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Are super-rich people just better at making money?

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

#491

Post by gnull »

burlesona wrote: post #377

There are two core insights here that are actually pretty obvious: 1. 20% of 1200 is more than 20% of 800. Duh! But the practical insight is simply that people with more wealth can afford bigger bets and expect bigger payouts. 2. Many systems are sensitive to initial conditions. In this model, the first coin flip matter vastly more than all others and determines almost the entire outcome. As others have pointed out t…

> If we made it much much easier to build housing then then rental housing market would be like the used car market: viable but not an easy place to sit back and make passive income.

You're overthinking it. Sweden made renting out apartments unattractive without all this sophistication, they just regulate the prices and keep them low.

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

#492

Post by int_19h »

WalterBright wrote: post #467
bmitc wrote: post #112

Earlier quoted context omitted.

I have already covered this elsewhere, but that's an excuse and actually only points to how concentrated the wealth is. Too bad they pay more money than others. Tax them more.

The wealth that wealthy people have isn't "concentrated", it's created. I.e. they didn't take it from you.

It's not created by those people. It's created by some worker somewhere, and those people collect most of that created wealth as economic rent, solely because they own the capital used in the process.

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

#493

Post by int_19h »

jmyeet wrote: post #197
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 idea of the “middle class” is propaganda. The whole point of this as well as any number of wedge social issues is to sow division and direct your anger at marginalized groups instead of the wealthy and powerful. There are only two groups when it comes to economic status: labor and the capital-owning class. Labor is anyone who derives their income from their labor and goes all the way from the janitor to doctors a…

You're right, but this misdirection goes both ways. Logically, it would make more sence for the "lower" and the "middle" class to present a unified political front to tax the capital-owning class. But with the division in place, politicians backed by capital can sell a tax plan that is mostly, in fact, about raising taxes on the middle class but not the capital (most proposals that focus on personal income tax rates are in this category) to the "lower" class.

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

#494

Post by int_19h »

ethanbond wrote: post #359
hartator wrote: post #349

Earlier quoted context omitted.

Or maybe just align income tax on capital gain taxes?

Eh, this would discourage investment. Investment is important.

By the same logic, taxing sweat-of-the-brow income higher than capital gains discourages labor. And, between the two, labor is clearly more important.

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

#495

Post by newZWhoDis »

mint2 wrote: post #375
newZWhoDis wrote: post #305

Earlier quoted context omitted.

If the government is not bound by a balanced budget amendment (can spend more than it takes in), and can print money whenever it wants, why do I pay taxes? If the entire monetary system is fake, why do they need 40+% of my paycheck?

Because without an income stream no one loans to the government, or at least not at current rates. Interest rates would explode. Funnily enough Britain just demoed that for everyone. the prior pm tried to reduce taxes a ton and everything nearly went to hell in a hand basket. So at least we can be confident the taxes are actually doing things.

> Because without an income stream no one loans to the government

The government prints whatever money it needs to pay its bills, and does so already with impunity. It also pays interest on money loaned to it (bonds) with printed fiat.

Also, you completely missed the point. Of course taxes “do things”, and ending them would also “do something”. That wasn’t the question.

The question is simple, why pay taxes at all when the government has the ability to print an endless supply of money?

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

#496

Post by tgsovlerkhgsel »

ChuckNorris89 wrote: post #199
tgsovlerkhgsel wrote: post #163

Earlier quoted context omitted.

> As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.) Switzerland does it and it seems to work pretty well.

Can you give some details for the non initiated?

You pay a (progressive) % of your wealth in tax every year, based on your declaration.

Financial institutions report your wealth (to some extent), and the development of wealth is checked against your income, making tax evasion non-trivial. You could hide the money in a shoebox but you'll lose more in opportunity cost (missed investment gains) than you'll save on tax.

The other side of the coin though is that capital gains generally aren't taxed.

Mainly, I don't agree that "it is very difficult to tax wealth". It's basically a box "your wealth: " on the tax declaration, with an extra spreadsheet/list to fill out showing what the wealth consists of, plus proof (e.g. bank/stock account statements).

