No, not the AI. Just the owner
of means of production like AI.
The fact that capital owners successfully avoid contributing to the financing of our states and social systems is, in my view, one of the fundamental problems of our time.
The fact that capital owners successfully avoid contributing to the financing of our states and social systems is, in my view, one of the fundamental problems of our time.
Capital Gain tax occurs when you sell an asset for more than you paid for it.
AI (software) is not an asset, and I'm not sure how you'd sell it. Computers and robots are assets (although they typically depreciate not appreciate.)
Either way capital gains tax is applied to the asset not the productivity of the asset. The productivity in turn is taxed as part of income tax.
Perhaps I have misunderstood your point though?
If its value grows beyond the value the business originally invested to acquire it, it is quite literally a capital gain.
Why do you think Anthropic is worth $175-$350bn? Where did that capital value come from?
However the thread revolves around employers replacing employees with AI. Given that the number of AI creators is minimal, and the number of companies replacing employees is large, it follows that most companies replacing employees are renting AI, they did not create it.
Hence, for those companies, AI is not an asset, it is an expense.
One way of taxing those companies would be to tax AI producers based on revenue, not profits. If 50% of revenue was tax, then, the costs of AI to the end-user would go up to cover that. So revenue would "double", but half would go to govt.
I am not a tax lawyer though, but I expect such a scheme is so radically different to the current tax regime, that is has precisely zero chance of being implemented like this.
Why?
Taxing the profit of AI companies is useless since profit is a number that is easily manipulated to 0. Taxing revenue is much more direct. Prices have to go up to cover the tax. Hence the consumer oays "more" and that more is passed onto the tax man.
Taxing profit is exactly why businesses pay so little tax - it's trivial to make "no profit". (For example if the IP is held in another jurisdiction with a lower tax rate, and is "licensed" by the company which wants to make no profit. )
What is it capable of generating in real profits? Yet to be seen.
It's a good thing we give the D compiler system away for free! You don't have to be concerned about being taxed on it.
The fact that an earned derivative gets heavily taxed and an unearned derivative gets lightly taxed is so stupendously wacky that the absurdity is obvious, but the integral is the core problem.
You could reset realized long term capital gains taxes to match income tomorrow and it would not be a huge material difference in the budget. I am 100% for doing this anyways simply because it’s fucking absurd any professional W2 employee is paying more percentage in taxes vs someone who just happens to have idle cash at hand - but it’s more of a “social contract” thing for me than actual tax policy.
The issue really is tax deferral strategies and wealthy folks being able to consistently find strategies to roll over investment dollars into new investments without ever having their gains be subject to pretty much any tax. Stuff like stock buybacks, tax loss harvesting, 1031 exchanges etc.
I don’t think the “loans against a stock portfolio” tax dodge thing is nearly as large as social media decided to pretend it is - but I am very much in favor of taxing any realized value at regular capital gains rates at the time of realization. This means you will probably need to sell a bit of an asset to pay the taxes - which is the entire point.
Unrealized gains are tricky. I’ve been in a situation as a bootstrapped startup founder where I owed “phantom” tax on money I had not yet realized and ended up taking a loss on years later. Zero ability to recover those taxes paid. It put me into a hole for over half a decade. This gives huge preference to those with existing wealth and makes it even harder for someone with nothing to “come up” without handing out a majority share of their company/idea to idle capital. Especially if you’re just doing regular economy things to create a small business doing boring stuff at single digit net margins.
I am of course deeply sympathetic to the "founder scenario," but I'd rather address it specifically than hobble tax collection generally. This could be done by a "payment in-kind" mechanism. If we wanted to steer it towards startups I'm sure the valuation rules could be set to do so, but I'd personally like to aim higher and go for progressive taxation on the basis of market cap to encourage company splitting and competition. Industries with the most dramatic returns-to-scale (semiconductors) could be exempted.
That said, the (in)ability for new founders to self-fund is deeply tied to the same gini coefficient story as the rest of the economy, so policy that addresses the gini story should help bootstrappers as well.
Now think about how they're going to respond to it.
A major problem with taxing unrealized gains is how to measure them. For publicly traded companies that's pretty easy -- the stock is undergoing regular market transactions so you have a pretty good idea about the price. But what about assets that aren't? Closely held private companies that aren't listed on an exchange and haven't undergone any stock transactions in ten years. Art. The value -- or liability -- of a private contract for the future sale of goods at a defined price, when the market value of those goods might have since changed, or depending on what they are, be indeterminate.
It creates endless opportunities for playing games, and that complexity is exactly what allows the people who can afford fancy accountants to pay less in tax than everybody else. If you want to fix it you need to make the system simpler rather than even more complicated.
Keeps people honest (enough).
Suppose you own a company and you have a trusted friend. The company, not the owner, enters into a contract with the friend that gives them the right to buy all the company's assets for 1% of their value, if the friend can satisfy a condition that they could only satisfy with the cooperation of the existing owner. Then the owner declares that the company is only worth 2% of its ordinary value -- which might even be an overestimate given the risk that the friend could execute the contract. If the government exercises the option to buy the company, they get a company bound to an obligation to sell all its assets to the friend, and then the previous owner cooperates in satisfying the condition in exchange for the friend giving them the assets back.
"We'll ban that", you say. But then they'll be more subtle about it, and the only way to really catch them is to have a good way of determining the true value of the company, which was the original problem.
You also run into trouble with that one because people can play that game the other way. You have an asset which on paper should be worth around a million dollars, but its value has already been hollowed out or de facto assigned to someone else without actually transferring the asset. Then the owner declares that it's worth $400,000 and the government pays them $400,000 thinking they're going to make $600,000, only to find out that it's actually worthless.
The fact is that we have no problems with taxing consumption (billionaire buys yacht) but we have an extremely sensible aversion to taxing money spent on productive investment (company pays to build new factory). So business expenses are tax deductions.
The sensible way to handle this is to just use VAT, but then people say "what if they reinvest everything into new ventures and stop buying yachts"? The answer to which is supposed to be "that's what we want them to do". (They also say "consumption taxes are regressive" even though that's easy to fix by giving everyone a large fixed refundable tax credit.)
So to placate them we use something claimed to be an income tax and then push on it until it acts like a consumption tax. Dividends are taxable, but here's a 401k that makes them not while you're of working age and so you only have to pay the tax when you retire and start spending it. Capital gains are taxable, but only when you realize them, so they get deferred as long as you keep them invested in the same company but if you withdraw the money to spend it, that's when you pay. And so on.
This is, of course, dumb, because it makes everything unnecessarily complicated and creates lots of opportunities for tax avoidance, and because it makes the problem you're going to complain about next worse: If they keep reinvesting the money then there is too much economic power in the hands of too few people. But look at what you've wrought. Now if someone invests in a company they get to defer the taxes until they want to spend the money or -- and this is the big problem -- they want to invest it in something else. You have to pay the tax now if you want to do that.
Which means that everybody wants their money to be in some ever-expanding megacorp that allows them to defer the tax until they actually want to spend it, instead of taking the profits from one company and using it to invest in a new one. Which is the thing that wouldn't have been penalized if you were actually using a consumption tax.
And the corporations are actually the problem, not the owners. However much power is concentrated into Microsoft or Apple or Google, that's how much power the CEO of that company will have, regardless of what percentage of the company's stock they own. So you can't fix it by taxing the owners, you have to fix it by making the companies smaller, and that's the thing the existing system makes worse.
I’m happy for billionaires have their net worth go up, as long as it can be taxed if any amount they realize.
So this includes using their networth as collateral, donations (even to charities) and passing as inheritance (which should be taxed upon death)
And if the margin all tax rate over a 1 million is extremely high, then it’s pointless being a paper billionaire. People would actually spend their wealth and contribute to the economy
By the local municipality, not the federal or state government.
Except in a minority of cases (e.g. NYC), it is states and the federal government that taxes income and capital gains, and they are already not taxing citizens on the y realized value of their home.
So if one is upset about that, you have to take it up with local elections or introduce a measure with your state to prevent municipalities from levying this specific tax.
Tax on property is a completely different tax which works in a different way, and has a different name. A new tax on possession of robots could completely be a thing, but it just wouldn't be called a "capitol gains" tax.
Property tax is fairly regressive because everyone needs somewhere to live, property tax gets passed on as higher rents and living space generally scales sub-linearly with income. It's probably not something we should be emulating, especially if you're going to try to apply the same rules to small business owners.
It is normally not a fixed percentage of your value, but simply "here's what the county/city paid this/next year, divided amongst the properties proportionate to the value."
