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Comment by patmcc | Hacker News Reader

This is simplistic to the point of absurdity, and doesn't model how any sensible wealth tax would be implemented or paid.

First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher).

Second, taxes don't disappear into nothingness - they pay for civilization. It is clearly beneficial to everyone to live in a society where people are well cared for and have healthcare, public education, welfare, etc. There's a reason failed states and unstable/developing countries generally aren't where people are looking to startup the next big tech company.

Third, any smart founder isn't going to just sell 1% of their stock every year and pay the wealth tax with that. They'll take dividends, or take out a loan against the value of the stock, or use some cash from other investments, or whatever, and maintain control of their company. Yes, over the long term they'll lose some wealth, but not necessarily control of their company, unless that's the decision they make.

Fourth, this effectively ignores that wealth is a thing that grows and compounds. If your wealth is increasing at 4% a year (very attainable for the class of people a wealth tax would affect) a 1% wealth tax really doesn't have as big an impact on your long term wealth as this makes it seem.

Fifth, the idea that people "will just move to another country" is very silly. If some people do leave, or start companies only in other jurisdictions, that just means there's a market opportunity for the many people who remain. Unless this supposes that no one wants to take advantage of one of the richest markets in the world because they might have to pay a small fraction of their wealth to the government. Not to mention that even very wealthy people likely want to live in a good society - we don't see many people starting companies on boats in international waters for a number of reasons (left to the reader).

I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future, and I certainly feel for him, but I'd much rather we have well funded schools and welfare for those who need it.

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> the idea that people [read: super rich] "will just move to another country" is very silly.

This is a recurring theme in owners/investors: they always have some story that they will be forced to leave or close shop if some labour-proteaction-laws (like weekends, or 8h days, or banning of child labour), or taxes are implemented. It's a very old story, there's a history to it.

Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left. They did pass law that allow them to shift production overseas. But those laws can be repelled and then we will hear the story again of how this will kill their business,or force them to leave.

This is a great illustration that the wealth tax is not about rational policy. It's based on nothing but emotion and ideology.

We're not debating here the need for taxes, or labor protections. You don't get to justify bad policies by pointing that there are places where government regulation is called for.

Wealth tax is bad policy. Justify it on its own merits.

Here's my own-merits justification:

Holding on to wealth is an inherently risky prospect. Let's say you are very wealthy but live in an unstable country. You're like a dragon sleeping on its pile of gold. Your wealth is a target. You need to hire considerable amounts of security, stockpile weapons, etc. in order to preserve that wealth.

In a stable country, your wealth is not under that risk and you do not need to pay for that risk mitigation. You accrue the benefits of the wealth without taking on the risk.

In other words, the act of amassing wealth and keeping it is a direct function of the stability and prosperity of the country in which you live.

Because larger amounts of wealth incur larger amounts of risk, it makes sense that a portion of that wealth should be distributed to the country at large: for example, to pay for the less wealthy people who join the military to protect your wealth.

Now: what separates that from the existing notion of income tax, capital gains tax, etc? The idea that your wealth, as it is sitting there (not its growth, not what you are earning), is incurring a cost to society, and that society is taking on risk in order to keep your wealth safe. Risk you are not directly paying for.

Furthermore, in a stable and modern country holding onto wealth is so safe and protected that you can safely invest your wealth in markets and accrue compound interest. That is the polar opposite of what you would do in an unstable country, where you would keep your wealth hidden away underground, in mattresses, etc. So you are gaining a tremendous wealth-growth benefit by being in a stable country. (This doesn't seem to be addressed in pg's post, which I found confusing, because at 1% taxation you'd be below average market gains and would still gain).

I'm not sold on the above argument being a truly compelling and overriding one for wealth tax, it's just some foundational thinking. I do think it explains, in part, why a wealthy person might choose to live in a country with a wealth tax over a country without one, assuming wealth tax became fashionable across most stable countries.

Stability is one thing. But super rich like growth opportunity even more.

Now what about you can grow your wealth a lot faster if some laws change, would it justify a lobby campaign? Stability is one, but favourable laws for super rich have been passed and are upheld for so long.

The fact that fines are not wealth and/or income dependent is a testimony to the dysfunction of democracy. The absolute fines implemented in most countries enable certain "high net worth individuals" to ignore fine all together.

Well depending what the fine is for, absolute values might make more sense.

Eg for people overusing water during a drought, if you can fine them enough to build a water recycling plant that recovers the water they wasted, that essentially undoes the harm they caused. Why fine poor people less if they aren't doing less harm?

That's not a fine. We the people dont want over use of water by anyone, we implement fine. If its absolute the rich are immune to it.

If you want more money from the water used, put a tax on the water. This way water use pays for a new treatment plant.

Your absolutist statements ("based on nothing but emotion and ideology") do nothing but betray your own ignorance.

As an American living in Switzerland, a "good policy" (whatever that means) here has resulted in: 1) no capital gains tax, nor any capital losses and certainly no carryover loss shenanigans but 2) using a wealth tax in lieu of capital gains tax to collect any sort of tax on those who have presumably been using their capital to beget more capital.

Switzerland does not have any flight of capital, still actively is sought after for parking wealth (which is actually an economy-distorting problem as foreign investors seek to buy stable assets in the Swiss market), and definitely still has an ultra-rich class residing here or moving here.

So, if you thought wealth tax alone was bad policy, how does wealth tax plus removing everything-capital-gains (especially the carryover losses which the current US President likes to excessively utilize) sound as effective policy?

Are you talking about "up to $3k/year" carryover? How is that any significant?

$3k is just the amount you can deduct from income each year. You can carry over the rest of the loss to future years until you die (not inherited by your heirs).

Capital is there because foreigners who park their money are not subject to a wealth tax

I don't see why. There's a huge body of work that shows that taxing wealth versus capital income is likely to increase productvity while reducing income inequality, which is a hug source of our current economic problems and polarization: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3454385. Two MIT economists just won a Nobel prize for showing the benefits not just in a developed economy but globally.

Then why are all the manufacturing jobs in China and other countries without those labor laws?

The remaining jobs in the US are salaried position where "8 hour workday" and "weekend" are often meaningless.

Plus we're talking about a wealth tax in California. You can start a company in Nevada and still access the market of California just fine.

"Then who will purchase your cars?"

Let them leave. We have a government all the more for ourselves. We need not purchase products built with the exploitation of cheap, and even forced, labor.

Greater profit. How else are you going to pay a ceo 10mm per year...

They are not. In 2016 China produced about $4.566 trillion in manufactured goods. Coming in 2nd place, in 2016 the U.S produced about $3.602 trillion in manufactured goods.

He didn't say manufacturing output but jobs, a more relevant number for that argument would be total labor cost in the sector and it's change over time between two countries.

That's not such a relevant number because plenty of those US jobs went to automation, not to China. There are still over 12 million manufacturing jobs in the US. About 8% of all US jobs which is a significant chunk. Easily disapproving the wild exaggeration that "all of the manufacturing jobs are in China... ".

This is about startups, which are very rarely about manufacturing. Most of the “information economy” startups are still in the US.

The point was that businesses actually have followed through on those threats to move away from countries with things like "workers rights" and "unions" and "8 hour workdays" - it just took a few years. The fact that all the major new businesses in the US are software and other 0-marginal-cost products should be a big warning sign.

As always, if you "tax" something (or otherwise make it more expensive), you will have less of it.

You tax what you want less of, you subsidize what you want more of.

I don't buy it. "Worker rights" and "unions" aren't the drivers of globalization or deindustrialization.

Let's make an example. Suppose a "rational investor" in a globalized market is considering whether to manufacture a commodity in San Francisco or Jaipur.

The cost of living in San Francisco is 200%-2000% higher than the cost of living in Jaipur.

https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

The rational, by-the-numbers move is to put the factory in Jaipur because exchange rates make it radically cheaper. That's the real driver. Even if the would-be workers in SF made every conscionable concession and slogged for 25 hours a day, it wouldn't overcome the currency differences. Even if the workers in Jaipur had the most generous PTO and the most corrupt union boss, it wouldn't overcome the currency differences.

Of course, if you were pitching a town in South Carolina against a town in Pennsylvania, then maybe you'd consider numerically small differentiators like "how much extra do you have to pay for the 9th hour of work" - because small differentiators are the only differentiators available.

But that's not the issue with globalization. "Globalization" doesn't mean "moved from PA to SC to trim wages by 5% via lax overtime rules". It means they moved to Vietnam or China or Bangladesh to change the basic unit of measure with an aim to slash labor costs by 50% or 80%.

> The cost of living in San Francisco is 200%-2000% higher than the cost of living in Jaipur.

Why on earth do you assume that this is unrelated to workers protections? These protections aren't a bad thing, but to ignore their negative impacts can be shortsighted...

It's not a warning sign. The biggest new Chinese companies are also software companies. The barriers to entry in manufacturing are fairly high and the opportunity for becoming a Facebook by making widgets is almost non-existent which is why almost no one is trying to change the world by starting a manufacturing company.

start-ups are even easier to Geo-arbitrage than manufacturing. I think we would definitely see an increase in companies moving abroad. That trend already exist with small companies in the "information economy". See the book "Nomad Capitalist"

The most significant reason why (manufacturing) jobs no longer exist in the US is our exorbitant privilege of being the global reserve currency. It has nothing to do with labor laws or taxes.

Manucturing is still a huge employer in the US.

Due to lower labor cost and relatively stable government. Nobody even knows what China’s tax rates are. These jobs are also not in Chad or Central African republic

The US GDP contribution of manufacturing is about $2 trillion per year, and employs about 9% of our workforce. That is a far cry from having all of our manufacturing jobs shipped overseas.

Why are so many software engineer jobs in California, the highest cost of living state, and not in the lowest cost of living state with lowest taxes then?

You overlook the value of regional nexuses, and the positive externalities can dwarf the negatives of the taxes or regulations.

Ask yourself Nevada isn't Silicon Valley.

This is an artifact of history and where the companies that started Silicon Valley existed. California in the 50s, 60s, and 70s was a different place than it is today. It's remained a nexus in spite of the taxes and cost of living, not because of it. That doesn't mean you can raise taxes and cost of living arbitrarily high and the nexus will never shift. There is no force of nature keeping it in place, just habit and custom.

We're rapidly finding out this year that we don't even need to be in a particular place to continue working together, something that has only become true relatively recently.

It is dangerous to assume that things will remain the same as they always have been, regardless of other things that change.

There's obviously a breaking point at which people will leave. There's a thread here almost every day now about how everyone is moving out San Francisco.

It's also dangerous to assume that every business decision hinges on taxes. One of the extremely annoying things about politics is people constantly arguing that GDP growth is a function of some marginal tax rate here or there. The obsession with taxes overlooks so many other facts that govern success.

Why isn't Sweden a hellhole? They have higher taxes than many other EU localities, but have a more vibrant startup economy.

The artifact that created Silicon Valley was the University of California system, and the location of military and national labs, a nexus of government and academic R&D, with a ready and waiting STEM labor force. It was not because it was a tax and regulatory haven.

The academic and military labs were definitely big factors. There's also:

- California doesn't enforce non-competes - which allows people to leave and form new companies. The "traitorous eight" are as much part of the founding mythos of SV as the acadmic/military labs. That is a regulatory decision.

- Founders and early employees get paid largely in stock or stock options, which are taxed less than salary. This provides them with capital to become angel investors in new companies and provide not only funding, but mentorship and connections. That's partly a consequence of the way capital is taxed. If you start taxing capital so that founders aren't left with enough to become investors, you'll break that feedback loop.

Because the US doesn't have enough tariffs to compensate for exporters who don't meet US standards.

> still access the market of California just fine.

Good point. I'm surprised more places aren't taxing access to their consumers. That catches all players.

> Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left.

Some didn't leave.

There's a reason why Singapore has the highest concentration of millionaires in the world, and it's not because of their school system.

I'm not saying that all will leave, or even that most will, but some will.

> There's a reason why Singapore has the highest concentration of millionaires in the world, and it's not because of their school system.

No, it's because it's a city-state, and millionaires tend to be urban, so comparison with countries with lower urbanization is misleading. New York City (which has a population not much larger, so it's a community of roughly comparable scale that, like Singapore, is 100% urban) has a notably higher concentration of millionaires than Singapore does. (1 in ~8.4 compared to Singapore's 1 in ~20.)

> No, it's because it's a city-state, and millionaires tend to be urban, so comparison with countries with lower urbanization is misleading. New York City (which has a population not much larger, so it's a community of roughly comparable scale that, like Singapore, is 100% urban) has a notably higher concentration of millionaires than Singapore does. (1 in ~8.4 compared to Singapore's 1 in ~20.)

I'm not sure what your point is. Unless you're claiming that cities spontaneously generate millionaires?

From what I can tell, NYC has lots of millionaires primarily because rich people like to live there, so rich and talented people move to NYC from all over the US.

The same thing is true of Singapore, except that - as you so rightly point out - there is no "rest of Singapore" for them to come from. Instead, they come from the rest of the World, by necessity.

> From what I can tell, NYC has lots of millionaires primarily because rich people like to live there, so rich and talented people move to NYC from all over the US.

I couldn't find any data on this with a quick search, but my instinct is that NYC probably generates more millionaires than it acquires. You can move to the city straight out of college and become a millionaire in relatively short order if you land the right job; it's a much more circuitous path to get rich by starting, like, a construction company in rural Nebraska and then move to NYC.

