Comment by jacquesm
9 years ago
People already have a share in the GDP. That's what it is, the total domestic product, the sum of all the little parts. The problem is not that people don't have share in it (and this goes for every country, not just for the USA), but that they have a disproportionate share in it.
Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale. That will have a lot more effect than some fiction where you get to do a bunch of make-believe bookkeeping.
Of course in the current political climate this will not happen, in fact the reverse will happen, tax cuts for the rich at the expense of the poor and the middle class.
> Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale. That will have a lot more effect than some fiction where you get to do a bunch of make-believe bookkeeping.
Or go a step further do what nobody has the balls to do: tax wealth
That's what all these schemes are really trying to do, albeit in roundabout and inefficient ways. Taxing wealth has it's own complexities (unrealized gains and non-cash assets are the big ones) but it'd be saner than a negative tax (i.e. entitlement) calculated off GDP.
From the perspective of trying to get the budget balanced, taxing wealth is probably the single most efficient way to do it.
From the perspective of the tax code as an incentive system, taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy, and thereby causes fewer GDP-building things to happen! (This is also, for a similar reason, why economists don't like corporate taxes or trade tariffs: they disincentivize exactly the things that help the economy the most.)
Economists are usually more in favor of a land-value tax, because it punishes people for something that doesn't build GDP (investing their wealth into property and then sitting on it as it appreciates), and encourages them to instead do things that do build GDP (like investing their wealth into companies.) A land-value tax is still essentially a luxury tax, but it doesn't have the same problem of unilaterally discouraging GDP creation that taxing wealth does.
I think becoming wealthy is incentive enough to become wealthy. No one is going to stop trying to be wealthy just because they might get taxed for that wealth. If anything, they will just try to hide it in another state. But the argument that a wealth tax would remove any incentive to become wealthy is not very strong.
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Since a couple years back, we have a 1% tax on wealth in Colombia, which applies to anyone who has above approx. 330,000 USD in assets
I don't think it has disincentivated anybody from becoming less wealthy and/or working less. It just incentivizes tax evasion, but even that is not significant.
On the other hand, a large number of social programs have been built around this new tax. Anybody in the country could get cancer and would get free decent healthcare.
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> taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy
If we're talking about how people feel about their tax system, I think we need to talk about how a huge portion of the US misunderstands "tax brackets", and seems to think that paying more taxes when they're "bumped to a higher tax bracket" is a thing, and that there's some strategy in avoiding getting paid marginally more than some threshold. (Since tax brackets apply to marginal income, this is incorrect; you're still taxed at the lower rate for your income up to the threshold.)
This is almost certainly causing people to behave in ways that are economically irrational for themselves far more than any tax on large wealth (let's say, for the purpose of argument, $100M or more) would be. Yet there is no campaign to fix people's understanding of tax brackets so that more people feel incentivized to make more money.
If we're talking about an actual rational response to the tax system, I would much rather have $102M in the bank and get taxed on half my savings over $100M than have $99M in the bank and get taxed on half my savings over $100M.
> and thereby causes fewer GDP-building things to happen!
Why does a tax on wealth cause fewer GDP-building things to happen? The rational thing to do given a tax on wealth is to spend your extra wealth on services you're interested in, donate it to charities you support, etc., all of which seems like it increases GDP more than investing it for yourself would: it produces additional revenue for organizations, which produces jobs, which grows the economy.
I'd believe this argument for a tax on income, since it disincentivizes people from making more money, which means they're not spending that money because they didn't make it, and also they're voluntarily refusing to do profitable work they otherwise would have done. (I don't think I agree with the argument, but at least I understand how it works.)
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> From the perspective of the tax code as an incentive system, taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy, and thereby causes fewer GDP-building things to happen!
I think this is false in practice, especially with a progressive wealth tax.
Most people don't want money, they want the things money can buy... long, healthy, and generally happier lives. People that keep striving past that point are people that seek to change the world, folks like Gates or Musk. A progressive wealth tax starting at $10M wouldn't really change the incentives at play.
taxing wealth is a strange thing—it makes people feel less interest in becoming wealthy, and thereby causes fewer GDP-building things to happen!
