Comment by jedberg | Hacker News Reader

Comment by jedberg | Hacker News Reader

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A noble idea, but the logistics of it are difficult. How would you actually do that tax?

For example, take Jeff Bezos. His income isn't all that much, so you'd probably want to tax his wealth. Luckily, most of his wealth is from a public company, so we can skip the difficulty of valuing it (something a lot of other billionaires would have to deal with).

But now how do you collect the tax? Do you make him sell 95% of his shares of Amazon? That would certainly tank the stock, and then you would owe him a big refund for overtaxing him.

Or does the government just take his Amazon shares? So now the government would be the biggest shareholder of Amazon. Is that good? What does the government do with that stock? Does it start giving shares to government workers instead of paychecks? Does it pay off its debts with Amazon stock? Would the government's vendors even take that as payment?

I agree that wealth inequality is a problem, and we need to do something about it. I'm not exactly sure what or how though.

> But now how do you collect the tax? Do you make him sell 95% of his shares of Amazon? That would certainly tank the stock, and then you would owe him a big refund for overtaxing him.

Apropos of anything else, the IRS bases things on the calendar year, and then gives you to April to "settle up". It wouldn't owe him a refund in this situation, then, but his next year tax bill might be lower.

If the law didn’t have a way to get a refund for a loss in value when you sold to pay the tax then you could potentially owe more than you have.

I was assuming such a law would have to have a provision for that.

If you get assessed at 100 billion, start selling off the assets and when you get to 50 billion you have nothing left because of the loss of value, you’d still owe 45 billion? That wouldn’t be fair at all.

> I agree that wealth inequality is a problem, and we need to do something about it.

Why? Wealth isn't zero-sum. Most of the American super-wealthy got that way by providing value to others. I'd argue that the bigger problem to societal stability is jealousy and envy, and the idea that rich people got that way by taking from the poor.

The hugely inflated net worth numbers of the likes of Bezos and Musk are fake anyway, in the sense that their assets could not be converted to that amount of dollars; and the Fed should take a large share of the blame here, because ZIRP made it so that investors could only really put their money in growth tech companies.

> Wealth isn't zero-sum.

Of course it is. We live on a planet with finite resources; everything here is zero-sum. I don't buy the myth that we can create value from nothing. Some people are just better at socializing their harmful byproducts.

So if I have some wood, and I create a chair out of it, would you would say that nothing of value was created?

Previously we had some lumber worth $10 and now we have a chair worth $250 dollars.

Where did the $240 dollars come from? Was it stolen from somebody else?

Where did the wood come from? Where did the calories you used to make the chair come from? Where did your tools come from? Who trained you? Who owns the property where your workshop is located? How much marketing effort did you have to spend convincing another human that the chair is actually worth $250? What potentially carcinogenic chemicals did you treat the wood with, and how much grant money is your government giving to doctors to treat the consequences of those carcinogens in the larger population?

All of those factors have hidden externalities baked into them that erode the net value you're creating. My argument is that it's all just a shell game where we're passing costs down the line to future generations while telling ourselves we're creating something valuable from nothing because it's what we need to do to sleep at night. We just don't perceive the longer-term externalities in a lot of cases.

I'm not going to claim that all externalities are priced. There is certainly a lot more that we could do. But many of them are. The cost of the calories, the tools, the training, the property, and the marketing are certainly all priced.

But let's just say that you priced all of the externalities perfectly. In this hypothetical example, can you really make an argument that all of that adds up to more than, say, 100 dollars?

And if you can't, then you still have a lot of "value" to account for.

If all the externalities are perfectly priced at $100, then that's the value of the chair. At that point the extra $150 you manage to get out of the buyer is just grift, not extra value produced from thin air.

Value is subjective. It's not from nothing. It's from human action.

In an oversimplification, when Peter decides to do business with Paul and Paul is interested in taking his business it's because both believe they'll be better off after that.

Now you could [prematurely] argue that there might be externalities and so on, but you must recognize that that action of trading in itself can be seen as something that is going to increase the overall wealth of both as they'll be more satisfied after the fact (assuming everything goes well).

> We live on a planet with finite resources; everything here is zero-sum.

This isn't even true at a cosmic scale, let alone in human scales. Planet Earth receives exogenous energy from the sun.

You want an example of creating value from nothing? Say your choice this evening was to sit on the couch and do nothing versus charge your neighbor $20 to clean up his yard of fallen leaves. By choosing the latter, you have created $20 of value for your neighbor where none existed before.

> Some people are just better at socializing their harmful byproducts.

This is trivially true, but you make the great leap of equating all wealth creation to an arbitrage in externalities.

> you make the great leap of equating all wealth creation to an arbitrage in externalities.

I do indeed. I think on a long-enough timeframe, all human activity is just externality arbitrage.

As Keynes said, in the long run, we are all dead.

Exactly. Thinking wealth is a zero-sum game is short sighted.

Yes, there are many rich people who are rich directly or indirectly thanks to wealth redistribution: the state is very powerful in taking wealth using force (violence) from the poor and giving it to some wealth people.

But the natural course of how people become wealth is by generating wealth in a way that is positive for everyone!

There's nothing wrong with being wealthy. Poverty is a real problem, and the states are partly responsible for driving people to misery through wars, and the evils of forcing their own fiat currency with inflation and taxation.

