9 ms·

> The annual turnover for e.g. Apple stock is ~0.4%, so a 0.8%/year wealth tax would triple the number of sellers without adding any new buyers. Is that assumi

> The annual turnover for e.g. Apple stock is ~0.4%, so a 0.8%/year wealth tax would triple the number of sellers without adding any new buyers. Is that assuming the tax money is going into the void? I agree it might force roughly 0.8% of shares to be sold in a given year. But as to not adding any new buyers: no one's being forced to buy stock in the same way, but shouldn't someone be getting the money and potentially using it to buy Apple stock? Let's imagine for a second the wealth tax money is simply given to people who are below the threshold. Most of them may waste it on silly things like food and rent, but some might end up with a surplus and become investors. Same effect if say the income tax is lowered to make the wealth tax revenue-neutral. Or if say it's used to expand Medicare. It's hard to for me to imagine a way to spend taxes that doesn't help someone. Even if the money is used on war—a net destruction of value and lives—there are some people selling missiles better off a result.

roenxi 2mo ago
Although the argument does look fundamentally reasonable, I think its biggest weakness is it doesn't make an attempt to prioritise - yes taxes always make someone better off. So does wealth. A decision has to be made. Which is more valuable? We've got a highly reliable and effective system for working that out (aka the free market economy) and no alternative in 2nd place that doesn't typically lead to mass starvation because someone underestimated how much food was needed. They people benefiting from the taxes are going to be making very different allocations to the places that the capital is being drained from. The people behind wealth taxes generally handwave explaining how their system will be better at allocating than the people who make a living of allocating wealth effectively because it is all just obvious that it doesn't need to be justified. Poor people will get more money if rich people have less, duh, QED. So far no compelling cases where they've turned out to be right. If they could do a better job, why even allow private wealth at all? > Even if the money is used on war—a net destruction of value and lives—there are some people selling missiles better off a result. Case in point, there is a topical example of Trump going in to Iran like a maniac. Yes there are some people who are better off as a result who wouldn't have been. And yet we can be pretty confident that not forcing US citizens to fund the debacle would have been a better allocation of capital.
- scottlamb 2mo ago
  > The people behind wealth taxes generally handwave explaining how their system will be better at allocating than the people who make a living of allocating wealth effectively because it is all just obvious that it doesn't need to be justified. Poor people will get more money if rich people have less, duh, QED. Even your straw man version of this argument is pretty convincing to me alongside graphs showing the extent to which our inequality is growing. https://inequality.org/facts/wealth-inequality/ https://inequality.org/facts/wealth-inequality/ see the "The Top .01% Don't Pay Their Fair Share as They Hoard More Wealth" graph in particular. This is more a disagreement of values than facts, I think. Some people see the richest man's net worth go from $100B to >$1T and think he deserves that for starting these companies, and taking any of it from him is class warfare. Others think that rich people's pissing contests and lifestyles would be essentially the same if their wealth capped out at say $100B instead, we're morally obligated to use that money to try to meet Americans' basic needs, and using other's taxpayer dollars to allow him to reach those heights (see <https://en.wikipedia.org/wiki/You_didn%27t_build_that https://en.wikipedia.org/wiki/You_didn%27t_build_that>) is class warfare. High marginal income taxes (it was 91% in 1963, 70% until 1981, there's your compelling case where they turned out to be right, inequality was not growing then like it is now) or a wealth tax are not the same as Soviet style socialism. They still give an incentive for entrepreneurs, innovators, and hard workers.
  - AnthonyMouse 2mo ago