The same seems (broadly) true of other financial or tech capitals. It's easier to build wealth in cities than outside of them.

> my instinct is that NYC probably generates more millionaires than it acquires. You can move to the city straight out of college and become a millionaire in relatively short order if you land the right job;

I guess it depends on how you count. I see most those people who would have been millionaires anywhere they moved to (e.g. top 10% Harvard law grad).

Will they make better money in NYC than probably anywhere else in the US? Probably. Are there more high paying law and finance jobs in NYC than anywhere in the US (with the possible exception of DC)? Probably.

But as many people are fond of pointing out, that doesn't really consider labor's role in this. NYC has jobs, but it needs talented people. There are plenty of talented people who are born and grow up in NYC, but there aren't nearly enough to fill the high salary jobs that open every year.

> I see most those people who would have been millionaires anywhere they moved to (e.g. top 10% Harvard law grad)...NYC has jobs, but it needs talented people.

This is kind of my point (and, I assume, the OP's): most of those people move to the city to become millionaires, not because they already are millionaires and prefer to live in the city.

In that regard, cities do sort of spontaneously generate millionaires in that most wealth is produced there and not (there's probably a better way to phrase this) imported.

> I'm not sure what your point is. Unless you're claiming that cities spontaneously generate millionaires?

There's nothing “spontaneous” about it; millionaires don't just appear out of the ground, they arise through economic activity that is more concentrated in centers of trade and commerce, aka, cities.

Then how do you explain all the millionaires taking up residency in Florida to avoid NYC taxes? They obviously vote with their feet.

> how do you explain all the millionaires taking up residency in Florida to avoid NYC taxes

They treat Florida residency like a flag of convenience[1]. There are some who legitimately retire or move to Florida for a lifestyle change - not exactly a new phenomenon - and a bunch of young professionals who choose to live in Miami because it's Miami, but for most it's just paperwork.

David Tepper is a great example. He "lives" in Florida and moved Appaloosa to Miami, but Charlotte is now the center of his personal life and he spends almost half of his time there.

1. https://en.wikipedia.org/wiki/Flag_of_convenience

This is the exception that proves the rule; even with high taxes and low-tax alternatives reasonably close by, enough millionaires continue to choose NYC that it's among the most likely places you'll find one. Same goes for California.

I'm responding to the grandparent comment "They never left.", which is clearly not true.

Saying that some still remain doesn't refute my statement.

I think if you saw a headline claiming "The millionaires have left New York" you'd spit out your drink.

Sure, some millionaires have left, but not nearly enough to call it an exodus - "the millionaires" as a class are still there; they never left.

Indeed, according to Forbes, there are more billionaires living in NYC than any other city in the world: https://www.forbes.com/sites/giacomotognini/2020/04/07/world... And according to this cnbc article, the same is true for millionaires: https://www.cnbc.com/2019/01/18/new-york-city-has-more-milli...

> Then how do you explain all the millionaires taking up residency in Florida to avoid NYC taxes?

NYC has the highest concentration of millionaires in the world.

Money laundering.

Singapore exists at the behest of the United States. Its sovereign wealth fund is heavily invested in the United States and its geopolitical precariousness on the straits of malacca is predicated upon the implicit protection of the United States Navy.

It's a political choice to let millionaires flee there, just as it's a political choice not to tax them at home. A snap of the US's fingers will change Singapore's policy.

Like when Wrigley sent a US Congressman to visit - he snapped his fingers and chewing gum was no longer banned.

> Singapore exists at the behest of the United States.

That's true of basically 85% of the world. The only really independent countries, as far as I can tell are the US, China and Russia with France, Germany, UK and India on the edge.

I'm not sure what your point is unless you think the US will suddenly reverse its centuries old policy and start colonizing the world.

Their point was that the presence of wealth outside of the US is not an indicator of more "correct" economic policy.

>That's true of basically 85% of the world.

That's precisely why the argument of "if we tax the rich they'll just take their wealth elsewhere" doesn't stack up. If it happens, when it happens, it happens because we made a conscious decision to enable it.

> Like when Wrigley sent a US Congressman to visit - he snapped his fingers and chewing gum was no longer banned.

He must not have snapped very loudly, because the only way to buy chewing gum to this day is as medicine (e.g. nicotine gum) from a doctor or pharmacy.

chewing gum is now legal in singapore and no longer banned. but you’re right, you can’t buy it locally.

The possession and consumption of chewing gum (this feels hilarious to type) have always been legal; the import, sale, and manufacturing of chewing gum was banned, as it still is save for the “medical” exceptions.

I can show an example otherwise - the PM of Singapore saying no to Bill Clinton when he asked the Singapore authorities to not impose corporal punishment on an American citizen (caught for vandalizing cars).

Singapore is not just dependent on the US. It depends heavily on China too. Defense wise, Singapore has one of the strongest forces in the region.

And most millionaires in Singapore are Singapore citizens.

Singapore's status is not just some offshore tax haven, as seen by many in the west. It has a diversified economy.

>>Please note that we have weekends/8h work day/ban on child labour and also still have the super rich. They never left.

The fact that are still super-rich people doesn't imply that such interventions did not have a negative on the number of people who are super-rich in the US. High taxes have a well-established negative effect on capital formation, and investment in-flows. This isn't some conspiracy theory promoted by the super-rich to manipulate you.

I think you're giving the arguments made against high taxes a very shallow treatment.

> High taxes have a well-established negative effect on capital formation, and investment

That's interesting because in absolute numbers countries with a very high taxation are among the first for number of millionaires.

Japan is 3rd, UK is 4th, Germany is 5th, France is 6th, Italy is 7th

Compared to the population, Switzerland and Honk Kong are 1st and 2nd

In Switzerland taxes are usually low compared to the rest of Europe, but in Geneva they are 45.5%, the highest rate for Switzerland and yet is the city with the highest concentration of millionaires per square kilometer in the World, more than Monaco and SF.

Millionaires in Switzerland are almost two times those of the US compared to the population (9.5k/100k vs 5k/100k)

4th is the Netherlands, 5th is Denmark and 7th is Sweden, three countries famous for their high tax rates but equally high social and economical wealth.

>>That's interesting because in absolute numbers countries with a very high taxation are among the first for number of millionaires.

>>Japan is 3rd, UK is 4th, Germany is 5th, France is 6th, Italy is 7th

Nearly the entirety of the developed world has high taxes, and the developed world has the most wealthy individuals.

It must mean that high taxes don't have a negative effect on capital formation and that "developed" is more about fairness and justice of the system and not about "how many more billionaires there would be if the system was less fair?"

1. Development can roughly be summarized as a measure of per capita GDP.

2. The rest of the world has been gaining ground on the developed world over the last 50 years. A common pattern could be that countries institute sensible economic policies, based on what science (Economics) says works, and then when they get wealthy, become complacent, and adopt all sorts of anti-capitalistic policies that retard economic growth rates, which in turn results in all socioeconomic metrics stagnating.

Economy is not a science

US has the highest GDP in the World, the highest per capita spending in healthcare in the World and the lowest life expectancy in the entire west

Unfortunately it also has one of the worst children mortality rate among the 36 most developed countries

"Compared with other OECD countries, the U.S. ranks No. 34 out of 36 countries"

https://data.oecd.org/healthstat/infant-mortality-rates.htm

Speaking of socio economic indicators, wanna talk about homicide rates in US, ten times higher than the European average and 1.5 times worse of Nigeria?

It means that every 2 homicides in 100K citizens in Nigeria there are 3 in USA.

It's easier to get shot and killed in USA than in Nigeria.

Doesn't sound very developed nor that the system is working towards a better life for everybody.

If you were right that would not be possible

If fighting for the children to stay alive after being born is anticapitalistic, than BIG THUMBS UP for the anticapitalism

Inequalities lead to very few living very well and the rest just surviving

Which is a recipe for disasters

Economics IS a science. This anti-Economics bias rears its head whenever people find economic evidence contradicts their ideological narrative.

It's similar to the anti-Medicine bias exhibited by anti-Vaxxers, who frequently cite the many mistakes made by the Medical establishment and orthodoxy, in an attempt to discredit it.

>>Unfortunately it also has one of the worst children mortality rate among the 36 most developed countries

The correlation between per capita GDP and quality of life is not perfect, yet it's there nonetheless.

Pointing out an outlier doesn't invalidate my point that development is generally a measure of per capita productivity.

And while we're on the subject: the US has unique attributes that have nothing to do with its economy, that result in higher infant mortality statistics.

For example, the US has a much higher proportion of its population of sub-Saharan African ancestry, which is a cohort that has higher infant mortality rates in European countries as well.

The US also has the best neonatal facilities in the world, with a much higher proportion of premature infants being counted as live births and subsequently cared for, than the norm in the developed world. Counting the deaths of premature babies as infant deaths, instead stillborn, is the biggest contributor to the US having higher infant mortality rates.

The rest of your comment is you veering even further from the subject matter, to attack the US. This shallow and overly emotional treatment of Economics doesn't do the complexity and importance of the subject justice.

> Economics IS a science

It is not

Not because I am anti economics, but because there is no proof available

> it's similar to the anti-Medicine bias

No, it is not

My parents are doctors

I know the difference

> The correlation between per capita GDP and quality of life is not perfect, yet it's there nonetheless.

That's an understatement!

If the country with the largest GDP cannot even keep babies alive like Estonia can do, it must mean something...

> For example, the US has a much higher proportion of its population of sub-Saharan African ancestry,

I come from a country where hundreds thousands of people come from Africa every year

Have you ever had an emperor that ruled your continent born in Africa?

Because I do!

Your arguments are weak at best

Are you a racist?

Because, you know, people coming to US from central Africa are not that many, unless you count slaves brought there 300 years ago.

If 300 years are not enough to treat them like everybody else, I guess there's a problem...

> has higher infant mortality rates in European countries as well.

It actually does not

We have an universal healthcare system that takes care of everybody regalrdelss of where they come from

> The US also has the best neonatal facilities in the world,

Proof?

> to attack the US.

I do not make the statistics

> This shallow and overly emotional treatment of Economics doesn't do the complexity and importance of the subject justice.

Show me then what makes US better than Nigeria if I don't want to be shot in the streets...

>>Not because I am anti economics, but because there is no proof available

Yes, it is. Scientific proof is not available in economics, but that doesn't make it not a science.

You're disagreeing with academic consensus on what economics is when you claim it is not a science.

>>My parents are doctors

>>I know the difference

That you have these advantages and are exhibiting this clearly ideologically motivated anti-science bias is even worse.

>>Have you ever had an emperor that ruled your continent born in Africa?

What the hell does that have to do with anything?

>>Are you a racist?

Again, what do these despicable attempts at character assassination have to do with anything I argued.

>>It actually does not

People of sub-Saharan African ancestry in Europe DO have higher infant mortality rates..

>>Proof?

Do some research on the causes of higher infant mortality rates in the US. It mostly comes down to more pre-term births being counted as live births, and the deaths of these infants being counted toward infant mortality statistics, instead of being counted as stillbirths.

> Yes, it is. Scientific proof is not available in economics, but that doesn't make it not a science.

It literally does.

> That you have these advantages

A doctor parent in Italy is not advantages, my parents come from poor families, are born during the ww2 and studied a lot to get there, working hard while studying to support their families

They are now retired and worked their whole.life for the public healthcare systems, they weren't high paid surgeons the like you see in US TV shows, they simply wanted to help people, not get rich.

That's why they never made a lot of money.

It is possible in countries where studying doesn't mean taking a loan of hundreds thousands of dollars, but it's almost free for everybody

You know that thing you hate there, called social welfare?

Makes miracles, especially for keeping babies alive.

> What the hell does that have to do with anything?

That most of us in Italy have African ancestry in our DNA

> People of sub-Saharan African ancestry in Europe DO have higher infant mortality rates..

They don't.

Look at France, 8% of the population comes from Africa, their infant mortality rate is 35% lower than the US

Not 1,2 or 3% less as one would expect from the richest country in the World, 35% less

It means US has 1.5 times worse infant mortality rate than France

Every 2 in France in US there are 3

That's a very large difference!

What's the explanation for having a 3.625 times worse infant mortality rate than Estonia whose GDP is so low that it is measured in billions?

> Do some research on the causes of higher infant mortality rates in the US.

Do some research on what make other countries have a better record than US

There are at least 33 of them

BTW what's your excuse for the mass shootings or the homicide rates worse than countries controlled by warlords or having the lowest life expectancy of the west?

Are those traits that actually make US better than, for example, Sweden?

Can you prove in any meaningful way that growth = general wellbeing?

I mean, without blaming black people if you can...

>>That most of us in Italy have African ancestry in our DNA

First of all, that has no relevance to the debate. Second, everyone has some trace of DNA from every region. That's not a revelation. Third, it was almost all North African admixture in the Italian population, not sub-Saharan African admixture, and it was people of sub-Saharan African ancestry which I specified as having high infant mortality rates in the US and Europe. So even your Red Herring is incorrect.

>>Look at France, 8% of the population comes from Africa, their infant mortality rate is 35% lower than the US

North African is not "sub-Saharan African". Most people of African ancestry in France are of North African descent.

And I didn't say demographics constituted the entire cause of the US's lower infant mortality statistics. I clearly said it's mostly due to methodology, with the US counting more premature births as live births, and consequently, the deaths of premature babies as infant deaths, while other countries count more deaths of premature babies as stillbirths.