Citation? I know it feels correct, but is it actually correct in practice? Is there any evidence that the rare person who generates enormous wealth was motivated substantially by wealth (and not a drive to build something substantial or change the world)?
At least in the case of Gates, I suspect he would have built Microsoft even with slightly more onerous (to the wealthy) tax policy.
Taxing land value is even better: not only does it not punish any economic activity, so doesn't have any dead weight cost; it actively encourages better land use, and thus might even benefit the economy.
Also land is hard to hide, and relatively easy to value. So it's really hard to evade the tax. If you are going to tax wealth, and want that to include assets like equity in private companies, you are going to have to value those assets.
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Money and power (and the accompanying freedom they bestow upon the holder) have always been their own reward. Even in Communist systems, money was just replaced by "party capital" -- even if you were poor on paper, your power will lead to your children having more power.
Multiple incentives to be wealthy -- or worse, feedback loops to ensure the children of the wealthy maintain their advantage -- are just redundant.
> From the perspective of trying to get the budget balanced, taxing wealth is probably the single most efficient way to do it.
Why? As a total layman, wouldn't it be incredibly inefficient? If we tax the wealth of, say, the top 100 richest Americans, wouldn't that cause some pretty terrible downsides? If we force them to sell their holdings, wouldn't that ripple through the economy?
Take Jeff Bezos--if you forced him to sell a significant portion of his stock, wouldn't that depress the Amazon stock price, which affects a significant number of other individuals and businesses?
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> taxing wealth is probably the single most efficient way to do it.
It's not taxing wealth so much as taxing the mechanisms that create undue inequality that would work: yes, I'm talking about taxing rental income. The number one driver preventing people from building savings is draining their income through rent.
The solution is sort of obvious, but hated by people who love the AirBnB model: https://news.ycombinator.com/item?id=14493769
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>do what nobody has the balls to do: tax wealth
Just to clarify, nobody in the US is doing this, but it's not unheard of elsewhere. For example, Norway has a wealth tax of about 0.85% and there are some other examples at https://en.wikipedia.org/wiki/Wealth_tax#Current_examples .
The drawback of taxing wealth is that it distorts markets, it discourages saving.
EDIT: Can't comment ("You're posting too fast, blah blah blah"). Here are some replies to the comments bellow:
> It's encouraging people to make their money be productive instead of stashing it under a mattress.
When you have money in the bank, you're effectively lending most of it to other people. Your money is "productive", which is encouraged by the interest.
> Everything distorts markets. The question is how to distort markets into providing the best outcome.
Neutral tax (https://en.wikipedia.org/wiki/Optimal_tax) doesn't. But of course, market distortion is not the only or primary factor in policy decision-making.
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We tax real property, which is a form of wealth taxation.
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Many top corporate executives in Norway & Sweden will evade this by "living" in Switzerland for >183 days a year.
Inflation is not deductible, so the US (and most other countries) have defacto wealth taxes to the tune of INFLATION RATE * CAPITAL GAINS TAX RATE, or roughly 0.48% annually to high earners in the USA.
It's not a matter of balls, it's a matter of understanding that the most important part of tax policy is compliance, that is actually collecting the taxes.
Even our current methods of evaluating quantities and distribution of wealth are vague estimates, and that's without people incentivized by taxation to hide or minimize it.
A wealth tax that turns into anything but a buildings-and-cars tax is a fantasy from an enforcement perspective, and significant property taxes have issues of their own.
There is an option for enforcement you're not realizing here, called the Commodore Mathew Perry method, it goes like this. --Location: Tax Havens--
>Knock Knock Its the United States
With huge boats, with guns, gunboats.
>Open your banks' records, stop having them be closed
and theres not much they can do about.
So they sign a treaty making sure their banks' records are not closed.
--------------------------------------------------------------
Inspired by this, both historically and in delivery https://youtu.be/Mh5LY4Mz15o?t=4m46s
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That's a good argument for the land value tax as primary revenue source.
We do tax wealth in a very limited way in the form of real estate property taxes. Though I would note that it hits the middle class and poor more disproportionately than the extremely wealthy. And I'd note that the tax cuts in front of congress propose making that scheme land even harder on the middle class by eliminating or curtailing the state/local tax (including property tax) exemptions from federal taxes.
