post #396

Earlier quoted context omitted.

> If you work a 40 hour week already and make a decent living at 40-50%, and now get told that anything above that will get taxed at 75%, unless you're going to somehow generate more than double, you're going to spend that time doing more productive things (like spending it with your family). Hold up - 1. Why is this about working more hours , instead of working harder / more effectively? There are 168 hours in a wee…

> Why is this about working more hours, instead of working harder / more effectively? Because they are tightly linked for most people. I've managed to increase my income ~5x from what it was when I started but to do that I have had to put in 2 hours/day of side study.

Sure, and if I insisted on working exactly 40 hours I probably would not have gotten the raises or opportunities I got. But I am personally nowhere close to the amount of income we're talking about here, let alone wealth, and I've sort of maxed out my ability to be productive. Do we think that at the margin that a wealth tax would kick in - which is specifically not most people - the number of hours worked is relevant?

Re: American Equity

#464

Post by cryptonector »

mundo wrote: post #405
cryptonector wrote: post #271

Earlier quoted context omitted.

Can you show us a comparison of GDP growth rates, before and after wealth taxes were promulgated (and, where it happened, repealed)? Also, please, a comparison of GDP history between countries that have and lack wealth taxes. Near as I can tell Europe has lagged way behind the U.S. in economic growth since the 1980s. I remember back in the 90s when catching up to the U.S. was stated goal of the incipient EU. How did…

> Can you show us a comparison of GDP growth rates, before and after wealth taxes were promulgated? Two hours before saying that, you said: > ...every time it's been tried anywhere it's been a disaster for the overall economy: capital (and wealthy people) flees.

Is there any doubt that U.S. GDP has outstripped European countries?

Re: American Equity

#465

Post by JesseAldridge »

jacquesm wrote: post #16

People already have a share in the GDP. That's what it is, the total domestic product, the sum of all the little parts. The problem is not that people don't have share in it (and this goes for every country, not just for the USA), but that they have a disproportionate share in it. 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 rai…

> People already have a share in the GDP.

Yeah but the value of that share doesn't increase when GDP goes up. That's the difference.

> raise your taxes on the rich and lift up those that are at the lowest end

I believe that is what Sam is suggesting. With the caveat the amount of tax collected is again tied to GDP.

> Of course in the current political climate this will not happen

Which is why he is proposing a potentially more palatable variation.

Be more constructive and less defeatist please.

Re: American Equity

#466

Post by ChuckMcM »

ChuckMcM wrote: post #433

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 ima…

Random question which struck me about this discussion.

Let's take a company like Google and re-imagine it.

From its public statements we know that the bulk of Google's employees cost Google money and cut into its profit. Nearly all of its profit comes from its search advertising business and everything else mostly loses money. If Google was structured as an "economy" than the 1200 or so people who were responsible for search advertising would be like the world wide 1%. They would enjoy lavish perks, free food, daily massages, etc. While all of the other employees would have to work very hard every day doing what they were doing and hope that something didn't come along and get them fired while living out of their car on a salary that was commensurate with how much they were costing Google.

Instead, everyone at the company benefits from the work of the 10% or so of the employees that make all the money in the company with free food and buses that take them to and from work. And even though they are losing the company money by being there, the environment remains vibrant and energized because the company is so wealthy as a whole that they don't have to worry day to day that they will be fired if they do their job to the best of their abilities and be good corporate citizens.

The US is an amazingly wealthy economy. Many of the richest people in the world are citizens of the US. What I hear Sam proposing is that we create public policy around making the US a great place to live for all of its citizens, just like an Apple or Google make their companies a great place to work for all of their employees, regardless of whether they are entry level or C-suite level.

I don't know if it is possible to pull off but I do think it is worth trying to pull it off.

Re: American Equity

#468

Post by DoreenMichele »

Absolute poverty would be eliminated, and we would no longer motivate people through the fear of not being able to eat.

This is just UBI with a new branding platform, basically. There are tried and true solutions that have an established track record of working, such as universal basic health coverage. It would make more sense for the US to implement those things first, rather than try something experimental.

U.S. health care spending grew 5.8 percent in 2015, reaching $3.2 trillion or $9,990 per person. As a share of the nation's Gross Domestic Product, health spending accounted for 17.8 percent. *

There you go. The $10k per person that is so often bandied about for UBI, and it would do more for the neediest automatically. People with serious health problems would get more out of the system without having incentives to try to game the system or milk it.

* https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...

Re: American Equity

#469

Post by kamaal »

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.

>>Some people will work harder anyways, and many will be discouraged.

Some people will work harder, by moving to a different country, where the tax laws are saner and don't punish hard working prime movers for the very value they provide.

Re: American Equity

#470

Post by santiagogo »

kaybe wrote: post #444
santiagogo wrote: post #373

Earlier quoted context omitted.

Since a couple years back, we have a 1% tax on wealth in Colombia, which applies to anyone who has above approx. 330,000 USD in assets I don't think it has disincentivated anybody from becoming less wealthy and/or working less. It just incentivizes tax evasion, but even that is not significant. On the other hand, a large number of social programs have been built around this new tax. Anybody in the country could get c…

How much is a normal house in Colombia?

It’s a big country, so it really depends a lot on which city you live in and and what you consider a normal house. It ranges from $20,000 USD for a rural house near a small town to $150,000 for a 2-3 bedroom apartment in Bogota which is the capital.
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