Comment by tablespoon | Hacker News Reader

Comment by tablespoon | Hacker News Reader

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> If you have a billion in stock but live a humble life, what's the point in taxing it? You'll live the same way, and sell some stock. But selling stock to pay taxes is not necessarily good, unless whatever the government does with the money is better than whatever the company was going to do. Sure, it could be good, but it's not a slam dunk.

Who makes that decision? In a democracy, the people do, via the government they elect.

> The idea of wealth is just very different in the modern world. If wealthy people were hoarding (keeping a bunch of stuff without using it), then taxing would put that stuff back to use. But wealthy people hold onto money-producing assets, which means someone is still using the stuff....

> I'd much prefer that we tax consumption. It could be a 1000% tax for a Ferrari. Encourages better use of stuff and can be very progressive without triggering as much anger.

One important thing that's missing from your analysis is power. One important function of inheritance taxes is make wealth-power less hereditary.

Also, wealthy people consume less, proportional to their wealth, than poorer people do. It's pretty much impossible for a billionaire to "consume" their fortune, unless they decide to do something useless and absurdly grand, like building a thousand ziggurats or something. Consumption taxes only work to concentrate the tax burden on non-wealthy people.

"It's pretty much impossible for a billionaire to "consume" their fortune"

So what?

If someone uses some tax loopholes and then buys a few exotic cars, I can work up a little outrage about that. Maybe get mad about the loophole. Same if they are hoarding a bunch of stuff -- empty apartment buildings or something.

But if they had to pay $1M for a Ferrari, and $900K of that was taxes that I might benefit from, it's hard for me to maintain that outrage. And if they had to pay 1000% tax on that empty apartment building (nobody else is using it, it must count as consumption, right?), then that could make a sizeable tax payment.

In fact, this is starting to sound better and better. Anything not being rented out counts as the owner renting it, and paying consumption taxes. That'll get more stock in the housing market, fast. Probably need to sort out some accounting about how to treat depreciation vs renting vs buying.

The main point is to tax people for consuming or wasting stuff.

> Who makes that decision? In a democracy, the people do, via the government they elect.

So, you're proposing people don't form opinions or try to influence opinion? You're just arguing for maintaining the status quo here.

> Also, wealthy people consume less, proportional to their wealth, than poorer people do. It's pretty much impossible for a billionaire to "consume" their fortune, unless they decide to do something useless and absurdly grand, like building a thousand ziggurats or something. Consumption taxes only work to concentrate the tax burden on non-wealthy people.

In real terms the wealthy consume far more than the poor. That's how Ferrari's exist; that's why consumption taxes make sense to a lot of people.

The money the wealthy don't consume (therefore the part that wouldn't be touched by consumption tax) is invested in producing assets and is already being used by society. Consumption taxes produce more money from the rich, and provide incentive for the rich to invest more and consume less.

> One important thing that's missing from your analysis is power.

Real power only comes from the use of wealth, you can trick some people by the promise of eventually paying but that wears thin very quickly. Influence via media campaign is easily taxable (probably already is?); gifts are already taxed once they get meaningful. Paying public officials for preferential treatment should be treated like the blatant corruption it frequently is.

If you want to improve society, that's great. Consumption taxes are a way to help society. Bashing consumption taxes because they don't hurt the rich sounds more like petty bitterness.

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