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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?

#521

Post by rsj_hn »

dr_dshiv wrote: post #116
smilekzs wrote: post #21

Earlier quoted context omitted.

One thing I've noticed consistently, is when politicians talk about "taxing the wealthy", they almost always follow that with "earning more than $xxxk a year". This is conflating wealth with income. Being within this tax bracket myself, I do not deny that I am biased, but I do hope this bullshit gets called out hard whenever someone brings up yet another underhanded measure to milk us (typical SFBay SWE) above and be…

Come to the Netherlands! 52% kicks in early and plus there is the 2% worldwide wealth tax on all non-real estate investments. Is it worth it, just to live in a shockingly civilized society under a highly functional government?

You mean the shockingly civilized society that is a drug trafficking capital of the world with a recent spate of mafia murders? The one with 1.55 births per woman?

I always laugh at dying European societies that consider themselves "civilized" vis-a-vis the rest of the world and can't help but lecture everyone else about how to structure their society. It reminds of Borrell's "Europe is a garden, the rest of the world is a jungle" remarks, which went live before his recent bribery scandal.

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

#522

Post by Tiktaalik »

bawolff wrote: post #47
smilekzs wrote: post #21

Earlier quoted context omitted.

One thing I've noticed consistently, is when politicians talk about "taxing the wealthy", they almost always follow that with "earning more than $xxxk a year". This is conflating wealth with income. Being within this tax bracket myself, I do not deny that I am biased, but I do hope this bullshit gets called out hard whenever someone brings up yet another underhanded measure to milk us (typical SFBay SWE) above and be…

As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.) I don't think the issue is lack of will but lack of plan that actually works in the face of assets with unclear value and/or difficult to liquidate. And this doesn't just affect the ultra rich but people like SWE too. How much is the stock you have in the non-public company you work at really worth? SWE are probably one of th…

I don't think it's very difficult at all. We already have an elaborate system to measure and tax wealth with our system of property taxes on real estate. That's already in place.

It would be trivially easy as well to track and tax the wealth of people hold public equities.

Those two things there are an enormous bulk (majority?) of wealth.

It only gets a bit more complicated with privately held equities this I will grant.

If you start to get into the nitty gritty of assessing assets like ming vases and such it gets complex as well and likely diminishing returns, but at this point, with this stuff, you might as well not even bother because few are going to hold their wealth in ming vases.

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

#523

Post by Tiktaalik »

astrange wrote: post #505
jmyeet wrote: post #175

Earlier quoted context omitted.

We tax property without realizing a gain. We even tax bonds on deferred interest (eg zero coupon bonds). We can and should do this for stocks. The ultra-rich already borrow money to avoid realizing gains (and thus paying taxes). If they want to keep their stocks let them borrow to pay their tax bills.

Property taxes are pretty bad! Everyone hates paying them, retirees can’t afford them, and they tax building improvement which motivates owners to tear down their buildings. LVT is a much better related tax. Anyway, wealth taxes are probably bad because taxes are supposed to be deflationary, but wealth taxes are inflationary if you collect them in USD, since taxpayers have to sell assets first. Unless the IRS is will…

I guess LVT is better, though I find it almost a pendantic thing at this point given that in so many places where property is expensive the property tax is effectively a land value tax already as the land dominates the assessed value so strongly.

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

#524

Post by Tiktaalik »

simonswords82 wrote: post #93
bmitc wrote: post #79

Earlier quoted context omitted.

I don't think any individual should be a billionaire. There's no conceivable reason for a single person to need or have the right to be a billionaire.

I'm not saying I agree or disagree with this stance but at a practical level it's interesting to think about. Let's say life is a computer game, and once you max out at $1bn in earned wealth (presumably this includes liquid and illiquid assets such as properties, cars etc), you cannot accumulate more wealth. How does a government enforce this stance? You cannot stop say Bill Gates shorting Tesla and earning millions…

> Do you simply tax the shit out of people if they have over £1bn in wealth?

Seems like the obvious answer, though you're probably right in that people will move assets around and do elaborate things to avoid the tax but they already do that now.

Make a hard cap wealth cap at $1B. Oh you made a great investment that made you $400M dollars? oops looks like you're $200M over the cap. You now owe the government $200M. But good news you hit the $1B cap. You "win" capitalism. Have a nice medal maybe.

Seems reasonable to me.

I suppose the argument against it is that you'd be dissuading near billionaires from investing their money in things (eg. starting new companies) though I'm not entirely sure if money is a real motivator for people who have ~$900M. Is it? I don't know any 900 millionaires to ask.

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

#525

Post by Tiktaalik »

an-allen wrote: post #106
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…

This all presupposes that the government is an efficient user of capital, when its pretty clear its not. Heavy taxes on the rich, means that capital investments that a rich person might finance, become government programmes and bureaucracies. Theres obviously a sweet spot here - but rich folks are good at creating capital and governments are notorious for wasting it. Now in the US I probably don’t have to tell you wh…

Rich folks are only so seemingly "efficient" and good at creating capital because they decline to do what the government does.

The ultra wealthy property developer only builds what is profitable, and so slices off to serve only the most profitable part of the market to serve, and accordingly only builds luxury condos.

