Gates says billionaires should pay 'significantly' more taxes
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* If we want a truly flat tax, everyone would pay the exact same amount. In the U.S., that would be roughly $14,000 from each adult to cover all funding. Obviously, that's absurd.
* Or we could use the 'flat tax' (or 'equal rate') described above, where everyone pays the same rate. In the U.S., that would be very roughly a 17% tax on all income, corporate or individual.
But I don't think the 'equal rate' tax above is really equal. If you make $10,000 in a year, $1,700 is a much larger blow than $1.7 million is if you make $10 million.
* What is fair, IMHO, is equal sacrifice. It's harder to quantify, but the taxes paid by people making $10 million, or $100,000 or $10,000 should cause roughly equivalent pain. It depends on the individual's situation and we'd never do it perfectly, but maybe there is an economic theory of utility or quality of life that could be used as a proxy; maybe we should subtract necessities and calculate it based on discretionary income.
To be clear, there may be additional policies associated with a flat tax that may make a lot of sense. I'm talking purely about the "flat percentage" bit.
The only advantage it provides is a slightly less complicated calculation. But it simplifies a calculation that can be represented in a few lines of code and a single excel formula. As a trade off, it completely ignores the idea that the marginal value of money changes depending on the base. If you earn $50k another $10k has a lot more marginal value than if you're earning $500k.
It sounds good but it's terrible policy.
All the people that go on about incentive and the open market amaze me when they claim that it's a disincentive for people to work when you lose say, 50% over some high amount.
Once you have a ton of wealth, it just becomes relatively worthless to you. People with a ton of wealth don't add (significant) value except by providing that wealth to others, which then nets them even more.
We should be trying to limit the ability to just continually accrue wealth. At some point it stops serving society for an individual to have more. The incentive is gone - no one is not going to try because if they are so successful they earn over $10m say, they will not get any more.
Investments that produce positive returns are the primary mechanism by which productivity increases. Productivity gains explain almost all of the rise in standard of living experienced throughout human existence.
Centrally planned economies don't make these considerations and languish in productivity as a result.
The wealth generated should go to the investor who earned it.
>>or even automate rich people out of their jobs.
Go right ahead. Any automated tool you create that can effectively identify investment opportunities would be a enormous boon to humanity.
What you'll find as you grow more familiar with how an economy works is that investment is a dynamic, ever-changing process, and individual initiative and enterprise is always necessary to make it happen.
Many people make the mistake you're making now, of taking for granted the process of managing and allocating capital, because they don't understand how enormously complex the task is.
As for efficiency, you're overestimating how efficient political establishments can be in comparison. Just because a plan calls for the government to act efficiently, in the interest of the public, doesn't mean that this is what actually happens.
All of the tendencies toward waste and corruption seen in the market are manifested in politically appointed institutions as well. Private sector investment has been demonstrated to be the best way to increase productivity, and to be far more effective than politically directed management of economic assets.
It’s not fair that I should pay 30% tax on my minimum wage part-time Algebra tutoring job just because my software internship earlier in the year had a high salary. And yes, it did serve as a disincentive to work and I quit that job and the students had to make do with what I assume was a marginally worse tutor at the same price.
Similarly it’s unfair that if I do a three month software contract and then go off to Mexico to surf for the rest of the year, I pay the same low tax rate as someone who works hard all year to make the same amount and has to pay high cost of living in the US the entire time.
If you pay an employee that's a payment/purchase, if you buy food that's a payment/purchase, if you put money in an investment the broker fee is taxed, and when you get money back the increase is taxed.
When you buy a home, plane, apartment, land, car, all taxed at the same rate of 10% or so... (whatever is decided).
Since GBI would help lift a lot of people up, more people could then afford the sales tax. PErhaps we could also have a tax discount card which basically just proves U.S. citizenship so travelers to America essentially pay a 'tarriff' for being in the country. Instead of kicking out illegals then - they'd simply be paying more for groceries and not getting GBI because they're not citizens.
Obviously there's room here for discussion on what should/shouldn't be considered a purchase/sale and what not, but it needs to also possibly grab more from the rich, for instance maybe every dollar put into an offshore account is taxed at some rate, or maybe have also a 3% tax on a person's total net worth over 100k.
