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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

#541

Post by analog31 »

NoMoreNicksLeft wrote: post #357
analog31 wrote: post #249

Earlier quoted context omitted.

All of the people I mention wealth tax to give me the same two counter cases: Grandma and Elon. I think there's no reason why a wealth tax can't be progressive. Just making up numbers here, it could be zero for your first 30 million, and rise to some palpable amount for your first billion. This would protect granny from being taxed out of her house, and in fact would affect relatively few salary earners. I'm not over…

>I'm not overlooking the possibility that such a tax structure could create an effective wealth cap at some level. No, I think what that does is create an effective corporate decimation. No one has a billion in cash that I've ever heard of. When you say "tax the billionaires of their wealth" because this billionaire has $1 billion, you're talking about his shares right? Maybe in one company, maybe across many. Is he…

If someone sells the stock, someone else buys it. The value is still the net present value of future earnings. This is a redistribution of wealth, not a decimation. The wealthy can still earn more if they want to.

Re: How to convert between wealth and income tax

#542

Post by sokoloff »

topaz0 wrote: post #482
sokoloff wrote: post #428

Earlier quoted context omitted.

It’s also a practical policy. It’s far easier to know the stepped-up basis on the date of X’s death than it is to know the basis that X had in something once X is dead.

Which argues in favor of the inheritance tax mentioned. There could be other solutions too -- say, require a virtual wash trade at time of inheritance, so the capital gains from the parent's lifetime are taxed at time of death and the child gets the stepped up basis. Somewhat different than an inheritance tax, but at least not a giveaway.

The full value of the shares (original basis plus step-up [or step-down] in basis) is already part of the estate and so is already subject to the inheritance tax rules.

It's just that the exclusion amounts are fairly high, so in practice the tax owed is often $0.

Re: How to convert between wealth and income tax

#543

Post by newtonianrules »

dheera wrote: post #159
Havoc wrote: post #23

I think the assumption that we're looking for an equivalence here is fundamentally flawed and with it the entire post. For most people income is tied to selling their time. It doesn't scale at all. Unless the income comes from wealth. The societal problem here is a group with self-reinforcing run-away levels of wealth. And to counter that you do need something more extreme than this nonsensical equivalency of income…

> 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…

Yeah because the one thing the US has is a risk of being overregulated.

Re: How to convert between wealth and income tax

#544

Post by solidsnack9000 »

i_cannot_hack wrote: post #360
solidsnack9000 wrote: post #274

Earlier quoted context omitted.

I'm not sure how there is a societal problem with "run-away levels of wealth". We have societal problems around food costs, housing costs, healthcare costs, &c; but people with extreme wealth are not bidding up sandwiches, studio apartments, &c, &c. If we "solve" their wealth by taking it from them and giving it to the government, what does that help? What good is the government going to do with that? Allocating mone…

> Allocating money through the government has not been a particularly successful strategy for improving the overall standard of living. What are you even basing this assumption on? Just quickly comparing the highest ranking countries by Human Development Index with the highest government budgets per capita and the highest income tax rates would, if anything, support the opposite conclusion. https://en.wikipedia.org/w…

This is potentially a long conversation; but why would you start with rankings like this, which only go back a relatively short time?

Broadly speaking, human welfare got a lot better in the last three hundred years, due to productivity improvements that were tied to things like property rights, joint stock companies, availability of credit, &c.

We haven't really found a good alternative to it. It may seem to you that countries like Austria, &c, are doing the right thing by taking very large amounts of GDP out of the hands of private enterprise and using it "for good" instead of "for growth"; but that is just eating the seed corn. It looks good in the short term.

Re: How to convert between wealth and income tax

#545

Post by [deleted] »

adrianwaj wrote: post #533
Hnrobert42 wrote: post #526

Earlier quoted context omitted.

Transaction taxes are considered regressive. That is, they disproportionately affect the poor. The idea is that everyone must spend a certain amount of money to live. For the poor, that amount is a greater proportion of their total income and wealth. Basically, a wealthy person can choose to pay the same taxes as a poor person by only spending as much as a poor person. Maybe that's fair. Maybe it's not. But it is a c…

That's true, the only thing I can think of is an "amplification curve" being set on whatever is paid, and that can be paid by everyone after any given period based on all the flows a person was involved in during that time. So if a frugal rich person can be paying a similar amount to a poor person in overall tax looking at living expenses alone, one can also look at all the extra income the rich person gets from asse…

[deleted]

Re: How to convert between wealth and income tax

#546

Post by abletonlive »

booleanbetrayal wrote: post #507
abletonlive wrote: post #495

Earlier quoted context omitted.

