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Comment by zozbot234 | Hacker News Reader

> The most important nuance being that you control most of this wealth for most of this time and will be paying your taxes out of interest.

Then a wealth tax boils down to a punitive tax on interest income. Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way. (See, e.g. Larry Ellison's yachts as an especially obvious example of billionaires' consumption.) That's an "economic policy tool", alright. It's not as clear that it's a sensible one.

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> Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way.

That's the goal. The idea is that society doesn't need billionaires, so you force them to get rid of their wealth. Either through taxation, or by spending it on things that benefit others.

Interesting question there - do Larry Ellison's yachts "benefit others"? (And i mean beyond the immediate effect of "spending money". We should always keep in mind that opportunity cost is a thing, and that investment involves plenty of "spending" and economic activity of its own.)

> do Larry Ellison's yachts "benefit others"? (And i mean beyond the immediate effect of "spending money".

I don't think that's a useful question, though the answer is generally no. Yachts, or more generally pleasure craft, are a form of entertainment. The owner spends large and ever-growing amounts of money, funding other people's lives, in exchange for some kind of fun for themselves and their immediate circle.

Larry Ellison could certainly make them benefit others by, say, using them to provide housing for the homeless, but that's not a part of the primary equation.

> We should always keep in mind that opportunity cost is a thing, and that investment involves plenty of "spending" and economic activity of its own.)

The economic activity of moving around vast sums of money benefits very few people, and those are generally not the people working multiple jobs just to make ends meet. That's the reason people want a wealth tax: concentrating wealth to such an extent benefits almost nobody.

"funding other people's lives" is not enough? When the shipbuilder fires people, and the engine maker fires people and Larry fires the maintenance people who will fund them?

I do think it's enough. My point was that excluding money from the question is not useful, because buying a yacht is explicitly an exchange of money for entertainment.

They do. He's paying sales tax to buy them, he's paying for the wages for people that built then. Consumption is when the money starts to trickle down. I think I'd be ok with forcing super-rich to spend their money or taxing then above some level. Let's make the limit somewhere around GDP of a smaller European country (Slovakia - ~105bn, Ukraine - ~140bn) & tax above that.

"The idea is that society doesn't need billionaires"

so when was the vote to declare that the line in the sand? what about millionaires? Let me guess, there are enough millionaires now that it's too big of a group to make an enemy out of. You can't say society doesn't need millionaires because there's enough that maybe someone's friend or family is a millionaire and will think "..wait a minute, that doesn't seem right".

Flip it around and give the 0.01% poorest people the same treatment, society certainly doesn't need the poorest of the poor either. It makes about as much sense.

> Flip it around and give the 0.01% poorest people the same treatment, society certainly doesn't need the poorest of the poor either. It makes about as much sense.

Again, that's the goal.

There was no vote to declare a line at 1 billion, because nobody cares about the exact number. The goal of measures like this is to reduce inequality.

Definitely. There's a conversation to be had about which billionaires do we want. Most Americans have a favorable opinion of Bill Gates [0], but not Jeff Bezos [1]. And there's good arguments for having large-scale philanthropic efforts be semi-privatized.

A "punitive tax on interest income" is popular with the left because it is, on paper, very progressive and avoids taxing the poor. But in truth, I don't think people actually want fewer billionaires, they just don't want aristocratic billionaires.

It also doesn't help that it's so unclear what the money would be spent on.

[0] https://today.yougov.com/topics/politics/explore/public_figu... [1] https://today.yougov.com/topics/politics/explore/public_figu...

A mildly-punitive tax on high levels of personal consumption (including imputed consumption. such as business owners using business assets for private use, etc.) would seem to be a lot less distortionary and more socially-beneficial than a punitive tax on wealth, and just as politically sensible. What it doesn't have, unfortunately, is the raw appeal of soundbites like "soak the rich!" and "you didn't build that!".

There's a cool related video of Greg Mankiw [0]. He talked about two "redistribution" schemes:

1. $1000 per month to those with zero income, phased out at 20c / dollar extra income, financed by 20% tax on all income above $60k 2. Transfer of $1000 per month to everyone, financed by 20% flat tax on income

Apparently a group of Harvard students he asked were strongly in favor of the former, without realizing that the two plans are equivalent. It's all about framing.

[0] https://www.youtube.com/watch?v=4cL8kM0fXQc

That's just who has better PR (been longer at it)

This is trickier than it might seem. A yacht is actually an asset! (Albeit one that depreciates quickly and has enormous running costs).

Practically everything a billionaire could spend money on "at scale" is just another asset. Although again, "yacht" is a terrible asset class.

To actually get rid of enormous wealth you have to either waste it (throw a huge party? own assets that depreciate a lot? shoot it into space?) or give it away somehow.

I think one common criticism of wealth taxes is that assessing these asset values can be gamed. When I'm donating my yacht to charity it's worth way more than when the government is assessing it for taxes

But there's other stupid crap you can waste money on that doesn't count as assets. Spaceship rides, political donations... Maybe you can sell your yacht to some yacht company and lease it back from them?

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