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Comment by ansible | Hacker News Reader

People in general are hugely sensitive to perceived unfairness. This is a critical thing to maintain in any organization.

For example, you can take a group of five billionaires. Give the first four a little tax break for something, which totals up to only be a million each. No big deal, right? All these people are the 1% of the 1% of the 1%, the pinnacle of wealth in the world. There's no way that little tax break would prevent the 5th billionaire from buying the private island he always wanted, or whatever.

In practice, though, that 5th billionaire will be pissed he didn't also get the tax break. He will spend a lot of time either angry at the situation, or spending that time also trying to get a tax break. Is that a good use of his time? He would be happier driving around on his 80ft yacht... if he could focus on that instead. But that's not how our brains are wired.

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It's not just humans. This behavior seems to go pretty deep: https://phys.org/news/2017-02-animals-unfairly-dont.html

The cool thing is that cheat detection/unfairness detection seems to happen at the semantic level of reasoning. You can see this with kids - one example I recall is a friend's 5 year old being upset at seeing another kid with ice cream. $Parent said it was that kid's birthday (who knows), and her kid immediately got over it.

So if only billionaires were human, we could just suggest their semantic categories were wrong. <rimshot>

Maybe something about a previous life?

I'm fairly sure "it's their birthday, so they get a tax break" won't work.

Are we sure? Maybe no one has tried yet...

The monkey experiment:

https://www.youtube.com/watch?v=meiU6TxysCg&t=71

> He will spend a lot of time either angry at the situation, or spending that time also trying to get a tax break.

It is a good financial decision to spend up to "$1M * <odds of success>" to get that tax break, or another better one. (especially if the ~$500K spent on retainered-lawyers sets you up to pay less due to future tax hikes.) Economics gets weird when any of the numbers get really big, or really small.

I don't like this example though, as it doesn't detail why the tax break was so specific. Did 4/5 of them have no taxable income that year? Do all of these billionaires live in a despotic-shithole where the rule of law doesn't apply equally to everyone? (to be fair, most billionaires do. /s)

It's a good financial decision for a business that is supposed to maximise profit for shareholders or employees or something.

But this example is not about that. First to answer your last question, it's the despotic shithole kind. The point being, the reason is completely arbitrary.

This is about a billionaire who can already buy whatever they want, regardless of said tax break. It won't make them directly happier because it doesn't allow them to buy anything they couldn't otherwise buy.

The point of the example is that given this is the case, we still have a built in biological desire for "fairness" and if this billionaire would realise and observe this desire having no logical basis, they would not fight it. (assume fighting it is not as enjoyable to spend their limited life time as they could be doing something else with the money they already have)

In an analogous situation, five people go to a fancy restaurant and for some reason four of them get 10 plates of food, and one gets 9 plates of food. Assume the restaurant is so generous one person can't possibly eat more than 2 plates anyway.

Why is it easier to imagine simply not making a big deal out of it and enjoying your meal(s), in this situation?

(Especially considering that the meal example is 100x more unfair)

While I agree this is common human nature, 1) you seem to be speculating about billionaires without actual evidence, even anecdotal, and 2) individuals differ - some may have the maturity and perspective not to worry about it.

However, in support of your point, while Bill Gates and Warren Buffett both say billionaires and other "better off" people should pay more taxes, to my knowledge, they haven't been unilaterally sending checks to the government for the difference between current taxes and their ideal amount. They seem to believe that their private foundation can make better use of their excess money than the government can. They're willing to advocate additional taxes for groups, rather than just for themselves.

Let's replace the term "billionaires" with "rational actors" then

"emotional actors"

What kind of idiot pays more than they owe in taxes? I'm sure you don't either.

I don't know why some people seem to expect that of billionaires. It's not rational behavior for them or anyone else, so why do you think they should be behaving that way.

I've seen this more than a couple times in HN comments and it always befuddled me.

marginal utility is much higher for the government (and the public) than for you

I think that statement is backwards.

Are you asserting that the government (and the public) will get more utility (benefit) from the extra 1 dollar on its $2.7 billion budget (increase of .000 000 04 percent), than I would from the extra dollar in my net annual income (on the order of a thousandth of a percent)?

That's a pretty incredible contention.

On a per-dollar basis, you indeed get more marginal utility from the extra dollar than the government would.

But on a percentage basis (in a progressive taxation scheme, and especially in the higher tax brackets) the government gets more marginal utility from a 1% tax increase than you would from a 1% tax break.

Nope.

In any bracket and at any percentage, the government will be adding $x to it's huge budget by taking $x from an individual or organization's much smaller budget.

(* Note that it really isn't valid to compare marginal utility between entities. It's an individual, relative measure, rather than an absolute quantity.)

I don't think they should pay more than they owe, and I'm not sure why you interpreted it that way. (Though I have paid more than I'm required to sometimes because of the pain of dealing with records and filing. Struggle with it until it gets to an acceptable level, then just pay to be done with it).

But Gates and Buffett both say that they SHOULD be paying more in taxes - but they don't. So what they're really saying is, all those other guys (the "well off") should pay more, and then they'd pay more, too.

This supports the original poster's contention that the billionaires would seek that tax break (for "fairness") even if they didn't need it.

Reading it again, I think I must have missed "However, in support of your point" which changes the meaning.

> So what they're really saying is, all those other guys (the "well off") should pay more, and then they'd pay more, too.

The well off don't pay much tax, and they will probably pay none at the top end (they'll donate to charity, for example, which they work at, and the charity will fly them around to their meetings, pay for accommodation, etc). Generally it's the middle class who end up paying tax until it's not worth working any harder.

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