Inheritance tax also taxes wealth, but it does so rarely and again the rich tend to find ways to avoid this.
The problem with many "wealth" taxes is that they end up missing the top 1% and hurting the people who are building a business.
Eg inheritance tax does a fantastic job of just screwing over family businesses that on paper are worth say $7mm+ because on paper the kids who inherit the business now owe taxes on maybe $2mm (I think the first $5mm is tax free w/ inheritance), but selling any of the business to pay the taxes would often destroy the business.
And I'm not talking about massive businesses like Walmart - I mean businesses like a large-ish family farm where just the land, equipment, animals, etc are all worth $7mm+ on paper, even if the farm doesn't produce massive profits.
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Capital gains tax + inflation is a wealth tax. Each year you have to grow your money by inflation for it to maintain buying power. 2% inflation * 20% top rate LTCG tax means the wealthy pay a deferred 0.4% wealth tax yearly.
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It'd be better to tax things we don't want, like pollution.
Massive inequality is among the things we really shouldn't want.
Massive rent-seeking, enclosures, network effects, and benefiting by public infrastructure and institutions, without paying back full costs, or by imposing dislocations on other economic sectors, as well.
Aviation accounts for 6% of transportation fuel use. For a small portion of passenger and minuscule fraction of cargo movement.
I'm persuaded that wealth taxes and maximum income are the appropriate solution: after X million per year, you don't get more money, and after you and your family heap up Y million of _fluidly defined_ assets, you get taxed on what you hold/control/manage-via-tax-shelter.
Obliterate the tax shelters, obliterate the tax havens, bring the money back home under threat of criminal law.
I'm not saying you can't be a fat cat. But at a certain point (fluid and blurry, but distinctly present), it's just morbid obesity that is squishing other citizens.
Everybody tends to put that certain point above where they are at. I realize, as limited to a US discussion, it is easy to say Bezos and Gates are rich, I am not. But if this was expanded, simply as a thought experiment, to the entire world would you be fine classified as a "fat cat"?
Assuming (perhaps incorrectly) you are in the US, you are also reading Hacker News, so you are probably the top 1% of the worlds wealthiest. Again, just a thought experiment, but would you be fine with your government saying that as a 1 percenter in world wealth you can no longer earn anymore, you have hit that certain point, are a fat cat and can grow no more wealth, under threat of criminal law?
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How can you implement such a practice when our politicians and leaders are fat cats (or aspiring fat cats)? Only vote for people below a certain wealth line?
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I like the idea of a wealth tax.
The details will be difficult: how do you assess wealth with any semblance of accuracy, especially in the face of an increased incentive to hide it? I'd love to hear anybody's clever ideas to tax wealth in a way that catches cheaters. The biggest issue is what you do with wealth held overseas.
But even if the cost of catching cheaters is many billions of dollars of enforcement apparatus, it seems worth it. Of course, you create a new problem: avoiding corruption in a large enforcement apparatus chasing after people with the resources to easily bribe them. (But this problem is not unique to wealth taxes, and I don't think bribing the IRS is actually much of a problem—people just bribe Congress.)
There's another problem: wealth taxes would probably need a constitutional amendment in the U.S. From Article I, Section 2:
"Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers..."
There's already an amendment to clarify that federal income taxes are OK. But wealth taxes will need their own amendment.
Conceptually, though, I totally agree: if the problem is unequal wealth, just redistribute the wealth directly to move toward a less catastrophe-prone distribution.
> Or go a step further do what nobody has the balls to do: tax wealth
Heard of this before. Have there been any attempts of that before and how did it fare?
It would seem to be as soon as wealth is taxed, wealth will morph or change shape to avoid being taxed. We'd end up with some new arcane tax scheme where wealth is held in a tropical island nation and the owner of the wealth gets a stipend or I don't know, rents all their possessions from that entity.
The estate tax is a tax on wealth.
It's actually a tax on wealth transfer, and it has far more favorable terms than tranferring wealth above gift limits while still living. In some sense, the entire estate process is a massive loophole that allows wealth transfer without realizing any income, but a fairly understandable one given the nature of family relationships.
Only for mortals.
Without a doubt, a global wealth tax would significantly improve the quality of life for every human on this planet; even those with the large amounts of wealth being taxed.