    > This is more a disagreement of values than facts, I think. It's a disagreement over policy. Increasing inequality is bad, the question is what's the best way to do something about it? There are many alternatives with better characteristics than a wealth tax, like antitrust enforcement to break up concentrated industries and lower corporate profits through increased competition, zoning reform to reduce housing costs so that ordinary people keep more of what they earn instead of paying it to banks or landlords, tax reform to remove existing advantages in the tax code for huge multinational corporations over domestic small businesses owned by ordinary people, etc. > High marginal income taxes (it was 91% in 1963, 70% until 1981, there's your compelling case where they turned out to be right, inequality was not growing then like it is now) The high marginal rates in the mid-20th century were fake. The tax code at the time had so many loopholes that nobody really paid them. When the rates were lowered in the 1980s, many of the loopholes were closed at the same time, resulting in the "federal receipts as a percent of GDP" chart looking like this: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Which is to say, you'd have trouble using that chart to even guess when it changed.
AnthonyMouse 2mo ago
> Is that assuming the tax money is going into the void? It assumes that it's going somewhere else, which, if it wasn't, would cause it to have no purpose or effect. > shouldn't someone be getting the money and potentially using it to buy Apple stock? Going from "predominantly what happens" to "it's theoretically possible occasionally" is a question of magnitude rather than direction. > Most of them may waste it on silly things like food and rent, but some might end up with a surplus and become investors. Or their spending it on food and rent results in an increase in rents, even for the people who didn't get any, which rents go in part to foreign investors who remove it from the jurisdiction, and then domestic people have even less to invest than before. Compare this to the thing where you e.g. relax zoning rules to reduce housing scarcity so that rents come down and then domestic people have that money to invest. > Same effect if say the income tax is lowered to make the wealth tax revenue-neutral. Which is to say, same problem -- you've now created a preference for spending rather than saving/investing while increasing your reliance on the taxation of saving/investing. > It's hard to for me to imagine a way to spend taxes that doesn't help someone. Even if the money is used on war—a net destruction of value and lives—there are some people selling missiles better off a result. Things have both opportunity costs and externalities. If you take a billion dollars from a company building grid battery storage whose investors would will the profits to a malaria charity then the grid burns more fossil fuels, consumers pay more for electricity, more people get malaria, the pointless war kills innocent people, those populations get pissed off and commit acts of terrorism, and the defense contractor gets a billion dollars (this is supposed to be the benefit) which it uses to bribe the government to increase the amount of bombings. This is obviously a massive overall net loss and would be better off not happening notwithstanding that the defense contractor likes it.
- scottlamb 2mo ago
  > Going from "predominantly what happens" to "it's theoretically possible occasionally" is a question of magnitude rather than direction. Okay, fair enough. I took "without adding any new buyers" literally but yes, I can imagine this creating some downward pressure on stock prices. > Or their spending it on food and rent results in an increase in rents, even for the people who didn't get any, which rents go in part to foreign investors who remove it from the jurisdiction, and then domestic people have even less to invest than before. ... Compare this to the thing where you e.g. relax zoning rules to reduce housing scarcity so that rents come down and then domestic people have that money to invest. Are these mutually exclusive? I concede that people being unable to afford rent limits rent to some extent, but it's not my preferred price control. Giving them more money that they could use on rent might make it more clear we need to make other changes, and I can live with that. > you've now created a preference for spending rather than saving/investing while increasing your reliance on the taxation of saving/investing. Yes. Is that worse than the status quo? There's a lot of spending now that should be happening and is not—people literally dying from inability to afford medical treatment. You'll probably say—just as with the rent example—that people being more able to pay will cause medical costs to increase further, and I agree that should be addressed, but again I think people being flat-out unable to afford it is not the best way to control medical spending. > [...pointless wars are a massive overall net loss...] I think you understand this, but just to be clear in case anyone was wondering: I also hate pointless wars, just was making the point that even in the stupidest use of the tax money I can imagine there's still someone getting money to buy Apple stock, even though as a whole we're worse off.
iso1631 2mo ago
> Most of them may waste it on silly things like food and rent, Which then goes to the owners. I believe this is called "trickle up economics", and unlike trickle down actually has evidence in reality.