All existing taxes are eliminated and replaced by a sales tax. The tax rate can optionally be set differently per product category (e.g. you could set the tax rate on public transit tickets to zero as a subsidy, or impose a higher tax rate on cigarettes as a deterrent).
Then, crucially, the tax rate of a company depends on the ratio of employees and revenue. For example [1], if you have 5 employees per 1m € revenue, that's not enough and your tax rate will be high. Astronomically high, actually. Maybe 200%. No one in their right mind would want to pay these tax rates. So they have to put more people on the payrool. Once they have, say, 7 employees per million € in revenue, the tax rate moves down to a reasonable level.
So the idea is that employees are tax-deductible (to a certain point). The obvious criticism is that some companies (esp. tech companies) need way less employees than others. Should they employ tons of useless workers? No. Instead, they shall employ people that don't actually work for them. Since you don't have to obey labor protection laws for these, you can also employ children, students, retirees etc. The wages of those people constitute a basic income.
There are some rules for tax-deductible employee to prevent the obvious attacks:
- An employee can only be deducted by at most one company at any time. (They can work for other companies, but not be deducted.)
- An employee must earn a minimum wage (depending on hours worked) to be deductible. In the example calculation [1], the monthly minimum wages were set to 1000€ for absent employees, 2000€ for part-time employees <= 20h, and 3000€ for full-time employees <= 40h. (Salaries are not taxed in this model, only sales, so gross salary = net salary.)
To boost entrepreneurship, all companies with less than 250k € revenue do not have to deduct employees; they get the lowest sales tax automatically. This means that you can earn a basic income as an absent employee for a big company, while working in your own one-man business full-time.
All in all, taxes in this model are much lower for individuals (who pay no taxes at all), and also for small and medium-sized companies. Only large enterprises pay much more taxes since there are (hopefully) no loopholes. The entire tax code fits one a single page of paper (except for the table of tax rates, if you're doing different tax rates per industry).
Also, most of the social state can be abolished. Most money transfers are more than replaced by the 1000€ income for absent employees (compared to currently ~250-300€ child benefit, up to 600€ student benefit, 800€ minimum pension, etc.). Only small groups of people (e.g. physically or mentally disabled people) would still need to be subsidized in addition to the 1000€ income. Furthermore, the creator of the model [1] also calls for a tax-based universal health insurance.
The big question mark, as always with UBI schemes, is whether cost of living would adjust upwards to eat up the basic income.
[1] The economist who proposed the model is German, so his examples are based on German salaries, cost of living, etc.
Source: http://www.bandbreitenmodell.de
+$10,000 for a broke person is entirely different from +$10,000 for a billionaire...
I strongly agree, if it could be implemented effectively. My completely uneducated guess is that it would be difficult to obtain reliable reporting of all wealth, and that income is easier to obtain information about because it involves financial transactions, often involving banks or large corporate entities.
Taxing wealth would have other advantages. For example, a wealthy person could predict their tax liability years in advance and integrate that into financial planning. Also, I think it might avoid the claimed disincentive of high income tax rates for wealthy people: Your incentive to earn is undiminished because you'll keep 90% of the money.
In the U.S., as far as I know, there is around $85 trillion in wealth and total government budgets are around $4 trillion. On that basis, the average wealth tax rate would be under 5% per year.
Is a flat amount unjust or just impractical? I'm not proposing we go to flat-amount tax. I'm just considering one question and nothing else: what would be just?
A flat amount seems more just to me. Is tax not to pay for services rendered? Did a millionaire really use ten times the government services that a middle-class person did? Or take a milder example. Jim is a computer programmer, making $100,000 a year; Joe is a carpenter, making $50,000 a year. Jim pays twice as many dollars in taxes as Joe. Does Jim really use twice the government resources that Joe does?
There will be some people who can't pay any tax, no matter how small, because they're out of a job or whatever. Sure, the government can decide to forgive the debt based on certain circumstances. But that's different than saying you never owed it.
Is a variable tax expedient? Yes. Could we afford to run even a sliver of our current government with a fixed tax? No, but before the Civil War the United States had no federal income tax at all.
