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How to convert between wealth and income tax

paulgraham.com

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Re: How to convert between wealth and income tax

#511

Post by GS523523 »

thrance wrote: post #251
dheera wrote: post #159

Earlier quoted context omitted.

> you do need something more extreme That's how you end up with an over-regulated country where people doing great things for the country's economy start choosing a different country to build their dreams in. It's also how you drive the currently-wealthy to other countries to spend and invest their fortunes in. The possibility of being ultra-wealthy is a huge reason to build awesome shit in the US that creates millio…

This nefarious logic has been used for 50 years to justify ever worse austerity and tax breaks for the wealthy. And look at the situation today: pedophile oligarchs rule the world while we fight for scraps. The West has no future, unless we start aggressively redistributing wealth.

Hasn't a rich oligarchy been the status quo for most of humanity? It seems to me most of humanity has had quite a future to look forward to, historically speaking.

Re: How to convert between wealth and income tax

#512

Post by lazide »

Dylan16807 wrote: post #491
lazide wrote: post #464

Earlier quoted context omitted.

It does change that there is a multiplier. Even 5% is likely a deathknell for all but a couple percent of assets owned by the most aggressive ‘sharks’. A good way to make owning anything unaffordable though! The carve outs would just defacto set a cap for normal people. No more than one house, etc.

What's your definition of affordable here? You can still own millions and billions of dollars of things, but you'll have to shrink your money pile over time to pay for those things if you don't have a source of income.

It depends on the asset and the ability to earn income from it.

The higher the rate, the harder it will be to do.

At some point, only speculators with deep pockets and the desperate with enough cash flow could do it.

Re: How to convert between wealth and income tax

#513

Post by shomp »

stymaar wrote: post #300

It's funny, because even though he got the math right, PG got the reasoning completely wrong. > Each 1% of wealth tax is equivalent to 20% of income tax. Yes, this is the right part. Taxing wealth at 1% is equivalent to taxing income at 20-25% (depending on which return you count as baseline) > It's clear that politicians don't get this from the way they talk about a "mere 1%" wealth tax. None of them would speak of…

Oh he understands the reasoning. He is one of the people who would be subject to the tax :) The wealthy writing essays on how to not infringe upon their wealth is nothing new, although it did go out of favor in the Carnegie-Rockefeller era when they competed to see who could do more public-good with their immense fortunes before their shoving off the mortal coil. Looks like the ultrawealthy currying sentiment to preserve ultrawealthy wealth at any expense is back in vogue.

Re: How to convert between wealth and income tax

#514

Post by vineyardmike »

WalterBright wrote: post #474
pzo wrote: post #436

Earlier quoted context omitted.

at least all financial assets (stocks, etc) are easy to assess value so why not start with that? same with gold, silver etc. Some minimal amount you can make it nontaxable to reduce administrative burden.

The value of stocks fluctuates every second. Sometimes wildly.

Weakest of the many weak arguments.

Let’s do the bog-standard obvious and sane thing and pick a single point in time, once a year and use the value then. Maybe, i don’t know, close of market on the last trading day of the year. At which point it won’t fluctuate again until the new tax year. Then, we can call it “mark to market” because we’re marking the value to the market at a point in time.

Finally, we stop with silly bad faith arguments because fluctuations in stock have been successful taxed for decades. This is how day-traders pay taxes, and it’s not even a little challenging to do.

Re: How to convert between wealth and income tax

#515

Post by Glyptodon »

chasd00 wrote: post #257
Glyptodon wrote: post #217

Earlier quoted context omitted.

Lol, that's still totally feasible for normal FIRE/retirement situations, my understanding is that most proposals only start at $50 million or more. You can still have a super cushy retirement with $3mil+ and 3% withdrawal forever.

> only start at $50 million or more curious how they came to that number. There's probably plenty of voters willing to cast a vote for $0.5M+ and plenty ready to cast a vote for $100M+. How was the line drawn?

There are probably good argument for it being lower (maybe circa $10 or $12 million. But I have a feeling they do want to try and not hit land-rich-but-otherwise-maybe-not "family farms" that have hundreds or thousands of acres.

Re: How to convert between wealth and income tax

#516

Post by credit_guy »

mannanj wrote: post #471
credit_guy wrote: post #458

Earlier quoted context omitted.

