“ what can you possibly do that justifies making $100 MM a year?” That’s not up to you to decide in a free society. Market determines that.
Literally they did.
In 1944, the top rate peaked at 94 percent on taxable income over $200,000 ($2.5 million in today’s dollars3). That’s a high tax rate.
Over the next three decades, the top federal income tax rate remained high, never dipping below 70 percent.
https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...
Note the parent said "marginal" tax rate.
> During that period the government captured ~17-18% of GDP in taxes which is the post war average.
Even if the 17~18% of GDP is true (not saying it isn't, just dont have time to verify), it's very likely the highest tax bracket had way fewer people than it does today, so it would be equivalent of taxing earners of $100M/year in today's world. Weighing against GDP total negates increases in spending by the government to provide services that spur economies / provide benefits / etc. Point is - this figure is irrelevant and doesn't normalize the discussion.
[1] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
Yes they literally did. Your article says exactly what I said:
The 91 percent bracket of 1950 only applied to households with income over $200,000 (or about $2 million in today’s dollars). Only a small number of taxpayers would have had enough income to fall into the top bracket – fewer than 10,000 households, according to an article in The Wall Street Journal. Many households in the top 1 percent in the 1950s probably did not fall into the 91 percent bracket to begin with.
You need to understand the difference between marginal tax and effective tax. What you're referring to is effective tax. The parent very explicitly said marginal tax.
[0] - https://www.cbpp.org/research/federal-tax/marginal-and-avera...
The data from Piketty, Saez, and Zucman is not divided among federal, state, and local taxes, so it is difficult to tell exactly how much the rich were paying in federal income taxes specifically during this period.
Some of the distributional assumptions in the Piketty, Saez, and Zucman paper are questionable. In particular, the authors assume that the full burden of the corporate income tax falls on owners of capital, which may not be correct. However, the authors note that they “have tested a number of alternative tax incidence assumptions, and found only second-order effects.”
> The Saez paper points out that even among the 0.01% people were avoiding that top rate.
Of course there were - tax avoidance is inevitable, but to say literally none of them were pay the stated rate with no evidence is disingenuous.
Bringing this back the overall point of the discussion - with a marginal tax rate that high (even with avoidance) it raised the effective tax rate nearly ~600 basis points higher. That's significant.
[1] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
If .2% of earners REPORT INCOME greater than $x, they paid tax on that!
We get the percentiles straight from the IRS data.
There's this idea that people report they made $100 MM to the IRS, but are like, "Well, I only want to pay tax on $300k of that." And the IRS is like, "Sure."
You wouldn't be in the top .2% if you only reported incomes of $300k to the IRS. You'd barely be in the top 2%.
Taxable income is highly elastic as taxes and income increase. See Emmanuel Saez’s paper here [1]. (Conclusion on page 60) it’s a good overview of the inefficiency of high marginal rates.
It’s nice to believe we could just scoop up the wealth of the wealthiest in society and make good use of the money, but it becomes very hard to collect in a hurry in the real world. Most OECD nations with generous social benefits fund them with VAT and taxes on middle income earners. They’ve all abandoned things like wealth taxes and soaring marginal rates for practical reasons.
[1] https://www.nber.org/system/files/working_papers/w15012/w150...
Its a time and a half the top marginal nominal rate, which is significantly above the real rate collected on the top 0.01%.
So, yeah, its much higher.
You have zero evidence for this.
Again, like I did 4(?) posts above this one, I'm going to ask for evidence, because I've heard this assertion a lot but never seen any specifics. Surely if they had plenty of tax avoidance strategies, you would be able to point to their version of the Double-Irish. Maybe even be able to estimate the magnitude of dollars avoided in taxes?
There’s a giant sucking sound as all the money in the economy accumulates out of towns and cities and into the endless digital coffers of the investment class.
As an aside, the US seems like a very weird place to me. There are homeless people everywhere. I have never seen so many homeless people anywhere in my life...even in developing countries. It is crazy. I don't understand how people tolerate that. Not only poor people but the US seems to be a country which breeds a total lack of empathy, I don't understand how wealthy people tolerate it...and then you read the hyperbolic comment elsewhere on this thread about a founder saying this is theft, this well end Silicon Valley, it is insanity, it is intolerable...try tolerating sleeping in a tent under a bridge.
Either way, the reason you tax the $100m is so you don't end up with a govt that will take more than your money. The notion that you can just take forever has never been a part of politics.