Meanwhile the government is obliged to serve everyone, the disabled, the poor, etc, and so with its housing whatever profits are gained by its market priced rents to the middle class are leveraged toward sustaining the unprofitable housing it is obliged to create, and the whole enterprise isn't profitable and needs outside subsidy to continue. We disparage this as "inefficient" government yada yada.

These two different groups aren't working on the same problems.

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

#526

Post by chii »

imgabe wrote: post #198
chii wrote: post #186

Earlier quoted context omitted.

Switch sandwiches out with internet service provider, and do you get the same story?

Yes? The vast majority of people are able to buy Internet service and it is not a significant percentage of income, even for people with a low income. Do you know of people taking out second mortgages on their house or drowning in debt to afford Internet service? The flip side of the equation is that if a business is to exist, it has to set a price that people are capable of paying. Yes, sometimes with supply constra…

> The vast majority of people are able to buy Internet service and it is not a significant percentage of income

how did you know that the cost of such a service is not way overpriced compared to the cost of production?

Are there really many ~sandwich providers~ISP that you can compare it to? Or are the prices just taken because there's no alternative, and that ~sandwiches~internet access is needed for living?

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

#527

Post by wholinator2 »

dennis_jeeves1 wrote: post #510
dennis_jeeves1 wrote: post #475

Earlier quoted context omitted.

>A very simple distribution solution therefore is to stop privileging capital gains and tax all income equally. An even more simpler solution would be to take away the all wealth of rich people and divide it among all people. The calculations would be a lot easier. Taxes are complicated.

Had 2 people fall for this already, fellow HNers, my above statement was said in sarcasm. Of course there are people here who are stupid enough to suggest it for real.

You should be aware then that HN is a place for sincere and kind discussion. If you're going to speak sarcasm you must mark it, that's how it goes here. You shouldn't come here calling people stupid because you're not following proper social etiquette. In case you aren't aware, placing a \s at the end of your comment is enough to properly denote sarcasm. Communicating intentions is very important and I think you'd be surprised who might say what you said genuinely. A healthy and kind discussion has no place for denigrating those who take you at your word or for trolling people into "falling for it". This place trusts you to properly communicate your ideas.

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

#528

Post by chii »

popcorncowboy wrote: post #259
donatj wrote: post #195

The whole yard sale model suffers from the fallacy that there is a predefined amount of wealth. If that were true, we’d have exactly as much wealth as our cavemen brethren did, which is clearly not the case. Every time anyone creates something more valuable than the sum of its parts, value is added to the system. A bow is far more valuable than the wood used to build it. A hammer and nails far more valuable than the…

Nonsense. It doesn't have to be a perfect model to still be a useful one. It's precisely because it's so unintuitive that it's interesting. Your introduction of a positive sum mechanic doesn't invalidate the model. Introducing a $new_value component still begs questions around who gets access to that value - and if the yard sale model holds, even perfectly equal distribution of that $new_value suffers from exponentia…

> value is disproportionately captured by the already wealthy

value is generated using both capital from the already rich, and labour from the poor.

Over time, labour isn't increasing in productivity. It's capital that's increasing productivity, such as by improving labour's efficiency.

With this in mind, why is it that the rich shouldnt be the ones to capture the new/increased productivity? After all, it is their investment that would make such productivity possible. If you had told the rich that their investments would not actually gain them profit (because labour captured the increases that produces the profit), they would not have invested in the first place.

One way to break out of this cycle is for labour to provide something more than unskilled labour and merely using capital to produce goods/services. For example, research and development, knowledge/skill from education, etc.

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

#529

Post by chii »

int_19h wrote: post #487
donatj wrote: post #195

The whole yard sale model suffers from the fallacy that there is a predefined amount of wealth. If that were true, we’d have exactly as much wealth as our cavemen brethren did, which is clearly not the case. Every time anyone creates something more valuable than the sum of its parts, value is added to the system. A bow is far more valuable than the wood used to build it. A hammer and nails far more valuable than the…

> We can all make incredibly informed decisions these day. Better informed decisions than ever possible by all the wealthiest royalty in human history, in literally seconds. And yet there were numerous stock investing experiments in which random choice delivered similar or better results than respected investment specialists. It's almost as if, at the end of the day, we don't actually make "incredibly informed decisi…

> we don't actually make "incredibly informed decisions".

the original argument differentiates between "can" and "do".

It is a form of "victim blaming" - they could've made good decisions, but because they didnt, the outcomes they had were "self-inflicted".

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

#530

Post by chii »

xg15 wrote: post #438
donatj wrote: post #195

The whole yard sale model suffers from the fallacy that there is a predefined amount of wealth. If that were true, we’d have exactly as much wealth as our cavemen brethren did, which is clearly not the case. Every time anyone creates something more valuable than the sum of its parts, value is added to the system. A bow is far more valuable than the wood used to build it. A hammer and nails far more valuable than the…

Yes, but value is not created out of thin air, you need capital to create value, i.e. you need to be wealthy. So you could extend the yard-sale model and include a rule that after each round, each $ will turn into $1.5 with some probability. Guess what? Now the rich players can't just risk higher stakes in the coinflip games, they will also have more opportunity to introduce more money into the game through value cre…

However, the outcome of such a system would be that there's more stuff than ever at the yard sale. Things that didn't previously exist.

Therefore, the fact that new options exist at the yard sale is itself a form of wealth.

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