roenxi 2mo ago

Although the argument does look fundamentally reasonable, I think its biggest weakness is it doesn't make an attempt to prioritise - yes taxes always make someone better off. So does wealth. A decision has to be made. Which is more valuable? We've got a highly reliable and effective system for working that out (aka the free market economy) and no alternative in 2nd place that doesn't typically lead to mass starvation because someone underestimated how much food was needed. They people benefiting from the taxes are going to be making very different allocations to the places that the capital is being drained from. The people behind wealth taxes generally handwave explaining how their system will be better at allocating than the people who make a living of allocating wealth effectively because it is all just obvious that it doesn't need to be justified. Poor people will get more money if rich people have less, duh, QED. So far no compelling cases where they've turned out to be right. If they could do a better job, why even allow private wealth at all? > Even if the money is used on war—a net destruction of value and lives—there are some people selling missiles better off a result. Case in point, there is a topical example of Trump going in to Iran like a maniac. Yes there are some people who are better off as a result who wouldn't have been. And yet we can be pretty confident that not forcing US citizens to fund the debacle would have been a better allocation of capital.

scottlamb 2mo ago
> The people behind wealth taxes generally handwave explaining how their system will be better at allocating than the people who make a living of allocating wealth effectively because it is all just obvious that it doesn't need to be justified. Poor people will get more money if rich people have less, duh, QED. Even your straw man version of this argument is pretty convincing to me alongside graphs showing the extent to which our inequality is growing. https://inequality.org/facts/wealth-inequality/ https://inequality.org/facts/wealth-inequality/ see the "The Top .01% Don't Pay Their Fair Share as They Hoard More Wealth" graph in particular. This is more a disagreement of values than facts, I think. Some people see the richest man's net worth go from $100B to >$1T and think he deserves that for starting these companies, and taking any of it from him is class warfare. Others think that rich people's pissing contests and lifestyles would be essentially the same if their wealth capped out at say $100B instead, we're morally obligated to use that money to try to meet Americans' basic needs, and using other's taxpayer dollars to allow him to reach those heights (see <https://en.wikipedia.org/wiki/You_didn%27t_build_that https://en.wikipedia.org/wiki/You_didn%27t_build_that>) is class warfare. High marginal income taxes (it was 91% in 1963, 70% until 1981, there's your compelling case where they turned out to be right, inequality was not growing then like it is now) or a wealth tax are not the same as Soviet style socialism. They still give an incentive for entrepreneurs, innovators, and hard workers.
- AnthonyMouse 2mo ago
  > This is more a disagreement of values than facts, I think. It's a disagreement over policy. Increasing inequality is bad, the question is what's the best way to do something about it? There are many alternatives with better characteristics than a wealth tax, like antitrust enforcement to break up concentrated industries and lower corporate profits through increased competition, zoning reform to reduce housing costs so that ordinary people keep more of what they earn instead of paying it to banks or landlords, tax reform to remove existing advantages in the tax code for huge multinational corporations over domestic small businesses owned by ordinary people, etc. > High marginal income taxes (it was 91% in 1963, 70% until 1981, there's your compelling case where they turned out to be right, inequality was not growing then like it is now) The high marginal rates in the mid-20th century were fake. The tax code at the time had so many loopholes that nobody really paid them. When the rates were lowered in the 1980s, many of the loopholes were closed at the same time, resulting in the "federal receipts as a percent of GDP" chart looking like this: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Which is to say, you'd have trouble using that chart to even guess when it changed.

AnthonyMouse 2mo ago

> Is that assuming the tax money is going into the void? It assumes that it's going somewhere else, which, if it wasn't, would cause it to have no purpose or effect. > shouldn't someone be getting the money and potentially using it to buy Apple stock? Going from "predominantly what happens" to "it's theoretically possible occasionally" is a question of magnitude rather than direction. > Most of them may waste it on silly things like food and rent, but some might end up with a surplus and become investors. Or their spending it on food and rent results in an increase in rents, even for the people who didn't get any, which rents go in part to foreign investors who remove it from the jurisdiction, and then domestic people have even less to invest than before. Compare this to the thing where you e.g. relax zoning rules to reduce housing scarcity so that rents come down and then domestic people have that money to invest. > Same effect if say the income tax is lowered to make the wealth tax revenue-neutral. Which is to say, same problem -- you've now created a preference for spending rather than saving/investing while increasing your reliance on the taxation of saving/investing. > It's hard to for me to imagine a way to spend taxes that doesn't help someone. Even if the money is used on war—a net destruction of value and lives—there are some people selling missiles better off a result. Things have both opportunity costs and externalities. If you take a billion dollars from a company building grid battery storage whose investors would will the profits to a malaria charity then the grid burns more fossil fuels, consumers pay more for electricity, more people get malaria, the pointless war kills innocent people, those populations get pissed off and commit acts of terrorism, and the defense contractor gets a billion dollars (this is supposed to be the benefit) which it uses to bribe the government to increase the amount of bombings. This is obviously a massive overall net loss and would be better off not happening notwithstanding that the defense contractor likes it.

scottlamb 2mo ago
> Going from "predominantly what happens" to "it's theoretically possible occasionally" is a question of magnitude rather than direction. Okay, fair enough. I took "without adding any new buyers" literally but yes, I can imagine this creating some downward pressure on stock prices. > Or their spending it on food and rent results in an increase in rents, even for the people who didn't get any, which rents go in part to foreign investors who remove it from the jurisdiction, and then domestic people have even less to invest than before. ... Compare this to the thing where you e.g. relax zoning rules to reduce housing scarcity so that rents come down and then domestic people have that money to invest. Are these mutually exclusive? I concede that people being unable to afford rent limits rent to some extent, but it's not my preferred price control. Giving them more money that they could use on rent might make it more clear we need to make other changes, and I can live with that. > you've now created a preference for spending rather than saving/investing while increasing your reliance on the taxation of saving/investing. Yes. Is that worse than the status quo? There's a lot of spending now that should be happening and is not—people literally dying from inability to afford medical treatment. You'll probably say—just as with the rent example—that people being more able to pay will cause medical costs to increase further, and I agree that should be addressed, but again I think people being flat-out unable to afford it is not the best way to control medical spending. > [...pointless wars are a massive overall net loss...] I think you understand this, but just to be clear in case anyone was wondering: I also hate pointless wars, just was making the point that even in the stupidest use of the tax money I can imagine there's still someone getting money to buy Apple stock, even though as a whole we're worse off.

iso1631 2mo ago

> Most of them may waste it on silly things like food and rent, Which then goes to the owners. I believe this is called "trickle up economics", and unlike trickle down actually has evidence in reality.