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Comment by cambaceres | Hacker News Reader

I don’t know what country you live in, but I can tell you how it is in Sweden. As a freelancer I pay appropriately 70% of what I charge in taxes. How high do you think taxes can get before people stop putting energy into raising their productivity?

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Better distribution is through capital tax, not income tax. Taxing workers even more is the opposite of sharing productivity gains captured by shareholders. Are capital gains and dividends taxed at least at 70% in Sweden?

1. Salary is your company's money that becomes your money.

2. Capital tax is tax on your company's money.

3. Income tax is tax on your money.

With either tax, the economic system that consists of you and your employer is being robbed.

Speaking of which, if someone takes your groceries and runs, just before you have paid for them, that is shoplifting. If it's just after you paid, it's robbery. You might think you're better off with the former, but shoplifting raises prices; some of it is shifted onto you, so that it is effectively robbery.

1. Companies only have money because of the work I and others do.

2. It doesn't follow that when companies have more money their workers get more. Evidence is: record profits concomitant with layoffs, corporate profits vs wages, etc etc.

3. Taxes fund a government that answers to me. Capital powers corporations that not only don't answer to me but likely want to exploit me.

The government does not answer to you; it answers to corporations and the rich.

That's why taxes are instigated where they are.

If what you were saying were true, there would be no corporate tax, and probably no worker protections, no social safety net, no building safety standards, no regulatory apparatus, no antitrust, etc etc.

I like that stuff, and I'm pretty confident corporations wouldn't have done it themselves without a democratic government forcing them to.

There's a meaningful difference between democratic governments and corporations, and governments don't have to be perfect for this to be true.

The situation is trickle down from laissez-faire is definitely proven wrong just by the situation we are in and is the starting point of the discussion. Tax is just a tool to correct the failure of the system of failing to correctly redistribute productivity gains from workers starting a few decades ago (and the point above is with the promises of LLM it’s crucial we address that situation). Robbery or not is not the debate here, income tax higher than capital tax is just a good candidate cause and solution (given historical data), but of course we can discuss alternatives.

>With either tax, the economic system that consists of you and your employer is being robbed

Except differences in tax rates will have significant impact on what type of income people want to earn. If personal income is taxed lower than capital, then people will want to increase their income through work.

If personal income is taxed higher than capital, people are incentivized to build more machines than the economy needs and this will put people out of work.

by tax revenues In China, corporations pay more than 2 times more taxes than individuals (in the US, individuals pay almost 6 times more taxes than corporations). China: corporate income tax (19%), individual income tax (7%) USA: corporate income tax (7.6%), individual income tax (41.1%)

As a fellow Swedish freelancer I’d like to know how you calculate that. Or are you doing B2C?

I’m including VAT in the calculation, and simplifies a bit by viewing the rest as salary.

IMHO that is very misleading in this context where there are a lot of Americans.

If the VAT rates went to 0% you would still get to keep the exact same amount as with the current 25% rate. And when discussing B2B prices VAT is never included, as it is generally not an expense for the company but rather just an accounting detail.

I would include VAT. No matter B2B or not, it's how much your end customer pays is what matters. Yes, business will pass on this tax further, but end consumer won't be able to claim it. It's the same as a sales tax in the US. To include it in price or not is more a psychological thing (in the US it's not included in price). When I pay $106.25 for something it makes a little difference for me that $6.25 goes to my state or passed to the previous business, and if I only have $100 you lost me. That's the reality.

Basically it's very similar to debates about US taxes. Sure, it's not 70%, but things add up quickly. Income tax, social security, medicare, medical insurance, sales tax. The usual argument is "but, but ... it's not me who is paying my medical insurance or half of social taxes, it's my employer, so it's not my tax". Well, it is. That's the money your employer would have paid _you_ if those taxes hadn't existed.

It does all add up quickly indeed.

Not to mention, things that fall outside of capital / income taxes which increase the overall percentage in sneaky ways in the US: car registration fees, the death tax, property taxes, student loan repayments (depending on your view of subsidized university).

Agree. So, their effective tax rate is 45%. Not so bad for a well-run country like Sweden. "Pay a lot (in taxes), get a lot (in services)."

Nobody can be fully certain of this, but I suspect all the way up to 100%

We can actually be certain that humans work the other way since we ran huge experiments in labs called the Soviet Union and China. In those experiments we found out that people worked way less/not at all when there was no economic incentive to do so.

Sure that’s risky for 100% of population. But for 0.1 percent of population who makes many millions a year, who cares? No one is that special of a snowflake we need to optimize for their productivity. Most of those people are either already workaholics or already retired on a yatch.

There’s an economic incentive for someone to increase their productivity at every taxation level that is less than 100%, no?

Technically correct, but totally missing the point. There’s going to be a big incremental incentive difference between, say 10% and 90% taxation.

An apt comparison is sharecroppers. Their effective tax rate is close to 100% but they still work hard because eating > not eating.

Societies taxing their entrepreneurs at 10 and at 90% are always vastly different. This difference in turn heavily influences every participant’s system of motivations, so comparing these two numbers alone is usually not very helpful

That’s not true. Many companies people work at provide them little to no incentive to work harder or better, yet still a lot of people try to do so. Lots of places have almost no possibility of promotion just the ability to go elsewhere. Some professions like teaching, nursing pharmacy treat all workers as interchangeable with no performance incentives.

I can tell you that there is no way I’d be doing what I do if it wasn’t for the money. I’d be developing useless keyboard firmware or some other junk no one but me would care about. It would provide minimal value to the world.

People have an incentive in those cases. To improve themselves so that they can get hired at another company or in an industry with more demand.

Who pays nurses more just because they are good? In a lot of professions rates are set by governments or institutions and there is not enough competition between businesses for wages.

I guess that depends on what you mean by good, but better credentialed, more experienced nurses do get paid more. Source -- my wife is a nurse.

Any private clinic would pay the better nurse more? You can check this quickly on job-listing portals – nurse wages are in the 20000-100000k/year range, so clearly supply and demand as well as qualification are determining it. Which socialist country is it where wages are ceiled by the government?

Agreed. After all, that is the equivalent rate for all work done in the commons, on free software for example. Zero dollars earned, but somehow the incentive is still there. Money is not the only thing that motivates human beings.

Sure this works for creative endeavors. Now what would motivate someone to pick fruit in the summer Sun? Or clean toilets in a corporate office?

Sure you could say, "there are some people who just enjoy picking fruit." But are there enough people to satisfy the demand? And even if there are, what do you do with them as that demand decreases? The people who love picking fruit will have to clean toilets.

I believe this is why the income tax is so popular with economists. Other taxes create some type of negative feedback where raising the tax decreases transactions and shifts capital elsewhere. But with the income tax people have no choice but to keep working and may even have to work more. So the "economy" benefits because more labor/capital can be squeezed out of individuals without slowing anything down.

I wonder why people endlessly argue how much they should tax the rich and the poor, there is only one answer: 100% of everything, i.e wealth, income, gifts etc. It's a nice round number and everybody is taxed fairly.

North Korea called, it wants it's ideology back.

Wth. Are you trolling or what?

Interesting, my understanding is exactly the opposite. In my opinion the reason why so many people don’t care much (or are so in love with admin jobs) in Sweden is precisely because it’s too safe?

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