> What exactly are you contributing here beyond discord? Well I'm not on here very much and don't comment very much but sure I'll give this a shot: The rejection of populist ideas that have pushed many into celebrating political violence and death. Want examples? The rejection of the vicious cycle of envy that has been brewing in these comments and other platforms like this one that is the path that directly leads to…

Is this a Peter Thiel smurf account or something? I'm going to disengage from you and whatever brand of twisted sychophantic (re: "envious") proselytism this is, now. It's boring and certainly not engendering any support for your cause. Quite the opposite. Maybe you should try to post even less, as it would do more for your cause.

Please disengage if you're not getting anything out of it. I'm sure letting random billionaires live rent-free in your head is deriving much more value for your life. It's not a rocket launch, you don't need to announce that you're disengaging.

Re: How to convert between wealth and income tax

#547

Post by adverbly »

AnimalMuppet wrote: post #146
jppope wrote: post #145

Just going to put this here to open up discussion: https://en.wikipedia.org/wiki/Georgism

Which is a tax on only one kind of wealth. Back when that was the kind that mattered most, that made sense. Today? Not so much.

Still, seems like table stakes.

Start with georgist/pigouvian taxes, and then expand to other kinds of income/wealth afterwards.

But Georgist taxes can go really far I'd imagine.

Re: How to convert between wealth and income tax

#548

Post by solidsnack9000 »

accrual wrote: post #494
solidsnack9000 wrote: post #274

Earlier quoted context omitted.

I'm not sure how there is a societal problem with "run-away levels of wealth". We have societal problems around food costs, housing costs, healthcare costs, &c; but people with extreme wealth are not bidding up sandwiches, studio apartments, &c, &c. If we "solve" their wealth by taking it from them and giving it to the government, what does that help? What good is the government going to do with that? Allocating mone…

> but people with extreme wealth are not bidding up sandwiches, studio apartments They are, though. Private equity continues to buy apartments and increase rates. States with increasing PE ownership also have increasing rates of cost-burdened renters spending more than 30% of income on rent and utilities, e.g. in Tampa, Phoenix, DFW, and Atlanta. Maybe not specific people , but the ultrawealthy nonetheless drive thes…

When a PE fund buys an apartment building, isn't that really competing with landlords, not renters? The PE fund is not living in the apartment -- they have to try to rent it out, after all.

Re: How to convert between wealth and income tax

#549

Post by solidsnack9000 »

Epa095 wrote: post #359
solidsnack9000 wrote: post #274

Earlier quoted context omitted.

I'm not sure how there is a societal problem with "run-away levels of wealth". We have societal problems around food costs, housing costs, healthcare costs, &c; but people with extreme wealth are not bidding up sandwiches, studio apartments, &c, &c. If we "solve" their wealth by taking it from them and giving it to the government, what does that help? What good is the government going to do with that? Allocating mone…

Money is votes into the economy and what it shall produce. The more money you have, the larger vote you have. Taxes are the way the government takes controll over a fraction of the votes. Then the government can use this power to make good or bad decisions. One thing which is clear is that the billionaires is not using their power over the economy to fix any of the deep fundamental problems we are facing

Consumption is a kind of voting in the economy, I suppose; but the economy is heavily geared towards making things that regular people want. How many Corollas are there for every Bugatti?

If what you're saying is true, would it be unfair of me to say that the government is not using their power over the economy to fix any of the deep fundamental problems we are facing?

Is it good policy to take people's money because they aren't doing what we think they should be doing with it?

Re: How to convert between wealth and income tax

#550

Post by solidsnack9000 »

ethbr1 wrote: post #535
HDThoreaun wrote: post #521

Earlier quoted context omitted.

Housing is only a good investment when supply is constrained. These PE firms buy housing because they see that NIMBYs are in control. As they predict rents soon begin to rise. Youve got the cause backwards

What's to stop PE from supporting NIMBYism in markets they're part of?

Nothing -- but the crazy thing is that people vote for it, not that landlords support it.
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