Again, I'm not advocating it, just trying to understand.
A millionaire almost definitely used way more government services than a middle-class person. Rich people become rich because of many things, but one large part of that is the government and infrastructural services provided for all people that gave them the money in the first place. A government is not a company with services rendered.
Adam Smith said "To ensure its wealth, the government would regulate trade and maintain a strong government control over the economy"
They provide services to level the playing field and keep companies and individuals from growing out of control.
Thank you for responding.
Can you give some examples? I'm having a hard time picturing it. And is it not at least partly paid for by (1) sales tax, (2) corporate tax, (3) the jobs and products they brought about?
And the milder example seems easier to think about, someone making $100,000 versus another making $50,000.
> A government is not a company with services rendered
Can you please go into this a bit more?
For example the first $5000 of income would not be taxed.
Someone who earns 10k would pay $850 which is a 8.5% effective tax rate. Someone who earns 20k would pay $2100 which is a 10.5% effective tax rate.
So the minimum wage worker as 70% less buying power than me: making it fair that I contribute more. We look at taxes of our salary like "you can't take 30% of my pay! I work hard!" instead of "I'm going to make a contribution to the society I live in by a fair percentage". If we saw our tax bills and payslips this way, and talked about it to our kids and in the media like this, we'd all feel a lot kinder towards what we would consider as giving.
Maybe technology will allow future transparent societies to be governed with full transparency and this will come to pass.
* (This presumes a fair society without corruption, which I'm aware many of us do not live in)
I don't think you can assume that it's fair based only on the income. Maybe their job is useless or even harmful to society while yours is useful and helpful.
> we'd all feel a lot kinder towards what we would consider as giving.
Giving implies that it's voluntary. It's not.
I think it's completely correct that income reflects this.
>Giving implies that it's voluntary. It's not.
A transparent society can show that sharing a fair portion of your income has a greater benefit to you than keeping it to yourself.
The point of my original comment is that it would be something I hope to see, where society moves in the direction of seeing sharing a portion of income with your community/country as giving, rather than as a tax to be taken. Your statement confirms that taxes are currently completely unwanted.
Not at all. Many (non-criminal) scammers probably make more than the two of us combined, and their value to society is most likely negative. It's actually pretty easy to come up with examples of professions that are harmful to society but still have very good incomes due to one or more of the following:
- Their societal costs are externalities - They abuse political power to get unfairly rewarded - They make their income by taking money in small slices from other people in a way that people don't care much (lots of payment providers/intermediaries do this) or by scamming people.
> Your statement confirms that taxes are currently completely unwanted.
I didn't comment on whether it is wanted, only on whether it is voluntary.
"More people use the internet in China than in the US" - whether that's true depends on the interpretation of "more". This is intolerable and everyone with a mathematical background should strive to be clear on which "more" they are using.
He is arguing for a relative more, the starting point at which is specified as the current state.
1. more in absolute terms (which they already pay due to higher income) 2. more in relative terms (progressive taxes) 3. more than now (what you claim).
I don't that it's clear what he means in in the story, though. It could easily be taken to mean "yes, we pay more, and we should pay more (than others) so I don't support the republican plan!". Your interpretation is also valid - "the rich should pay more (than we do now)".
https://www.cnn.com/2018/02/18/politics/bill-gates-taxes-cnn...
"I need to pay higher taxes," Gates, who is worth over $90 billion, said in an interview with CNN's Fareed Zakaria on Sunday. "I've paid more taxes, over $10 billion, than anyone else, but the government should require the people in my position to pay significantly higher taxes," he said.
That first sentence sort of simplifies the interpretation.
I was comfortable eliminating 1 based on it being part of a well established status quo. An article about Bill Gates having expressing that opinion would have me pinching myself. And, 3 umbrellas 2.
When we start in this state:
rich pay 10% on the margin poor pay 2%
And then cut all tax brackets by 1% absolute (to 9% and 1%)
This can be portrayed as both "most gains from the cuts go to the rich (because we were super progressive initially!)", and "poor get relative 50% cut, rich 10% (at the margin)". Anyway, I just am trying to guard against future misinterpretation and mixing up of absolute/relative terms.