Only if the tax revenues are spent wisely. In the US, some 42% - 57% of the tax base goes to defense spending [1]. It's extremely arguable if that is a good way to spend such a large quantity of tax dollars. One could argue "we should elect representatives who make better spending decisions," however the defense lobby makes sure to get involved with all lawmakers. Once again it comes back to campaign finance reform as the necessary first step to straighten out the political system.
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I'd be fine with a wealth tax on a national level with restrictions on offshoring cash, but I don't want to steal wealth from everyone in the west to distribute it globally. You'd also have a very difficult time getting nations like China to agree to something like this.
Edit: sorry, wasn't aware of the exact definition of this. Having everyone pass this sort of thing is a great idea imo.
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> Or go a step further do what nobody has the balls to do: tax wealth
"Nobody?" Other countries manage it.
Any examples offhand?
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+1.
And whence the money for the share? Taxes. So this is just a UBI.
This, like all UBI proposals, seems like a way to dress up a massive tax hike: "but you'll be getting your share of GDP!". The only way to get me to like a UBI is to have UBI replace absolutely all (and I do mean all) welfare programs so that we can just haggle at every election over one headline UBI number + necessary taxes. And the initial UBI and tax rates would have to be no more burdensome than the current total of welfare it would replace, and preferably significantly less burdensome than that. Many UBI proponents, of course, would not mind this because they'll aim to ratchet up the UBI and taxes for it in a way that becomes culturally irreversible -- and that's a reason to be against UBI.
And incidentally, all instances of "soak the rich" in American history have actually been "soak those who aren't rich but have high incomes". The truly wealthy have no income as such -- instead they have capital. And why don't we just tax capital? Well, because every time it's been tried anywhere it's been a disaster for the overall economy: capital (and wealthy people) flees.
I'm ready for the downvotes, by the way.
Bragging that you are ready for downvotes is like wearing a codpiece to the beach.
Anyway, talk of UBI in the US is pretty silly when you look at how many people would rather not have the government do things like help people access health care.
Also, this is why the fantastically wealthy tend to be for increasing the income taxes: they pay none of that, but they pay those incomes, the growth of which they hope is restrained by higher marginal taxes.
Trust capitalism, but not capitalists.
There are wealth taxes in Switzerland, Norway, France, and the Netherlands, amongst others in Europe.
They've been repealed in countries like Sweden and Austria, not because they were disasters, but because exceedingly wealthy people have a lot of influence. That's the only story.
As such your claim that no such taxes exist is wrong; and your claim that they've been a disaster is also fallacious.
p.s. your "ready for downvotes" nonsense is such immature nonsense. You said an untrue thing that HN audiences wish were true, and then pretended you're being brave. You're a joke.
Can you show us a comparison of GDP growth rates, before and after wealth taxes were promulgated (and, where it happened, repealed)? Also, please, a comparison of GDP history between countries that have and lack wealth taxes.
Near as I can tell Europe has lagged way behind the U.S. in economic growth since the 1980s. I remember back in the 90s when catching up to the U.S. was stated goal of the incipient EU. How did that go? How does that relate to overall tax rates, public spending as a proportion of GDP? Are fertility rates artificially lowered by a high tax burden? Are they improved by the welfare state? Or is something else the matter with Europe?
I think "disaster" is an appropriate adjective for wealth taxes.
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Not informed enough to comment on the others, but the wealth tax in France had a massive backlash and likely impacted their economy for the worse. The mistrust of the French Government due to this is affecting their bid to replace London as the financial capital of Europe. People are very, very wary of moving there.
This idea is basically UBI couched in capitalist terms. If every American gets a share of GDP, and GDP is concentrated, then that means that either 1) the share of GDP that each person gets is tiny and inconsequential (see: GOP-style tax cuts) or else 2) you need progressive taxation.
Another difference, aside from wording/marketing, is that the UBI is implemented as a progressive redistribution of future wealth generation as opposed to a tax on existing wealth ("as the economy grows...")
> This idea is basically UBI couched in capitalist terms
"Universal Basic Income" is already a radically capitalist idea. It's often discussed using terminology borrowed from Marxism and socialism, but it couldn't be any more capitalist of a construct. We're just not used to hearing it discussed with that language.
