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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

#701

Post by AnthonyMouse »

greedo wrote: post #663
AnthonyMouse wrote: post #624

Earlier quoted context omitted.

This is what parrots continuously say while ignoring that the original problem was that in the existing system they not only don't pay taxes on the money they don't spend, they don't even pay taxes on the money they do spend, because they can borrow what they want to spend instead of using taxable income and then defer capital gains or keep assets in shell corporations. Getting from that to where they at least pay th…

Yes, getting them to pay "something" is a good goal, but if it hurts people who are financially vulnerable is non-optimal.

We already know how to solve that one though. You now have corporations and billionaires actually paying the consumption tax along with everyone else, so you take that money and use it for a UBI, which causes the effective rates on lower income people to be much lower or even negative even though everyone is still paying a uniform marginal rate.

Re: How to convert between wealth and income tax

#702

Post by AnthonyMouse »

Manuel_D wrote: post #656
AnthonyMouse wrote: post #622

Earlier quoted context omitted.

> Most high end private planes are the same models as regional jets (e.g. Embraer ERJ line), so a tax on them would still be mostly impacting normal folks' plane tickets. Planes are the things airlines buy, not the things economy passengers buy. If you're conceding that taxes corporations pay get passed on to consumers then what does that imply about corporate income tax? Also, poor people don't generally buy a lot o…

Correct, corporate tax rates are generally regressive in their effect. Building jets and houses creates jobs though. A more likely outcome of a consumption tax is that wealthy people simply spend less.

> Correct, corporate tax rates are generally regressive in their effect.

Corporations can be shell companies. Whatever rate or tax you want to be applied to "the rich" has to be at least that high on corporations or "the rich" would just put their money inside a corporation and pay the lower tax. So it turns out all taxes are "regressive" at which point you might as well use the the simple, uniform, less distortionary ones (e.g. VAT) and then achieve different effective rates via transfer payments, the most efficient of which is a UBI.

> Building jets and houses creates jobs though.

That's assuming they're building houses instead of buying up the existing stock while restrictive zoning prevents more from being built. Moreover, jobs building private jets or satisfying other hedonistic consumption are less helpful than jobs building battery factories or growing food, even if they did employ the same number of people.

> A more likely outcome of a consumption tax is that wealthy people simply spend less.

The reason wealthy people don't spend most of their income is that they already buy whatever they want and then still have money left over. Bill Gates isn't going to buy an economy car instead of a luxury car over a sales tax.

Re: How to convert between wealth and income tax

#703

Post by credit_guy »

mannanj wrote: post #688
credit_guy wrote: post #678

Earlier quoted context omitted.

This is wishful thinking. Billionaires can vote with their feet, or can pay expensive lawyers and accountants to find all the possible loopholes to not pay those taxes. California wants to tax Elon Musk for his trillion dollars. But how much of that trillion dollars was generated in California? He has a very valid claim that a lot of it was generated in Texas, and he'll go all the way to the Supreme Court with that.…

It's wishful to ask the system designed for a goal, to do the goal?

Exactly. You can ask many things, like you can ask for world peace, and you can ask for universal brotherly love. If the ask has no chance to result in the outcome you desire, it's purely wishful thinking.

It feels to me you are asking "why can't we just eliminate billionaires". Well, they have a vote in that decision.

Re: How to convert between wealth and income tax

#704

Post by refurb »

WaxProlix wrote: post #662
refurb wrote: post #627

Earlier quoted context omitted.

This isn’t true. Plenty of landlords don’t cover their monthly expenses for providing the housing.

In what sense are landlords "providing" housing? Is there an argument around like, stabilizing a demand floor for new construction or something, or is this one of those weird in-group terms that cover over what might otherwise be seen as a relationship of power or dominance? Either way, if I rent out my house and pull in $5k/mo but spend $2k/mo on principal, $2k/mo on interest, and $1.5k/mo on miscellaneous costs, th…

Providing housing is exactly how the word is defined - giving something - in this case a place to live.

Go and ask all the landlords in Toronto how the finances are working out.

Tons of landlords were cash flow negative against fully loaded costs. Then the market flipped and house prices dropped 30%.

Now they’re shelling out $2000 of their own cash per month, gaining $500 in equity, while they pay down a $700,000 mortgage on a home worth $500,000.

Re: How to convert between wealth and income tax

#705

Post by ethbr1 »

roenxi wrote: post #683
ethbr1 wrote: post #647

Earlier quoted context omitted.

By using progressive taxes, either wealth or income, those who benefited from the current system get to keep some of those excess benefits, while keeping less than they would under a no tax system.