Anyway, you've completely avoided dealing with the original subject matter. It was a broader point about how economies are organized, and all you seem to want to talk about is the US and how its national healthcare program doesn't offer universal coverage.

You seem have a very narrow agenda, focused entirely on confronting whoever you imagine to be opposed to socialized healthcare in the US. Diverting the discussion like this, to push your agenda, is very rude, and harmful to the public discourse.

> Scientific proof is not available in economics,

“Scientific proof” isn't a thing. Empirical falsification of a hypotheses is, and it is absolutely available for the subject matter of economics (as conventionally understood; Austrian-school ‘economics’ overtly is a system of working out the implementation of deontological principles and is thus more a branch of moral philosophy than of social science, but that's an exception.)

It's true that a lot of the work done on economics is or builds on speculation beyond the present practical capacity of reliable testing due to complexity, but that's not uncommon (even if the ratio may usually be lower) in other scientific disciplines.

Lay (and particularly government) people frequently fail to understand the status of various economic ideas and treat speculation on shaky foundations of simplified models taken outside of their area of utility as approximations as truth, but that is also not uncommon in other scientific domains, though the practical consequences of it in economics may be more pronounced.

> but that doesn't make it not a science.

Not being a domain in which hypotheses are subject to empirical falsification (the closest thing there is to “scientific proof” in any domain) would, indeed, make it not a science.

Economics is a social science, and is widely acknowledged as such.

Economic theories are not falsiable, but neither are climatology theories, and no one would claim climatology is not a science.

Soft sciences are distinguished from hard sciences for not being subject to controlled experimentation, which can derive something approaching scientific proof, pedantry notwithstanding.

What's motivating the 'economics is not a science' narrative here is the same thing that motivates attempts by anti-vaxxers to discredit Medicine and Epidiomology: their beliefs are being contradicted by the experts in the field.

Sorry I don't have the time to respond in more detail to your comment. I just wanted to quickly make that point.

But indeed corporations (which are "people") have moved en masse to Ireland.

And New Jersey saw a significant exodus towards lower tax states among its richest.

It's not empty threats - it's just that the cost of the taxes has to be higher than the cost of moving. For most people, the cost of relocating is higher than the taxes. For the richest people, this wealth tax might just tip the scales.

Ted Arison and Eduardo Saverin are the most famous examples I'm aware of - it's mostly because laws were changed after they managed to move without being taxed. Do you think there are no more loopholes? Do you think these are the only cases?

>First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher).

Uh huh.

>Second, taxes don't disappear into nothingness - they pay for civilization.

But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth tax and then arguing for the necessity of taxes when challenged. Taxes are a necessary part of a functioning modern economy. Wealth tax is not.

>Yes, over the long term they'll lose some wealth, but not necessarily control of their company, unless that's the decision they make.

No. What are you talking about? The math is very simple. You will lose control at some point, because there's only so many ways you can rearrange the deck chairs.

And no, dividends are not an option because issuing a dividend may not be in the best interest of the company. Dividends are also taxed separately.

That you think taking out debt to cover wealth taxes is a solution is insanity.

>Fifth, the idea that people "will just move to another country" is very silly

But that's exactly what happens. We have data on this from various experiments. It doesn't bring the revenue you expect it to because there is capital flight and brain drain from the country in response - and when that is taken into account, you may end up with a net loss in tax revenue. It's also expensive to administer and enforce because net-worth is not easy to calculate. It's no coincidence that this form taxation has been falling out of favor.

>I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future,

No. That is a strawman if I ever seen one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?

>>Second, taxes don't disappear into nothingness - they pay for civilization. >But there are bad taxes. There is such a thing as too much tax. So you have to justify the wealth tax on its own merits instead of trying to pull a motte-and-bailey fallacy by pushing a wealth tax and then arguing for the necessity of taxes when challenged. Taxes are a necessary part of a functioning modern economy. Wealth tax is not.

Indeed. The parent is arguing that the wealth tax is better than, say, a carbon tax, which is considered a fairly efficient form of taxation.

> >I suspect that Mr. Graham is wringing his hands over potentially having to cut a large (in absolute terms, but small in relative ones) cheque to the government in the future, >No. That is a strawman if I ever see one. Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?

To add to this, Paul Graham doesn’t live in California, and would not pay the tax. He’s opposed on principle.

We can have both carbon taxes AND wealth taxes, of course. Carbon taxes seem to be an excellent way to curb carbon emissions, which is necessary, but they're also regressive, and unlikely to be sufficient to pay for the things we expect the government to provide.

PG may not be impacted by a California wealth tax, but that doesn't mean his opposition isn't self-interested. If it succeeds in California it could be taken up by other states, or the US as a whole - maybe wiser (in PG's view) to nip it in the bud.

It may be taken up by other states, but the US as a whole seems a bit of a stretch. The typical liberal states, sure.

I think he lives in the UK

PG is tone deaf and missing the mood of the nation here.

He says:

> Even a .5% wealth tax would start to keep founders away from a state or country that imposed it.

Mr Graham doesn't consider the possibility of startup founders leaving / kept away from a place that doesn't impose a wealth tax. I am not a successful startup founder (yet), but I would consider it my duty to live in /start a company in a place with better laws and taxes that are more equitable for everyone.

Money is not the only thing that drives startup founders to do big things. Complaining about a wealth tax and suggesting it will ruin things in the valley / CA due to people leaving completely ignores the societal improvements that could come from those tax dollars.

The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy! Why would the future prospective wealthy startup founders want to live in a massively unequal society, that is bent on increasing incoming inequality (the topic of another recent PG essay, where he argues that decreasing wealth inequality is a bad idea)? I sure wouldn't.

Mr Graham, a lot of startup founders may leave if large measures to improve society like a wealth tax are not 'imposed'.

You said,

> Taxes are a necessary part of a functioning modern economy. Wealth tax is not.

But you don't back this up. Why should wealth tax not be a part of modern economy? Modern economies are broken right now, obviously, for most people anyway, so keeping the status quo is a red flag and a bad sign.

> Could Mr. Graham not be against this tax because it's an objectively bad tax with many unintended consequences?

If that is his position, he does not explain it very well. Especially with the context of many of his recent essays, he does seem especially concerned with his image and wealth.

What about the unintended consequences of adopting policies that specifically intend to increase wealth inequality? PG doesn't seem to much consider the consequences that his models/opinions/plans would have on other people if implemented.

>PG is tone deaf and missing the mood of the nation here.

Twitter is not 'the mood of the nation'. You are not representative of 'the mood of the nation'. In fact, you're an outlier.

>The idea behind increasing taxes on the wealthy is to build a better society for everyone - including the wealthy!

You're trying to pull the same fast one as OP. Wealth tax is not the same as increasing taxes on the wealthy. You can make an argument that taxes should be increased and at the same time see that the wealth tax is a terrible way to do it.

> Why should wealth tax not be a part of modern economy?

Because it's a bad tax. It doesn't work. It doesn't bring revenue you think it does. It's expensive to administer and enforce. And it has many bad unintended consequences.

Not sure what Twitter has to do with any of this. ?? Anyway..

Am I an outlier? Then I only know outliers in real life, I guess, since I only know people who share this opinion? I get that I'm in my bubble, but it seems like a really really widely shared bubble.

> Wealth tax is not the same as increasing taxes on the wealthy.

A wealth tax is a form of increasing the taxation against people who are wealthy. Are you saying this is false? What do you mean by that?

> see that the wealth tax is a terrible way to do it.

Why though? You haven't backed any of this up. I think a wealth tax is a great idea. Why are you so certain that it isn't?

> Because it's a bad tax. It doesn't work.

What do you mean by bad tax? You don't explain this and my googles turned up nothing. What about this tax makes it "bad"? Why does it "not work"?

> It doesn't bring revenue you think it does.

I don't think it brings in any particular revenue specifically. What do you have in mind by this statement?

> It's expensive to administer and enforce.

So are most good things that we have in this world. Something being expensive doesn't make it bad.

> And it has many bad unintended consequences.

What are these, though? Can you list any?

> Twitter is not 'the mood of the nation'.

Are you saying that, presented with the facts, most Americans would express satisfaction with the current distribution of wealth and its trajectory?

>Twitter is not 'the mood of the nation'. You are not representative of 'the mood of the nation'. In fact, you're an outlier.

According to a Reuters poll from this beginning of this year a large majority of Democrats and a slim majority of Republicans support the idea of a wealth tax. While there isn't a large amount of polling on the subject (that I can see), that somewhat undercuts the Twitterspace argument.

The specific question people responded to in that poll was "the very rich should contribute an extra share of their total wealth each year to support public programs" so you can dissect it at your will.

> According to a Reuters poll from this beginning of this year a large majority of Democrats and a slim majority of Republicans support the idea of a wealth tax.

That's only because they haven't seen the specifics.

That seems like an argument that could be made against literally every opinion poll. The “specifics” according to whom?

I once dug around to specifically find out how gallup accounts for population and they simply don’t show you. You just have to take their word on it. So until opinion polls give exact equations used and raw data so I can verify myself I completely ignore them.

Yes, that is a problem with every opinion poll about a hypothetical policy proposal. Those polls aren't super useful for gauging how popular a concrete piece of legislation would be in practice.

> But there are bad taxes. There is such a thing as too much tax.

Having a wealth tax doesn't mean the total tax goes up. Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut, otherwise it invariably becomes a discussion about whether high/low/more/less taxes are good.

Historically a wealth tax has been an increase in taxes that ironically led to increased regressive taxes as the projected gains failed to materialize due to business restructuring.

citation needed

> Normally when discussing the merits of a certain kind of tax it's best to assume another tax is cut

from parent, citation also needed.

Mr Graham may have good reasons to be against this tax but he hasn’t argued them here. The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his.

As an occasional entrepeneur I do not at all mind being subject to this tax. I’ll worry about the wealthy when I join them, not before. They don’t really worry about me.

I think most of the reasoned objection to various taxes was summed up by Bill Clinton in his first campaign: what people mind is not getting what they’ve paid for by their taxes.

> The analysis is so far below his usual clear and insightful reasoning that I wonder if it’s even his.

OT but sadly this has been my reaction to most of his recent (last few years?) posts. :( He's definitely lost the well-reasoned, useful insight and interesting thoughts he had previously in his essays.

I also agree with your other points FWIW.

Word. Graham jumped the shark quite a few essays ago. He's veered quite far from his "Hackers and Painters", circa 2004.

>As an occasional entrepeneur I do not at all mind being subject to this tax.

That is not an argument. You can be a masochist and love to be beaten, it is not an argument people should be beaten. If it does not matter to you it does not mean it does not matter to others, it does not mean you are representative and it does not mean it is morally good.

The wealth tax as proposed should be concerning to everyone in CA whether they pay the tax or not.

It will be the state's 4th largest revenue stream but will be paid for by only 40,000~ people. It will definitely be volatile due to people leaving (see the governor of NY making personal appeals to wealthy NYers not to leave). The volatility will make hurt programs funded by the revenues.

CA's budget already goes thru painful boom / bust cycles because it relies so heavily on market gains - see all the painful cuts during the financial crisis. This adds to that instability.

If you want more revenue streams try making it so that they're sustainable and not subject to the whims of the ultra riches home address or how well the stock market does this year.

Do any wealth taxes being seriously discussed not have floors/exemptions for primary residences/marginal rates/whatever?

Why is a wealth tax a bad tax? Why is it worse than income tax or a VAT or anything else we currently do? Many places currently have property taxes (a type of wealth tax) and they tend to work well.

You need to redo your math. If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong. So ~1% of your wealth going to taxes is eminently affordable. No need to lose control.

Capital flight can be handled with exit taxes and restrictions on foreign ownership. Brain drain is usually high income (not high net worth) individuals leaving. The reason net-worth based taxation has been "falling out of favour" is because billionaires have an outsized impact on media and politics, and that very clearly suits their interests.

He could be - but if that was the case he'd have better arguments. Why didn't he talk about capital flight and brain drain, and how other taxes would be more appropriate? He's a skilled essayist; he chose his words carefully, and he used language around stocks, founders, and ownership specifically to appeal to tech geeks who expect to start successful companies.

> Many places currently have property taxes (a type of wealth tax) and they tend to work well.

Don't forget inheritance tax/estate tax! It's a wealth tax, just applied after (or near to) death.

I'm pretty opposed to estate taxes, they tend to penalize sudden deaths really heavily and place unfair stress and complication on widows/widowers. Plus the rates are sometimes high enough that they can lead to asset liquidation, selling of companies, etc. which I'm not a huge fan of. An annual wealth tax is much more sustainable for an individual or business.

How does an estate tax place undue complications on widows but a wealth tax doesn’t place undue complications on individuals?

Estate taxes are often on the order of ~20%+, so they can necessitate the sale of assets (real estate, companies, etc.) - and in the case of a sudden death, this can come at a very inopportune time, as well as being stressful on people who have just had a loved one die.

An annual wealth tax of ~1% doesn't come with the same complications - just like income tax, it can be predicted, saved for, etc.

Also most people with sizable estates (who have some idea they'll die in the next several years) can gift away or otherwise arrange to avoid estate taxes pretty successfully, so I don't think of them as especially useful.

I don't worry about it too much since estate taxes are usually on quite large estates (>$5mil), but I just don't see it as a very good tax.