Some, like sewer, etc, are per-property, but most are done via the above.
California is an outlier because of Prop-13 but that makes it usually better except when buying.
Side-effects of this can mean that development in your district can reduce your tax rate, depending on what kind of development and who lives there (as property tax is often mainly a school tax, a development for 55+ will bring in more tax payers but not increase the school burden noticeably).
Like with any tax, I'm guessing the rate would change if the county's revenues didn't match their expenses?
My property taxes have practically only gone up over the years, but the tax rates from the various entities have mostly trended downwards.
it is absolutely a tax on unrealized gains
and it's a huge problem to where people who bought the house long ago (or it was passed down to them) but whose income hasn't kept pace (like many people's) can't afford the increased property taxes anymore and have to move
How do we get royalties on this, like our share of the oil proceeds if we were citizens of Qatar? How do we trade our share of the contribution? There's twenty years of my posting on Reddit, Slashdot, HN, and other forums, that we know for a fact has been used in these frontier models. Great... where's my royalty check?
Pay us, not the government. We'll have to pay taxes regardless, and yes, close the tax loopholes on security-based capital gains (don't tax me for all the investment in my primary residence, that's a double dip).
I heard this called "Coasian" economics (as in Coase). I'm not sure what that actually means, though.
I support the idea of UBI with zero conditions, but not this. You didn't get royalties before AI when someone was heavily influenced by your work/content and converted that into money. If you expected compensation, then you shouldn't have given away your work for free.
Says who? I mean what if black artists said they gave blues to black people, and white people making rock'n'roll? Black people spent money in black communities, now it's white people making it and spending it in theirs.
In essence they are the same point about outflows of value from the originating community. How you define a community, and what is integral is subjective.
I'm not convinced either way, but this line of reasoning feels dangerous.
I'd rather say that all ownership is communal, and as a community we allow people to retain some value to enable and encourage them further.
And no, taxes don't just magically benefit everyone. It's actually the point of them, that they are redistributive.
Taxes fund the state. The state provides a minimum set of services - law and order, border security, fire safety - to everyone regardless of ability to pay. That others may derive additional state benefits is beside the point. Everyone gets something.
now, there is an oligarchy coming to compile all of that community to then serve it at a paid cost. what used to be free with some search, now is not and the government of the people is allowing no choice by the people (in any capacity).
once capital comes for things at scale (with the full backing of the government), and they monetize that and treat it as "their own" i would consider that plagiarism.
how can we be expected to pay taxes on every microtransaction, when we get nothing for equally traceable contributions to the new machine?
Almost none of the original work I've ever posted online has been "given away for free", because it was protected by copyright law that AI companies are brazenly ignoring, except where they make huge deals with megacorporations (eg openai and disney) because they do in fact know what they're doing is not fair use. That's true whether or not I posted it in a context where I expected compensation.
I just don't think the AI is doing anything differently than a human does. It "learns" and then "generates". As long as the "generates" part is actually connecting dots on its own and not just copy & pasting protected material then I don't see why we should consider it any different from when a human does it.
And really, almost nothing is original anyway. You think you wrote an original song? You didn't. You just added a thin layer over top of years of other people's layers. Music has converged over time to all sound very similar (same instruments, same rhythms, same notes, same scales, same chords, same progressions, same vocal techniques, and so on). If you had never heard music before and tried to write a truly original song, you can bet that it would not sound anything like any of the music we listen to today.
Coding, art, writing...really any creative endeavor, for the most part works the same way.
I don't think royalties make sense either, but we could at least mandate some arrangement where the resulting model must be open. Or you can keep it closed for a while, but there's a tax on that.
Alaska as a state managed to do just that and more or less has an annual UBI.
Payment for content access is a sure way to limit progress and freedom. Should I pay you based on quantity, quality, or usage that relates to your content? How about the ideas you took from other people, should you pay them? Where does it stop?
I think the copyright system as it exists today is just absurd - a complete inversion of what it was supposed to do. It was meant to promote progress by protecting expression. Now look at what's happened: total concept and feel protects aesthetic gestalt, Structure and Srrangement protects how elements relate, Whelan Test protects the entire logical skeleton while AFC (abstraction filtration comparison) enables hierarchical abstraction protection.
Each rung up the ladder takes us further from "I wrote this specific thing" toward "nobody else can solve this problem in similar ways". This is how platforms get rich while common people, readers and creators, lose their freedoms and are exploited.
However, the root questions are: what should the state provide, how much, and of what nature? A secondary question then becomes how important the redistributive aspect is. That’s what you’re seemingly alluding to when you say: people work, get taxed on it, but others automate that work and this automation does not get taxed.
Following that line of thinking makes sense, but it also contradicts the core benefit of automation, which is to delete non-needed work, make things cheaper, and make the value creator richer.
If the goal of redistribution is usually that “more” people reach a higher standard of living, then adding taxes and friction to processes like automation may conflict with that goal, given that automation is arguably one of the strongest natural drivers of higher living standards overall.
Of course, the counterpoint to “what and how much should the state provide” is “who should pitch in, and how much,” which is what you’re focusing on. I mostly agree that everyone should be taxed fairly, but I also see many exemption cases, because taxes are friction and we often want certain things to be frictionless. For example, I would oppose taxes on life-saving surgeries. But where do you draw the line? What about automation that indirectly enables or improves life-saving surgery?
The core benefit of automation is to give back time to humans to free us to do more creative things with our big beautiful brains. At least, that would be the core benefit if humanity was on a positive trajectory.
The cost of providing the basic obligations and debt service of the U.S. amounts to roughly 1/3rd of the U.S. GDP, while taxation on any activity induces friction and higher costs - the bill will need to be paid either via capital markets or taxation. The investment in automation is no more important than food, or my children's education in my view.
Taxation is generally preferable for capital owners compared to currency debasement and forced debt purchases as it maintains boundaries on what the state can and cannot do. If the current trend is towards a greater share of the economy accruing to capital owners is maintained, then capital taxes will eventually need to rise to sustain state obligations.
This could be almost any tax system depending on the what one views as "fair".
I replied to GP with the same thought as you, but I think there might be some merit in the "loan" angle.
Lets look at the case that you operate as a consultant/contractor/etc. Your "startup" starts making some very large revenue, and you'd like to use that money to pay rent, go on vacation, pay for surgery, etc.
Any money (say, $amount) the business pays on your behalf (hospital, landlord, etc) is considered your personal income and taxed appropriately.
But, if the books reflect that it was given as a loan, and you are now on the books as a debtor (with the business being your creditor), then that specific $amount isn't taxed as your personal income (loans aren't considered income, as far as I know, because they are a liability).
So, as long as you are in control of the business, the business doesn't need to initiate the "pay back now or we start legal proceedings" process. What instead happens is that this loan amount in the business books just grows and grows (interest accumulates) until the business dies/ends/is sold without ever collecting on it.
As long as the business itself does not have outstanding creditors when it eventually comes to an end, that "loan" can be just written off.
What's the revenue service going to do? Claim that businesses can't write off debt anymore?
Unfortunately this doesn't work for individuals: tax codes in, well, every first world jurisdiction, are very clear that any money going to an individual for their exclusive use is taxed.
I operate as a consultancy (registered tax-paying business); If I use my revenue to pay my bond or get surgery, that $amount is considered personal income even if the company pays for it.[1]
The real problem is that corporations are taxed on profit and individuals are taxed on revenue!
All the costs that a corporation has to foot just to remain in existence is tax-deductible. All the costs that an individual has to foot to remain in existence is taxed (double-taxed, in some cases).
A corporation that pays $amount for rent won't pay tax on $amount in income, while an individual who pays $amount in rent is taxed on the $amount in income.
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[1] I hear what you are saying about a loan that is paid back, and maybe that is one loophole I can explore, but the revenue services have seen all "hacks" and this is no doubt one of them. This is why the tax codes are so complex and convoluted - each time a hack is discovered, a new code is added to specifically shutdown that loophole. The only remaining "hacks" are those that are allowed anyway by the overall tax policy, like "individuals are taxed on all revenue, corporates are taxed on profits only"
I like the idea of classifying it into four buckets: those that are below tax net gains for a country, those who are above and those that are above the tax net gains using just their wealth, and then the government.
This is extremely aggressive framing. It smashes together two wildly different kinds of citizen with wildly different, often opposing incentives and access to power: those who sell their labor for a living and those who literally own the economy. It poses them both in opposition to the government which has 1/5th the revenue of the latter.