As an aside, I think most Americans perception of authoritarian govts is that they are anti-democratic in this way...but if you look at monarchies, there was always responsibility from the wealthy, there was always a safety valve...the US has no safety valve, there is no social responsibility from the wealthy, they have taken everything and are asking where the rest is (and sound utterly deranged when you suggest they should make $5m rather than $10m). There are things much worse than taxation, you have to live in the world with other people.
EDIT: I will add...I would kind of quibble with the notion that markets are free in the US. The amount of state support for capitalists since 2008 (not talking about TARP which was necessary) has been very significant. Free money for the wealthy, usurious interest and rent for the poor. In particular, the level of downward social mobility in the US is very low for a capitalist economy. Markets are free in the US...in one sense.
“Bread and circuses” is derogatory, but the unsustainable parts of technological industrial society aren’t “rich people exist”. Conditions are so ridiculously prosperous and powerful for everyone that the new injustices are stuff like “my life expectancy is 70 instead of 80” and “I can’t afford to pay for debt I took”. What’s unsustainable?
There are plenty of homeless, but there’s also lots of jobs. They may absolutely fucking suck, but in terms of buying power you’re not gonna die and can live quite materially well vs rural.
On the other hand, if you're making $100 MM a year through corporations, then it's the corporation that the market values, not you personally; and corporations (and equities in them) are state-intermediated fictions.
Corporations have no natural existence, or natural rights. They exist because governments say they do, they have cap tables because governments say they do, and they pay out dividends and have transferrable equity because governments say they do. They are government-drafted incentive structures to motivate productive labor, just like tax credits or mining rights or intellectual property are incentive structures to motivate productive labor.
Or, to put that another way: corporations are de-facto nationalized; by default, the government is the actual direct creator of every corporation that exists in the country. When the person who asked the government for a corporate registration, receives 100% equity in the resulting corporation, that's a transfer of that equity from its original holder at time of creation, the government. The government isn't obligated to do that. It just does it because that's what makes people excited to work hard building corporations.
Sure governments help enforce the terms of the contract and even set some ground-rules on what is/isn't allowed but the entire thing is built on mutual trust that everyone involved will follow the agreed-upon rules.
History has not been kind to nations whose governments break those rules and started nationalizing corporations. Not too long ago, North Korea was the side with the industry, railroads, hydro-elec dams, steel mills and manufacturing plants.
Securities are valuable assets for the same reason that greenbacks have value: because the state is standing there ensuring everyone's playing a fair game. If the state didn't punish counterfeiting, greenbacks would be worthless. If the state didn't punish non-dilutive duplicate share sales (i.e. selling the same whole pie to two people), securities would be worthless.
As such, the state is creating the worth of those things, from nothing. Your effort into a corporation is additive, but the government's pre-invested effort into building the framework on which corporations rest is multiplicative, with the multiplier having started off, before that effort, at 0. Neither fiat money nor securities work in a lawless world. The government—that is, the People—get all the credit for making those things possible. Should they thus not get the reward? (Commodities do work in a lawless world, but not through tokens representing them. You'd have to bring those 10K bushels of wheat along with you if you want any credibility, which is pretty inefficient.)
Let me put it this way: if we were starting with a form of socialism where corporations exist, and have founders and executives and boards of directors, but no shareholders, with the government instead earning all corporate profits (which it then spends on things like UBI); and then someone proposed a capitalist class that would earn some of those profits instead, taking them directly out of the UBI budget... would that proposal be justifiable through any particular argument to natural rights/freedoms? There might be a practical argument, in terms of a profit motive incentivizing entrepreneurship and investment, leading to a "rising tide"; but would there be an ethical argument in favor?
> History has not been kind to nations whose governments break those rules and started nationalizing corporations. Not too long ago, North Korea was the side with the industry, railroads, hydro-elec dams, steel mills and manufacturing plants.
North Korea isn't a particularly good example; their economic stall is a result of trade embargoes more than anything. (They're actually doing as well as could be expected, given that they're an isolated, non-globalized economy whose only trading partners are much larger globalized economies [China, Russia] who don't need anything NK could provide.)
Meanwhile, China's own mostly-nationalized corporations do pretty well for themselves.
Hell, even Canada has tons of Crown Corporations, and everyone here is begging our federal government to nationalize the cellular infrastructure (and then lease it out fairly) because it'd be much better than the current oligopoly situation we're in.
Corporations can't exist without some entity enforcing contracts and agreements. That is sometimes the government but it is often also 3rd party arbitrators. In any case though government provides the ultimate backstop.
Most corporations also wouldn't exist without the strong will of a dedicated founder to drive the shared belief and vision of what the corporation could become even when the barriers seemed insurmountable.