This didn’t at all answer the question. You’ve basically said since it’s a static amount and because someone just died and also because it affects only large amounts it’s ok. None of this has anything to do with burden.

Estate taxes almost always apply to estates valued at > $5m. Why anyone who isn't super rich would give two squirts boggles my mind, and it a symptom of the American "temporarily embarrassed millionaire" mindset. Sadly, the professional/managerial class seems to be wholly preoccupied with these fantasies.

> If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong.

So the argument a tax is good is that it's your fault if you don't make enough money? Is it everyone's purpose in life to make enough money to pay taxes?

> So ~1% of your wealth going to taxes is eminently affordable.

Being affordable does not mean it is right. I can afford a $1200 iPhone, but I will never spend that kind of money on a phone, so asking me to pay $1200 for a phone is not right just because I can afford it.

I was responding to a specific point - that a wealth tax means that someone will lose control of their company. That's all I was arguing against with those points.

And I responded to your arguments, word for word.

No, you responded to arguments you thought I made, namely:

1) That a wealth tax is good because you should be making more money than the tax.

2) That a wealth tax is right simply because it's affordable.

I didn't make either of those arguments. For 1 - regardless of whether you're making or losing money, any sensible wealth tax is marginal, only on net worth of amounts over $10mil (or whatever). So the very worst a wealth tax will do is keep you at that cap - you don't pay anything on your first $10mil (or whatever).

For 2 - no, I'm saying a wealth tax is affordable, so it's clearly not wrong based on that alone. I'd say a wealth tax is right because it's progressive, not unaffordable, and ultimately not significantly impactful on the people it would impact (rich people).

We need to have taxes of some kind. What do you think is the most "right" kind to have? Why is it more right than a wealth tax?

Perhaps a flat sales tax? Or something fair? Why is there an attempt to punish the rich here? We need some taxes, but this shouldn’t be a blank check. At what point do you think the government should stop taking taxes? By your logic should we not just give 100% of our pay to the gov and start issuing cars, houses and other needs? Also why is anything good simply because it’s progressive? Is there no other factor?

What exactly is "fair"? There are lots of ways we could tax people, that some or other people would declare to be fair.

Sure, we could tax all sales at 20%, or 45%. That would be fair. Can you see any problems?

We could tax everyone a flat amount - $10k or something. That would be fair. Can you see any problems?

We could tax everyone a flat percentage - 15%, say. That would be fair. Can you see any problems?

We could tax everyone such that we all have the same income - $50k perhaps. That would be fair. Can you see any problems?

The idea that higher taxes "punish" the rich doesn't make sense to me. We have the money! Of course that's where taxes should come from. What, we're going to shake down the people making $12 /hour? They don't have any money.

Here is my thinking: we should decide, as a society, what is essential. Defense, roads, fire departments, schools, etc. And then we figure out the best tax system to pay for that. We should aim for that system to:

1) Gather as much money as we need to pay for the essentials.

2) Cost as little to administer as possible.

3) Discourage harmful societal behaviour and/or encourage beneficial societal behaviour (generally, the more you tax something, the less of that thing you get).

4) Impact people's lives as little as possible. This is where progressive taxation wins - if you tax a poor person, that's money they really, really need. They were going to spend that on essentials. If you tax a rich person, their quality of life isn't meaningfully impacted. If Jeff Bezos has to pay more taxes, that impacts his day-to-day life exactly not at all.

5) Be conceived from behind the 'veil of ignorance', as much as possible. (This is where the 'fairness' argument comes in)

So as a society we are saying it’s ok to tax the wealthy, but we also give people the opportunity to become wealthy and encourage it but then once you make it bad, time for punishment via taxes? What exactly did Bezos do that requires him to pay more taxes? He didn’t “get a small loan”, he earned his and now your saying people who have no desire in life to be anything more than a store clerk deserve some of his money. Can they afford it? Sure. Is it fair, absolutely not.

I think framing it as a punishment is a bit disingenuous. The idea is not to punish rich people, the idea is to change how the tax burden is distributed. I would turn the question around and ask why we as a society are intent on punishing the middle class with the tax burden?

It seems pretty spot on to me. Your rich, this is evil, and now you gotta pay.

Because the middle class is the one asking to increase it with the constant addition of social programs that benefit them and those in lower classes the most? Unless you want to get into some twisted math on how much resources they use by breathing.

> At what point do you think the government should stop taking taxes?

When millionaires stop crying because they have to pay them.

So it is punishment?

That's exactly what I was talking about

Only kids and millionaires cry when you ask them to do their duty

And that's why the government can't stop asking for taxes to rich people

What exactly is their duty? They earned money so they owe it to you as duty? What entitled you to their money? Do you have stuff? Can I come in your house and take things because it’s your duty?

> What entitled you to their money? Do

What entitle you to speak on their behalf?

The story of the rich who cry about their money being taken away by some evil entity, it's just the constant, endless, uberable whining of the wannabe rich people

So boring...

They are not giving them to ME, they are giving them back to society, the same society that made them rich.

There are many billionaires who wants to pay more taxes because it would simply be fairer.

> Can I come in your house and take things because it’s your duty?

You are wrong, again

1) If it was my duty, you couldn't do it, because you cannot collect what's in the government duty to collect.

2) Your duty would be, at best, to report to the authorities. But since you're one of those americans who don't understand what "society" means, you think everything revolves around you and you alone.

Spoiler: it doesn't.

Your duty is to contribute back in proportion of what you earn and own.

What about you simply do it and shut up?

p.s.: you are obsessed with punishment, are you one of those americans who believes that the bible is the law?

somebody already told you that

"framing it as a punishment is a bit disingenuous. The idea is not to punish rich people, the idea is to change how the tax burden is distributed. I would turn the question around and ask why we as a society are intent on punishing the middle class with the tax burden?"

https://news.ycombinator.com/item?id=24210412

Of course you have no answer to that, because you should admit that if it is wrong to punish rich people with taxes for being rich, it is vastly more wrong to punish people who are not rich for not being rich.

What duty - when tax dollars are spent on regressive policies, teachers unions, handouts and bailouts. Look at infrastructure and schools in the US.

1% of income earners already pay 90% of income tax in the US.

What more do you want? Wealth is not a zero sum game. Billionaires employ millions of people.

Even if you could tax 100% of all billionaire money, you will only fund the entire federal governments spending by a year.

Fix where the money is spent first. It is highly inefficient

Correction they pay equivalent income tax to the bottom 90% (and a third of all once tax)

That's the problem, because their wealth is many times larger than the bottom 90%

The top 1% of the population in US owns 39% of the wealth, top 10% own 76% of the wealth, bottom 50% owns only 1% of it.

If the system was fair, bottom 50% of the population should pay no taxes, because they own too little to live.

BTW you are another of the wannabe rich I guess who drank the billionaires cool aid, the top 1% only pays a marginal amount of the taxes

"Zucman, as detailed in his new book, "The Triumph of Injustice," written with fellow University of California at Berkeley economist Emmanuel Saez, found that the 400 richest Americans now pay a total tax rate of about 23% — that's lower than the bottom half of U.S. households, who pay a rate of about 24%"

American Scholars and the FED are making these analyses, not some hippie socialist in a kibbutz

It's time you all wake up

> BTW you are another of the wannabe rich I guess who drank the billionaires cool aid, the top 1% only pays a marginal amount of the taxes

This is a horrible excuse. Nobody has ever argued they want things to stay this way because one day they’ll be rich. How the liberals got this idea is a great question. The reason why people care is because this is a slippery slope. One side thinks you can’t pay enough taxes, and the other side wants their money to spend on themselves. It’s not “wannabe rich” so quit running around spouting that off out of ignorance. What we want is fairness and we happen to understand the rich people own the businesses. If you keep reaching into their pocket they will leave. Then what? Businesses and money will magically appear? I think it’s time you wake up, unless this is gonna be a typical liberal tantrum where we won’t hear the end of it until we submit to further taxation.

To be clear, it is wrongful thinking because people cannot usually grasp the vastness of billions and make their idea around their thousands as of it was the same

It isn't

Consider this

If you had a billion today and paid 1% every year in 20 years you would pay 220 millions total

In those same 20 years if you invested in a conservative way, say 4% guaranteed, which is arguably easy if you have a billion, after 20 years you would have gained 1.2 billions

In other words a net positive of one billion

Talking about numbers helps because the ratio is the same if you apply them to 1 thousand dollars

220 dollars spent, 1.2 thousands gained, 1 thousand net positive

The only difference is that making 4% with a thousand dollars is harder than with a million times a thousand dollars

Simply put you have a million 1,000 dollars chances VS Just the one

Or put it another way you could spend 1k every day for a million days, which is approximately 2,740 years, it means you could spend 10k/day for 274 years or 100k/day for 27 years or a million every day for 3 years.

And the compound interest would keep the initial billion grow indefinitely.

It basically means you have infinite money.

And you are worried that taking 1% would be detrimental for billionaires?

> If you keep reaching into their pocket they will leave

Biases are so boring... (you used a mix of confirmation bias and ancoring bias)

We are not even reaching their pockets now, they are paying less than the poor

Wake up, or you end up living worse than rich people's dogs (you probably already are right now in US)

> And you are worried that taking 1% would be detrimental for billionaires?

Yes, because again it’s not fair. I completely ignored the rest of what was above this because I’m not a child and am quite capable of understanding quite advanced math and how large a billion is. So to recap you’re saying it’s ok because they have a lot of money.

I’m actually living quite well in the US, despite coming from a very poor family with both parents getting cancer and having absolutely no money to put me through school. Instead of complaining or finding new inventive ways to take others money I taught myself skills worth a lot of money and now no longer have to worry about it.

As far as your paying less than the poor statement, let’s get some facts to back that up? Actual facts, not liberal news articles.

Also I see we’re taking the “we want more of your money” tantrum route.

I guess some people in US are just blind

Billionaires don't pay 90% on incomes

They leave the money in their companies that, like Apple, evade taxes sheltering their money through international tax heaven

They are worth billions not because they have billions cash on which they paid taxes, but because they own stocks and properties worth billions

So yeah, paying a marginal tax on their wealth is only fair

> Even if you could tax 100% of all billionaire money, you will only fund the entire federal governments spending by a year.

There are 11 million millionaires in USA, if you take the 1% of their wealth over a million you could have an healthcare systems that don't let you die like flies when the next COVID-19 hits

But if you prefer to die, it's ok to me

Just know that your system is broken

> There are 11 million millionaires in USA, if you take the 1% of their wealth

There’s that word again, “take”

If they were willing to give volunterly that wouldn't be necessary

Taxes are always taken, even if you earn 20k/year

I know that the only reason USA are born was to avoid paying taxes, but it's a bit silly to think that a billionaire cannot be asked to contribute back to help those that are in need

A billionaire

It means at least a million times a thousand dollars

1% for them is virtually nothing

Unless billionaires want to send their children to collect trash, ship Amazon packages, drive cabs, keep the house clean, defend the country in the military (funny how rich people almost always skipped it) etc. etc. then they owe to society more than society owes to them

It's that simple

To not understand it one must be mentally challenged

The funniest thing is that you're not a billionaire and would only benefit from a more just society

But you felt for the same mistake that Scott Fitzgerald made many years ago.

"The rich are different from you and me” wrote in his novella, The Rich Boy, with a sense of romantic longing.

Ernest Hemingway is said to have replied “Yes, they have more money.”

Hemingway wrote later on, in a 1936 issue of Esquire magazine, “that was not humorous to Scott. He thought that they were a special glamorous race and when he found out they weren’t, it wrecked him"

Don't be a Fitzgerald, be a Hemingway.

> You need to redo your math. If your net worth is $10+ million and isn't increasing by at least ~4% a year you're doing something very wrong. So ~1% of your wealth going to taxes is eminently affordable. No need to lose control.

So now if I make $10mil, which is plenty to live off of today and likely in the near future, and want to call it quits and retire, I now have to continue to make 4% (why 4% also, seems arbitrary) so I can support a wealth tax? Do you not see you’re taking an option away by forcing someone to cover this tax with further gains?

What about

> Fourth, this effectively ignores that wealth is a thing that grows and compounds.

You absolutely will not "lose control at some point" so long as the value of your company/stock keeps pace with inflation + wealth tax.

It's the simplest, most straightforward reason this "modeling" is bunk.

100% agree with everything you wrote.

Paul's modeling of the wealth tax is incredibly naive and simplistic... to the point of either being extraordinarily dumb or intentional misleading. Given how intelligent Paul Graham is, I'm gonna say the later.

I don't even gross 200k USD per year and I could afford a 1-2% wealth tax, no sweat.. wouldn't even miss it. In fact my savings would continue to grow almost unabated.

The wealthy want us to believe that their money is the true wealth of America... that the {insert country} would fall apart if the wealthy left. In reality, our wealth is in our natural resources (food, energy generation, fresh water) and industrious, hardworking people of this country.

I say this clearly... Jeff Bezos, Elon Musk, Bill Gates (etc.) are not responsible for wealth creation in this country. There have been 10's of thousands of people who brought the technology of those respective companies to fruition, and an entire society that made it possible. The idea of the "self made millionaire/billionaire" is ridiculous in its essence.

That we DO NOT have a wealth tax, and high taxes on earning above a wealth threshold, is ridiculous and (dare I say) unethical/immoral. We need to entirely re-frame the argument surrounding taxes on corporations, wealth and sky-high incomes.