If capital is the big bad, this framing is a mind-virus that makes the problem hard to think about and speak about.
> friction
Friction plays a key role in "the unreasonable effectiveness of capitalism." It's a big part of the reason why we can rig the game in favor of capital and not simply have the economy immediately degenerate into "capital rules, labor drools" due to the exponentials inherent in "rich people get paid for being rich in proportion to how rich they are."
Removing friction is not necessarily a net good if it contributes more to distributional problems than it relieves in deadweight loss. Nobody is a fan of deadweight loss, but I'd be a lot more sanguine about eliminating it if I thought we had a credible handle on the distributional problems. But we don't.
The right question is who benefits the most from state’s services. For example if a whole lot of security, legislative or admin services go to protecting the capital, then those who has the most capital need to chip in the most.
> redistribution is usually that “more” people reach a higher standard of living, then adding taxes and friction to processes like automation may conflict with that goal
This is basically a 50 year old trickle down argument. But real wages have not increased in comparison to gdp since 70s, so nothing trickled down. We are demonstratedly bad at sharing what we have achieved together, no reason to believe more tech will magically get better treatment than that.
Besides redistribution is not about shifting the curve up, but making it flatter - see gini coefficient.
> the core benefit of automation, which is to delete non-needed work, make things cheaper, and make the value creator richer.
Except the era of classical capitalism and inventor’s profit is over, since 70s it is rentiers unreciprocated extraction on top of purported value people didn’t necessarily ask for or need in the first place. Likewise most people aren’t dying for AI automation, and not even for structural threats; it is not even proven that it will provide a net total productivity gain when the hype cools down, despite being shoved down people’s throats.
Let’s not kid ourselves, there is little concern for real value creation but a capture-the-flag on a gigantic data-moated compute monopoly. Whatever democratic means enabled proper taxation would have already prevented this type of speculative berserk, failures of which I assure you will be socialized.
So friction = societal consent, internalizing externalized costs, revealing what is actually value versus monopolist’s rent. It is healthy for the society, it is healthy for capitalism.
You shouldn't.
>and employers probably shouldn't even be involved in sponsoring group health plans in the first place.
They are free to lobby for socialized medicine, but they don't because they like how the current system helps lock employees into bad jobs for any amount of healthcare.
From the perspective of the employer, that's real money, no different than if they had paid the $20,143 directly to the employee as wages. It's not the employer's concern what happens to that money after they fork it over.
The correct number to use is called "total employee compensation". This includes:
1. salary
2. paid days off
3. health care benefits
4. retirement benefits
5. employer 401k contributions
6. incentive stock plans
7. taxes paid on behalf of the employee (such as the so-called employer's contribution to social security)
8. free food in the company cafeteria
9. any other benefits that cost money
The cost to employers for these benefits adds about 30% to total employee compensation.
I agree it shouldn’t be an employer item too, but whatever employers lose on premiums, they get more on an overall stickier and cheaper labor supply.
[1] one could argue the productivity of healthcare increased, and the data indeed supports this with the overall life expectancy increase from 70s to now mid 70s plus quality of life treatments. But again most of the spend is actually on the tail end at this age group, which raises the workers’ premium without delivering the benefit. Therefore not much structural gain for the actual working age employee.
The problem is that libertarians have been able to retcon their fan fiction into what Capitalism is and gloss over the original anti-rent seeking, anti-monopoly, pro-government oversight parts that Capitalism REQUIRES in order to stay healthy,functioning, and beneficial to society. And people just accept that 'capitalism good' = 'late 20th/early 21st century libertarian fanfiction of what capitalism is' is the definition of Capitalism, when it is very far from it and has zero relation to the functional Capitalism that lifted the world up.
Combining this late 20th/early 21st century fanfiction version of Capitalism with the current tech company goals for AI is something totally new, zero percent Capitalism, and 100% would be hated by original Capitalist thinkers as damaging.
chatGPT is a sypcophant and without regulation any AI company can and or will juice their algorithms so their AI system becomes cocaine for the millions of lonely to unsatisfied people out there.
My friend has a partner of 30 years but their relationship is that of roommates. If you think she is not you that might be correct but you know someone like her and possibly many like her. Unsatisfied, not able to get that movie type love / romance / fantasy and now unfetterd AI can get these people hooked like cocaine and into the depth of zero reality!
I would change my opinion if it could be shown to have the negative physical harm that your cocaine example implies.
When AI behaves sycohphantically towards someone, it can encourage and exacerbate any mental health problems they may already be having, especially related to social isolation.
What will the mental health of society start to look like if every person who's on the edge has a computer to tell them they're totally correct and everyone else are haters?
That is...literally the point of government...
If you meant, that something shouldn't be banned just because it is dangerous, most people would agree with you. But almost everyone would agree that regulation of dangerous things is essential.
The preamble of the U.S. Constitution literally states that part of its purpose is to..."promote the general Welfare."
Literally, the First Congress made up almost entirely of Founding Fathers passed laws regulating dangerous things...
If you want to use a nonstandard definition to suit your own ideology you're free to do so but don't expect others to join you.
Corporations pay taxes on profit. Shareholders pay taxes on dividends and capital gains.
Shouldn't we also not do that?
Suppose you pay a 25% income tax and then a 10% sales tax. You're paying the same amount, almost a third of your income, as you would with a 47% sales tax. Which to begin with misleads people into thinking their rate is lower than it is, and on top of that incurs the significant overhead of needing two independent collection infrastructures.
Why isn't it better to just pick one?
No, I don't, because I don't spend 100% of my income every year on income-tax applicable goods. A good chunk of my income, even that which is taxed with income tax, goes to other things (like my mortgage, other investments, groceries, savings accounts, charitable donations, etc.) that either defer paying sales taxes or have no sales tax applied.
Meanwhile other purchases have extra sales taxes applied such a liquor or hospitality taxes.
Think for a second. What kind of household spends every penny they make? Which one maybe manages to toss some money into savings every month? Which one doesn't even come close to spending their income?
Which household here pays the highest effective tax rate?
You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people. You've pointed to nothing that changes this truth.
Caps that are set to the amounts where people start having enough money to hire a tax accountant and thereby use the various other ways of deferring income tax on money you're not immediately spending.
> You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people.
The status quo is even worse: They not only defer income tax on the money they're not spending, they defer it on money they are spending, by borrowing against the assets and spending the loan. Which a consumption tax would have them paying.
Meanwhile you can exempt necessities from a consumption tax to various degrees or issue a large fixed tax credit to everyone, which lowers the effective rate on ordinary people by as much as you like.
> Meanwhile you can exempt necessities from a consumption tax to various degrees
So, a non-uniform sales tax. So not the thing you were arguing for just a few comments ago.
Seems sensible. I remember when W reduced capital gains rates. I think they used to be closer.
Since all my competitors are also running dark factories, we compete essentially on source materials + energy (assuming we have similar design/quality). Margin would be eventually razor thin. The dark factory does not make much capital gains, even as it produces 1,000 gizmo per second.
The capital gain is not much , but since we have only a handful of employees, that is enough to pay everyone a decent wage, after paying for the factory itself, source materials and energy.
How much tax do we expect to get from this gizmo company ? 10 years ago, to produce the same gizmos, I needed 5,000 employees, the unit price was way higher, and had higher revenue. But since AI and dark factories came, the prices cratered, instead of 5,000 jobs, we only have 5 jobs to produce the same.
Sure the 4,995 unemployed might be able to afford the gizmo, but the state does not receive the same taxes. So what happens to those 4,995 unemployed people ? who is paying for their health benefits and social security (retirement) ?
I am wondering how best to solve that equation ?
Also that's a singular industry, if the current crop of AI companies deliver what their hype and valuation demands it's a shock across the whole economy not isolated.
200 years ago, 95% of the workers in my country worked in subsistence farming. Today, only 2% are farmers. The whole spectrum of labor has turned upside down and upside down again, in that time. It has certainly not been a singular industry.
My job title did not even exist when I was born.
I am wondering if we are touching on a human biological limitation. Human are adaptable and flexible, but there is a limit to that flexibility. Some sort of biological limit on how fast we can turn around.
The technology acceleration is increasing, and I am wondering if there would be a point where the technology would evolve faster than what human biology can comprehend.
1,000 years ago, anyone could pretty much build or fix the current technology (anyone could fix a cart). 50 years ago, a majority of people could build or fix the current technology (e.g. most could fix a car). this year, a limited number of people can build or fix the current technology (e.g. how many people can fix a self driving car?) 10 years from now, a very limited number of people if any could build or fix the current technology (e.g. explain how is AI doing this thing?)