Could you clarify what you mean? a UBI seems like pretty straight forward wealth re-distribution which I generally don't see described in most capitalist philosophies.
Everyone gets $10k. Obviously not everyone is going to pay $10k in taxes otherwise the system would be pointless and we could instead just eliminate taxes altogether. Those at the bottom would benefit, those at the top would pay more in taxes, and somewhere between is a break even point.
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It is and isnt capitalist.
There's only a limited amount of stuff at any one time. Rarity and usage can make its worth different than other things. So it makes sense to track these things. Ideally, recycling allows recoup of most or all the material, which returning should provide the credits back.
It really then matters how much credits people get and thus how much resources and where. But then again, socialism and communism never talked about personal effects - but instead it talked of the machinery to create.
What the UBI enables is a migration that everyone gets the spoils of the machines of creation. The Story of Manna by Marshall Brain discusses more of how this might be possible.
This would address one (but not all) of my fundamental complaints about UBI though: What do you do when due to some disaster, you must pull back your UBI payments? Consider significant war losses, for instance. In this case the answer is that GDP would go down and so would the payment. (Though maybe we can't tie it to GDP per se, since in a war situation you can't afford to see your GDP rise due to forced construction and then also have to pay your populace more.)
That said, it addresses it structurally, but I still think the result would still be a disastrous political explosion if that ever did happen. UBI seems to be fundamentally predicated on the idea that growth and improvement are inevitable, the only possible way that things will develop going into the future, including any structural or societal changes that may develop as a result of UBI or GDP-sharing itself, and therefore there's no need to ask who starts swinging from trees the first time that UBI or GDP-sharing has to be cut back, and what disastrous decisions will be made on the basis of not wanting to be the one swinging from trees.
The currency inflates.
If the situation lasts long enough, the standard of living falls.
Money exists to move goods around. If all the money is in one place, goods cannot move.
Money is not limited. It is an information measure of, variously, debts, or bidding rights to production. What it can bid on is limited, and how currency-denominated asset valuations change as money supply and circulation do, can also change.
But the problem in the case of a national disaster isn't that money cannot be produced. It's that those who would rely on money to address immediate needs (water, food, shelter, medical care, transport) have no bidding rights (currency, credit, grants) to transact purchases. You're balancing the interests of those outside the disaster zone (assuming there is an outside) with those in it. (Though this generally is the case.)
If the disaster is big enough, and rescue or infrastructure needs sufficiently high, those may affect national accounts and economic activity for a time, but it would take an absolutely massive shock for the impairment of raw productive capacity alone to impact the economy. Far more likely that buying power is lacking amongst a segment of the population.
And for that, money is precisely the cure.
We reduce welfare spending when times are hard. Same deal. Not a substantial argument against welfare or UBI.
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well like many other attempts to inject more government control into our lives; usually to "get back" at someone who is "unfairly benefiting/abusing/etc/etc"; those with the proposal wrap it up in a grand egalitarian wording and market only the promises that sound good but are too good to be true. to sell it they sneak in seemingly related facts that are not debatable.
the one common response they all have when their plans are revealed for what they are and comparisons made to what others have done is always the same , we will do it right this time.
it is easy to prey on the greed of anyone by simply remaking it into the person having their stuff taken as being the real greedy one.
>Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale.
I don't understand why this is something people believe needs "solved". Did you build Microsoft?
Bill Gates is part of a system that built Microsoft. The system needs to be maintained if it's going to continue to produce outcomes like that.
And... if we would prefer different outcomes?
Because a growing share of Americans are beginning to feel trapped by poverty and when masses of people feel trapped instability often follows.
Everyone, from the CEO to the custodian has an interest in people feeling there is some truth to "The American Dream." Which is not that you might get rich but that you can at least get ahead.
Did bill gates build Microsoft? He had a larger part than probably anyone, but he wouldn't even be remembered if he ran it on his own. The reason people think it's something to be solved is because for some reason our society attaches all the reasons for success, and the associated benefits, to a handful of people for enterprises that are a group endeavor
Than any one person through the lens of an authoritarian hierarchy that’s structured to reinforce the necessity of top-down rule.