So when the potato chips at my local supermarket have gone from $2 to $6 in a couple years, they got 3X tastier/more good, right? The potatoes in the produce section are still the same price, and my friends up north who literally grow those potatoes aren't making a dime more, so the money is all going to the chip makers. Are lays potato chips suddenly curing cancer or something?

Or when netflix raises it's price, they definitely have way more content and more reliable distribution right?

Tell me again how a company making more profit while everyone else suffers is magically not zero sum

> Wealth isn't zero-sum.

Source ? Wealth can and is in many case a zero sum game.

> Most of the American super-wealthy got that way by providing value to others.

Source ? Making money and providing value are not the same thing.

> I'd argue that the bigger problem to societal stability is jealousy and envy

Sure let's not address the problem but instead focusing on the emotion of the people affected. Jealousy and envy are human emotions. They are only a problem for society who fail to adequately provide for their citizen.

> the idea that rich people got that way by taking from the poor.

Every time a someone doesn't pay the adequate amount of taxe, or a company loobies for certain privilege. Where do you think that money come from ?

What would you consider wealth that is inherited, then? The wealthy people who did not, in fact, get their wealth by providing value to others?

The existence of lottery winners do not mean that all wealth in the world was generated via lottery, or some kind of heavenly manna that a select few were lucky enough to collect.

None of the top 10 richest Americans got to that place via inheritance. Of the next 10, there are heirs of the Walton, Koch, and Mars families, none of whose source of wealth goes back more than two generations. Contrast that to the egalitarian, redistributive European system which allowed the richest families in Florence 700 years ago to still remain the richest families today.

"Most of the American super-wealthy got that way by providing value to others."

The super-wealthy don't get that way by providing value, they get that way by keeping as much profit from business for themselves and leveraging that money to amass more ways to make money, rinse and repeat. When you look at some of the super-wealthy what you'll find is a pattern of consolidation, wage suppression, bending public policy to benefit themselves, and consumption of public resources.

Consider Walmart. Walmart stores drove small businesses out of towns across the country. The wages paid by Walmart are typically lower than the small businesses they killed. Walmart seeks tax benefits for plopping a store in an area, so doesn't return the same kind of money to the public coffers that the collective small businesses did and the jobs offered are worse and they're harder on suppliers than the small business because of the predatory way Walmart works with suppliers.

Walmart workers are some of the largest consumers of Medicare and SNAP benefits -- because they don't pay enough for people to live on. So the public foots the bill for the difference.

What the American super-wealthy have provided, more often than not, is convenience and temporary lower prices -- not quite the same thing as value. It's easier to do all your shopping at Walmart. It's easier to shop with Amazon. They're cheaper until they've sufficiently snuffed out competition.

> jealousy and envy

Pure Ad Hominem. What is the implication here? You think people are faking their (right or wrong) arguments to cover up jealousy? You think it's not possible to be wronged and envious at the same time? It's not an argument.

> Do you make him sell 95% of his shares of Amazon? That would certainly tank the stock

Why would it tank the stock if the ownership of those shares was transferred from Bezos to a social wealth fund?

Because the market is irrational and fears change. The stock dropped when he got divorced and some of the shares transferred to his ex-wife, even though he still had a controlling share.

Stocks always drop when the biggest holder sells for any reason. People don’t understand the nuance they just see the headline.

But in this hypothetical, Bezos was legally compelled to sell--there is no signal for the market that "maybe Bezos is losing confidence in the company."

Like I said, people don’t understand. When he got divorced he was legally compelled to transfer to her. Stock dropped anyway.

When the CEO of Netflix had to sell because his options expired, the stock still dropped because the headline said he sold.

If this were a real example, he'd have been selling small amounts for a long time and your concern would never come to fruition.

Why would it matter if it did?

I would start by leraning more about how public markets really work

that's were the solutions need to be implemented

but I find it impossible to have good conversations about this. the last time I was able to discuss this I ended up concluding that somehow euler's constant is basically the same as the gravitational constant but people tell me I'm misscalibrated, so my only retort is I'm mister calibrated....

The logistics are just more difficult because WE let it be more difficult. "Oh it's so difficult to tax a billionaire". No it isn't. If we wanted to do it, we could. We just do not care, and we let them get away with it.

Shares are not money, shares are a percentage you own of a company, that's it. It's when you sell said shares and turn it into money that it becomes taxable. It's not rocket science. If you hold the shares forever, that's fine. But as soon as your future son sells them, they get taxed.

I really don't know why everyone always says stuff like that, it's really not a difficult concept. Money is money, stuff that is not money is obviously not money. A house worth 1 million is not equal to 1 million until someone gives you 1 million for it. Before that it's just a pile of wood.

Now this would promote not selling shares, but maybe transferring them. Okay you can't transfer shares.

We just don't try, there is no attempt at anything. If we wanted too, we could.

I am not saying we'll get everything, but even 1% more of what we get right now is worth probably the same tax we collect from all of the poorer tax payers.

I personally don't think we should tax income, I am a proponent of a higher sales tax and zero income tax personally. I think that's easier. You want to buy a jet? Ya you're paying 40% tax, but you get to keep all of your millions.

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