Comment by cloverich
7 days ago
> Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.
You can tax whoever you want as much as you want but the problem is the industries from the past are no longer in this country.
This was actually the real cause of the collapse of Zimbabwe. The tax base disappeared. People think it's just because they printed into oblivion but that's not the full picture.
in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.
My point is some industries just die. And its okay. The solution is not to go backwards, but tax the winners of the change to subsidize and retrain the people who lost.
But in America, the extreme winners have convinced the rest of us that we shouldn't tax them, and Trump is now asking us to instead tax everyone more
> in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.
> My point is some industries just die. And its okay.
You've got your example dead wrong. American farming didn't "just die," it got insanely more productive.
And a lot of the industries people want back didn't "just die," they just got moved so the "extreme winners" could profit off them even more. And then those same winners and their defenders always go "herp derp, industries gone, nothing we can do! Don't fight it, just repeat: gone foreverrrr."
Caveat
> and Trump is now asking us to instead tax everyone more
Trump is now demanding to instead tax US residents more indirectly
Sure, but the industries of the future arguably are. At least for now.
It's not like money isn't being made in the US today.
Regulations kill any and all profit on physical goods made in the US. It was more important to lift China out of poverty (Communism), kill a whole class worth of jobs and enact regulations to stifle any innovation because it’s okay if China pollutes, just not the US. It’s okay to buy goods from mega polluter China shipped on boats running on crude oil, instead of supporting Americans and American companies.
2 replies →
No, but we have new ones.
The vast majority of industries from the past are now highly automated and would be made even more so if the alternative were paying US-scale living wages to the employees.
So you bring the factories back to the US, but 95% of the created jobs are for robots.
Problem solved...?
100% this, in 2010 I briefly worked for a company that built assembly lines in the US and number one requirement for every client was reducing the number of workers needed. Almost every project going at the time reduced the number of workers by 80%+ and I imagine it's only become more automated since then.
It is absolutely wild to me that money gained from letting it sit is taxed less than money gained from working your ass off. A crime against the working class.
The system wasn't named “capitalism” because it systematically favors the working class, I mean, what do you expect?
Where in the US constitution is capitalism mentioned?
2 replies →
The working class have property and stocks too and don't want them taxed stupidly.
That's the entire reason why income tax is progressive, and there's no reason that couldn't be applied to any other implemented tax including capital gains.
Yes, but far less. We can have tax free thresholds, you know. Like the capital gains exemption for sale if a house.
Any working class person against higher and broader capital gains taxes is not thinking very deeply, in my opinion.
3 replies →
You need to enforce monopoly laws, and more important than individual tax rates, you need to get the tax base spread out correctly again.
1950: 25% tax revenue came from personal income. 25% from social security. 25% from businesses. 25% from excise taxes.
Today: 50% tax revenue from personal income. 35% from social security. 7% from business. 7% from excise taxes.
This problem is never understood.
Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
He's one economist from a very conservative line of thinking.
As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed.
As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically
I asked ChatGPT to explain the arguments of Sowell and Piketty.
https://chatgpt.com/share/67eebae2-df3c-800b-aba9-6e36c04810...
I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
> raw materials - which often have to be sourced elsewhere
Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
1 reply →
Remember when Piketty advised the government of François Hollande? They enacted the wealth tax and there was simply a ton of capital flight and nothing was fixed? Leading to Macron winning the elections and enacting a ton of conservative policies and leading to pretty decent economic growth...
2 replies →
Maybe we should raise tariffs and raise taxes on the wealthy? Does it have to be framed as an either-or?
> and much of it does not have a domestic allegory
Well some would argue that's the problem. Maybe now we will? Idk.
3 replies →
> taxation and wealth redistribution remain an effective way to bolster a societies resilience
Tangentially:
It’s wild how inconsistent the public and political reactions are to different ways of getting revenue. Take this common pattern:
When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often: "That’s only 0.01% of the federal budget. It’s nothing!"
But when someone proposes a tax on billionaires that would over time raise a similar amount suddenly the reaction flips: "We’ll solve inequality! Fund healthcare!"
This contradiction is everywhere. How can $20 billion in government savings be "nothing," while $20 billion in new tax revenue is "transformational"? It's the same money.
6 replies →
>It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
Have you ever tried to purchase electronics in Brazil? I don't know if that increased demand for domestic goods is necessarily a good thing...
Yeah, I think all of the arguments made for and against tariffs are only partly true depending on the context.
Interestingly, Lua came out of Brazil for these reasons...
> It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
But domestic producers will surely increase their prices to match their foreign competitors’ tariffed prices.
Not necessarily, if there's adequate competition and no collusion. I think of Costco's Kirkland products which have a capped profit margin, for example.
1 reply →
> And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer
How are those things related? Are poor people bribing politicians to increase taxes?
The argument is that increasing government revenue doesn't automatically mean We the People benefit; it usually means more pork and other ways of funneling money to benefit the people with the power to funnel it.
1 reply →
It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.
US homes tend to be built with lumber, not steel.
3 replies →
And? Ask Sowell if he prefers progressive taxation and welfare or rapid spikes in tariffs sparking a global trade war.
(He actually was interviewed yesterday and he was very much not a fan of the tariffs.)
Sowell would be against tariffs, he’s a free market fundamentalist.
As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.
[flagged]
No, tax increases will not create better jobs to backfill the ones moved overseas by globalization.
The tax increase wouldnt be used to create better jobs, they would be used bolster social welfare and reduce the national debt, at the expense of wealth generation in the upper class.
The primary benefit of the approach is that the pre-tarrif economy is strong, health care, high prices, and very high SFH prices are the primary ways people are hurting. Modest taxes as noted above address 2/3 without upending the economy in the process.
Prices wont come down, but unlike the tarrif plan they also wont go up so... seems like a better option at least to my relatively uninformed brain.
Increased taxes (on the wealthy) could also be used, not just to pay down debts, but to start new programs like expanding domestic production, back loans for small businesses and house construction. Heck even just 'new new deal' style jobs that build infrastructure.
Though I am partial to using new revenue to increase competition (new startups) in weakly competitive markets. That's the most effective way of increasing supply, and choice, and letting a market function.
What better jobs do you anticipate will be created?
None, as they said.