If AI evolves at the same pace, and replacing labor (robots) and services (AI), I am not sure that human would turn around? How do you think we can turn things around ?
Education ? but we are reaching the limit already of how much technology we can teach in a student lifetime. Now we could argue, that one does not need a PhD in computer science to use AI, but eventually do we even need someone to use AI ? Would AI be cheap and pervasive enough that AI would drive AI would drive AI... why would you add a 20W analog brain in the loop ?
What activity would require human involvement ? Genuinely curious how the technology acceleration in general and AI in particular would affect the economy.
I see no indication that we are close to building a GAI, or that we are close to solving the hallucination problems that severely limit the utility LLMs without human managers. We don't understand how our own intelligence works, or even an ant's. The notion the we are close to replicating or exceeding it seems far fetched to me.
> What activity would require human involvement ?
Nurses, bar tenders, barbers... Hasn't anyone read Player Piano? :)
> How do you think we can turn things around ?
I dunno. Did anyone know how dangerous fire or deadly spear points world work out?
I think it's weird there's so much pushback on the idea that if the hype proves true and it /can/ replace basically any knowledge worker (and potentially drive robots replacing physical laborers) that that would have a bit of a larger effect than inventions that affect some parts of some industries...
There's plenty of space to think it just won't happen (where I'm personally at, at least on the current LLM driven versions) but if it does work the broad spread of the impact would require a huge amount of change all at once.
Ok, appreciate the clarification. But in that time frame there have been a number of really tectonic inventions that changed pretty much everything: steam power, ICE power, electrification, refrigeration, computing and the internet, just to name a few off the top of my head.
> There's plenty of space to think it just won't happen (where I'm personally at, at least on the current LLM driven versions)
Same. I am both optimistic about human ability to find new jobs, and skeptical that "AI" is going to make that necessary in the new future.
And again, I remain skeptical that general artificial intelligence is actually that close at hand.
Yes, it took some time to go from manual/animal labor (energy used is food) to mechanical labor (mostly oil energy). And oil is more energy dense than food, and tractors are more powerful than horses. And bonus points for the oil, it allowed to build fertilizers to boost productivity per acre. So, yes eventually we just need 2% to do what what 95% used to do in farming.
AI is promising to do the same but in virtually all industries (manufacturing, services, healthcare, etc.) and in a way shorten span.
Work used to be labor (human/animal) fueled by energy (food) + intelligence (human) fueled by energy (food), then labor (machine) fueled by energy (oil/electricity) + intelligence (AI) fueled by energy (electricity).
IF work is mostly done by AI/machines fueled by energy. Then work's price is mostly a function of energy price (assuming materials can be extracted/transported/transformed is also a function of energy).
If energy becomes abundant and cheap, then there is no reasons to not let AI do the work.
But then what happens to the rest of us, how the economy keeps humming ?
But that's good, right? It means that the difference between what workers get paid when they do work and what they pay when they buy things is small.
> Sure the 4,995 unemployed might be able to afford the gizmo, but the state does not receive the same taxes. So what happens to those 4,995 unemployed people ? who is paying for their health benefits and social security (retirement) ?
Let's consider the two possibilities here.
The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything.
The second is that there is still work you need people to do, and then they do that, and still have jobs.
And the more stuff you do automate, the less expensive it is to produce things, and the less assistance anyone needs to afford the now-lower cost of necessities. So if you get halfway between one and two then that's still fine because costs go down in proportion to the lower demand for labor.
The real problem is if the cost of necessities are held artificially scarce through regulatory capture and zoning rules. But that's not an automation problem, that's a government problem.
So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.
We would need to find a way to give money to people so they can keep participating in the economy even though everything is cheap. If not UBI, we would need to find ways for the majority to do something that is not automated, and give them some coins in exchange.
For millennia the currency has been energy (human labor, then machines) and intelligence (human intelligence, then artificial intelligence). If energy and intelligence price goes down, and the amount of energy and intelligence increases, then what is left for humans to claim some reward/coins ?
Money is an abstraction, so prices are always relative to wages. If prices go down, that's equivalent to wages going up. If your costs are $1000 and your wages are $1000, that's the same to you as if your costs are $100 and your wages are $100.
So the problem solves itself. You previously needed a job that would pay you $1000 to cover your costs, now you only need one that pays $100. And there is still $100 of work that needs to be done, because that's why things cost $100 instead of $0.
Even if the cost for food and shelter is $1 per month, if there is no revenue, it is still too expensive, right ?
I am trying to understand the speed comparison between how fast the prices will go down, vs. how fast people will lose their jobs. If job loss goes faster than the price decrease, we might have a problem to solve.
Why would there be no revenue? Right now you need a job that pays at least e.g. $2500/month to afford basic necessities. If those jobs disappear but the cost falls to $1/month, you don't need those jobs, because a job that pays $3/month leaves you in fat city, much less one that pays $50/month.
> If job loss goes faster than the price decrease, we might have a problem to solve.
That would be a transient problem while the prices catch up, not a long-term problem. You could solve that by e.g. printing some money in the short term.
Like sure all the goods are stupid cheap but things that are actually naturally rivalrous and exclusive like real estate continue to hold value most random people are pretty fucked it seems.
Apartments aren't land, they're buildings. Buildings can be made arbitrarily tall; if we built tall buildings we'd have more housing units than people long before we ran out of land.
So if there is a machine that can build buildings for free, apartments should be cheap. If there isn't a machine that can build buildings for free, get a job building buildings for money.
Even if 100% automated, there might still be a residual cost to building as it needs energy (assuming than raw material is free). I do not think that because the building would be not free, it would allow human to compete (too slow, inaccurate, etc.)
Delivery should be automated.
Rent would obviously crater as building housing craters too (robots making it, materials being extracted and manufactured by robots too). But again, it would still cost something (energy at very least and assuming energy is not free).
So I suspect that even if 100% is automated, we would still need little money to pay for the basics (food, shelter).
And that's the point. The problem isn't caused by automation, it's caused by zoning restrictions.
In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a disproportionate increase in sales because customers are just choosing the lowest price, and then sellers keep lowering prices until margins are thin because it's more profitable to get a $0.05 margin on a thousand units than a $0.10 margin on a dozen units.
Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent.
Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a broken distribution system. So what actually replaces labor as the primary claim on surplus?
Labor is essentially the sale of time. If labor becomes cheaper then energy/matter becomes the bottleneck. Except that there is actually quite a bit of energy and matter in the universe and the main bottleneck on collecting more of it is labor, so if labor gets cheaper then so does energy and matter.
The things you're pointing to are the things that are artificially scarce. How expensive is a housing unit if you can build a 100 story building on any lot and the labor to do that is cheap? Now how expensive is it if building tall buildings is banned and there is an intentional regulatory bottleneck on more people getting trade licenses?
If you still need human labor to build housing then people can get jobs building housing until housing gets cheap. If you don't need human labor to build housing then housing would already be cheap. Unless you have the government artificially constraining the housing supply, in which case you need to fix that. And the same thing for medicine and education.
That is the meat of it. Zoning laws are why every city doesn't look like Hong Kong, even if it cost $1 to make a sky scraper. There are artificial limits on supply of doctors, and we don't pay teachers enough which is a whole other topic. If that's what we have to fix in order to make progress, I'm suddenly doubtful of how much progress will really be made in the face of the singularity.
The reason every city doesn't look like Hong Kong is that Hong Kong has a population of 7.5 million and a US city is considered "large" if it has 50,000 people.
Zoning laws are why every city doesn't look like Lubbock or Boise, which is hardly a problem.
> If that's what we have to fix in order to make progress
That's what we have to fix in order to make progress. It is what it is.
Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). So unless we assume energy cost is 0 and raw materials are not scarce, the final product has a cost, and a price, now my understanding is that if everyone uses dark factories, the margin would go down, and so the gain per "company" would drop too, hence the limited tax base.
My guess is from the 2 ends of the spectrum that you listed, we are moving from "there is still work you need people to do, and then they do that, and still have jobs." to "we automate everything". And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).
If we do not change how we tax things, I do not see how we would sustain a society where the majority is materially (gizmos) rich, but financially poor (no job, no retirement, no social security, no education).
While dark factories keep producing high volume of gizmos for next to nothing...
I am curious how we can manage that transition, which I believe could happen way faster than politicians can move.
But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs.
> And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).
But things would also cost less, in the same proportion.
Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.
Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses. This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again.
Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers.
But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.