... my 0.02.

His modeling could be naive and simplistic. But emotionally losing 2% on 200K and 200 billion have very different effects on human brain.

It's one thing to pay 2K totally different thing to pay 4 billion.

You could make an argument that for some one with 200 billion, paying 4 billion isn't that much. But they are likely thinking on the lines of some great grandchild inheriting that money.

>I don't even gross 200k USD per year and I could afford a 1-2% wealth tax, no sweat.. wouldn't even miss it. In fact my savings would continue to grow almost unabated.

THIS! Most Americans just don't have many sitting assets, so even if you made the wealth tax apply equally to everyone, and we all had to pay an additional 1% on our net worth each year, for most of us that's either 1% of our house value or 1% of a small amount sitting in a bank account. For a billionaire that's $10M, which is about my city's whole budget. So another framing could be: "billionaires should annually pay for a small city's municipal expenses" -- it seems more than fair.

Even in the case of not-yet-wealthy-startup-folks, assuming shoddy implementation -- "my money isn't liquid -- paying 1% tax on $1M of monopoly money from a startup is going to be hard" it's actually just $10k. And marginal rates and floors can easily make it all work. I'm a spoiled tech employee, I'd pay 1% of my salary a year for the purpose of helping mitigate income and quality-of-life inequality.

Your first point doesn't really apply, because PG is talking about someone who starts a successful startup, which—at least for Silicon Valley levels of success—would be above the relevant floor. (And he specifies: "over the threshold at which the tax starts".)

Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without. Unless you think all developed countries are going to implement the wealth tax.

I don't think your third point speaks to the issue. The article didn't mention control of the startup, only finances, and I don't think the successful 28-year-old startup founder who's looking at the impact of a wealth tax 60 years in the future is primarily concerned with control of the company at age 88.

Your fourth point also makes no difference. Suppose you make $1 billion, and you earn zero interest on it. The wealth tax takes away 45.3% of that over 60 years. Suppose you make $1 billion and compounded interest at 4% would increase it to $10.5 billion over the course of 60 years. The 1% wealth tax still takes away 45.3% of that over 60 years, leaving you with 54.7% of the $10.5 billion. Multiplication is commutative.

To your fifth point—well, does anyone leave for tax havens, or arrange for as much as possible of a company to be officially inside a tax haven? I think they do. A wealth tax that ends up making a large difference over the long term might make a large difference in how many people leave.

I don't think you've shown that PG "doesn't model how any sensible wealth tax would be implemented or paid" in any significant way.

The wealth taxes being talked about, broadly, would impact people with wealth of tens of millions of dollars and above. But PG talks about what they would "mean in practice for a startup founder." Already he's made a clever rhetorical move and conflated startup founders (a large group) with very successful startup founder (a much much smaller group), in attempting to broaden the people who look like they're impacted directly by his argument.

Over the medium-long term, I think any countries that don't implement a wealth tax (or some other way of addressing wealth inequality) will not remain developed countries.

PG uses 'stock' throughout the essay as opposed to 'wealth', and I believe he did so on purpose; he's appealing to emotion. Startup founders care a great deal about control and ownership, more so than wealth in the abstract. Look later as well - "And at 5% this threshold is getting asymptotically close to being an upper bound on how much of the company you get to keep." - he's directly talking about ownership/control rather than simple wealth.

Yes, this is obviously true. But again, PG's phrasing here is key; he's making it seem like you'll have only 55% of what you start with, which isn't remotely true. It just means your wealth compounds at a lower rate. Much less impactful, clearly.

Maybe. A wealth tax on its own doesn't solve this, you also need to sort out tax havens. And again, you need to look at the real cost of these people leaving - if a billionaire moves away (instead of paying a wealth tax) what does that cost us?

One could perhaps argue that billionaires moving to other countries (and therefore taking their political lobbying that creates environments where becoming a billionaire is possible) might be a net gain for the country losing the billionaires. As other people have said in one form or another, becoming a millionaire is a reason for celebration, but billionaires are policy failures.

> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without.

This is an incredibly simplistic take.

When choosing a USA with a hypothetical wealth tax versus other existing countries, the contrasts are far larger than just a wealth tax. The USA has increasingly bad health/medical costs, university tuition costs, cost of living in affluent areas, deteriorating infrastructure, political strife, etc. It's important to talk about this hypothetical wealth tax as a weighted component of all of the likely decision points.

Of course all "developed" countries (i.e. countries with the high levels of education, health, and safety that can support development of high-margin industries) will institute a wealth tax. And, for the lucky ones that thrive without one, they'll eventually adopt it, too.

> Your second point isn't really relevant for a founder who can choose between one developed country with a wealth tax and another one without.

I can't get why many who advocate against a wealth tax are afraid of raising a single penny on a billionaire amid the fears of scaring him off the country. This is really a bad refuse of Reagan politics that hasn't proved to be true. Moving wealth around while bypassing capital controls is expensive. Relocating a whole business is even more expensive. And if someone really wants to do it to make sure that they don't pay taxes on their billionaire wealth, then they're welcome to go - a developed country has plenty of talent to replace them, and in many cases there will be one less lobbyist to keep inequalities high and politics hostage of his own interests. Lots of taxes have been raised on low-earning classes in the past decades without the blink of an eye, but as soon as someone proposes a tax on the rich some people cry out against the exodus of billionaires.

> Suppose you make $1 billion, and you earn zero interest on it. The wealth tax takes away 45.3% of that over 60 years. Suppose you make $1 billion and compounded interest at 4% would increase it to $10.5 billion over the course of 60 years. The 1% wealth tax still takes away 45.3% of that over 60 years, leaving you with 54.7% of the $10.5 billion. Multiplication is commutative.

Taxation on real estate isn't that different. As an house owner I pay every year a tax that is proportional to the value of my house. Sure, if I look at how much the tax compounds over 60 years I may get scared, but on a yearly basis I can barely feel its impact on my finances. And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society. I don't get how someone sitting on a $1 billion wealth may consider a $10 million tax unsustainable. A large house, a yacht, $1 billion shares in a company or a luxury car are privileges reserved for few, and it's unfair to just let those few sit on such wealth while the government every year has to raise money from those who earn much less. That inevitably ends up with most of the wealth is accumulated in the hands of few, and that's a scenario that society should avoid at all costs.

> And I consider it a fair tax as well - having a house in the middle of Amsterdam is a privilege, and I feel that it's fair to pay for my privilege and redistribute that money back to society.

I don't think that you are paying your fair share, because I am not able to own a house in the middle of Amsterdam, and I think that the wealth gap between us is too big. Your cushy privileged lifestyle is unfair and you should pay more. Consider giving away four fifths of your remaining earnings left after your monthly bills.

A wealth tax shouldn't be designed in such a way that everyone has the same access to the exact same things. It should be designed in a way that removes or lowers the barriers for accessing those things, and gives more people the opportunity to access those things.

On one extreme you have a wealth tax that ensures that everyone has the exact same access to everything - that degenerates in a communist regime where nobody can get richer than another and people don't really have any incentives to be more productive than others.

On the other extreme you have no wealth tax at all - that degenerates in the American plutocracy and anarcho-capitalism, where a tiny fraction of the population owns most of the wealth, can swing elections in whichever direction they like, can make sure that politicians never charge a penny on them, and where the GINI index is at the same levels as it was in 1929 and the intergenerational earnings elasticity is so low that basically the family where you are born determines how much you're going to earn, regardless of your merit.

Between these two extremes there's a wide spectrum of wealth tax rates that you can apply to redistribute wealth and opportunity in a fairer way and find the best trade-off between meritocracy and equality. "Wealth tax aims to make everyone earn the same" is pure bullshit. "If you don't tax the billionaires then they will invest more and the wealth will trickle down to the population" is also another piece of utter Reaganist bullshit. It's time to admit these simple truths, because I'm honestly getting sick of people concluding "a wealth tax is communist" without even considering how wide the spectrum between the two extremes actually is, and I'm starting to question their actual intelligence.

I'm concerned about your particulr privilege here, why should I care about people who are wealthier than you, it's you who can take care of that, isn't it? It's a race to the bottom after all. If you claim that billionaries should not exist, I definitely claim that you are not allowed to own a house in the middle of Amsterdam (I think you should start by moving to Diemen, then we'll let you know if that's enough), and I definitely claim that you shouldn't be wealthier than an average citizen of, let's say, Bangladesh. It definitely will lower the barrier for them. By the same standard that you apply to billionaires. Your arguments about two extremes and how the tax should be designed to not affect your lifestyle specifically is no less a pure bullshit coming from a privileged virtue-signalling and comfortably-living european.

On the fourth point, the distinction is material. A bystander may feel bad for the founder if their wealth drops from $1B to a mere $550mm. But the bystander is unlikely to feel bad for the founder if their wealth only rises, naturally, to $5.5B or so.

If the real (ie inflation adjusted) rate of growth of capital is greater than the wealth tax, the wealth tax does not cause _actual loss_ to the wealthy.

The nature of the psychology of loss aversion means the distinction between "loss" and "reduced gain" matters. The loss may sting enough to cause the founder of move, but reduced gain will only matter if it prevents them from achieving a material goal.

He tries to compare a wealth tax to an income tax. But they are not comparable. If a person's gains from capital are above a certain threshhold and exceed her gains from income, then that person can afford to pay an additonal tax, not based on income.

CEO's can infamously "work" for $1/year because they do not have to rely on income (labor) to support themselves.

At a certain point, "income tax" becomes a misnomer. Thanks to the value of capital, some people do not actually have to engage in labor. Through work done by well-paid advisors, it is at this point that many of them have also reduced their income tax liability to zero, more or less.

Comparing a wealth tax to an income tax makes little sense.

If Piketty is right, in today's world gains derived from capital always exceed gains from labor (income) over the long term. That excess just keeps accumulating. The wealthy keep getting wealthier. Quite the opposite picture from Graham's, where gains from wealth dissipate over a lifetime.

I will say this, his model looks great in a text-only browser. Wide margins, a basic table; succinct. The simplicity is pleasing to the eye.

Government already owns 40% of what everyone earns in the US (see government spend as % of GDP is about 40% now). If that's not enough to pay for stuff, nothing ever will be. And it's much much higher if you're living in a blue state where salaries and COL are much higher, not to mention their state taxes are higher.

Taxing the wealthy is not an effective means of helping people. If you taxed every last billionaire in the US, 100% of all the wealth they earned over the last 50 years and gave it to every member of the US, split evenly, and divided by 50 years, you'd get a pitiful small number of about 200$ per person per head. (2.7 trillion total billionaire net worth in US / 300 million / 50 )

Its far less than 40% of what the extremely wealthy earn.

If Americans are temporarily embarrassed millionaires, then many of the good people on HN are temporarily embarrassed tech billionaires.

Silicon Valley is full of millionaires who are temporarily embarrassed tech billionaires. Thus, why they come out in threads like this so wildly. Slow day at the home office - I guess.

The amount of people I know with millions in assets but think they're poor and will someday be a billionaire is astounding. ("I just bought a nice vacation home in Lake Tahoe and a rental property in Santa Clara but I'm struggling with my little home in Palo Alto, you know? I barely have any money." - real example I've encountered multiple times) They're, of course, against wealth taxes. They are all convinced they're gonna be the next billionaire and that any taxes will absolutely destroy them in their path to ... whatever their destination is. (They don't even know - they all just want recognition)

>First, any wealth tax being seriously discussed has a floor and/or has marginal rates, probably starting at 1 or 5 or 10 million (or higher).

The floor is adjustable. As more tax money is squander, the floor will be adjusted for greater taxation.

>Second, taxes don't disappear into nothingness

They actually do. The return on your tax dollar in California is abysmal.

>Fifth, the idea that people "will just move to another country" is very silly.

They can move to another state. Schwab is moving to TX. The tax savings will build their new corporate HQ in Westlake. How many Hedge Funds have left Conn, NY, NJ, etc for Florida?

I don't have a dog in this fight. Taxes are necessary but when the State is not held accountable for their spending and continues to squander tax dollars, there is no amount of money that will ever satiate them.

I hope California goes through with their plan. It will be an interesting to see the outcome.

There's a lot of assumptions in there that the economy is rapidly proving wrong right now. Wealth doesn't grow for everyone - and an income tax is more fair because people whose wealth is going up pay more than people whose wealth is going down.

We live in a world where remote work is rapidly becoming not just acceptable, but standard. Post-coronavirus geographic mobility will be high.

Look, we already have a wealth tax. Instead of dinging you every year and guaranteeing plenty of billable hours for accountants, we bundle it up in a big charge at the end. Everyone dies. How about we just enforce inheritance taxes and call it done?

> Wealth doesn't grow for everyone

Yeah, but it does generally grow for people who have millions of dollars, especially over the course of the 60 year period that the original essay is discussing. In the short term, the stock market fluctuates and has recessions, but in the long term it's only ever gone up.

> How about we just enforce inheritance taxes and call it done?

Because having a semi-predictable tax base is good? It's a lot easier to manage the government budget if you get 2% of the value every year, versus 100% of the value in a lump sum at some unpredictable point in the future. There's only 630 billionaires in the US, so it doesn't seem like statistics helps even this out, either.

The difference between an income tax and a wealth tax is that currently those with wealth are able to avoid income taxes. Approaches like negative gearing and other strategies exist.

