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Comment by rorykoehler | Hacker News Reader

I see it the opposite way around. We should only have a wealth tax and no income taxes. Capitalism means capital that earns for you while you sleep. Those who benefit the most from the system should pay for it. With only a wealth tax more people would have the means to amass wealth and there would be a greater incentive to spend rather than sit on money which would be good for the health and dynamism of the economy.

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> Capitalism means capital that earns for you while you sleep.

If it earns for you while you sleep then it is also taxed while you sleep. Income is income: the tax man doesn’t care where it comes from.

Income taxation creates a bureaucratic burden with no discernible benefit. We also disproportionately tax the poor via point of sale taxes which is just mind boggling stupid.

Wouldn't wealth tax also create bureaucratic burden? I would imagine that it is much harder to determine the value of the assets of all Americans than it is to determine their income.

in a state like california, the poor already enjoy negative income tax. they derive more than they contribute in terms of services and infrastructure.

That's kind of true, but also not quite true either. If you earn income from capital you are only taxed when you sell that capital. Theoretically this means that if you want to spend money on living expenses or luxuries you have to sell capital to fund your lifestyle. However the super rich can borrow money at extremely low rates with their assets as collateral, bypassing taxes and allowing their capital to keep earning for them. Also, capital gains are taxed, but at a much lower rate than ordinary income. Capital losses can also be used to offset gains, even carrying forward over many years. Imagine being able to be taxed on your average income over a period of years. I would have paid practically nothing for several years after college because I made practically nothing during college. There are all kinds of little advantages that accrue for capital but not for workers. I don't think this is necessarily bad, but it may be out of balance.

Honestly, my major problem with wealth inequality is not that rich people get to have money; it's that wealth concentration leads to power concentration. That's not healthy for democracy. This is probably extremely controversial, but I say go ahead and collect a wealth tax and then burn everything you collect. It's not about the budget, it's about limiting the power of billionaires and the corporations they control. There are probably better ways to accomplish that goal, but a wealth tax is at least a start in the right direction.

> Honestly, my major problem with wealth inequality is not that rich people get to have money; it's that wealth concentration leads to power concentration. That's not healthy for democracy. This is probably extremely controversial, but I say go ahead and collect a wealth tax and then burn everything you collect. It's not about the budget, it's about limiting the power of billionaires and the corporations they control. There are probably better ways to accomplish that goal, but a wealth tax is at least a start in the right direction.

I'm not totally convinced by this. in fact, I'd argue the opposite: wealth is the result of power, not the cause. consider jeff bezos; I'm sure we would all consider him a powerful man. is he powerful because the shares he holds are worth $200 billion (on paper), or is he powerful because he controls one of the largest companies in the world?

here's a thought experiment. suppose there was an asymptotic tax that limited net worth to a maximum of $1 billion, so jeff bezos would only have 0.5% of his current assets. how much would his power be diminished? I tend to think his status as the founder and CEO of amazon would put him in a pretty similar position.

Wealth and power are not divorced in a capitalist society. Jeff Bezos is powerful because he controls Amazon. He is also powerful because he has 200 billion dollars. He has 200 billion dollars because he owns a large portion of Amazon. If Bezos had only 1 billion dollars, he'd still have a lot of power, but much less of it. Further, the rest of his wealth could go to other good things (to the people living in the state/country or to Amazon workers, who I believe are more deserving (collectively) of it than Bezos.

capitalism means creation of capital.

[..]In economics, capital consists of human-created assets that can enhance one's power to perform economically useful work. For example, a stone arrowhead is capital for a hunter-gatherer who can use it as a hunting instrument; similarly, roads are capital for inhabitants of a city. Capital is distinct from land and other non-renewable resources in that it can be increased by human labor, and does not include certain durable goods like homes and personal automobiles that are not used in the production of saleable goods and services. Adam Smith defined capital as "that part of man's stock which he expects to afford him revenue". In economic models, capital is an input in the production function. [..]

i think you misunderstand what capital really means..

>Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.

Mostly it's about creating imbalances particularly great ones so that power can be projected through coercion. The world runs on on the wealthy getting poor people to do the work they don't want to. With the rise of the finacialised economy we are far away from your definition.

Disagree. Capitalism is based on goods and services. We are not living in a feudal society where wealth is accumulated by labour. Nobody is picking cotton or growing rice on lands to become wealthy. Those days are gone. Wealth comes from services provided by companies like Facebook and Netflix and Amazon etc.

> Capitalism means capital that earns for you while you sleep.

That's a big assumption. Not all capital earns for you while you sleep.

> Those who benefit the most from the system should pay for it.

That's also a big assumption. Just because one has capital does not mean they're benefiting from the regime they're currently under.

So people will be incentivized to spend in riskier investments, just like the zero interest rate policy nowadays.

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