Not sure to follow, machines need energy as input. So unless energy is free and unlimited, even if the machines run without people, there is a cost for the products. It is not free, even if that is 100% automated. At the very least you have to pay for the energy, if not for the raw materials.
> > And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). > But things would also cost less, in the same proportion.
Yes, things (material) and services would cost less. But still cost the energy to produce those things and services.
> Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.
Not sure why healthcare would not be 100% automated, but for the exercise, let's assume it still needs some people. Unless you also assume that unemployed people could get some ABI or SNAP from government (in US already 1 out 8 adult receives SNAP) to pay for food (cost less with 100% automation, but still cost the energy for fertilizer, tractors, transport, transformation), for shelter, etc. and pay for healthcare.
I am not sure if the gov lose 80% of its tax collection, it could sustain the population basic needs.
> Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses.
Not sure why we need doctors or nurses ? Doctors are mostly a sensor + decision tree... that speaks to the patient. I could see doctors and nurses to disappear eventually. It might take longer for robots to do surgery, but it should eventually come. So the cost should drop. Drugs manufacturing should be 100% automated too. Lab work automated.
> This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again. Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers. But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.
I guess the disconnect, for me the end of spectrum, is that all the products and services could eventually be 100% automated without human in the loop, expect for consuming the products/services. Those 100% automated product manufacturing or services, would cost energy (electricity basically) and raw material (arguably free, just need to pick it up on the ground using some energy). So, one machine would build everything and all services, with just energy as input. If energy is not free, then products and services would cost something. How people pay for product and services ?
But where does energy come from? You would have machines that can make solar panels and install them and operate a power grid, or people would still have jobs doing those things.
> Unless you also assume that unemployed people could get some ABI or SNAP from government (in US already 1 out 8 adult receives SNAP) to pay for food (cost less with 100% automation, but still cost the energy for fertilizer, tractors, transport, transformation), for shelter, etc. and pay for healthcare.
If everything other than healthcare was automated then energy production, fertilizer production, tractor production, transportation, etc. would all be automated.
If everything is automated then everything is free. If there is still anything that can't be automated then people still have jobs doing that.
So are we're simultaneously facing a big unemployment crisis, and a big shortage of health care providers and retirement care takers?
If AI is so good that it can replace health and retirement care, then the price should fall to.
But basically, we would end up with AI and dark factories building gizmos to sustain and entertain humans and fixing them until they die.
I guess taxes at this point are irrelevant, AI could build new factories of factories, money would be useless.
If you're referring to some equivalent of wealth tax or inverse of accounting for deprecations in terms of assets, then that seems pretty problematic. 1) how do you asset the value of something until someone pays something for it? Unlike homes, where you can compare roughly to those around you, this seems much more dynamic for software / AI. 2) Let's say we are able to assess the value, so now a startup with software but no revenue has to pay taxes? Where does the money come from?
Certainly you can argue income inequality is too high and capital holders and high earners need to pay much more.
But you cannot seriously argue that capital owners "avoid contributing to the financing of our states and social systems". They pay a lot in capital gains and income taxes, even if they don't contribute as much as they should.
starting your reply with an insult, great way to spark "grown up discussion"
Can we have an honest discussion that uses numbers instead of hyperbole?
Notably, that still seems pretty insulting to me. jimbokun wants to have an honest discussion about the problem, using true data instead of emotional exaggeration. This is a reasonable thing to ask IMO, but of course it seems like an insult towards the person that's making stuff up.
Receiving a relatively low official salary (Bezos's Amazon salary was $81,840 for many years).
Not receiving dividends, so the wealth remains in stock that is not taxed annually.
Borrowing money against their stock holdings to fund their lifestyle. Loans are not considered income and are therefore not taxable, and the interest on the loans can sometimes be used as a deduction.
This basically defers the taxes to a later date and charges you interest for 'em. Which might be worthwhile, depending on how quickly and reliably your capital is growing.
If you have a lot of assets you can just refinance your loan with more debt.
Right, but you're ignoring the loop-hole OP mentioned where you borrow un-taxed money then deduct it. Kill the loop holes.
So the only way to pay less tax is to surrender all your assets.
[1] https://www.fidelity.com/learning-center/life-events/cost-ba...
I included options because that's how ultra wealthy get their wealth from and it has market value of 0 so company could give lot of them.
Also anyone can get majority of your earning in stocks, not just ultra rich. Companies want to pay in stocks, and it's a win win for both, if there is a loophole.
(I'm happy to be wrong about this, since it seems unfair, but AFAIK this is how it works?)
A loan should definitely be a taxable event and capital gains taxes should apply to rebase the value of the stock to the market value at the time the loan is taken out. Currently, very wealthy people use the loan dodge to avoid selling stocks and since the loan isn't paid off until death (usually), estate taxes wave their hands and any gains in the stock price go away, so that the next nepo generation gets to repeat the same dodge.
- And: lobbying their congressmen for tax cuts
Sure we can. Peter Thiel managed to put $5 billion in his Roth IRA.
https://www.propublica.org/article/billionaires-tax-avoidanc...
"Using stock deals unavailable to most people, Thiel has taken a retirement account worth less than $2,000 in 1999 and spun it into a $5 billion windfall... What’s more, as long as Thiel waits to withdraw his money until April 2027, when he is six months shy of his 60th birthday, he will never have to pay a penny of tax on those billions."
This is exactly the kind of thing I was looking for.
> In the United States, for example, about 85% of federal tax revenue comes from labor income,
That means only 15% is coming from all other taxes, including corporate taxes, capital gains taxes, and other taxes on the wealthy (estate taxes), mostly because they find creative ways -- and loopholes by design -- that allow them to reduce those taxes significantly.
Making capital gains taxes more progressive is a good first step.
If billionaires (soon to be trillionaries) paid as much taxes as their wealth disparity compared to the middle class, a significant percent of the population would be exempt from taxes by the sheer insignificance of their contribution, and I don't mean only the poorest people.
(Plus, one of the tricks employed is to avoid earning actual taxable money. Steve Jobs famously had a $1 salary; folks like Musk now just borrow against their ever-rising shares. https://www.propublica.org/article/the-secret-irs-files-trov...)
> But take out a loan, and these days you’ll pay a single-digit interest rate and no tax; since loans must be paid back, the IRS doesn’t consider them income. Banks typically require collateral, but the wealthy have plenty of that.
It’s the same pattern everywhere around the world (perhaps there are a few exceptions). Businesses can be much more creative with tax evasion as well.
Businesses don't pay taxes. People do. Every dime that a corporation pays is a reduction of capital returns to shareholders, or a reduction of investment into business activity, both of which are taxed again by the people who ultimately receive the capital.
Why should workers care about being more productive if they do not reap the rewards in terms of wages?
https://en.wikipedia.org/wiki/Decoupling_of_wages_from_produ...
If AI does begin to really crater the job market, only owners of AI (yes including shareholders) will benefit but most folks do not own stock - or at least do not own any significant amount of stock.
Workers do not benefit in increased compensation of any sort when AI increases company productivity.
Obviously I don't seriously believe we should depress productivity so that nurses make less money and hospital stays are cheaper. But, you know, it doesn't make it untrue.
World Economic Forum: https://www.weforum.org/stories/2020/11/productivity-workfor...
Compare like to like. Mean productivity increase tracks mean wage increase super well, same for median productivity increase vs median wage increase.
Tax is one of those issues where there are actually correct and incorrect answers, thanks to many hundreds of years of active experimentation and relatively simple/robust theory. But people ignore the correct answers for social reasons.
The correct answer on tax is:
1. Figure out how much money the state needs to supply the services that are in-scope for it to an acceptable level of quality.
2. Aim to raise that much in taxes.
3. Optimize deadweight costs. That is, configure taxes to minimize the level to which the activities being taxed are discouraged and driven either out of existence or abroad.
If you do this sort of thing then you get Georgeism, you get zero capital gains, I think you get zero taxes on businesses, and a bunch of other policies I can't remember right now. The results can be economically very efficient i.e. they make everyone better off. However, almost nowhere uses them because there's nothing in the above three items about social engineering, and governments use taxation largely as a tool of social engineering. And in particular to please leftist voters who use the tax system to penalize wealth for its own sake, and to reward groups of client voters. Many governments also have a lot of trouble defining what's in scope for them and then working backwards to needed tax revenues; they prefer to raise as much tax as they can manage without totally crushing their economies and then find ways to spend it.
Switzerland is a bad example because they tax capital more directly. In the form of a wealth tax. https://en.wikipedia.org/wiki/Taxation_in_Switzerland#Wealth...