I'm on the fence on estate taxes as a general rule I'd say it definitely make sense above some threshold but if you look at the mess with Samsung there definitely needs to be some thought in how illiquid stocks are dealt with. I'd put a bit of cash on Lee Kun-hee sill being 'alive' until after my death or at least until a change in South Korean tax law.

There are a lot of weird incongruities in what you're saying here. First, how is an income tax more fair than a wealth tax? There is no guarantee at all that "people whose wealth is going up pay more than people whose wealth is going down.", let alone that the relative amounts of those items are fair. Additionally, wealth often accumulates via tax-advantaged vehicles that lower income individuals simply don't have access to.

Next, are you really implying that people will magically move to another country entirely because they can work remotely? The portion of workers who are even able to do such a thing, let alone likely to, is vanishingly small for many reasons (including, interestingly, income taxes).

And to your third point... again, you seem to not be aware of how estate planning works specifically to avoid paying taxes via things like trusts and inheriting shares in companies. Fixing inheritance taxation wouldn't come even close to being as effective as a wealth tax in preventing long-term accumulation of wealth with little economic input.

Here's where we're at: we have been trying income tax and the rich keep getting richer. Demonstrably and repeatedly. It isn't working, unless your definition of "working" is robber-baron era levels of economic disparity in America. If your proposed solution is variants of income taxes, well then you know the saying "define insanity". Wealth taxation is the only plan I've seen that logically prevents workarounds and actually serves to balance economic outcomes for Americans in the long term.

> How about we just enforce inheritance taxes and call it done?

How about we just enforce an inheritance tax in your family alone, and donate everything you have to a local charity and see if it makes a difference in your community? Your goal is to give away your wealth, as far as your comment goes, so it sounds like a legit plan of action. Just don't impose the same goal on everyone else.

because that's not how societies work, you live in a state you benefit from the expenses and investments and other people in the state and you pay in to that, sorry it is the deal, in the last 40 years there has been a reversal of where the tax burden falls not to mention there are trillions of dollars of tax fraud https://www.taxjustice.net/2020/07/22/tax-justice-networks-o...

> because that's not how societies work

Can you prove that? So far I just see a bunch of people claiming other people's wealth their own to dispose of. That's definitely not how a healthy society is able to function in a long run. USSR tried that, Cambodia tried that, Venezuela is trying it now.

> Second, taxes don't disappear into nothingness - they pay for civilization.

Modern monetary theory disputes this commonly held idea that governments need to collect tax before they can spend it on public works. On the contrary, government creates money to pay for public works, which leads to money in circulation, and in turn allows tax to be paid. The purpose of tax is to redistribute wealth and lead to harmonious society.

Or, and that's another possibility we should consider, taxes disappear into the pockets of bureaucrats and a handful of rent seekers with very little effect on civilization.

Before arguing for additional taxes, one must first show some evidence that we're getting reasonable ROI on what we're already paying, and https://transparentcalifornia.com/ shows exactly the opposite.

I am 100% in support for public healthcare, for example, but it will continue to look like a financial absurd as long as a knee MRI is 3x of any other country. Same thing with the higher education, public housing, etc.

While we're considering new possibilities, maybe there should be a wealth tax AND more accountability in allocation of government funds.

Don't forget that Paul's stock portfolio doubled in the past 4 months on the back of a "poor tax"... what the Fed printed and gave to banks to buy stocks (via buying bonds).

Right so the government that already has enough money to fund all those good public services will suddenly stop funding the military to a ridiculous degree and finally use taxes for the best interest of the people?

Oh, I don't disagree at all! Government spending is currently not how I would allocate things. But somehow I expect that wherever taxes were going, rich people would be displeased with the amount of taxes they were being told to pay. And honestly, I don't blame them, it's a very natural feeling, I'd rather not pay taxes either.

Here's my thinking: as a society, we should decide on what needs to be handled by the government. Defense, roads, pandemic response, scientific research, welfare, healthcare, whatever. Make your own list, we can all hash that out. Then we figure out how much that costs, then we figure out the best taxation method to pay for all of it. I think the goals of that tax system should be to encourage beneficial habits, support economic growth, lower people's standard of living as little as possible, and generally maximize utility. It seems pretty clear that in this kind of system, a progressive system that taxes the wealthy more is a clear winner.

I'm sure you meant to RAISE the standard of living.

I worded it badly - I mean that the paying of taxes will always lower someone's standard of living, but we should minimize that as much as possible - basically that progressive taxation is clearly the better way.

We should also work out the costs of not having good cheap public healthcare, education, infrastructure - and not also having public access to the best R&D talent because it's working to make billionaires even richer through clever rent-extraction strategies from the markets.

And so on.

All of these negatives cost money. Aside from the humanitarian considerations - not trivial - they're a huge drag on social mobility, innovation, and business opportunity.

The fact that some people feel irrationally inconvenienced by the prospect of extra taxes - which in reality will not materially affect them or their opportunities in any significant way - is an unconvincing reason to ignore the staggering social, economic, and political costs of their uniquely privileged position.

> The fact that some people feel irrationally inconvenienced by the prospect of extra taxes - which in reality will not materially affect them

Perhaps it's because we oppose them in principle.

If you are accepting that the statements (1) "[wealth tax] in reality will not materially affect them", and (2) "[status quo is] a huge drag on social mobility, innovation, and business opportunity" are correct; opposing them in principle is not rational.

> Here's my thinking: as a society, we should decide on what needs to be handled by the government. Defense, roads, pandemic response, scientific research, welfare, healthcare, whatever. Make your own list, we can all hash that out. Then we figure out how much that costs, then we figure out the best taxation method to pay for all of it.

We already do that. It's called politics. However, you seem to want a strictly regimented "waterfall" version of politics, but in reality it has to be continuously iterated and handle the complex interplay of many factors (like different people having mutually exclusive ideas of what the government should actually do).

> Second, taxes don't disappear into nothingness - they pay for civilization

You've never worked in government it sounds like. It's a bonfire of money.

Both are true. It's a bonfire of money. And it gives us civilization. It's horribly inefficient and wasteful, and yet very few of us want to live without it. (But more efficiency would absolutely be welcome.)

Civilization is being created by the creators of wealth. Before you can distribute anything, that anything has to be created. Once it's been created, it belongs to its creator by the unalienable right of property, the right that made the Civilization that you are currently living in possible. If you believe otherwise, you should sell, let's say, 95% of your total assets immediately and distribute that wealth among memebers of your local community to make it a slightly better part of the civilization you want to live in.

Walk me through how you have property rights without the state enforcing then.

Where have you seen mine claiming that there's no role for the government as a protector of property rights? In fact, it's one of a few only valid purpouse of any state. Not welfare, not free stuff, but the protection of unalienable rights of individuals.

I'm so tired of this boring old fairy tale where mythical "job creators" will the entirety of civilization into existence like gods raising the earth from the ocean with a touch of their spear, or Athena leaping fully formed from the head of Zeus. Frankly, the mythologizing serves to justify a level of deference to the ultra-rich that they simply have not earned.

In order for the "wealth creators" to work, they need a stable legal system and a currency just to start. Those things aren't free. And if they wanted to create, as a completely random example, a company that sells and delivers books, they might find it convenient for there to already be a well-developed trans-continental transportation infrastructure (and traffic laws, vehicle safety standards, air-traffic controllers, publicly-funded universities training students in logistics and supply-chain management), ports to receive goods from overseas (and trade agreements with other countries, and a navy to protect shipping lanes, and internationally standardized shipping crate sizes), a fire department to come rescue your investment when a warehouse full of books is burning, and perhaps a revolutionary global telecommunications system to let customers buy books with the click of a button (and a government research agency to invent it).

"Wealth creators" exist as a part of the system - not apart from it. Their attempts to create new and better products should be encouraged and even celebrated. But we should never forget that those opportunities only arose because of a collective investment by all of America, funded by American tax dollars. No investment - no Amazon, which is why Jeff Bezos doesn't live in the Democratic Republic of the Congo. So when "wealth creators" refuse to contribute to that investment, they are stifling the innovation and creative potential of the next generation of dreamers and inventors.

And as an aside, property rights are a social fiction. They exist only as long as it serves the collective interest of society. You "own" a particular piece of land because you happened to see it first, just as much as you "own" the front seat because you called shotgun. If you believe otherwise, you should immediately return your land to the native people it was stolen from.

> If you believe otherwise, you should immediately return your land to the native people it was stolen from.

Define native people. Did any other peoples live on that land before them? Did any tribe fight with the other for the same piece of land?

> And as an aside, property rights are a social fiction.

I'm glad you said that. Next time robbers get into your house don't call the police, instead suggest your service to them.

> In order for the "wealth creators" to work, they need a stable legal system and a currency just to start.

Before you have any currency you need a valuable stuff to be created so that you can measure its value by your currency. Before you have a legal system you have to agree on the fundamental principles foundational to your way of living. Unalienable property right is one of these fundamental principles that made possible all the stuff around you and that you benefit greatly from. If you believe otherwise, try a lifestyle in Venezuela or Somaliland for a change.

> they might find it convenient for there to already be a well-developed trans-continental transportation infrastructure

Infrastructure is created by the same wealth creators https://en.wikipedia.org/wiki/Great_Northern_Railway_(U.S.) Your government doesn't produce it out of nowhere, and before the government is able to contract any kind of infrastructure work, it has to extort money from those who created this currecny-measured value in the first place.

> Define native people. Did any other peoples live on that land before them?

Okay, how about "the people who first settled a particular piece of land, thereby laying an inalienable claim of ownership to it."

> Did any tribe fight with the other for the same piece of land?

Oh wait, never mind. If somebody else didn't recognize their rights, I guess you don't have to either. Sounds to me like you're fishing for a reason not not respect their claim to the land. I can't help but question how committed you are to the vision of property that you presented. Inalienable doesn't mean "absolute, except when somebody else violated it first", or "except when the theft happened a long time ago", or "except when somebody else is living there and it would make them really sad to have to leave". It means always, forever, no exceptions. So if you don't believe that, why not just admit so?

> Next time robbers get into your house don't call the police, instead suggest your service to them.

I'm glad you said that. It's an incredibly hackneyed trope, but also perfectly illustrates my point about how enforcement of property rights serves the collective interests of society and isn't absolute. The police are not actually there to protect my property at all costs. They are there to enforce the social contract to the extent that we have collectively decided is economical. This is a balancing of various concerns (privacy, safety, financial) of the community, not a recognition of any supreme right. In fact, barring extraordinary circumstances, the police will do absolutely nothing to help me recover my property. They will probably snap a couple pictures and take down a police report, but making me whole is the responsibility of my insurance company.

> Before you have any currency you need a valuable stuff to be created so that you can measure its value by your currency.

Finally an interesting point that directly addresses the substance of what I wrote. It's true enough, but misses the point that a "wealth creator" who lives in a non-monetary society probably isn't accumulating sufficient excess profits for it to be socially useful to tax them, which I will remind you is the context of this discussion.

> Before you have a legal system you have to agree on the fundamental principles foundational to your way of living.

No, you don't - a legal system is exactly how you reach that agreement. A system of laws isn't like a mathematical structure, with immutable axioms at the foundation and theorems built on top. It's more like an empirical science, where the theories evolve and adapt to fit the realities of the physical world. That's why even the constitution can be amended.

> try a lifestyle in Venezuela or Somaliland for a change.

If those countries have anything in common, it is that ownership, as defined by ability to occupy protect the land with a gun or a pointy stick, has subsumed all other aspects of the social contract. So if you want to live somewhere that respects your right to kill others in defense of property, those would be excellent choices. As I pointed out in my comment, my friend Jeff Bezos and I would prefer to stay in a society that takes a more holistic view of social obligations, instead of recognizing only the rights of whomever happens to be exploiting a piece of property at this particular moment.

> Infrastructure is created by the same wealth creators https://en.wikipedia.org/wiki/Great_Northern_Railway_(U.S.)

First of all, here is a quote from the very top of the article you cite: "The Great Northern was the only successfully built privately funded transcontinental railroad in U.S. history. No federal subsidies were used during its construction, unlike all other transcontinental railroads." I'm not sure this proves what you think it does. And even if it did, I offered an obnoxiously long list of other elements of the infrastructure that were provided, in part or in whole, by Uncle Sam. So unless you're going to claim that Amazon delivers exclusively via the only privately funded railroad, I'm not sure if I see the relevance of this point. But since you brought them up, I will also point out that the railroad industry was one of the most predatory monopolies that has ever existed, and is the root cause of much of current day anti-trust law, which was establish when society decided that their freedoms were being excessively harmed by allowing exclusive, unlimited control of such an important resource. Their operation is a perfect example of the consequences of unfettered accumulation of capital, and a great argument for a wealth tax. In fact, Andrew Carnegie is the only person in US history to ever have a tax bracket of his very own.

Your tax dollars as a wealthy individual also pay for the police forces to keep the less wealthy people from coming and just taking your property, as they might in a state with zero taxes and thus zero public services, without you spending extra money to hire security who would be loyal only to your dollar and who you couldn’t trust not to turn on you in an instant since it might just have no consequences for them without a judicial system.

> Your tax dollars as a wealthy individual also pay for the police forces to keep the less wealthy people from coming and just taking your property

No disagreement with that, I am willing to pay for police protection of my property and myself, after all that's a valid purpose of a government. Yet this topic is not about paying for your protection, is it? This topic is about ever-growing attempts to extort money for an unknown cause under a pretense of virtue.