In reality, all the laborers at Microsoft built it into what it is today. And it (like most companies) are at a scale of complexity that is far beyond the fiction that workers are acting out CEO’s “visions.”
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It offends my sense of fairness to see the disparity between the very small number of very, very rich and the very large number of very, very poor.
It offends my sense of "people should enjoy freedom" to see so, so many people who are very much not free because of the economic system that offers them no way out of poverty.
(And I don't believe that poor people are all choosing poverty. I've been poor, and no one wakes up to that and says "this is what I choose.")
And it offends my sense of language when people use phrases like "build Microsoft" as though it was a doghouse that someone assembled in an afternoon and sold for the cost of materials plus $50 profit. Gates no more "built" microsoft than George Washington built America, or whatever. Lots of people were involved, and even if they were compensated well, maybe they weren't compensated fairly. Profits being the unpaid wages of the working class and all...
> Did you build Microsoft?
Yes. I purchased several of their products, thereby increasing the capitalization of Microsoft.
I expect you intended the answer to be "No," implying that Bill Gates (and a few others) built Microsoft. However, that rests on a specific understanding of ownership and causality that not everyone shares.
But you did not do so out of the goodness your heart. They provided a product which provided enough utility to justify the cost. Producing such a product is where the value is created, not in the purchase of said product.
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Would Bill Gates have worked so hard (presumably) if he didn't have that specific understanding of ownership and casuality? Isn't that type of motivation and incentive necessary, to grind through the obstacles?
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>Yes. I purchased several of their products...
Which is "no". Buying and building are two different things. So I guess you were right about what I intended.
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My React todo app is just as important as Microsoft.
That's why we have money - so people can say things like "No it isn't, because if it were people would have given you billions for it."
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Currently, most [EDIT: many] people's share of the GDP is (mostly) their income from labor. Y Combinator / Sam Altman worries that increasing automation will make many people's job obsolete; merely lowering taxes on the salary of a McDonald's worker won't help if said worker will soon be unemployable.
(Whether this will actually happen is a separate topic; but there's a reason why Sam Altman doesn't just propose your tax-the-rich scheme.)
> Currently, most people's share of the GDP is (mostly) their income from labor
"Most"? According to [1] only around 50% of the US citizens do get a paycheck (155 of 322 mio). The others probably mostly are kids, senior people and housewives, but they make up a significant portion.
[1] https://data.bls.gov/timeseries/LNS12000000
The economist wrote an article on this recently discussing how the United States raises a lot of money from rich citizens compared to other countries, but redistributes relatively little of this money to poorer citizens: https://www.economist.com/news/united-states/21731642-how-am...
This article cherry-picks a lot and makes quite a few distorted comparisons. To prove the rates on rich citizens are high, they show the rate on low-income citizens in America is lower than other countries, and that the tax curves upward in the US. They use this to argue that the government could spend money differently, but if you look at the numbers in detail you might see tax burden being roughly 20% higher on the poor and roughly 30% higher on the rich in some countries with huge social services. You might also see that 20% being negligible for that poor single mom given that she spends more than that on healthcare that's instead state provided, but not going bankrupt because of broken underfunded healthcare provided by the 30% for the rich might be important for her. Or having public transit so she doesn't have to own and maintain a car on a low income job, etc. Even just using the percentage of income coming from which demographics while ignoring the services provided creates a lot of skew because for instance higher taxes on the poor replacing an insurance mandate with services might end up with the poor spending less total money for better healthcare.
What are you talking about? I suppose there's technically wiggle room because you said "raise" taxes on the rich (implying that regardless of whatever rich people pay now it should be more). But it's an absolute fiction that rich people don't pay taxes. The top income tax rate is about 43%, and the new GOP tax bill doesn't change that.
Did you know the richest 2.7% of all earners pay > 50% of all receipts collected by the government(1)?
Or that -- when asked explicitly whether the rich should pay more -- most (3/4) people, like you, say "yes", but when asked what the tax rate should be for top earners, precisely 3/4 of respondents said it should be 30% or below(2). Again, the top rate is 43% right now.
(1) http://www.pewresearch.org/fact-tank/2016/04/13/high-income-...