GP said setting taxes on capital to zero was a bad idea. Switzerland has only set capital gains taxes to zero. It still taxes capital.
The type of tax matters a lot. The reason capital gains taxes are bad is that they discourage investment, but investment is how you create wealth. "Creating wealth" is ultimately a synonym for creating material progress. Voters like progress, and so this is a very simple and direct argument, which is why most countries that have capital gains tax it at a lower rate than income. Wealth taxes have different incidence and change incentives in different ways. Basically, they discourage having wealth rather than creating it.
It can create its own problems. Switzerland has had big problems in the past with the wealth tax discouraging the creation of tech startups. The reason is that if you create a company then sell some equity in it to investors, that creates a valuation of your company which is then considered wealth, even though it's theoretical wealth and not liquid. In other words, doing a big VC raise can land the company founders with an unpayably massive tax bill: they literally don't have the money to send the government because it's only paper wealth.
To fix that the Swiss tax authorities had to introduce a new rule that says if you have ownership of a startup, this doesn't count towards the wealth tax. What exactly is a "startup" and what differentiates it from other kinds of business? Whether it is "innovative". What counts as innovative? The taxman decides. That means creating a startup in Switzerland is quite risky as if some random bureaucrat decides your product isn't truly innovative and you do a big VC raise you could be personally bankrupted (or you have to use some of the investors money to pay yourself out each year, which is then taxed as income too pushing you into a much higher tax bracket, etc). There are lots of other practical problems with the wealth tax.
Tax incidence is complicated!
In practice the Swiss approach works because:
- The wealth tax is quite low
- This "innovative startup" hack seems to work out in practice even if it's concerning in theory (tech startups aren't the only way to create a lot of wealth)
- Wealth taxes discourage all kinds of wealth equally, so the effects are diffuse and they don't specifically discourage e.g. getting promoted over company formation over inheritances, which is a distortion a lot of other approaches do create.
airstrike: zero taxes on capital are a bad idea
mike_hearn: Switzerland has no capital gains taxes and it's great.
triceratops: Ok but it still taxes capital.
mike_hearn: I live in Switzerland. No capital gains taxes are great and everywhere other than Switzerland has a lower tax rate for them than income because we want more capital gains. Also wealth taxes can cause startup founders to be taxed heavily.
There's a bit of a disconnect here. You're arguing against multiple strawmen IMO.
Outside Switzerland the current situation is: regular people pay high income taxes while they work, then somewhat lower capital gains taxes in retirement. Ultrawealthy people pay far less of both because they have ways to avoid them (keep employment income low, borrow against wealth instead of selling it).
In Switzerland, since the wealth is straight up taxed, even if at a lower rate (I ran the Swiss wealth tax numbers myself a while ago and you're right it really is a very small amount. I pay way more in capital gains taxes) there are fewer games. Everyone pays taxes on what they make or own.
The startup wealth tax problem has another solution: allow payment in non-voting startup shares, instead of liquid cash. The shares go into a sovereign wealth fund. The government either reaps a windfall eventually alongside the founder, or it misses out on tax revenue it shouldn't have collected anyway (if you look at it from the fairness point of view).
> The startup wealth tax problem has another solution: allow payment in non-voting startup shares, instead of liquid cash
This is an excellent idea! Did you come up with this yourself or have you heard of others proposing it?
I don't think it's a particularly revolutionary idea because sovereign wealth funds already exist. Improving productivity means using less labor which means lower income tax revenues as time goes on (and that's what you want - higher productivity, fewer labor inputs).
And yet, the government needs revenue. What's growing? Wealth. Liquidating wealth to pay taxes is problematic. Hence the sovereign wealth fund. You can apply this to most forms of wealth - even publicly traded stock, real estate, crypto, and artwork.
I've proposed it on this site several times in the past.
The shares are illiquid and that poses a problem for the taxpayer because the government only accepts cash. If instead they could sign over an equivalent number of shares then morally (and arithmetically), they've paid what they owed.
The government may subsequently choose to dispose of the shares on a secondary market, if one is available. Or it may hold on to the shares until there's a liquid, public market for them. Or it may never sell. It all depends on how the sovereign wealth fund is managed and structured. Way smarter and more knowledgeable people than me would have to design how the fund actually works and prevent market manipulation and insider trading.
The argument for low capital tax is that if it's high, the people with the capital - who, crucially, need someone else to use it to make money from it - will just hoard it. For one thing, the obvious glaring issue with it is that however high the capital gains tax is, so long as the owner of capital in question still gets to pocket some of the wealth produced using it, they still have an incentive to continue - something is better than nothing. The actual, real world threat is that some other jurisdiction sets the tax rate lower than you will, and capital will then move there. But this same threat applies to many other taxes, capital gains aren't special in that regard.
When people talk about wealth creation they mean the creation of new wealth. Filling potholes isn't normally described as wealth creation because it's sustaining activity. You can choose to define wealth creation differently, that's fine, but it makes the term useless because it'd become synonymous with any kind of work.
Additionally, there's no real world difference between investors and workers. The idea you can separate capital as a class of people from workers is a Marxist concept that doesn't make any sense outside that broken ideological framework. The classical example: if someone owns a food stall, are they capital or a worker? If they pick up that stall and cart it to a bigger town down the road, is the act of them hauling their cart along the road work or an investment? You could argue equally well both ways, which makes the distinction just a distraction.
> however high the capital gains tax is so long as the owner of capital in question still gets to pocket some of the wealth produced using it, they still have an incentive to continue
Not at all! This is the kind of weird prediction that false distinctions between capitalists vs workers causes. It's why Marxist economies always fail. Investment is work and it also requires taking a lot of risk. If you confiscate 99% of someone's ROI nobody is going to say oh well, at least I got 1%. They're going to give up investing at all because the act of making the investment not only took effort, but also meant they could have lost the whole shebang.
I feel like you have only a cursory understanding of finance, economics, and taxation. If you didn't, you would't ask questions such as
if someone owns a food stall, are they capital or a worker?
It reads like you're trying to find evidence that reinforces your priors while dismissing whole swaths of empirical and theoretical work that would immediately challenge it.
For context, I spent a decade as an M&A banker, so as far from a Marxist as one can be.
There's a distinction between capital and labor when the terms are used in an accounting sense but when "capital" is used as a shorthand for a class of people, there isn't. Once someone starts talking about "actual workers" vs "owners of capital" they're drawing that distinction.
If last year I had wealth X and this year I have wealth X+Y, I have to pay a wealth tax on the gains, in addition to the the tax on the amount I had previously.
So my gains are still taxed.
- Wealth tax is much lower, think a percent of your wealth or less vs 20% of your gains.
- You can avoid wealth tax by spending. If you sell a bunch of shares to earn $100k then take a year off to see the world, you pay no tax on that (other than sales taxes etc).
- In practice a lot of things aren't covered by wealth tax. If you spend on a fancy new TV it's not measured. Only the big ticket items are wealth taxed (houses, financial assets, art, cash piles, etc).
It's unclear that the model can be replicated generally, let alone whether it should. Importantly, there may not be sufficient demand for banking services like the Swiss provide.
Your three step plan says nothing about how much should be taxed at the personal vs corporate income level, or on the gap between capital gains and labor income taxes.
I'm not arguing for higher tax revenue overall. I don't believe in that, but I also wouldn't even need to make the argument even if I believed in it.
The simpler, more defensible argument is that taxes on capital gains must be much closer to income taxes. Historically they were, even in the US, and we seemed to be fine.
Meanwhile, financial privacy isn't inherently questionable. The USA did a big push in the 1970s to strip privacy from the financial system which until that point had been the default. That was the birth of the concept of money laundering, created as part of the war on drugs. The approach failed as drug cartels found ways to launder money cheaply enough that it wasn't a big friction for them (normal estimate, it adds ~10% to their costs). Not everyone thought that was a great tradeoff, and the Swiss numbered accounts had been used by people trying to hide from the Nazis.
At any rate, the USA forced their concept of anti-money laundering on the world (not that most countries needed the arm twisting) and Switzerland has implemented exactly the same policies as everywhere else for decades. It has no special rules with respect to banking for a long time now.
> Your three step plan says nothing about how much should be taxed at the personal vs corporate income level
It's a set of principles for answering those questions, not the full set of answers.
It's been years since I looked at this but IIRC the general agreement is that you shouldn't bother with corporate/business taxes, because they're both an indirect/inefficient way to collect tax (all taxes are paid by people in the end), and easily avoided.