> Fifth, the idea that people "will just move to another country" is very silly.

Definitely. After a certain point, increasing wealth isn't about wealth, it's about power. I would wager that most of the uber-wealthy would rather have slightly less power in a place that they want to have power in, rather than have marginally more power in a place that's not their home.

A long time ago the Western world had a voluntary wealth tax of sorts, the tithe. That's 10% of your income and/or property to your church. Admittedly taxes were then much lower, but whatever else you may think of them, churches poured vast energy and resources into social services.

Now that it's an elected government instead of an opaque non-profit providing social services, they've become unpopular with the wealthy. I suppose the government can't assure you a place in God's Kingdom :-)

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

Edit: certain of these are based on land, not income; see the article.

That's an income tax, not a wealth tax.

The zakat in Islam is a wealth tax. It is calculated based on how much wealth you have continuously controlled over the last year.

Correct. And it's not negligible either at 2.5% per annum according to some sources.

I think most people who pay a tithe base(d) it on income, not wealth, so it doesn't have the snowball effect that a wealth tax does. Islam's zakat is the only exception I know of, but IIUC even that is paid only on excess wealth.

Not to mention that real estate taxes and excise taxes charged as a % of value are already understood wealth taxes already. No problem there.

"Fifth, the idea that people "will just move to another country" is very silly. If some people do leave, or start companies only in other jurisdictions, that just means there's a market opportunity for the many people who remain."

I think you misunderstand this in two different ways.

First, retirees on fixed incomes are acutely, almost comically attuned to state income tax rates, property taxes, etc., and many of them plan their entire retirement and residency around it.

Second, although I agree with you that it is very difficult to just arbitrarily uproot and move your family, etc., because of a tax code change, it's not that difficult for wealthy people - especially those expecting a liquidity event - to buy a house on Lake Tahoe on the Nevada side and take the kids out of school for (365/2) days. "Remember that time we spent the ski season on the lake ?"

Wealth advisors and family office managers, etc., speak of this casually. Further, if you live in a wealthy community in the Bay Area (Ross ? Los Gatos ?) you'll see third or fourth cars with Nevada plates. Not an accident.

So, yes - I think you're right - nobody is going to stop living in California if we continue to increase the top end tax rate ... but define "living".

Third, the market is (with exceptions) global. If Google moves its headquarters to Toronto, that doesn’t open up an opportunity for a new American search engine.

I agree with you, but I do think something has to be discussed about the the issue with shares. Selling shares to pay tax does seem strange, the impact of losing ownership just to pay tax is weird to me.

Seems it make more sense to tax when the shares are sold, but with a percentage based not on your taxed income, but your whole asset holding. Or just to tax the companies themselves more heavily.

Right, but I'm saying no one would actually sell off their shares to pay the wealth tax (I mean, maybe some would in some years). They'd borrow against the assets, or take dividends, or whatever.

I get that, but it seems quite cumbersome and complicated to me. There's got to be a simpler solution that won't involve borrowing. That's where a simple change on income tax like I described I feel might be nicer.

The end result is the wealthier do get taxed more, but the taxing still only happens at liquidation.

Whereas currently this isn't the case. Since a wealthy person can cash out 10 million a year, be taxed on that to the same extent as someone else who made 10 million, yet the next year the wealthy person total wealth could have gone up, making it they can cash out 10 million year over year forever and still grow richer, all because they always get taxed the same as someone who is less wealthy but of a similar income.

Norway's wealth tax starts at ~$200K and has minor discounts for main residence and volatile shares, but that's about it.

And, yes, it is often possible to take dividends from an established, profitable business - but it is horrible for the way the startup (and investment in distant future) economy works, which is likely pg's frame of reference -

I start a company, a very promising one, but it needs 20 years and billions of capital to get there. I raise $30M, still keeping 50% of my company at this point; Oops; on paper, I'm worth $30M, and have to pay (at e.g. 1%) $300K wealth tax in the first year. I cannot get any dividend; I usually can't even sell my shares or borrow against them. And it gets worse each time the company valuation grows (whether I raise more money or not). Seems far fetched? That's Amazon. Okay, Amazon is one in a million you say - but notice that the bad parts apply to ALL founded companies, whether or not they were as successful as Amazon.

So, in addition to the wealth tax, something's got to give.

Either you exclude non-liquid assets (which is a huge hole that will render wealth tax moot). Or you accept wealth-tax-payment-in-kind (that is, you put 1% of your shares into government custodianship every year, and then can convert them to tax money whenever this becomes a possibility).

Or, the entire investment world changes - either investors will have to get used to paying an extra 1.5% to cover the founder's tax liability; or valuations will drop an order of magnitude to let founders pay out of their own pocket. Or investment will be diverted to places that don't have this tax. Or it will just drop significantly.

But the assumption that wealth tax will have minor (if any) effect is ridiculous. Somewhat comparably, Israel put a very small turnover tax on stock exchange trading (which is not wealth tax, but is close enough for practical purposes) and as a result, the Tel-Aviv Stock Exchange volumes went down by an order of magnitude.

"Founders" that the author wrings his hands about so much, owe 99% of their ability to generate wealth to the government. If you're from the US, you own most of it to global American imperialism and hegemony. You should be giving it up so that others can have the same opportunity as you did.

I live in a country with a 1.3% wealth tax (the Netherlands), but as long as you own more than 5% of a company it doesn't apply to that part (a bit more complicated than that, but effectively this is what happens).

The wealth tax does apply once it's cash, so dividends you received, or proceeds from selling (part of) the company. I would imagine a wealth tax in the US could do the same thing.

>taxes don't disappear into nothingness - they pay for civilization

Paying for civilization creates the conditions for even more elites to emerge. From an inequality perspective, you probably should disappear it into nothingness.

The exasperated/condescending tone of your comment is really inappropriate, given the number of specious and economically fallacious arguments contained in it.

Let's go through each:

>>There's a reason failed states and unstable/developing countries generally aren't where people are looking to startup the next big tech company.

There's a negative correlation between government spending levels as a percentage of GDP, and economic growth rates. Your implication, that society is better off with high levels of taxation, is not supported by the science on the matter.

>>Third, any smart founder isn't going to just sell 1% of their stock every year and pay the wealth tax with that. They'll take dividends, or take out a loan against the value of the stock, or use some cash from other investments, or whatever, and maintain control of their company. Yes, over the long term they'll lose some wealth, but not necessarily control of their company, unless that's the decision they make.

Completely irrelevant to the point. The point is that you lose much of the wealth you would have otherwise gained, in the absence of the wealth tax. Whether that's because you have to pay out more dividends, that would otherwise have been reinvested, to transfer to the IRS, or take on loans, that have to be paid back with revenue that would have otherwise been reinvested, is incidental.

Wrong. The losses also have to be compounded. That 1%, had it remained invested, would have grown at a compounding rate as well. So you lose the 1% and all compounded gains on it.

>>Fifth, the idea that people "will just move to another country" is very silly. If some people do leave, or start companies only in other jurisdictions, that just means there's a market opportunity for the many people who remain.

This is a misunderstanding of the factors behind an investment. Investment does not automatically emerge to fill every market opportunity. It emerges when the ROI on potential investments meets the demands of the available investable financial capital. Investment decreases when the expected ROI decreases, and when the available investable financial capital decreases. A wealth tax decreases both the expected ROI, and the available investable financial capital.

Moreover, you're completley ignoring competitiveness. Firms in low tax tax jurisdictions will outcompete firms in high tax ones, ceteris paribus. Opportunities are not distributed across the world evenly, and one factor that affects opportunity is tax rates.

>>I'd much rather we have well funded schools and welfare for those who need it.

Government spending as a percentage of GDP has increased from 25% in the 1950s to 40% today. Social welfare spending increased by an average of 4.8%, EVERY YEAR, between 1972 and 2010.

How much more do you think government spending should increase? What share of private economic output should be non-consensually redistributed for social welfare programs in your mind? Will there ever reach a stage where you think the negative effects on capital formation, from further tax hikes, will outweigh the positive effects of a greater share of economic output being available to the poor in the form of cash payments and social services?

> The exasperated/condescending tone of your comment is really inappropriate, given the number of specious and economically fallacious arguments contained in it.

Your own comment is considerably more condescending. As for speciousness...

> There's a negative correlation between government spending levels as a percentage of GDP, and economic growth rates. Your implication, that society is better off with high levels of taxation, is not supported by the science on the matter.

That correlation is disputed, to say the least. Even if it weren't, economic growth rates, while important, are not the be-all and end-all of society being "better", especially when a large amount of the wealth is concentrated in a few hands.

>>Fourth, this effectively ignores that wealth is a thing that grows and compounds. If your wealth is increasing at 4% a year (very attainable for the class of people a wealth tax would affect) a 1% wealth tax really doesn't have as big an impact on your long term wealth as this makes it seem. > Wrong. The losses also have to be compounded. That 1%, had it remained invested, would have grown at a compounding rate as well. So you lose the 1% and all compounded gains on it.

Perhaps. But a 4% rate of increase would still belie the contention in pg's post that "by 5% [the threshold at which the tax starts] is getting close to being an upper bound on how much of the company you get to keep". It seems probable that pg simply did not take interest into account.

> Government spending as a percentage of GDP has increased from 25% in the 1950s to 40% today. Social welfare spending increased by an average of 4.8%, EVERY YEAR, between 1972 and 2010.

Over the same period, the share of income going to the top 1% doubled.

> How much more do you think government spending should increase? What share of private economic output should be non-consensually redistributed for social welfare programs in your mind? > Will there ever reach a stage where you think the negative effects on capital formation, from further tax hikes, will outweigh the positive effects of a greater share of economic output being available to the poor in the form of cash payments and social services?

Ever? Certainly, if you keep cranking up the number. But the United States isn't necessarily at or even near that stage, considering that several large European countries have strong economies despite much higher government spending as a percentage of GDP.

>>That correlation is disputed, to say the least. Even if it weren't, economic growth rates, while important, are not the be-all and end-all of society being "better", especially when a large amount of the wealth is concentrated in a few hands.

The correlation is plainly evident in the datasets. It's a very strong correlation that has been widely observed and studied.

>>It seems probable that pg simply did not take interest into account.

It's possible he did. Regardless, PG clearly laid out why such taxes are absolutely disastrous for both the incentives to start companies and the expansion rate of existing companies. You can fiddle around with the numbers, and the basic conclusion wouldn't change.

>> Even if it weren't, economic growth rates, while important, are not the be-all and end-all of society being "better", especially when a large amount of the wealth is concentrated in a few hands.

Economic growth rates strongly correlate with improvements in overall socieconomic metrics. See my comment in the other discussion: https://news.ycombinator.com/item?id=24207752

>>But the United States isn't necessarily at or even near that stage, considering that several large European countries have strong economies despite much higher government spending as a percentage of GDP.

The US and large European countries have all seen their economic and wage growth rates stagnate since 1970. This is disastrous for the objective of improving quality of life. Nothing has a larger long-term impact on quality of life than per capita GDP. Productivity growth is the basis of nearly every improvement in people's living conditions.

Of course, Western countries still have strong economies. Other countries cannot catch up to three centuries of superior industrial development in a single generation. But the rate of improvement has stagnated, and other less social democratic countries have closed their gap with the West, so there is absolutely no reason to assume the last 50 years' experiment in social democracy has been a success.

>>That correlation is disputed, to say the least.

By whom?

>>>There's a negative correlation between government spending levels as a percentage of GDP, and economic growth rates. Your implication, that society is better off with high levels of taxation, is not supported by the science on the matter.

I don't think your correlation suggests what you think it does - look closer at which countries have the highest GDP growth rates. Economic growth rates are not a good indication of countries where people would generally choose to live. I'd generally use HDI, happiness, life satisfaction, or similar, all of which correlate to higher government spending.

>>>Wrong. The losses also have to be compounded. That 1%, had it remained invested, would have grown at a compounding rate as well. So you lose the 1% and all compounded gains on it.

Yes, of course. So your wealth (above the threshold) grows at an effective 3% instead of 4% (or whatever). PG's essay makes it seem like your fortune will dwindle away to nothing, which isn't true. It'll just grow more slowly than it could.

>>>Firms in low tax tax jurisdictions will outcompete firms in high tax ones, ceteris paribus

But this misses the point - other things aren't equal! California already has a higher tax burden than many other states, the US already has higher taxes than many other nations, and still they are among the richest places on earth. Higher taxes can create a society much more beneficial to all of its members, including the rich ones.

>>>How much more do you think government spending should increase? What share of private economic output should be non-consensually redistributed for social welfare programs in your mind?

Enough to make sure every person has enough to eat, somewhere to live, universal healthcare, access to education, and the opportunity to succeed.

>>>Will there ever reach a stage where you think the negative effects on capital formation, from further tax hikes, will outweigh the positive effects of a greater share of economic output being available to the poor in the form of cash payments and social services?

Unlikely. If there is such a stage, I suggest to you it's well below ~5% on all wealth above ~$10 million (which is at the top range of what is discussed in these kind of wealth tax proposals).

>>I don't think your correlation suggests what you think it does - look closer at which countries have the highest GDP growth rates.

I don't follow. The countries with the highest GDP growth rates are the ones seeing standard of living and poverty rates improve the fastest.