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

#497

Post by naasking »

WalterBright wrote: post #465
naasking wrote: post #392

Earlier quoted context omitted.

> That makes the top income tax rate 50%. While interesting data points, I'm not seeing an argument that they are paying enough, which seems to be your implication. Maybe it should be 90%. Maybe it should be even more.

Make taxes too high, and who is going to invest in America? It will be a Pyrrhic victory for you. We already see wealthier people fleeing California for Texas and Florida, the same for New York. It's not the government that produces the wealth in the economy, it's business. Confiscatory taxes will wind up with everyone poorer, including you.

Most business revenue in America is still from small to medium sized businesses, so this investment you speak of doesn't sound too important. So yes, I agree that business produces wealth, but the business that matters isn't going anywhere because they're largely local. The larger corporations are still going to do business here as well because of the market power.

As for wealth flight, it's overblown. First fleeing to another state is very different than fleeing the country. Second people aren't staying in America only because the taxes are lower, there's plenty more to offer.

Edit: I forgot to add that the actual evidence for wealth flight is pretty thin.

And for those corporations or wealthy people that do leave, fuck 'em. They're not special, irreplaceable snowflakes. They beat out their competitors by luck, and local competitors will immediately spring up to fill the void they leave.

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

#498

Post by didgeoridoo »

gnull wrote: post #491
burlesona wrote: post #377

There are two core insights here that are actually pretty obvious: 1. 20% of 1200 is more than 20% of 800. Duh! But the practical insight is simply that people with more wealth can afford bigger bets and expect bigger payouts. 2. Many systems are sensitive to initial conditions. In this model, the first coin flip matter vastly more than all others and determines almost the entire outcome. As others have pointed out t…

> If we made it much much easier to build housing then then rental housing market would be like the used car market: viable but not an easy place to sit back and make passive income. You're overthinking it. Sweden made renting out apartments unattractive without all this sophistication, they just regulate the prices and keep them low.

…and has consequently created a housing shortage so severe that their decade-plus waiting list was at one time being considered for the Guinness Book of World Records[0].

Price controls leading to shortages and rationing is basically the microeconomics version of the First Law of Thermodynamics. It has had the same result literally everywhere it has been tried.

The solution lies in the supply. Always. If you want more people to have more of something at an affordable price, you have to make more of that thing.

[0]: https://www.bbc.com/worklife/article/20160517-this-is-one-ci...

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

#499

Post by dontreact »

AuthorizedCust wrote: post #338
dontreact wrote: post #308

Earlier quoted context omitted.

Wealth isn’t zero sum but power over law (as defined by who has influence over the rules we live by) is. When you have concentration of power due to concentration of wealth, the society will become unstable and undemocratic. So even though wealth isn’t zero sum, wealth inequality is a problem that needs to be addressed for long term stability.

> Wealth isn’t zero sum but power over law… Religious extremism isn’t coming mainly from the wealthy. It’s dominantly a lower-strata southern thing, with notable metastases all around the country, yet it plays strongly in the US system. That some wealthy co-opt the extremists doesn’t change the above.

I don’t believe that this voting bloc is actually voting in its best interests. The power rests more with the people who are able to manipulate it.

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

#500

Post by naasking »

WalterBright wrote: post #452
naasking wrote: post #404

Earlier quoted context omitted.

> Other than 40% federal estate tax and 20% Washington state tax, which is right next to zero. Took me 5 seconds to Google this: https://smartasset.com/taxes/5-ways-the-rich-can-avoid-the-e...

Those can wind up deferring taxes, not eliminating them, and still they have exemption limits. The Roth IRA has contribution limits.

Gifts eliminate estate tax up to $12m. You can exceed even that limit by purchasing a property and placing it in a QPRT.

Life insurance trusts also have no limit.

Finally, even if it were true that it's merely deferring taxes, that means you can essentially time the market to pay less in tax when the rules are more favourable, and you can realize more gains in the interim.

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