No, I mean real resources as in tangible ones. Although in this case I'd also be interested in redirected labour even though that isn't really a tangible asset. Like if you were explaining to someone who didn't speak english and you had to point at the things that the wealthy control that you want to tax away from them, what real objects do you point at? [0] https://en.wikipedia.org/wiki/Resource#Tangible_versus_inta…

Why does tangible vs intangible matter?

For the last ~3000 years of human history, wealth has been liquid via some form of money.

Re: How to convert between wealth and income tax

#706

Post by ethbr1 »

Nasrudith wrote: post #685
ethbr1 wrote: post #520

Earlier quoted context omitted.

> 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 ing…

Excess profit is a stupid fairy tale told by the bearded idiot. It is literally impossible to not retroactively 'exploit' somebody. Not just in the practical 'need to know what the end user will do with it to avoid them making an excess profit' but if the value changes over time they need to somehow predict that perfectly or else be guilty of exploitation. The notion itself always assumes that the capitalist should g…

The "excess" in "excess profits" means profits greater than what a fully-competitive, perfect market would allow.

No one would be paying Apple or Google 30% of their revenue if there were infinite alternative app distribution options.

The essence of post-capitalism is that a lack of market intervention allows monopolies to not just grow (probably fine in limited niches with regulatory bounds) but also to rent seek without investing and adding value.

So yes, profit is a motivational force that has outperformed all others to date in aligning individual action with market desires.

But the excess profit era the US has been sliding towards for decades is not a free market.

When was the last time a large corporation was forcibly broken up?

Re: How to convert between wealth and income tax

#707

Post by smallmancontrov »

zozbot234 wrote: post #270
_DeadFred_ wrote: post #204

Earlier quoted context omitted.

What percentage of increased productivity has gone back to the workers as increased financial health during the last say 20 years? Not increased wages. Their increase in end of day actual financial health versus end of day increase in actual financial health of the owning class? Not some Peter/Paul highlighting Peter 'wages have gone up' while ignoring any stealing from Paul 'actual financial health' has gone down me…

People at the bottom end of the income scale are sharply deterred from holding any meaningful amounts of savings, because this can exclude them from 'means tested' benefits. This is effectively a disguised ~100% "wealth tax" that hits many among the most heavily disadvantaged and marginalized. We're essentially telling people that they have to be living literally hand-to-mouth before they're deemed to deserve any kin…

The party that abhors wealth taxes for billionaires is the same one that lobbies them into place for the poor.

Re: How to convert between wealth and income tax

#708

Post by WaxProlix »

refurb wrote: post #704
WaxProlix wrote: post #662

Earlier quoted context omitted.

In what sense are landlords "providing" housing? Is there an argument around like, stabilizing a demand floor for new construction or something, or is this one of those weird in-group terms that cover over what might otherwise be seen as a relationship of power or dominance? Either way, if I rent out my house and pull in $5k/mo but spend $2k/mo on principal, $2k/mo on interest, and $1.5k/mo on miscellaneous costs, th…

Providing housing is exactly how the word is defined - giving something - in this case a place to live. Go and ask all the landlords in Toronto how the finances are working out. Tons of landlords were cash flow negative against fully loaded costs. Then the market flipped and house prices dropped 30%. Now they’re shelling out $2000 of their own cash per month, gaining $500 in equity, while they pay down a $700,000 mor…

This sounds like an investment that didn't pan out - I've had one or two of those myself, never pleasant. But are they providing housing? I guess in my mind the builders, equity incentive assistors, re-zoning advocates, etc might be 'providing housing'. How is a landlord providing housing?

Re: How to convert between wealth and income tax

#709

Post by Ensorceled »

AnthonyMouse wrote: post #333
Ensorceled wrote: post #314

Earlier quoted context omitted.

I've never seen a wealth tax proposal where "wealth" was defined as ~400K in assets. They tend to start in the millions with generous carve outs for IRAs and primary residences.

See reply to the sister comment posted earlier than yours and saying the same thing.

What is the point of this reply?

Re: How to convert between wealth and income tax

#710

Post by anon291 »

mbgerring wrote: post #690
anon291 wrote: post #654

Earlier quoted context omitted.

Im building more homes in a market lacking homes where no outside group wants to invest. If you're building more homes on your property, by all means. No one is though and people are being priced out.

Just to be clear: you think you deserve a tax break for becoming a for-profit landlord? Isn’t the money you’re going to make by renting the homes sufficient incentive? Why should you also get a tax break?

Wasn't planning on being a landlord and no... I think my tax treatment should count income in the traditional way.
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