Within the developed world, those countries with the highest GDP growth rates are those that are producing the highest wage growth for their people.

>>I'd generally use HDI, happiness, life satisfaction, or similar, all of which correlate to higher government spending.

HDI, happiness, etc improve faster in countries with higher economic growth rates. A common pattern could be that countries institute sensible economic policies, based on what science (Economics) says works, and then when they get wealthy, become complacent, and adopt all sorts of anti-capitalistic policies that retard economic growth rates, which in turn results in all socioeconomic metrics stagnating.

Look at the Scandinavian countries: they attained the highest life expectancy and health outcomes in the world by the 1960s, after a century of very free-market oriented policies and moderate tax rates.

Then they adopted very socialistic policies, and subsequently saw both their economic growth rates, and their rankings in metrics like per capita GDP and life expectancy, suffer.

Hong Kong and Singapore for example caught up to and surpassed every Scandinavian country in life expectancy over the last 50 years. That is not a sign of superior policy in the European social democracies. That's a sign of squandering a lead, based on economically misinformed narratives favoring non-consensual income redistribution.

>>So your wealth (above the threshold) grows at an effective 3% instead of 4% (or whatever). PG's essay makes it seem like your fortune will dwindle away to nothing, which isn't true. It'll just grow more slowly than it could.

The essay explains how much you're losing over time, compared to what you would have had in the absence of the wealth tax, but okay, fair enough.

>>But this misses the point - other things aren't equal! California already has a higher tax burden than many other states, the US already has higher taxes than many other nations, and still they are among the richest places on earth. Higher taxes can create a society much more beneficial to all of its members, including the rich ones.

Being among the richest places in the world is a consequences of centuries of prior policy, not the policy in this one snapshot in time alone! The labor productivity and wage growth rates clearly show a stagnation since the high-social-welfare-spending policies were instituted.

California has consistently lost the middle class to Texas since becoming a very high tax rate state. This pottentially indicates that the latter has better policy than the former.

>>Enough to make sure every person has enough to eat, somewhere to live, universal healthcare, access to education, and the opportunity to succeed.

What if that means 99% tax rate? Do you really think that is better for the population in the long run?

Where do you think opportunity comes from anyway? Your assumptions on what leads to societal progress contradicts the findings of a century of economic scholarship, and with all due respect, are every bit as ignorant as anti-vaxxerism.

>>Unlikely. If there is such a stage, I suggest to you it's well below

Wait, you think it's unlikely that there is a point at which higher tax rates for more social welfare programs would do more harm than good?

>>>I don't follow. The countries with the highest GDP growth rates are the ones seeing standard of living and poverty rates improve the fastest.

Right, because they have a lot of low hanging fruit to pick. I'd rather live in a advanced economy with a high standard of living than a developing one with a high growth rate.

>>>Look at the Scandinavian countries..

They still have excellent outcomes and high rankings in the HDI and Satisfaction with Life index. Hong Kong and Singapore are also doing excellent work, especially on the HDI. The Scandinavian nations are doing a lot better lowering poverty and wealth inequality though.

>>>The labor productivity and wage growth rates clearly show a stagnation since the high-social-welfare-spending policies were instituted.

Are you sure of the direction of that causation? Did welfare policies lead to low labour productivity/wage growth? Or were they introduced to address some of that stagnation?

>>>What if that means 99% tax rate? Do you really think that is better for the population in the long run? Where do you think opportunity comes from anyway? Your assumptions on what leads to societal progress contradicts the findings of a century of economic scholarship, and with all due respect, are every bit as ignorant as anti-vaxxerism.

A 99% tax rate on marginal incomes above, say, $10 million, or marginal wealth above $1 billion, would probably not be disastrous, no. I'm not suggesting it, I think ~60% max on marginal income and ~5% max on marginal wealth would be high enough. Please, lay out the harm for me there - what would befall us if we established even the 99% rates? What societal progress do you think is driven by high net worth individuals hoarding wealth? The growth of the middle class has been the overwhelming source of wealth and standard of living increases over the last century.

>>>Wait, you think it's unlikely that there is a point at which higher tax rates for more social welfare programs would do more harm than good?

Oh, sure, you could sabotage society easily enough if you had the highest marginal rates start at too low an income or wealth. But fundamentally, we could probably have a fully functional (better than the current) society where no one has more than $1 billion of wealth or $10 million/year income or something. But that's not really not what we're talking about - the question is if our richest 1% had slightly less money and our poorest 10% had slightly more, would society not be better off?

>>Right, because they have a lot of low hanging fruit to pick. I'd rather live in a advanced economy with a high standard of living than a developing one with a high growth rate.

Of course I would rather live in an advanced economy, but the question is, how does an economy become advanced.

The evidence strongly suggests it's most rapidly achieved through adoption of pro-market policies.

The last 30 years has seen the largest most rapid reduction in the global poverty rate in human history, and almost all the decline in poverty was due to economic development, which economists have concluded was massively facilitated by the spread of market institutions like property rights:

1. https://www.theatlantic.com/magazine/archive/2010/07/the-pol...

2. https://www.csmonitor.com/World/2016/0207/Progress-in-the-gl...

3. https://www.economist.com/leaders/2013/06/01/towards-the-end...

There is no reason to assume that this relationship between pro-market policies and high rates of economic growth stops existing for advanced economies.

We see indications of it manifesting across the developed world, like the superior performance of Hong Kong and Singapore relative to other developed economies, or Iceland relative to other Nordic countries, or in cross-European studies correlating low tax rates with high economic growth rates.

Economic growth is the primary source of all improvements in quality of life, so we should have policies that maximize it. It is how an advanced economy comes to be that way.

And there is no indication, or reason to believe, that economic growth's positive impact on quality of life disappears when economies become advanced. There is a strong correlation between per capita GDP and quality of life, and the reason is obvious: higher productivity gives people greater means to meet their needs.

>>They still have excellent outcomes and high rankings in the HDI and Satisfaction with Life index.

My point is that Hong Kong and Singapore did substantially better than them in improving their metrics.

Like I said, the Scandinavian countries attained the highest standard of living ranking in the 1960s, when they were still very free market oriented and had moderate tax rates, and had just had a century of the best economic growth rates in the world, again with free market economic policies.

Your analysis misattributes the cause of their high standard of living to their current social democratic policies, when all the evidence indicates that it was due to their previously more free market policies.

>>A 99% tax rate on marginal incomes above, say, $10 million, or marginal wealth above $1 billion, would probably not be disastrous, no.

This would be absolutely disastrous. Major companies, that bring in tens of billions in export revenue for the US, and produce groundbreaking innovations for the world, would have been founded and centered outside of the US, or simply never come into existence, with those kinds of disincentives for entrepreneurs and investors in place.

> Like I said, the Scandinavian countries attained the highest standard of living ranking in the 1960s, when they were still very free market oriented and had moderate tax rates, and had just had a century of the best economic growth rates in the world, again with free market economic policies.

As a Scandinavian that is an absolutely ridiculous claim. The free market period is now, with its quickly widening inequality, and the more socialistic period was during the period you claim to be "very free market" oriented.

The evidence contradicts your belief. Scandinavian countries have much higher levels of government spending, as a percentage of GDP, today, than any time before 1965. The majority of that government spending is on social welfare programs.

High GDP growth rate leads to high GDP down the road. How do you think the USA reached such a high standard of living.

> Fifth, the idea that people "will just move to another country" is very silly. If some people do leave, or start companies only in other jurisdictions, that just means there's a market opportunity for the many people who remain.

You're just name-calling here, it's not "silly" just because you don't like the fact. If they leave, they actually leave, period. Sweden's left-wing majority abolished the inheritance tax(!) because so many wealthy people left because of it (among them, the famous IKEA founder).

It's sad that your non-arguments and whinging are being upvoted by people who "feel" the rich ought to be taxed but refuse to think about the consequences.

It is silly. Your example isn't even about a wealth tax, it's about an inheritance tax. Sweden has a 30% Capital Gains tax (likely the vehicle for any form of future wealth tax) and seems to be doing much better than the US.

Not in terms of class mobility. Yes the floor is higher but try accumulating wealth in Sweden.

https://en.m.wikipedia.org/wiki/Global_Social_Mobility_Index

Sweden: 4th

Usa: 27th

Normally class mobility is not thought of as equivalent to accumulating wealth. In some ways they're almost opposites.

Sweden typically ranks much higher on class mobility measures than the USA.

> Normally class mobility is not thought of as equivalent to accumulating wealth. In some ways they're almost opposites.

Accumulating wealth is the only way poor people can stop being poor. Of course it's related to class mobility.

Sure, they're related, but they are not equivalent and even oppose each other in some ways.

A society that emphasises wealth accumulation above all else will have the privileged accumulate so much wealth it'll be nearly impossible for the poor to catch up, no matter how talented or hardworking.

One way of measuring class mobility is looking at your liklihood of finishing your life in a higher 'class' (variously definied) than you started it, or than your parents had. With that kind of measure, Sweden does extremely well. Certainly much better than countries like the USA, which arguably do emphasise making the accumulation of wealth (when you already have a lot of it) easier.

Is that right?

Sweden -- along with virtually all European countries other than Switzerland, Norway and Luxembourg -- have much poorer middle classes than most US states.

https://www.aei.org/carpe-diem/if-sweden-left-the-eu-and-joi...

https://mises.org/wire/if-sweden-and-germany-became-us-state...

Not sure what you mean by much poorer... in any case here is a list of European countries which have a higher median wealth per adult than the US, roughly in order of wealth per adult:

Switzerland, Iceland, Luxmbourg, Belgium, Ireland, France, UK, Spain, Austria, Italy, Malta, Norway.

If you go by mean wealth on the other hand, only Switzerland is higher than the US. But that is not a measure of middle class wealth.

Source: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...

A relevant factor is that the US has both a much higher income and a vastly lower savings rate than in Europe. Also, much of the wealth in Europe comes from hereditary property, which is not really a thing in the US. As a baseline, median Americans have much higher discretionary income than in Europe, so it is only savings habits that prevent many of them from accumulating wealth.

Americans with savings rates that are comparable to Europeans end up accumulating tremendous wealth over their careers, even in the middle class. This is offset by the majority that spend every penny. That Americans don’t save their prodigious income is an unfortunate artifact of having multiple generations of nearly unbroken prosperity.

This does seem a bit of a chicken and egg issue. If more countries followed suit, same as much of them followed suit on almost all other taxation schemes that were put in place in the past, then it's just a matter of time.

And the US is not Sweden. If the US blocks your company's access to its market for leaving or not paying taxes, you'll most likely lose more money than the tax.

Not saying I'm pro wealth tax, I'm still having to think about it, but I do feel the US is in a position to be able to protect itself from founders leaving.

I'm not saying that people won't leave, I'm sure some will. I'm saying worrying about some people leaving is silly. What disaster befell Sweden because the IKEA founder left?

> What disaster befell Sweden because the IKEA founder left?

It's not hard to figure out if you try to think about it in a curious, scientific manner instead of through your ideological glasses. Many wealthy people left and Sweden lost tax income, investments and angered people. To the point where the left-wing parties realized how bad an idea it was.

https://iea.org.uk/blog/how-high-tax-sweden-abolished-its-di...

An annual wealth tax of ~0.5% and a floor of ~$10million is very, very different than an inheritance tax of 30%, to the point that they're not even that comparable. So sure, I agree we shouldn't have a high inheritance tax.

> An annual wealth tax of ~0.5% and a floor of ~$10million

... is pointless, as it will just drive wealthy people away, into tax evasion schemes etc. while providing only tax income from the stupid. I'm in that bracket and if my country decided to introduce such a tax, I'd be somewhere else in the EU in no time.

(still expecting a haircut-like single tax grab of 10% or more from our idiot government because of their ruinous Covid-19 politics though)

Let's talk rough numbers - I'll assume you have a net worth of $15 million. You'd owe 0.5% on $5 million - $25k a year. That would be significant enough to move countries over? Completely upend your life, move kids out of school, buy/sell a home, etc.? It just doesn't seem reasonable to me.

You assume a number that is too close to your floor. Duh, someone with $10.5 million would not care unless he expected his wealth to grow quickly, eh? My taxes under your scheme would be well into six figures, more than it takes to house and feed a upper middle-class family with room to spare. So yes, I'd leave for greener pastures, since my frugal lifestyle shouldn't be punished.

By the way, I already paid 25% capital gains tax when I sold my company I'd grown over the years, at the time it was easily 20% of my total wealth.

Right-wing parties abolishing wealth taxes is not the same as "Sweden realized". It's fascinating how often I hear these kind of arguments. It's as if there have never been right-wing parties in power in Sweden that have adopted, well, right-wing policies.

Why cut that check to the Feds? They have destroyed schools. Look at the American placement in international tests since the Feds took over in the 1970s. Downhill.

Why have them control health? They've shown they are incompetent with Medicare (look at the waste, fraud, abuse, and anger by doctors due to red tape).

Why not have the States set the wealth tax? Be like Switzerland. The cantons and municipals set the wealth tax.

Ultimately, for me, this entire topic throws into stark relief the fact that the Federal government needs to be brought to heel. It is too large. Too incompetent. Too impossible. Look at the EU (the closest thing in the West to the US by population and economic scope). The EU doesn't set an EU wealth tax. They do not set an EU health service. They set regulatory requirements that the individual countries (from a GDP perspective equal to US States) implement.

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