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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

#81

Post by shmolyneaux »

There is a bit more to the story than a 1% wealth being "equivalent" to a 20% income tax. The primary difference is that unrealized gains are taxed by a wealth tax. We need a mechanism for assets to be sold by the richest in society. If those with assets keep accruing more assets the median person will suffer. When we're talking about real assets (housing, retail shops, warehouses, land) we don't need to be concerned about capital flight. The assets are still there on the ground. Reducing the cost of those assets is exactly what we need to help a local economy.

That being said, the richest are effectively _not_ paying the highest marginal tax rate considering all the tax structuring they do. Claiming that they would be paying the highest income tax in the world is misleading, for one. Secondly, the richest in the world _should be_ paying the highest income tax.

Re: How to convert between wealth and income tax

#82

Post by ojbyrne »

Why choose the median state tax? The proposed wealth tax is in California, where the top tax rate is 13%. Also relevant would be Medicare (1.45% or 2.35% depending on your employment income) and presumably for billionaires, the Net Investment Income Tax, another 3.8%.

I understand why he simplifies things, but it doesn’t really jive with saying politicians don’t understand how taxes work.

I think politicians have a better understanding of taxes than Paul does, and they have a better understanding of how politics work - basically as in all things political, if you convince the majority that you’re dumping on minorities (billionaires, immigrants, trans people) you’ll do well.

Re: How to convert between wealth and income tax

#83

Post by meta_gunslinger »

ceejayoz wrote: post #76
meta_gunslinger wrote: post #59

Earlier quoted context omitted.

Easily solved, remove the power centers and then the billionaires will have no power to buy or influence with their money.

Define "easily" for us, please.

Don't hand over power to politicians, bureaucrats and NGOs. It's not rocket science to need further explanation.

Re: How to convert between wealth and income tax

#85

Post by idle_zealot »

kingstoned wrote: post #2

If you want to understand why someone would even propose taking from the rich and complain about inequality, this post titled "Inequality Talk Is About Grabbing " is illuminating: https://www.overcomingbias.com/p/inequality-is-about-grabbin...

I think your blog post is confused. People on the left are pro-taxation because they (a) think billionaires do not have superpowers, and are benefiting from some combination of systemic injustices and plain old fraud gussied up for the modern era, and (b) think superheroes actually shouldn't be allowed to have 1,000,000 times the influence over the structure of the world and its economy compared to a mundane human, even if they existed.

There isn't a level of competence or ability that shifts the answer to the morality of power. There's not an earning threshold you can cross that entitles you to own a fiefdom or a level of genius that grants you moral right to dictate how others use your inventions. We create democracy and grant everyone an equal vote in matters that impact their lives. The economy gets layered on top to allocate resources efficiently. If the economy is deciding that some people live like kings and some like serfs, then we've failed to construct an economy that lives up to liberal values.

Re: How to convert between wealth and income tax

#86

Post by klaff »

Anymore I think the question shouldn't be about some kind of economic fairness (the time value of money thing being discussed) but the idea that wealth accumulation is a disease that afflicts society. I don't think anyone should have the level of control or influence on others that having a billion dollars currently allows. If a millionaire gives $100 to a political candidate it probably doesn't require too much thought. It's impressive to note that a 10-billionaire can give $1M just as easily, and so we have a class of folks who can throw around influence, who can order a team of lawyers to do things, can employ their legion of sycophantic followers to harass people, or can threaten the employment of many people not-of-their-class because they can make decisions that threaten someone's employer's bottom line. And note that above I compared a millionaire to the 10-billionaire, but there are plenty of folks, especially around the planet, who economically live several orders of magnitude below the millionaire.

As a bit of an aside, "spending more time with family" is an often-used euphemism around someone being fired, but if you have more money than you know what to do with and you aren't using it to spend more time with those you love, then what on earth is it for?

Re: How to convert between wealth and income tax

#87

Post by newsoftheday »

loteck wrote: post #70

Isn't PG's conflation of Denmark's high income tax with a proposed wealth tax a clear flaw in his math and argument re: "the highest taxes in the world"? Why wouldn't you instead compare to other countries that also have both income and wealth taxes?

As a layman, bringing up a purely income based argument with Denmark, seemed to be an odd juxtaposition.

Re: How to convert between wealth and income tax

#88

Post by ryeats »

goyozi wrote: post #21

I don’t follow the debate and situation in the US that closely but isn’t (part of) the point of wealth tax to offset the fact that rich people are routinely avoiding paying income tax and taxes in general? Thus even if we assume the simplistic conversion here, it’s not that they’re moved from 40->60 bracket but more like <30 ?

No it's just harder to accurately tax each and every form of wealth so we proxy it by taxing income.

Re: How to convert between wealth and income tax

#89

Post by tadfisher »

kingstoned wrote: post #2

If you want to understand why someone would even propose taking from the rich and complain about inequality, this post titled "Inequality Talk Is About Grabbing " is illuminating: https://www.overcomingbias.com/p/inequality-is-about-grabbin...

That is not illuminating at all. Like, the author just imagines the premise and finds three ways to repeat it. There is no exploration into why people think inequality is unfair; the underlying assumption is that it is perfectly natural and trying to address it is hypocritical and harmful.

The other major assumption is that billionaires are rich because of something they did or are good at doing, better than anyone else could in their position. There is no challenge to this assumption in the text.

This belies a deep disconnect with reality, and an unwillingness to confront the idea that maybe excessive inequality is caused by too much concentrated power changing the rules to further concentrate power. Taxation is just one mechanism to combat this tendency; another way is the guillotine.

Re: How to convert between wealth and income tax

#90

Post by blanched »

meta_gunslinger wrote: post #83
ceejayoz wrote: post #76

Earlier quoted context omitted.

Define "easily" for us, please.

Don't hand over power to politicians, bureaucrats and NGOs. It's not rocket science to need further explanation.

Politicians, by definition, have power. How do you easily remove or withhold it?
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