It was for this reason that the designers of the EU's taxation system originally configured corporate taxation to be collected wherever the nameplate was (i.e. an arbitrary location chosen by the company). The assumption was that with time individual countries would compete the corporate tax rate to zero, fixing the underlying inefficiencies. Of course what's actually happened is some of the countries try to gang up on the others to try and force them to stop lowering taxes. It's not a stable outcome, politically.
In practice business taxes are popular because politicians view them as a way to tax citizens of foreign countries. That has bad effects too but schools either don't teach economics or don't teach it properly in most places, so there are lots of weird hacks like this where something that creates more harm than the alternative gets preferred because people can't resolve the harm to the root cause.
A lot of the debate on this topic is tedious anyway because it revolves around semantic distinctions that only exist in specific kinds of ideological discourse.
You're welcome to make your substantive points thoughtfully.
So in theory, LVT could collect more tax than the state needs to fund services. If that happen, it would be distributed as a Citizen's Dividend.
I am skeptical that we wouldn't be able to find a productive use for government spending, but that's a discussion for citizens of a Georgist state to have.
Also, Georgist policies would discourage the existence billionaires and other people with extreme wealth simply because a lot of their wealth came out of economic rent.
In any case, California are where some of the most powerful tech monopoly are located, and not coincidentally it's also where some of the most expensive land there is.
Economic land is anything that's fixed, finite, and not man-made, such as land, the electromagnetic spectrum, and orbitals.
Services like amazon and instagram are something of a puzzle to Georgists, but it's at least clear that Amazon and instagram benefits from labor and effort of the platform users. Without people selling on Amazon, there's no amazon. Without users, there's no reasons to be on instagram. To be perfectly clear, platform companies obviously put in labor to build their services, but the network effect isn't entirely of their own making.
Point one: higher productivity is not necessarily our goal. I could think of numerous industries that would make the world better if they did less work.
Point two: There's a moral absurdity in taxing the wages earned by labor more heavily than the returns earned by ownership. One is tangible effort, the other is an abstraction backed by law. If anything, taxing capital should be the baseline, because it's the least tied to survival. Historically, when America was at its most broadly prosperous, capital gains and corporate profits were taxed at far higher rates than today.
Point three: AI intensifies that calculus. If AI is deployed by capital to further replace or devalue labor, then taxing only the worker is punishing the displaced while rewarding the displacer. That's pure extraction. If we want social systems to survive, the burden has to fall on the owners of the machines, not the people being replaced by them.
Genuinely one of the largest and most destructive ills of our society right now is that so tremendously more of our shared prosperity as a system is directed to those who do the least to create it.
So, what do you tax? You tax land and land-like things, non-reproducible privileges(like patents and copyright), pollution and other negative externality.
Now, there's an argument to be made that we couldn't possibly be able to fund governments on the back of these taxes. Fair enough, but it should mean we minimize those taxes until the economy grows enough to fund government services.
https://taxfoundation.org/blog/value-added-tax-vat-progressi...
Avoiding tax through various loopholes that Capital gets a seat at the table to help craft, while benefitting from externalizing the costs to taxing labor is just corruption.
This assumes the worker is the one benefiting from the productivity gains. We're just worked more and we don't get the added value.
When inflation is absurdly high like in Argentina, Economy does not make sense any more.
Basic economic assumption are not true and you get things like that or that "spending" is actually "saving".
I don't think it relates.
We have arrived to the point where capital is vastly more important and productive than labor. AI has only make that worse. Historically, there has been a balance because it was Capital and labor that were required to generate outsized returns. But once you strip out incremental cost with software, and tack on an AI "service" layer, where are the need for employees?
The one saving grace, is that this will also break the VC model. When one youtuber who has 100k subs can spin out 20 different apps a year, we fragment the app space, allowing alot of micro businesses to form around "brands". But "brands" will just be social media influencers.
The industrial era problem isn't capital but that economies of scale encourage consolidation heavily and make running small business an even more uphill battle. There is at least a counterbalancing force of competitive pressure and antitrust to promote some splitting for innovation's sake as opposed to just one big stagnant monopoly winning out just because it is biggest.
Are you sure capital owners do not contribute to our states and financial systems?
For instance, Jeff Bezos is worth $238 billion even though Amazon has a $2.6 trillion market cap. That's $2.4 trillion of value created for other shareholders plus trillions more for employees, customers, suppliers, governments, and other stakeholders.
Jensen Huang is worth $164 billion while NVIDIA’s market cap is $5 trillion. That’s $4.8 trillion of value for other people (ignoring value created for non-equity stakeholders).
etc.
I'm not saying that there should not ALSO be other ways to force contribution (e.g. via taxes), but to say they do not contribute at all is false.
I think it's pretty clear Amazon is quite a positive given by how many people like using it so much for it's convenient 1-stop shop, quick shipping, and hassle-free return process.
Are you saying it would be better to have to shop at 1000 different little websites with probably crappy or at least inconsistent return processes?
There is such a wide variety of products that people go to Amazon for. I know I do. So many things are niche I can't see how any local stores could exist to stock things like that in even a 1 hour range from a majority of the population.
How many people are going to drive hours to go to a special boutique that has this random thing they want or need?
Maybe people use Amazon to buy routine things that could easily be stocked locally. But I guess I use Amazon to get things that I can't really get or even usually find anywhere else for that matter. Most come from small operations using Amazon as their sales platform. Amazon is providing a lot of discoverability and logistics to them and I am not sure I would even stumble across the seller if I had to find some tiny website that they operated themselves.
I am not sure most people would prefer to shop locally, most people don't seem to even go to the store anymore and instead use delivery services for everything. This saves so much time to allow us to do other things that we enjoy in our lives. I don't think small shops would be able to offer this level of convenience.
Are you serious? I live in country where we are not using Amazon.
And if not, you are saying you have a similar availability of such a vast network of goods, almost anything you might want and the convenience of fast delivery and simple returns via local shops or something?
I guess I’m not sure what you are suggesting. I personally find that shopping and finding and acquiring the products I want is vastly more convenient and easier with Amazon than before we had Amazon and yes I was around back then too. I’d never want to go back personally. Most family and friend I know seem to feel the same.
1. Value created for other shareholders is a good thing
2. $ "value" directly translates to actual resources or services
3. These employees and customers would not get the same or more value elsewhere if Amazon did not exist
4. This "value" created by Amazon is better compared to the alternative (such as more resources used locally instead of global trade)
The poster is suggesting there is some _true_ value separate from what these customers who know their own situations best think. That they are secretly being fleeced and a central planner will somehow better allocate the resources.
Not at all. What if it were an employee co-op?
"The ultra-wealthy should have less power" != "We should implement a five-year plan for our command economy as thought up by glorious and correct Party."
What is the logic?
AI can calculate stuff that can be measured and calculated.
But investing (in stocks or otherwise) is not that. Investing is about the phychology of the people (all other investors). If investors as a whole make stupid decisions, the market movements make their decisions correct (like the incredibly stupid drop in Nvidia's stock due to release of Deepseek). AI can be more objective and better at calculating facts, but it doesn't matter if the market is driven by emotions and people.
It's not a given that this will remain true forever, although I don't think it's tied to AGI. One could argue that AGI push is the trigger for a massive increase in compute capacity and corresponding decrease in price that might make this kind of thing viable, but that's just wishful thinking, not a fact.
Not generally. Window repairmen get higher incomes, but the rest of the economy has less consumption and investment.
I don't believe that's true. I believe that's called the "Broken Window Fallacy" in Economics.
That's not Bezos' doing alone, that's Bezos plus over a million workers that did that. If Bezos never existed in history, someone else would have filled in that market. We need to stop this myth that a few men alone create all this value and that without them we'd still be dragging plows through the mud for our farms.
On the other side, Jeff Bezos is clearly an outlier. Even if we agree that ecommerce would have existed without him, we don’t know whether someone else would have created the same scale of value.
Folks that own a vast amount of stock do not pay taxes on that stock. They own the shares, and they take out loans against those shares. At some point they rollover or pay off those loans by selling some shares, but the shares have increased in value significantly in that time, or they’ve been granted new shares.
When we say “<business> has created value for shareholders”, it’s said in a way that implies that somehow that wealth creation makes its way into the tax system by virtue of the fact the wealth was ‘created’. It does not.
This is all aside from the fact that increased shareholder value means a more abundance society regardless of the increase in taxes. We could quibble over the exact distribution of who gains from the enlarged pie but it's certainly not the case the 100% of it goes to capitalists so consumers and employees also benefit.