It is about equal opportunity and a certain type of freedom yes. But all this is to serve the purpose of individuals proving to the world, others, and themselves that they are better and so deserve more.
The pursuit of happiness is the freedom to be better. And better cannot exist when all is equal. Heroes require villains. Light creates dark.
The self actualization narrative then is too tightly bound to the domination narrative. And domination always requires domination of humans. Attempts to humanize it by dominating instead some aspect of the world fail because we can do easily dehumanize others.
It's not that this narrative is good or bad, it just is. And it is also losing resonance with the wider world. It only works when the self-actualized has some sort of moral high ground or other advantage.
The taxes described here attack the resulting pattern of a run amock narrative but don't actually weaken it. It may actually strengthen it as it provokes a reflex response.
Extra bonus you can get rid of many loophole taxes (like Capital Gains and Inheritance taxes) since these feel unfair to take on a single year basis.
I get that a government shouldn't have infinite capacity to "milk" someone for free. But why should anyone be given infinite capacity to milk society? When you make 1000x more than you would ever need to live a fulfilling life while multitudes are impoverished, you need to pay taxes so society can build the next successful generation of people. When you stumble upon the ladder to the top, leave the ladder so others can follow, don't pull it up with you.
to a foundation which he controls. its how the ultra-wealthy preserve their wealth, its pretty standard issue.
They're not "preserving" his wealth in any way whatsoever
It's the opposite; it would be easier for people to catch up. By providing more funding for health, housing, and education, more people would have the opportunity to become wealthy themselves, and to do great things for society. How many potentially great developers are lost in awful educational systems, for example? The U.S. is supposed to be land of opportunity, where the belief is that anyone can thrive given liberty and opportunity, and that talent does not depend on the wealth of your parents. Right now, college education is determined, more than anything else, by parental wealth or income.
If you mean that it's harder for other billionaires to catch him, it's kind to consider their welfare. But as Gates would pay more tax than the other billionaires, they would catch up to him.
To offer an alternative interpretation, I’ve always seen the “American Dream” as opportunity to improve your position in life, rather than creating an entirely-level playing field for all. The latter experiment has been attempted many times in the 20th century in many nations, and the results have not been encouraging, to say the least.
Besides wealth-of-money, many kids benefit from parents with wealth of character, intelligence, wisdom, and even love; the importance of these cannot be understated.
I agree, of course, that wealth has never been more important in determining one’s ability to receive a good education, and that is a major problem. One solution could be to increase funding for public schools... but I am rapidly losing faith in the results they deliver. The most disadvantaged people are priced-out of the market for private schools, and the same can be said for many in the middle-class.
There is also a fundamental problem at play: those not suited for academia, but have much value to offer society, are always going to slip through the cracks under the “must-be-college-educated” paradigm. I want plenty of low-skilled jobs with a reasonable wage available for those who just want an income, while they tinker away at their genius invention in the evening, for example.
I don't see how not having at least a modicum of financial safety net could possibly be considered 'living the American dream'..
The American dream is just that - for most people it's just a dream, something to hope for but never achieve.
This is why I'm generally in favour of policies that create jobs, as the welfare system has utterly failed in creating upward-mobility for those in need and their progeny. (Edit: it's worth nothing that many charitable organisations do incredible work, with more cents of the dollars donated reaching those in need that gov. programs).
This is based on my presupposition that those people could, and would, thrive in an environment with more opportunities for work.
Edit: the downvote heat for non-socialist perspectives on HN is unreal. Simply unreal.
Well, I was just reading the wise words of chairman dang yesterday, that everyone on here feels they're in a minority in every way. It's always surprising to read comments such as yours are for me; they reveal similar feelings in everyone.
Maybe the downvoting wasn't, as you assumed, for the 'non-socialist perspective'-ness of what you said, but the way you said it, or something else? I've noticed people are often wrong, or seem to be, about what caused the downvoting, when they reveal what they assume the reason is. Well, maybe they're not 2 separate things - the veiled assumptions coming out in the prose, and the assumptions coming out in the voting complaints.
