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Who died and left the US $7B?

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Re: Who died and left the US $7B?

#541

Post by fragmede »

AdrianB1 wrote: post #299
fragmede wrote: post #50

Earlier quoted context omitted.

Where $1 billion is about 40,000 Honda Civics, I think most people would support limiting ownership of cars to 39,999. It doesn't even have to be a hard limit, just a luxury tax on cars that cost more than, say, $1 million, and on owning more than 40,000 cars. If you want a 40,001st car, your can do it but it means you're going to have to pay an extra fee that goes towards helping people with less.

"most people would support" is mob rule or tyranny of the majority. Not morally right. People have no right to tell you how many cars (or something else) you are allowed to own.

how many slaves do you own, how much cocaine do you own, how many guns do you own? how many crocodiles or tigers can I keep as a pet? there are lots of limits on what I can own

Re: Who died and left the US $7B?

#542

Post by AdrianB1 »

recursive wrote: post #39
AdrianB1 wrote: post #31

Earlier quoted context omitted.

No. But it is a slippery slope of having limits on people, from wealth to anything you can think of (random example: limit ownership to a single car). In the end if it is all legal, it is nobody else's business. If it is illegal, setting an upper limit is not the moral solution.

> If it is illegal, setting an upper limit is not the moral solution. Any particular reason you believe that?

Yes, if something is illegal then you don't need to set limits, you send people to prison, don't pass Go, don't collect $200.

Re: Who died and left the US $7B?

#544

Post by AnthonyMouse »

eli wrote: post #479
AnthonyMouse wrote: post #469

Earlier quoted context omitted.

> Yes, if you pay your taxes you will have less money. The issue is that it can cause you to have less than zero money, and be forced to sell (possibly illiquid) assets solely in order pay the tax. This is kind of a major deal, e.g. you have an asset worth $20M, but not if you have to sell it right now because it would take time to find the right buyer, so instead you're forced to sell it for $8M to the only person w…

I do not understand your first point at all. I’m saying we should eliminate the step up in basis for inherited assets. In what scenario would that force someone to sell something? Yes their heirs could hold the assets forever and never sell, correct.

> I’m saying we should eliminate the step up in basis for inherited assets. In what scenario would that force someone to sell something?

The proposal has been floated recently that unrealized capital gains should be taxed. This would nominally mitigate a major problem with your proposal, which is that it would heavily discourage people from switching from long-held mediocre investments with a low tax basis to better investments. So they're often proposed together or as the mechanism to remove the step-up in basis, i.e. it's unconditionally stepped up to market value every year but then you have to pay the tax immediately.

But if you tax unrealized gains then you force the sale of assets any time the tax is more than the owner's liquid cash, which is its own major problem.

Whereas if you don't do this, now you haven't solved the original problem that the owner suffers a huge tax penalty for switching from a long-held mediocre investment to a better one.

Re: Who died and left the US $7B?

#545

Post by mcmoor »

cycomanic wrote: post #157
missedthecue wrote: post #131

Earlier quoted context omitted.

I don't think you can consume your way to a higher standard of living. The only way to sustainably increase the standard of living is to increase productivity. This can only come from investment into hard capital and into human capital (education). So to me, it would be very hard to make an argument that it trickles up. It has to come from investment. And investment in the private sector is usually done by rich peopl…

Except for the fact wages and middle class wealth has not kept up with productivity for ages in most western countries. Also considering that the super-rich in developing nations are not that far behind the super-rich in developed nations, why hasn't their wealth trickled down and uplifted those developing nations? The reality is that developing nations have even higher wealth inequality, so refuting your argument.

Actually my realization comes when seeing that super rich in developing nations don't even compare to super rich in developed nations. Like there's sky above sky. My country's elites bow to world's elites.

Re: Who died and left the US $7B?

#546

Post by AnthonyMouse »

RHSeeger wrote: post #491
AnthonyMouse wrote: post #469

Earlier quoted context omitted.

> Yes, if you pay your taxes you will have less money. The issue is that it can cause you to have less than zero money, and be forced to sell (possibly illiquid) assets solely in order pay the tax. This is kind of a major deal, e.g. you have an asset worth $20M, but not if you have to sell it right now because it would take time to find the right buyer, so instead you're forced to sell it for $8M to the only person w…

> If you make it so the tax basis stays low so a sale would have to pay tax on 95% of the value instead of 25%, she doesn't sell, you don't even get the tax on the 25% and the tax base stays lower because she doesn't switch to the more productive investment. Eventually, someone will sell it. And, at that point, if the tax basis stays with it, all taxes that weren't payed before are payed then. Having the tax basis tr…

> Eventually, someone will sell it.

