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Comment by ndespres | Hacker News Reader

Putting a very high tax on wealth would have the benefits of a one-time infusion of tax revenues, AND a future disincentive for the ultrawealthy to seek to enrich themselves infinitely using business practices that take money from everyone else.

The problem isn't just that the ultrarich have too much money. It's that they get this money by doing things that make the lives of everyone else measurably worse. Selling us poor-quality products, paying low wages to work in stores selling those products, treating real estate like an investment instead of a human need, overcharging for healthcare, invading our privacy to find ways to more efficiently get us to buy their garbage, etc.

Without the incentive for the ultrarich to rip us off coming and going, we have a chance to improve our quality of life and change the things that are wrong in society, without leaving it to the rich to "fix".

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The things that affect me most directly in life are education, health and housing.

Neither one of these is getting fixed by simply increasing tax revenue alone.

When I goto the hospital and get an MRI and get billed through insurance and the cost is $2,000 and out of pocket I can pay $200 for the same procedure that looks like legalized fraud.

The same can be said for education. When the majority of student loans are given in such a way that a student can't default out of it, it reduces the risk on the lending party and so they give out a ton of cash and prefer the interest payments later on which raises the price of education.

Property taxes are also inherently low and should be raised and redistributed to lower income neighborhoods especially when so much property is already in the hands of the wealthy.

I would love to see higher property taxes because I have more faith in local governments than the larger bureaucracy.

Some people and corporations are getting obscenely, criminally wealthy by profiting from education, healthcare, and housing. I'm theorizing that if taxes were high enough such that it was impossible to accumulate obscene amounts of wealth in these sectors (and others) we could focus our efforts to provide these things to members of our society without interference by profiteers.

I think that's where regulation comes in rather than taxes.

Think of it like this if I'm in an industry and polluting the river. Do you want to raise taxes on me so that I stop polluting, or do you want to just make that illegal?

When there are things that completely don't make sense I don't think taxes are the solution.

If I can buy a house which costs more than education in a lot of cases with a mortgage and then declare bankruptcy and not have the mortgage follow me for the rest of my life why can't I do the same with a student loan? Taxing the student loan companies won't solve that.

Similarly for the large disparity in prices for healthcare for out of pocket vs through insurance.

>> Think of it like this if I'm in an industry and polluting the river. Do you want to raise taxes on me so that I stop polluting, or do you want to just make that illegal?

Well, I think that it mostly is illegal right now, but the penalties are either so insignificant as to be considered just an inevitable cost of doing business; and the companies with an incentive to save costs by polluting will support legislation and lawmakers who will do things like dismantle the EPA or eliminate fines for these destructive acts.

I don't think taxes per se are the way to change behavior permanently. I just think it is the easiest way right now to make it so that it is difficult or impossible to make ungodly amounts of money by hurting people and the environment. Ideally we could solve all of these problems without things like taxes or laws but my utopia isn't quite here yet.

> or do you want to just make that illegal?

The problem is, once you're rich enough, you can start paying off congressmen to pass the laws that remove regulations and make the thing legal again. Look at the US gov't for the past 3 decades...

The only solution is preventing any one person from having so much power over others -- power which comes solely from their wealth.

>> If I can buy a house which costs more than education in a lot of cases with a mortgage and then declare bankruptcy and not have the mortgage follow me for the rest of my life why can't I do the same with a student loan?

Because the lender can at least recover the house you secured the mortgage against.

The problem is that the group collecting the lion's share of the economic rents from healthcare is not insurance or pharmaceutical company executives, but doctors and nurses. Pretending that executives are responsible for ever-increasing healthcare costs is very popular, but (almost) completely untrue.

That's a strange claim to make even if it is factually correct (of course the majority of costs in the industry go to the thousands of front-line workers, and not the few executives) and not even really what I'm saying. It's the profit motive of the entire "healthcare industry" that I have a problem with, which is at odds with what people actually need ("healthcare"). If it were not so possible to extract wealth from the fact that people need health care, food, housing, etc., we could focus efforts on providing the best possible outcomes and not simply the most profitable ones.

There's a reason doctors drive nice cars and wear nice shoes; they are collecting monopoly rents. The doctors and nurses are the ones extracting the vast majority of the wealth from the ever-growing healthcare sector. The problem is that saying we want more, lower-quality doctors, and cheaper foreign ones to improve services and reduce our expenditures is politically unpopular.

Doesn't medical school in the US cost something like $350,000? That might have something to do with high doctor salary. Doctors and nurses, heck let's include hospital janitors too, are not "extracting wealth" from the healthcare sector. They are being compensated for their labor and skills. Wealth extraction occurs when people profit from the industry who are not performing any labor or providing any value.

Medical schools are the method by which doctors control the supply of competitors (as the AMA controls school accreditation).[1] The schools are simply collecting their share of the rent.

[1] https://medianism.org/2018/03/31/occupational-licensing-is-t...