That's not all that matters. The main reason to have taxes is to fund the government, not to make society a more just society. And thinking that billionaires will just take a wealth tax as served, and perhaps will ask "can I have some more" is one way to think about this, but probably not the best way. A better way to think is that action might be followed by reaction. There is no manifest destiny for California to b…

Does the government not have the goal to make society a more just society? When did that stop being a priority of government? Even a teeny, tiny one?

Sure, the government has that goal too. But the government has many tools, and using taxes for that is using the wrong tool. Or maybe you think that billionaires owe us not only to pay taxes, but also to play nice, and pay those taxes with a smile on their face?

Re: How to convert between wealth and income tax

#517

Post by scotty79 »

I have a weird take on income tax.

In my opinion it's not a tax on the employee but on the employer and one of very few solid methods of actually taxing the rich (for as long as the rich need labor to get richer).

Your income tax money never reaches your pocket so it's never a part of your actual income and if employer didn't pay your income tax, they are (not you) on the hook for that.

And if income tax rate was lowered to zero, the employer wouldn't automatically start paying you that much more. There would be a renegotiation and most of that money would stay with the employer, because you already agreed and demonstrate that you can work for as little as you do. Of course in specific cases that the position of the employee in the market is very strong, some companies might choose to use the money they don't have to pay as your income tax to compete for employers by offering higher salaries. But that's definitely not given. Company getting richer rarely automatically translates to higher salaries.

So employee, if the economy is strong, should advocate for as high income taxes as possible, because that one of the very few ways that the money in the economy flows from the rich to the poor (with a detour through governments, which are poor nowadays anyway, perpetually indebted to the rich).

Re: How to convert between wealth and income tax

#518

Post by vineyardmike »

sokoloff wrote: post #418
QuercusMax wrote: post #393

Earlier quoted context omitted.

So let's not even think about how to build a better world because the administration we have right now is garbage? We need a wealth tax, ONLY public financing of elections (no PAC money, no "I'm a billionaire so I can spend as much as I want on myself"), and many other reforms. Nationalizing critical industries and sectors is also something we should be pursuing.

> no "I'm a billionaire so I can spend as much as I want on myself" To me, that would seem extremely difficult for Congress to pass a law restricting individual speech in this particular way that would pass First Amendment muster, and I don’t think we should be at “let’s just set aside the Constitution when it clearly says something we don’t like” because I don’t think that ends well in today’s political climate (or…

We already have laws that limit how much you can give to someone else’s campaign. We’ve already crossed that threshold in terms of “free speech”.

Re: How to convert between wealth and income tax

#519

Post by adrianwaj »

Perhaps all taxes should be abolished and then a new one introduced: a transaction tax.

The question then remains, does the sender add a bit more before sending to move any given amount, or do they pay a given amount with the recipient getting less?

The system certainly scales well for net-worth and one's economic activity.

The question then remains - who/what is considered an "outside" party for a tax to operate in financial flows? It could work well in an agentic economy if agents are considered as a single entity with flows not taxed between them.

Re: How to convert between wealth and income tax

#520

Post by ethbr1 »

roenxi wrote: post #475
BugsJustFindMe wrote: post #372

Earlier quoted context omitted.

> On the other hand, almost a majority of people already pay no federal income tax anyways. That's an irrelevant diversion though, because the measure that matters when discussing the fairness of taxes is how much people are left with at the end after paying whatever taxes they pay, including sales tax, income tax, and any other kind of tax. And for those particular people you're talking about the answer is very litt…

There is no consensus on what is "fair" to tax, you can find people arguing from 0% to 100%. And if we're talking about measures of fairness. A much better measure is something like trying to maximise the median living standard without sacrificing any one demographic. > And for those particular people you're talking about the answer is very little, next to none... So... where are the real resources coming from then?…

> If we give one person enough money out of the tax pot to pay rent, that means the resources were redeployed from somewhere else that was about 1-rentworth of something.

Yes, and that "somewhere else" is others' excess profit.

That excess profit comes from (a) inventing or investing capital with a return or (b) paying less for goods / labor than they can be sold for.

Capitalist profit has always been equal parts ingenuity and fucking other people over, and as most often implemented makes no discrimination between the two.

The bargain by which this has traditionally been squared is "the person who made the profit gets to keep some of it" + "they pay the rest in taxes to support the society they're successful in and depend on."

Unfortunately over the years this has continually been eroded by capital's invasion into democracy, with the express purpose of neutering the latter part of that bargain.

Those who would be hit with a wealth tax are incensed by it precisely because it would be less avoidable than the myriad of loopholes that have been engineered into income taxes.

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