Hacker News Reader

Comment by vasilipupkin | Hacker News Reader

"Taxing investors less is really not what the U.S. needs now,” Saez said. “Instead, we should focus on trying to rebuild middle-class wealth” by encouraging families to save for retirement and pay down mortgages."

How do you encourage families to save for retirement? isn't a lower tax rate on investment income a way to do that?

View on HN

But how do you save for retirement when most of your income goes to expenses? It's not the tax rate on investment that keeps the middle class from investing - it's a lack of funds.

that's a different issue. To the extent that they have funds and do investing, their ability to save for retirement will be hurt by raising taxes on investment income.

Retirement accounts (401k, IRA, 403b, etc) are unaffected by taxes on investment income (capital gains, dividend payouts, etc.) Maxing out those retirement accounts (~$23.5k per person) is far more than most people save each year. So I don't think raising taxes on investment income would impact retirement much at all.

retirement accounts are exhibit A in why it's good to tax investment income at a lower rate. they are basically investment income taxed at zero.

It's hard to invest if you don't have any money, and as the article points out, investment income below $38,000 is already untaxed. Mortgage rates are a tricky lever to manipulate. Wealth redistribution (in the form of taxing capital gains / investment income more and taxing wages less, particularly middle and upper-middle class wages) is probably the only realistic way to accomplish this.

FTA “There is little empirical evidence showing that taxing investors less stimulates savings and growth,” said Emmanuel Saez, an economist at the University of California at Berkeley.

Yes. But that's because there is so little data and so many confounding variables There is little empirical evidence for everything in macroeconomics, including for Saez's claims.

Wait, did you really just say, “I acknowledge there is no evidence” immediately followed by “there is no evidence for the absence of evidence”?

If I’m not missing something you though was implicit somehow, that is some pretty remarkable logic.

There is evidence, but it's relatively weak from statistical significance point of view. This is also true of Saez's claims, such as if only we get rid of lower taxation on capital, things will improve for the 99%. I am not aware of any evidence that would support this prediction.

I don't need evidence to know that increasing return on investment stimulates investment. Some things are self-evident. I am giving the professor a D-.

Reply on news.ycombinator.com