I look at the bay area, and I almost feel the opposite in faith of 'smaller' governments constantly failing prisoner dilemma coordination problems with NIMBYism and a lack of an ability to make a asia-level metro area transit system. Small governments get little sunlight.

> Putting a very high tax on wealth would have the benefits of a one-time infusion of tax revenues, AND a future disincentive for the ultrawealthy to seek to enrich themselves infinitely using business practices that take money from everyone else.

This point relies on a false premise. The ultra-wealthy aren't taking money from you. They're mostly creating wealth that didn't previously exist.

It’s true they may create wealth but that doesn’t necessarily mean it corresponds to the actual share of the money supply they are taking.

For example let’s consider a hypothetical world where I control the food supply due to some artificial monopoly and there is $100 in circulation.

Food is required for everyone to survive so I could more or less charge what I want, up until there is incentive for insurrection.

Now the “value” I provide is really just extortion by using my power to control the food supply rather than purely positively providing “value” in way such as just making the food.

So your false assumption is that everyone is using their power to create value when in reality some people leverage their power to simply get a bigger share of money.

> It’s true they may create wealth but that doesn’t necessarily mean it corresponds to the actual share of the money supply they are taking.

You're right. They only take a small fraction of the wealth that they create.

> For example let’s consider a hypothetical world where I control the food supply due to some artificial monopoly and there is $100 in circulation.

Sure, these are called monopoly profits. This is a well known and well understood problem that mostly doesn't apply to the billionaires of today. The billionaires of today mostly exploit a more subtle thing: network effects and returns to scale.

We are still trying to figure out how exactly to regulate this form of rent extraction, and I don't think we have good answers yet, because traditionally our standard has been "consumer harm", but it's not clear that consumers are being materially harmed in this context.

> So your false assumption is that everyone is using their power to create value when in reality some people leverage their power to simply get a bigger share of money.

I realize that some people get rich via rent extraction, but the people being discussed in this thread are mostly tech billionaires. Those people made their money primarily by creating wealth that didn't previously exist.

No, they're not.

Yes, most of the wealth of the ultra-wealthy comes from the growth of share prices. But that growth didn't just materialize out of thin air.

It comes from other wealthy people and institutions (primarily the large banks) gambling on how successful the corporations the ultra-wealth own and run are going to be at generating profits.

Profits are the difference in the cost to produce goods and services and the revenues generated in selling them.

The production costs are a combination of the machines necessary to produce them and the labor necessary to run those machines - in a physical factory setting. In a knowledge setting, it is almost entirely the labor of the knowledge workers.

Notice how most of the billionaires come from the knowledge economy?

That wealth is literally generated by wealthy people and institutions judging that the ultra-wealthy will be ultra-successful at squeezing profits out of the people who did the work of creating their companies products by paying them less to create those products than they can generate by selling said products. And by squeezing money out of the rest of us by charging us more to use said products than it cost to create them.

It is literally generated by taking money from everyone else involved. That's what "profit" is and it's profit, or the expectation of future profit, that generates the wealth.

Most of that analysis is correct. Except you made a logical leap at the end from "profit" to "taking money from everyone else". That leap doesn't actually follow, at least, not from the argument that you made.

If I am a shoe maker and I make one shoe per day, and you invent a new process that makes 10 shoes per day, and my customers start buying shoes from you instead of me, have you "taken" my money? What about all the value you've created for your customers? Economists call this factor a 'consumer surplus', and it's much larger than the amount that I have lost, so the net wealth creation in the world is positive when you invent your 10-shoes-per-day process.

>> If I am a shoe maker and I make one shoe per day, and you invent a new process that makes 10 shoes per day, and my customers start buying shoes from you instead of me, have you "taken" my money?

No. But if you are a shoe-maker who employs 10 people to make shoes, and you pay them less than their skills are worth or take money for yourself beyond what is required to run the business, you are taking their money.

If you get a machine to make the shoes and fire the workers, and continue to charge me the same price for the shoes which now cost you less to make, now you are taking my money.

> No. But if you are a shoe-maker who employs 10 people to make shoes, and you pay them less than their skills are worth or take money for yourself beyond what is required to run the business, you are taking their money.

How do we determine what someone's skills are 'worth'? You seem to be espousing something called the Labor Theory of Value. The labor theory of value has a ton of problems, that you can read about here:

https://en.wikipedia.org/wiki/Criticisms_of_the_labour_theor...

Almost no economists believe it in anymore, although it was popular a long time ago. It just isn't consistent with a lot of real world problems.

> If you get a machine to make the shoes and fire the workers, and continue to charge me the same price for the shoes which now cost you less to make, now you are taking my money.

How, exactly? Are you entitled to my shoes at their marginal cost of production? Where in that interaction does the 'taking' happen?

This is a really interesting point - that the progressiveness of a taxation system can favor or inhibit certain business models, not just the volume and velocity of commerce in general.

Taxing the rich won't solve for crony capitalism...

Tesla's $7b in taxpayer subsidies.

The armies of lobbyists who LITERARILY write legislation.

The regulatory capture affecting certain professions - https://www.npr.org/transcripts/592376568

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