"In the long run, we are all dead." -John Maynard Keynes

"Eventually" could be a thousand years from now, or after the fall of the nation.

More to the point, compounding interest is a powerful force.

Suppose you have an asset valued at $1000 which is generating annual returns of 10%. You know of another investment that would return 11%, and also employ more people etc. If you had to immediately pay 20% of the $1000 in tax to switch to the better investment, it would take more than 20 years for the extra 1% to recover the cost, and then you might not do it. So instead you keep the original investment and in 20 years if you sell you would have (and owe tax on) ~$6700.

Whereas with a step up in basis, you could sell the investment immediately and invest the full $1000 (instead of $800) in the better investment. Then if you sell in 20 years you would have >$8000 and owe tax on >$7000. So both you and the government come out ahead when you sell in 20 years, to say nothing of the additional people you employed (and who themselves paid more taxes). Preventing that from happening is bad for everybody.

Notice also that this problem gets worse the higher you set the tax rate.

Re: Who died and left the US $7B?

#547

Post by AnthonyMouse »

arrosenberg wrote: post #475
AnthonyMouse wrote: post #456

Earlier quoted context omitted.

A perfectly valid way of reading "promote the general welfare" is as a constraint on the government, i.e. it shouldn't do anything not consistent with that premise, not that it's empowered to do anything that is. The latter would be inconsistent with the overall architecture of the constitution as setting out a government of enumerated powers. But the preamble to the constitution isn't legally binding anyway.

Even if you read it that way, it's not really a constraint. If I believe socialized healthcare improves the general welfare, then even your reading implies that it's something the government should be allowed to do. Maybe you don't think that should be it's overriding purpose, but I don't see how it constrains. If they wanted to be more specific, they could have been. > But the preamble to the constitution isn't lega…

> If I believe socialized healthcare improves the general welfare, then even your reading implies that it's something the government should be allowed to do.

It implies that it isn't something the government would be separately prohibited from doing, if they were otherwise allowed to do it.

Consider how the First Amendment works. The constitution explicitly gives Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries". But if they tried to pass a law saying that you couldn't quote a politician to demonstrate that politician's hypocrisy or mendacity as a violation of the politician's copyright in their own words, that law would be unconstitutional as a violation of the First Amendment.

A binding requirement for the government to "promote the general welfare" should likewise e.g. prohibit the government from issuing no-bid contracts to politicians' cronies for the operation of Post Offices, even though the government is explicitly authorized to operate Post Offices, because corruption doesn't promote the general welfare.

If you wanted the government to have the power to operate a healthcare system then you should have to amend the constitution to grant that power to Congress, since they didn't have it originally. Or have your socialized healthcare system(s) operated by the states.

Re: Who died and left the US $7B?

#548

Post by VirusNewbie »

hgomersall wrote: post #538
VirusNewbie wrote: post #535

Earlier quoted context omitted.

Are you seriously asking what reducing the money supply has to do with deflation?

Friedman was a charlatan and monetarism was trivially debunked when he came up with it. The 60 years since have not been any more kind to it. Don't confuse stocks with flows. The whole idea of money supply as a useful metric needs to be put to bed; one would have thought the 13 years post GFC would have made that apparent. (Of course, the Austrians have a peculiar notion that inflation can by definition only be consi…

Huh. So if I understand correctly, if we halved the money supply tomorrow, the price of everything would stay the same?

Re: Who died and left the US $7B?

#549

Post by kelseyfrog »

VirusNewbie wrote: post #548
hgomersall wrote: post #538

Earlier quoted context omitted.

Friedman was a charlatan and monetarism was trivially debunked when he came up with it. The 60 years since have not been any more kind to it. Don't confuse stocks with flows. The whole idea of money supply as a useful metric needs to be put to bed; one would have thought the 13 years post GFC would have made that apparent. (Of course, the Austrians have a peculiar notion that inflation can by definition only be consi…

Huh. So if I understand correctly, if we halved the money supply tomorrow, the price of everything would stay the same?

How would you halve the money supply?

Re: Who died and left the US $7B?

#550

Post by VirusNewbie »

kelseyfrog wrote: post #549
VirusNewbie wrote: post #548

Earlier quoted context omitted.

Huh. So if I understand correctly, if we halved the money supply tomorrow, the price of everything would stay the same?

How would you halve the money supply?

it's a thought exercise. I'm asking if you think that would the consequences be?
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