(2) http://www.themoneyillusion.com/?p=15005
> Or that -- when asked explicitly whether the rich should pay more -- most (3/4) people, like you, say "yes", but when asked what the tax rate should be for top earners, precisely 3/4 of respondents said it should be 30% or below(2). Again, it's 43% right now.
That's comparing a question people likely answered with a total effective income tax rate with the current nominal marginal income tax rate.
Not sure what evidence you're basing that off of. An alternative explanation would be people calling for taxes on the rich to be "raised" aren't really sure what they currently are.
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I think your idea means well but might not be in touch with the rampant abuse of subsidies given to those who qualify to receive them. Google (or similar) "ebt card abuse" and it's shameless and appalling. I'd conjecture that the aversion to the idea of being able to "lift up those" so needy is itself just skepticism at the ability to do so, given the rampant fraud. That's totally a sad conjecture to make, I must say.
> People already have a share in the GDP.
Yeah but the value of that share doesn't increase when GDP goes up. That's the difference.
> raise your taxes on the rich and lift up those that are at the lowest end
I believe that is what Sam is suggesting. With the caveat the amount of tax collected is again tied to GDP.
> Of course in the current political climate this will not happen
Which is why he is proposing a potentially more palatable variation.
Be more constructive and less defeatist please.
>>Bill Gates' (to name a random American citizen) has a far larger share in the GDP than most other Americans. If you want to solve that raise your taxes on the rich and lift up those that are at the lowest end of the scale.
The only thing you will end up achieving is stop the next Microsoft from happening, not the next Bill Gates from happening. The next Bill Gates will happen else where.
The problem literally is that many people don't have an adequate share of the GDP.
The footnote proposes to tax capital the same as labor.
An interesting thing about Bill Gates is what a tiny sliver of GDP he managed to capture over almost 40 years. Something like $0.1 trillion out of several hundred trillion dollars.
Caveats: GDP is no way to calculate wealth, and comparing the total GDP to any one person's wealth is pretty useless.
Let's say the total GDP over the last 40 years was 300 trillion dollars. Also, let's say Bill Gates's wealth is 100 billion dollars (for ease of calculation).
100B / 300T = 0.003 = .3% of 40 years of GDP
Let's say that the average population of the US during that 40 year period was 170M[0].
170M * 40 years = 6.8B person-years of work (PYoW).
Bill gates contributed 40 PYoW to the GDP, which is 0.000000059% of the GDP.
However, he captured .3% of the GDP as current wealth (not including wealth spent during that 40 years)
That means his wealth capture is 5 million times the "average".
That 'tiny sliver' is anything but.
[0] - https://fred.stlouisfed.org/series/LFWA64TTUSM647S
You are just beating on the fact that I based the comparison on the total rather than the mean GDP available to an individual.
But that was the point of my post, to compare the captured wealth to consumption. People always talk about how the wealthy are screwing the rest of us over and everything would be great if they weren't taking so much, but it turns out that consumption is also a huge portion of the economy. Total wealth in the US is on the order of $100 trillion (this includes all housing and so on). Consumption of several trillion dollars a year adds up to that pretty quick and seizing it all and turning it into circuses isn't going to go very far.
Which isn't to say I am against programs that result in wealth transfer, it just pays to try to look at things clearly.
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A single person capturing a few ten-thousandths of a percent in a country of over three hundred million people seems like a pretty large sliver to me, relatively speaking.
Oh of course, I just think people have a tendency to overlook how much of our productivity directly gets consumed.
I'm not strongly tied to the language I used, I just find the comparison interesting.
Wealth is not the same thing as income, like speed is not the same thing as distance traveled.
GDP is the national income.
Mostly agree, though I'd quibble (as did Simon Kuznets) that GDP is a poor metric for national income. The entire field of national income accounting is rather fraught.
Going back to Adam Smith, "Wealth is the annual produce and labour of the nation". Elsewhere he argues that "the sole use of money is to circulate consumable goods". As a man not given to short sentences, I recommend paying attention when he uses them.
https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_II...
Defining, and measuring, and allocating wealth has been a bit of a conundrum for the past 240+ years. And a while before by some reports.
but aren't Bill Gates' earnings mostly capital gains, and aren't capital gains not included in GDP calculations?