Similarly, most corporations wouldn't exist without those early investors willing to stake a portion of their wealth or fund's credibility on those founders.
To a lesser extent, early employees also play a significant role. They take on risk and give up lucrative salaries at larger companies in exchange for more impact on a product and the potential of a big payout down the road.
If any of these entities/groups are not present, the corporation fails. All are needed, not just government.
Not that people pay attention today but if you read your states laws there are limits to what corporation can do, be named, etc.
It is not a good idea to regulate all the time when in fact every regulation could effectively be a wall.
The article treats this principle basically as ambiguous.
So this principle could be not perfectly defined for some, or disputable, according to the article.
However, you miss the point.
Saying that this principle is just not strictly defined (according to the article) does not make it a reason to put it to the trash directly. You have to compare to the status quo.
For me what the article supports (implicitly) behind this reasoning would be that the status quo (coaction and violence by governors) is better: hey, just proceed with coaction because NAP is not perfect? I think there is a lot of consensus on things that are wrong that we would all accept. Consider it a subset of NAP. The bigger the subset, the better for everyone.
In fact, there is a very clear principle, at least in my opinion that can define things way less ambiguously: it exists the negative or natural law and positive law.
For me, basically, negative rights should be inviolable and positive rights are not rights as themselves in my opinion: none of us will ever have infinite capacity or power for an arbitrary action, and in doing so you will violate the negative rights of others: I want to date this girl (but she does not), I want to go to Harvard (but I need to spoil others and disregard their academic CVs and skip the line), I want to have 10000 usd per month (but my employer built the business and won't pay that)... no, those are not rights. Those are things we earn by ourselves or figure out how to do.
Vaccines.. at what level of disease severity should the government forcibly inject the entire populace with a vaccine to ensure that no one can aggress on another by infecting them (on purpose or accidentally).
If one jumbo jet passenger has a severe peanut allergy and other opens a bag of peanuts, is it an act of aggression?
3. I do not think a person with a severe allergy would not inform the crew or just avoid the flight or set herself in special and guaranteed conditions. We are not kids. We DO know better than all these paternalist governments that treat us as idiots what to do.I have far more confidence in people than in people who has to dictate coactively to others what to do with no consequence all the time.
Freedom is responsibility my friend.
If you want paternalism you can pay yours I can figure out how to deal with my stuff and not damaging others on my way.
What you cannot do is to try others realize your view of the world. You convince them or leave them alone and let them do their own way. I think it is the more fair position by far.
With my view you can have all these things you wish and I do not need to participate in them. I do not want any of those benefits either. If I want one, I can pay for it or join.
With other views this is not even possible. So this way of doing it is just superior in my view.
But I see many people afraid of letting people choose. Instead what u have is a small amount choosing for the rest with evil incentives on top of it. A much worse alternative in fact. And one where people always blame others of their own problems.
The closer to that ideal, the better.
Clearly it's a spectrum. Property rights are certainly the purview of governments to set & adjudicate the rules within their jurisdiction, as granted by their unique powers (nominally) conferred by the people.
> History has not been kind to nations whose governments break those rules and started nationalizing corporations
Yeah but history has been kind to companies who mold laws for and heavily intervene in them
That is, do you take issue with the fact that one person, employing many, profits much more than the people he employees or that he profits much more than his fellow man on the street?
The question of the self employed person making huge profits is another one. I advocate for a somewhat selfless mindset (beyond meeting basic needs for your well being and happiness). So if a single individual can make huge profits, that means it's costing the customers a lot of money. In my mind, a person making a lot of profit could save a lot of people money if they shared how they are solving these problems, and recruited others to help with the effort. So that might look like: make their project open source and help others join in the effort to make their solution more accessible. I see this as best for society.
What then of the food and shelter this entrepreneur requires? As long as food and shelter are hard to come by, the entrepreneur will be incentivized to withhold their solution from society and keep charging high prices to ensure they meet their own needs.
The solution I see is for society to provide for the needs of all. This can happen by ensuring that food and shelter are abundant. If we do that, we can see more developers and entrepreneurs willing to share what they know for the benefit of all. I believe that if executed well, this strategy can lead to a better and more innovative society than one in which every person is incentivized to withhold their knowledge from others.
Going back to your original question - it's not that I take issue with a single business owner earning a high profit, it's that I think we can do better. Instead of a few earning high profits while others freeze to death on the street, we can provide food and shelter to all, eliminate material poverty, and do this all while innovating faster. But to do so, we must drop the self-centered individualist mindset and think about how to both look after ourselves while also looking after others. We must think as a community instead of atomized individuals.