This rule does not apply to political discussion, however.
If someone is incorrect, or there is a disagreement, the community will usually offer a correction, or open the topic for discussion. They will directly offer a rebuttal to what has been said in a manner that it beneficial. This, I believe, is what makes HN the great place that it is.
Again, this rule does not appear apply to political discussion.
I agree that the HN community runs the gamut of political views. I made no claim to the contrary. My observation is that I consistently see comments that meet the "HN Standard" of reasonable discourse being down-voted, and this practice appears to apply overwhelmingly to criticism of central-planning by the federal government.
I find your comment to be needlessly mocking, and I cannot make sense of your attempt to fudge the definition of "socialism" as "things I don't like".
I guess one example of what I was talking about is your phrase: "your attempt to fudge the definition of "socialism"".
That's a rather inaccurate, poisonous misrepresentation of what I said and was doing, it seems to me. Yet you say it like it's the plainest fact, and maybe you believe it is. It's snarky. It's not assuming good faith. It's pure downvote material.
I was describing how it seems to me the word is used in the US nowadays. Or as I said, even more carefully, how it "seems nowadays to usually be used". I don't hear much news at all, less from the US, but a fair bit of that (before Trump anyway) has been hysteria about purported socialism, and e.g. any policy or intention Obama had that the far-right didn't like, described as such. It's laughable—at best, The Worst Argument In The World[0].
I likewise can't make any sense of how you thought I was trying to 'fudge the definition' of a word, if I understand what you meant by that. And I can't see which part of what I wrote was 'mocking', at all. The 'hahaha' at the beginning, if you were referring to that, was me laughing - I actually physically laughed like that, it was a record of that.
But I really appreciate the effort put into the rest of what you wrote, thanks.
not for lack of funding. taxing the shit out of billionaires isnt going to fix the structural problems that make the schools a poor environment for developing young minds.
>But as Gates would pay more tax than the other billionaires, they would catch up to him.
thats not really how progressive tax rates work. if he is paying more taxes under the same system he still has more after taxes. of course since he pledged to "give it way" then I guess theres nothing to tax?
It's going to be hard to fix those problems without taxing them. I'd say the right to an education trumps the right to have a billion dollars.
its going to be hard to fix those problems if your only tool is "even more of some rich guy's money". there are structural problems, these schools have enough money to pay administrative staff into the 6 figures. theres no accountability as to the outcomes. its not a lack of funding. its a systemic problem.
Debt and un-funded liabilities are staggering, and it’s politically unviable to implement plans to reduce that (although lip-service is paid), IMO.
I’d like to hear more about how those taxes would be spent.
How it should be is just covering the cost of a moving-average window for the previous x amount of years of spending mapping according to a integration across income.
It's nonsensically inefficient to debate on taxation without consideration of spending, and vice versa.
In principle, I like the concept of anchoring taxation to spending, because it could mitigate the political viability of spending what we don't have by making the pain immediate.
How would you integrate welfare, tax-credits, healthcare, and other federally-funded entitlements into this solution? How can we avoid a large (well, larger) schism between these groups, in the short-term, keeping in mind that we obviously want to increase mobility from that group into the tax-paying group?
Welfare, tax credits, and healthcare (outside of Medicare) is all spending, paid for by the general fund. The proposal is to automatically adjust taxes to match.
There is much evidence to suggest that it is, under current circumstances, extremely difficult for those on welfare to move back into gainful employment, especially across inter-generational timescales.
Without ever-increasing growth in the economy (a requirement much-derided by detractors of the free-market system), the liabilities would grow more expensive over time; as would taxes; as would the population reliant on said-entitlements. And with less people having disposable income, that would lead to even-less growth, right?
I understand that such analysis is, in general, anathema to the HN audience, but I'd love to hear some solutions to that riddle.
No, it shouldn't. If you wanted to target a balanced budget that wouldn't work, and I don't know why you would want to target perpetual deficits as a locked-in rule.
> It's nonsensically inefficient to debate on taxation without consideration of spending, and vice versa.
Whether or not a bill included mandates on both sides, IME, it's very rare for either spending it taxed to be debated without consideration (even if the quality is poor) of the other.