Mark Cuban: Thoughts on Our Federal Government, Taxes and Small Business | Hacker News Reader

Mark Cuban: Thoughts on Our Federal Government, Taxes and Small Business

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28 pointsinshane20 comments

Tear down foreclosed homes to prop up the housing market? If Mark is serious, then that is some of the most ridiculous dumbfuckery I have ever heard of. Let me give you a truly radical idea - rent the fucking homes.

I'm pretty sure Cuban is just mocking politicians here. Otherwise, how could he possibly fit two economic fallacies (broken windows and rent seeking -> wealth creation [1]) in one proposal?

[1] Seriously - the classic example of rent seeking is a hotel owner who burns down a forest to deprive competing hotels of lumber, thereby driving up prices.

" What bothers me are not the taxes I pay to help others and to support the services our country needs. What bothers me is the mis-allocation and inefficient distribution of our tax money."

Completely agree. I doubt many people would be happy knowing that a lot of their taxes (or government debt) goes toward funding the defense budget, two wars, and such. But that's the price everyone pays for a democratic country. If there were enough people pissed off about the misallocation of taxes, then vote the bastards out.

> If there were enough people pissed off about the misallocation of taxes, then vote the bastards out.

That actually happened in 2008, but apparently the public changed its mind again two years later.

Mark, watch out - the tea partiers, libertarians and wealthy will think you're some kind of socialist with that kind of talk.

It's a good problem to have is a great saying and has helped me time and again to put things into perspective.

"I have NEVER met a motivated person who has said they would not chase their goals because of tax rates" This is a common mistake that Cuban makes. The problem with taxes is that they affect marginal behavior. The doctor works a little less, and entrepreneur sells out a little earlier, the medium business hires one less worker than they otherwise would have. These decisions are invisible because they are small and we can't compare what is to what would have been. But, the costs of taxes on economic efficiency are real. We need taxes for to pay for government. And, we can debate how big magnitude of the distortionary effect of taxes. But this should be done with data not based on anecdotal feelings.

> But this should be done with data not based on anecdotal feelings.

This last line has me confused about the first part of your reply

Sorry for the meta-comment, but that's a brilliant response.

Of course getting hard data in economics is close to impossible since you can't run controlled experiments. The closest you can get is looking at historical data such as comparing what happened after Clinton's 93 tax increase and after Bush's 01 and 03 tax cuts. Or comparing similar countries with different tax rates. But there are just too many variables to really isolate the data and reach a firm conclusion. I do remember reading about some economist's study that tried to look at the data and came to the semi-conclusion that it doesn't seem that tax rates have much an effect on GDP at all (sorry I can't find source right now).

> we can debate how big magnitude of the distortionary effect of taxes. But this should be done with data not based on anecdotal feelings.

This is true enough for the Tax-Me-More rich folks, but much more so for the Tax-Me-Not crowd who oppose just about any taxation--a belief often supported by little more than "anecdotal feelings" itself.

This makes no sense. If my tax rate goes up, why would I work less? All other things considered equal, getting taxed more and working less is a double-whammy. If anything I think I would work more.

Suppose your marginal utility from an hour of leisure is 1.0, and your marginal take home income is $100/hour (yielding 1.1 units of utility).

In this situation you choose to work, since this maximizes your utility (1.1 > 1.0).

Now suppose tax hikes reduce your marginal take home income to $80, which only yields you 0.9 units of utility. Now you choose leisure, since 1.0 > 0.9.

The issue with these examples is that they presume people can actually trade additional work for additional leisure. What has been pointed out is that if I raise your taxes, you have that much less income with which to maintain your lifestyle, the same as any price increase. If people stop working because of taxes, we should see them stop working because of other tax-like behavior, e.g., increases in house prices or energy costs.

I'm sorry but this is a load of tripe. I consider myself a success and I have many successful friends as well. Some work for corporations, some run their own businesses. Everyone complains about taxes. NO ONE WORKS LESS SO THEY PAY LESS TAXES. NO ONE IS DEMOTIVATED FROM SUCCEEDING BECAUSE THEY PAY MORE TAXES.

"These decisions are invisible ... ", no, they are non-existent. People who want to work less to pay less taxes must be idiotic by nature because that's a zero-gain move.

>the medium business hires one less worker than they otherwise would have

No they don't. Businesses have more to stand from capital gains (one mechanism of gaining that is growth via hiring) than owner salaries when the marginal:capgains ratio is high.

With complete transparency we could have hundreds of volunteer deficit reduction Super Committees to look for the best places to cut costs and improve efficiency.

This sounds like a great idea, but I worry...

A lack of shared values means each "Super Committee" seems likely to fall into a battle over values. Some will insist on cutting defence spending, other will cut welfare programs. Compromises won't be based on what makes sense, but by trading off between sides.

I'm not sure that is any better than the existing system - and in some ways it is worse. It slows down government even more, and it is likely to increase partisanship.

I think the idea is more that ineffective (or at least terribly inefficient) programs would be much less likely to survive in such an environment. If program a is designed to achieve effect B, some people will argue for it because they think that B is desirable, and others will argue against it because they think that B is undesirable, or because it produces some side effect C which they find undesirable. However, if it is shown that program a does not achieve effect B, or is terribly inefficient at doing so, then even proponents of effect B would have to agree that it should be eliminated. Presumably, those proponents would then push for some new program aimed at achieving effect B, but that's a separate issue.

You have much more faith in people relying on facts than I do.

Given that some people actively discount expert opinion, I can't see how concepts like logical reasoning would work...

Pretty sure he means "moral imperative", not "moral hazard" which has the opposite meaning in that context. Sorry, it jumped out at me.

He is so wrong about nearly everything he says.

First you can't get money out of politics and you wouldn't want to anyway, because when the next Huey Long comes around, who is going to defend your business?

Second the higher the tax rates the less income you loose buy not working that extra hour. Since working has a cost, wear and tear on a car if you do deliveries, payment to have somebody take care of your children, etc this point will be meet before you would think it would be.

With regards to a corporation, the more expensive you make its operation, the more you help foreign corporations.

Finally the issue isn't lack of taxes, it is wasteful military spending, particulary in Iraq and Afghanistan. Not because the US isn't fighting efficiently but because they hsouldn't have been there in the first place.

Personally I would solve the budget crisis by getting most tropes home, reduce the army to one fifth, double the size of the elite forces (and use them to take out Bin Laden rather than occupy Afghanistan).

So long as the US has nukes, nobody is going to invade and there will never again be a world war two style clash of titans (because it would go nuclear and be done with before the soldiers could even be called up).

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