Simplest counter example is labor unions. There was in fact a huge campaign to dismantle labor union power in the United States. Look at the way labor power was limited by state force in the 1947 Taft Hartley Act for one example:
https://en.wikipedia.org/wiki/Taft%E2%80%93Hartley_Act
Meanwhile in Germany every big company legally must have representatives from the union on the board of directors. A lot has happened since Adam Smith and some of it was "masterminded" on both sides. For example the "organic" work day was 14 hours long until labor activists fought and in some cases died for the 8 hour work day. We have made many decisions about the structure of businesses in USA and unfortunately much of it favors the accumulation of power at the top to the detriment of most people.
Finally, we must recognize that no matter what structure we have, we can always imagine better ones. And we can apply the same effort and pressure to make change as has happened in the past.
In that school, students learn to work together not just to solve problems, but also to determine justice (under guidance from adult teachers).
In a world with bosses and workers, we are teaching everyone to do as they are told and follow orders. But we could, I believe, see a much better world if we teach everyone to be community leaders and collaborators.
> Another, if we are imagining a different society, is to make sure our educational system teaches every student the principles of worker self-management
what are those principles? Yeah modern work absolutely crushes the soul, but ... how else do we make the heckin .1% tolerance raw materials in the heckin factories? Where’s the room for improvisation or self driven innovation if you’re a line worker in a butcher shop? Seems hard. Not sure black panther community leadership is gonna help.
The board seats are not about "better orders" (tho that may be another benefit) they are about ensuring the needs of the workers are represented in board decisions. For example if the Amazon warehouse workers had representatives on the board, they'd get bathroom breaks and better pay. The only reason I mention workers making more decisions is if you want to eliminate the board entirely.
> what are those principles?
> Not sure black panther community leadership is gonna help
I know most people do not watch the videos I link (obviously), but it sounds like maybe you did not watch the video. If you want to know what principles I think would help, I really recommend the video! It will be better than me trying to tell you from memory (esp because I am sleepy). It's a great piece of history and it shows some ideas that would help make all students better community leaders and cooperative workers.
Anyway let's say you have a society where all the firms are worker self directed. It makes sense for firms to form broader organizations that represent different interests. So for example lets say you have an industrial zone on the edge of a geographic region. There's a shipping port, some bridges, electrical infrastructure, etc. All the firms in the area depend on this infrastructure to operate. And because they share this common interest, they have formed a regional cooperative made up of delegates from each firm in the region. When they need to make a decision about when to perform major infrastructure work, it is decided at one of their regular meetings. The delegates are not their to make their own decisions but to bring with them decisions made at their firm's meeting on the matter. If the delegate agrees to something their firm's people actually do not like, their people can recall them.
So the regional cooperative holds a regular meeting and there they decide they are going to build a bigger bridge and then decommission the old one. All the firms in this regional cooperative keep their money at a credit union which was set up specifically to represent these firms. They need to rustle up $500m to pay for this. They discuss how to raise the funds. There is a particularly big firm that will benefit substantially from the new bridge. They put up $50m on the condition that the bridge will have tolls and they will expect to be paid back $30m over 30 years. The rest of the firms together put in another $50m. The industrial zone regional cooperative takes their $100m to the broader regional cooperative which represents a large geographic region including several major cities which benefit from the industrial zone. The broader cooperative agrees to stake the other $400m for the bridge improvements with the agreement that the industrial zone regional cooperative will pay it back over 40 years.
So yeah. That's generally how you manage that. You can look up Murray Bookchin, David Harvey, and Richard Wolff if you want to know more. Also look up Zoe Baker on youtube.
If you don't like my made up scenario, maybe look up how ITER or LHC get their funding.
https://en.wikipedia.org/wiki/ITER#Funding
https://en.wikipedia.org/wiki/Large_Hadron_Collider#Cost
EDIT: Of course ITER and LHC are not workers cooperatives, just examples of how people delegating funds could make decisions.
Similarly, early and late stage venture funding and other forms of funding different companies would also take a haircut, probably (not much with a 10% tax above 100M, yes with a 100% above 100M). Which would suck for people who like medicine and electricity
> ITER and LCH
Yeah governments absolutely can fund things. The question is should they fund everything. And you should note that they weren’t funded by “workers councils”.
dude we have regional workers councils it’s called state legislatures and they absolutely do fund stuff. We even have decentralized hierarchical councils - city and county govt! And they do make infrastructure decisions! What they don’t do is fund chip development or factory scaling. And even the things they do fund they offload the decision work to experts (not workers).
