"We want to fund a new healthcare program, so we are going to pay for it by an increase in taxes" makes sense.
"We want to tax billionaires because they should pay more tax" does not make any sense.
That is a purpose of it.
But another use of taxation is to act as a counter-balance against the natural property that power is self-reinforcing: When you're rich, that gives the power to increase your wealth. And as that system iterates over time, inequality increases.
I think it would be a better world if we taxed the rich more even if we just straight up burned the money.
But, also, you can do useful stuff with the money. If nothing else, you can use it to lower taxes on everyone else.
Our system is built to funnel money away from the average worker and towards the top of management. Over time the boss wages grow and the labor wages shrink relative to the cost of living due to the incentives of those making the rules at the top.
This solution seems crude, it takes a slice of money off the top to relieve the tax burden for those at the bottom. It doesn't fix the root cause of inequality but at least it's a patch.
Or asked differently, how would you fix the root cause of inequality?
I see the root cause as being this observation: If you have power, you can use the threat of it to make people do things for you. Wealth is liquid power, and the threat of using it doesn't spend it.
The effect of that is that inequality has a natural tendency to grow: those with a little more can use that as leverage to get even more and repeat that process over and over.
Widespread progressive taxation is the most effective tool I can think of to act as a damping force on that positive feedback loop.
How would you execute a wealth tax? People having power can avoid it by preventing legislation and after legislation by using loopholes.
I think a fundamental precondition is a functioning democracy. The magic of democracy is that it subverts the usual dynamic of "wealth = power". The currency of democracy is votes and in an election, everyone has equal spending power to purchase the candidate they want.
Of course, lobbying, campaign financing, and all sorts of other shenanigans undermine that. I don't have a good solution beyond pushing for more civic engagement.
Otherwise, the US is run by and/or funded by institutions that are legally obligated to shareholders to maximize profit over human well-being, and the ultra-rich get to hide behind these frameworks to shield them from guilt.
Like you said, I don't think there is a great way to fix this without an overhaul of the entire government and voting systems to return power to the people.
Forces working against democracy are driven by people wanting more power at the cost of the majority. These people can head companies. So it might look like capitalism is trying to infiltrate a democracy.
The overall root cause would be much more complicated to fix. There is a lot of inequality built into the US that needs to be changed from the top and that probably isn't going to happen with a 2-party system where the 2 parties are fairly similar and block each other from making progress. Also, have so few choices when voting prevents any minority party from having a chance.
I think that would involve rank choice voting across the board is critical. It would allow new political parties and candidates to come into power and people could finally vote for politicians they like instead of voting against politicians they dislike. Obviously we also need more fair election funding and an end to corporate lobbying. We need to interrupt all the corruption before we can begin making very much progress.
The issue with all of this is that the people at the top with power have nothing to gain and everything to lose from these changes.
Consider some of the criticisms in the following video. I realize that the video says my suggested methods are futile, but I still see them as the path of least resistance towards progress.
I know that MMT is a bit controversial in economic circles, and I am very much not an economist, but that's my understanding.
There is an element of truth
Our taxes have been paying for something all along: yachts!
[0] https://www.whitehouse.gov/cea/written-materials/2021/09/23/...
That being said, the current tax code is pretty unfair and stupid, but a wealth tax is not the answer. Fixing the tax brackets (which currently top out federally when you earn ~500K or so, instead of increasing exponentially up to the highest earners), and increasing the capital gains (including long term) tax brackets would go a long way to fix the problem.
It baffles me when presumably smart people on HN overlook the simple solution and clamor for a wealth tax, which would be incredibly expensive and impractical to implement, require Orwellian surveillance of people's property, and would potentially upend the pattern of having the most productive people in society tying all of their net worth to their company, and not being beholden to short-sighted boards of directors.
Really?
I somehow doubt that. I'm not jealous of Bezos, Musk, etc. With my income, I have money left over after I buy the essentials and the non-essentials. I honestly have no idea what I would even do with a billion dollars except give almost all of it away. I don't want a mansion. I don't want a million dollar sports car. I don't want to pay a captain a full time salary to sit in a marina waiting on me to decide to take a cruise. I don't want any of that. I don't.
What I want if for kids to have free lunches and a great education. I want homeless to be taken in and given shelter and food. I wan't everyone to be able to just go see a doctor on a regular basis. Those are things I want. And the wealthy are keeping those things from happening. Either by electing (or being elected) people who won't do it or just not paying fair amount of taxes.
You already admitted that you have more money than you need? Why not divert that, via taxation, to the things you want?
It's not that I disagree with the content of the platitudes you are preaching, but it's so nonspecific, pointless, and self-righteous that I have no idea what you want, except to "tax the rich", which is meaningless, since they are obviously already taxed. I advocate for a specific, true progressive income tax bracket that stretches brackets up logarithmically to within an order of magnitude of the highest earner from the previous year, and also applies to the current long term capital gain situation. That's the solution to increasing income disparity, but I don't think being rich is some inherent evil.
> And the wealthy are keeping those things from happening.
Assuming you can prove your conspiracy, what is your solution? Killing them? Why not just fix the tax brackets? My point is that you and many others spend a lot of energy harboring negative intentions toward people who have done nothing to you simply because those people have a lot of money, even if they earned that money through voluntary value generation. Maybe you don't like to call it jealousy, but it's something unhealthy.
Besides, one could argue that Elon Musk, with all his flaws, has generated a lot more value to society than you or I or the equivalent increase in budget for the Department of Education if you taxed him into oblivion (such that he couldn't start SpaceX or buy a controlling stake in Tesla) after he sold his stake in Paypal...
Structuring tax policy to incentivize behaviors deemed economically healthy is nothing new. You may not like this or agree with all the specific policies, but it’s still a thing. Why pretend otherwise? How those revenues are spent are again a matter of debate themselves and another topic altogether.
The Fed was running on cheap money for a long time, the pendulum swings the other way eventually..
The purpose of taxation is to shape behavior.
Ask some teachers
The lack of cash is not the only problem, but generally it is a big problem