My point is not that The State should fund everything. It is that groups of people can elect delegates and those delegates can make decisions for us. I don't want them to be made by a centralized state but instead by voluntary collectives. Basically I advocate for worker owned collectives to manage the production that those same workers depend upon. This would I think lead to more freedom with less exploitation. Those workers would have dominion over the profits they generate, rather than the current arrangement where that control is traded for a wage. I believe this could lead to a world where all people accumulate enough wealth that they no longer need to work to survive. But that can never happen if an elite class siphons off all the workers' profit to spend billions on pet projects for amusement.
Did anybody say there was anything magical about workers? Since you are asking this question you must think that there is something magical about owners so why don't you tell us about that first?
> why wouldn’t they just be corrupt themselves
How would that corruption play out?
But to provide you a basic answer to advance the conversation more immediately: People must be educated to follow any society. We've never expected the checker at Home Depot to understand logistics of her store. But this is due to the division of labor, not a limitation of the human mind. When people imagine a totally different society this tends to include schools which raise people for that society. And so every person would be taught more about how all the bits fit together and how to make decisions collectively. As I said, many different schemes have been proposed and tried for what system would work best. But someone like Murray Bookchin would suggest that different regional cooperatives can make their own decisions about how best to organize. I would be remiss not to mention the Mondragon Corporation in the Basque Region of Spain. They're a federation of cooperatives with a total revenue of 13B Euro ($16B) in 2013. They do big industrial stuff, finance, retail, and education. [2]
However I realize I am talking about how really big decisions get made. Maybe you're asking about individual firms. It's past my bed time but for that look at how cooperatives are managed. This history of a grocery coop in San Francisco is very interesting. [3] Here's a list of other Bay Area cooperatives. [4]
[1] https://social-ecology.org/wp/1994/09/what-is-communalism/
[2] https://en.wikipedia.org/wiki/Mondragon_Corporation
[3] https://web.archive.org/web/20170606172106/https://www.rainb...
let’s say workers now control Amazon. all of Amazon workers. But it turns out Amazon AWS is a big part of Amazon revenue, the workers know jack about that, they either delegate authority to some aws experts and now as bans the same problem again if they ruin it. And you’re also assuming worker cooperatives wouldn’t follow profit motives - wouldn’t they? Workers want money. You want to abolish profitmotive but won’t do that. Workers could totally abuse monopoly or regulatory capture by vote
Second: It is my bed time and I regret that I cannot continue to answer by way of conversation, but I would suggest reading link [1] in my above comment if you want to see an overall picture of how such a society might be organized.
In XIX century, Russia was already THE superpower in Europe (which was everything that counted back then). Everyone else was afraid of her. She was poor, but it's possible to be poor and a superpower at the same time - you just need huge population to milk, and spend the bulk on your budget on military. Having a massive territory that's basically impossible to conquest and occupy no doubt helped as well. It meant that even if they lost a serious war, like they did against the Japanese, it was ultimately without major consequences.
Communists just continued with that modus operandi. They built oversized military, nuclear arsenal, top-notch global spying and propaganda aparatus, while the population supporting it was forced to work for peanuts - not to mention tens of millions who worked in concentration camps for free, and who either died there or had their lifes broken because of it. Even with all this ruthless inhuman exploitation, the Soviet model was just inferior and ultimately couldn't keep up with Western market-based democracies.
It's interesting that your idea of a free society is forcing businesses to organize in a certain way. Doesn't sound very free.
You're reading that in to what I said. Look again.
"We could, for example, alternatively have a free society where most firms are collectively owned and managed by their workers."
I do not in any way advocate for the use of force to achieve this, and you have assumed I did. Tho I did not mention it, my philosophy is explicitly voluntary. I argue that it makes economic sense for workers to organize in this way, and that they should do it for their own benefit.
> You're free to create a firm collectively owned and managed by workers right now, nothing is stopping you.
Yes you are right I can. That's what makes this plan great! It is voluntary and doable today. However what I want to achieve is not just one more co-op. I want to live in a society where all of the goods I depend on are mined, manufactured, and delivered by cooperatively run firms. To achieve that level of change I have to go on the internet and talk to nerds about why it's so great for all of us to do this thing. So that's what I'm here to do. You may have misunderstood my comment as a complaint that I want the government to fix my problems for me, but again that is a misunderstanding of my position.
EDIT: I am doing things in the real world to achieve these goals too (see my profile), I only make the point about talking about it online because I tire of the “go do it then no one is stopping you” line. I am on HN to discuss theory with theory nerds.
We create market conditions. It isn't some uncontrollable god we all have to live with.
Free in what sense? Are you implying the US is a free market?