Almost no one in the US pays the estate tax. It only applies to estates over $14MM and most large estates get reorganized into trusts with estate tax avoidance as a primary motive.
Yes this entire conversation is about the ultra wealthy not paying their "fair share". A $14MM exemption is practically irrelevant here.
> most large estates get reorganized into trusts with estate tax avoidance
This isn't so simple. Transfers to a irrevocable trust count against your lifetime 14mm estate and gift tax exemption and a trust in excess of the 14M exemption is subject to gift tax.
Also, this discussion was about "Buy Borrow Die" strategy. Irrevocable trusts don't make much sense in this context because trusts aren't subject to stepped up basis.
> capital owners successfully avoid contributing to the financing of our states and social system
Another fundamental problem is that the means of production are concentrated into the hands of a few.
I am more worried about the capability of people to use the free means of production (more precisely improve education) rather than the concentration.
Edit: and to remove any doubt, I do agree that taxation of capital is completely badly done now, but I do not think the capital is about owning the means of production but about the capital (effort) required to organize people to use the (mostly) free means of production.
[1] https://www.cbsnews.com/news/income-taxes-billionaire-tax-ra...
[2] https://www.propublica.org/article/the-secret-irs-files-trov...
40% figure is also based on individual income taxes. It drops significantly if you consider other sources (payroll etc).
Top 1% also receive preferential tax treatment and benefits disproportionately from policy changes.
So you are effectively suggesting to forcibly take their money from them and then give it back, but through a corrupt and bureaucratic system of the state.
Tax not paid by ultra wealthy goes back into he system as loans that extract interest that in turn is used to buy assets sold to pay for interest, those are then rented back to the system to extract more interest.
In essence by allowing no tax to be paid by the ultra wealthy, we facilitate the death of the middle class and transfer of everything to the very few - with mathematical precision.
Ultimately we need to ask ourselves why we have a society, what's it's purpose.
For the few or the many ?
Considering this, everybody might have to make (at some point in their lives) hard choices regarding where they choose to live. Yes, one should fight to improve the society one is living in, but there is also a saying "only the fool persists in their folly" ...
So many commnents here, yours included, make perfect sense when you simply look at them through the lens of the workers' relationship to the means of production.
Automation could be a good thing. It could mean we need to do less work and have more leisure time. Instead it gets concentrated in the hands of very few so they can become even wealthier. And the resultant layoffs are used to extract free labor from the people who remain and suppress their wages, all to eke out more profits.
By itself it wouldn't be a problem, the problem is at the same time they raise taxes for people doing OK, and salaries are mostly stagnating.
Farmers using machinery instead of labor has meant cheaper food for everyone, not rich farmers.
When your argument boils down to discussing fantasies in a fantasy world, you have a bright future as an economist indeed.
If you’re going to ignore it and call things a fantasy, why even bother commenting?
I think that if we look at inflation-adjusted productivity, and inflation-adjusted average income, then that would indeed prove increasing inequality, right?
I believe the chart in this link is adjusted by inflation. Showing overall the same trend:
One can imagine a world where productivity increases, the need for old jobs is reduced, but newer, better jobs more than replace them because the economy is experiencing genuine growth. Self-serving capital rhetoric will push you to always imagine it this way, self-serving labor rhetoric will push you to never imagine it this way, but good policy lies in figuring out what's actually happening in aggregate and responding accordingly (the framing I tried to push).
Because that increase in productivity comes almost entirely from technology owned by your employer.
To look at it in a contrived example, let's take textiles. There is a textile factory employing weavers who weave fabric by hand, and the factory owners buys a new automated weaving machine that makes the weavers each 3 times more productive. The maker of the machine created the technology, and is paid for it, the owner of the factory made the investment to bring the technology, and profits from it.
This is basically exactly what has happened to modern productivity.
I'd argue the same goes for many types of digital creators, artists, video editors, animators, and so forth.
Not really. That's essentially a weaver learning to use the new automated weaving machine. That is what you do to remain qualified for the job. Now, if you were a framework or key system creator, building the underlying platforms that get adopted throughout the industry, I would agree. But just learning to use the tooling the the industry creates isn't that different, other than the rate of change you have to keep up with.
An automatic weaving machine, operated by a capable operator, produces 3 times as much as a manual weaver. The productivity increase is the machine, not the operator. That's my entire point.
The owner of the machine reaps the surplus, not its operator.
> This is the problem of the decoupling of productivity and wages. It started happening at precisely the moment the gold standard was ended - weird.
You'll get no argument from me about the ills caused by the financialization of the economy, but I don't think that's what's going on here.
> An automatic weaving machine, operated by a capable operator, produces 3 times as much as a manual weaver. The productivity increase is the machine, not the operator. That's my entire point.
An automatic weaving machine operator, operating a capable machine, produces 3 times as much as the lack of a machine operator. The productivity increase is the operator, not the machine. That's my entire point.
What's different between what I just said and what you just said? Nothing. In fact they can both be true. Both parties can get 3 times as much money as they did previously. Why don't they? Why does one party get 10x and the other party get 0.7x?
If productivity increase is entirely caused by machines, why did it take until 1971 for wages to decouple? The reality is that both workers and owners would like their share to be as high as possible. In 1971, however, owners seized control of the money printer and they never let it go since then.
Increased productivity shifts the supply curve which will (unless demand has zero elasticity, which is unrealistic) lower the market price of the good. So tripling productivity does not triple the amount of revenue per hour worked.
> Why does one party get 10x and the other party get 0.7x?
Because the people purchasing labor (capital) are able to get the labor they need at that price. Automatic weaving machine operators are trainable, and if they were getting paid 3 times what weavers were paid then people would rush into that space, driving down labor prices—in other words, the supply of automatic weaving machine operators has high elasticity. The demand for automatic weaving machine operators (i.e. the supply of factories full of automatic weaving machines) has much lower elasticity, so capital (demand for labor) gets most of the economic surplus.
It comes down to the capital owners owning the money printer. And nothing else.
I'm aware of a few attempts to create a labour-owned money printer (using the ideas of cryptocurrency) but none that are getting off the ground. Bitcoin is not one - it was a good idea to try, but it got captured by capital just the same as fiat money did.
- It’s fundamentally more difficult to raise and organize millions of dollars to build a factory and fill it with automatic weaving machines than it is for someone to train for a few weeks to become an automatic weaving machine operator.
- Various government regulations, from environmental protections and zoning laws that make it harder to build factories to safety regulations for operating factories, make it harder to open new factories and so decrease the elasticity of labor demand. I want to be explicit here that I am not saying these regulations are bad—but we must recognize the side effects they have.
- Long lead times on capital investments greatly increase the risk of market movements or technological advances making the business plan untenable before it gets off the ground.
- Organizational inertia slows staffing changes. Corporations often make decisions at glacial speeds. Want to hire a new team? Who is going to manage them? Who do they report to? Where will they work? These discussions can take up months, at which point the market has changed and ehhhh maybe we don’t want to hire a new team after all.
- High cost and difficulty of firing people makes hiring for a possibly short-term market opening less attractive. Think union contracts, severance pay, etc. Again, I want to be explicit that I’m not saying these are bad things, but we need to understand the effects they have.
Productivity increases result in lower prices in any competitive market.
Are you talking about taxing unrealized capital gains?
Because for the situation where capital is directly replacing labor, the income generation is taxed regardless of the whether it’s generated by a human or machine.
If I hire people to make and sell hot dogs, they pay taxes on their wages. If I build an automated hot dog vending machine, I still pay taxes on the profits of selling those same hot dogs.
One can’t spend any of the money until it becomes personal assets. So what is not being taxed?
If I keep them in the company, I pay corporate tax on profits (22%) for retained earnings. And then I’d have to pay dividend tax (either 15% or 20%) atop those retained earnings to pay them out to myself as income. Or I pay myself a salary and pay regular income tax on the full amount.
Due to our progressive tax brackets and double taxation of dividends, both options end up with larger tax rates than when dealing purely with low wage human labor. We as a society collect more in taxes from one high income earner than multiple low income ones.
The oldest trick in the book is to use unrealized gains as collateral for loans - we even have banks specializing in this.
Oh, and the US has a law that erases the tax bill for dead people - you'd be stupid not to use this trick.
so the answer is yes.
However, i did not go as far as proposing anything. You are assigning value on my statement.
I merely pointed out that it is a mute point to say that you can not use your unrealized gains.
That is true, but there is a theory, applied very weakly, that supports this. The idea is that a decedent's estate is subject to a wealth tax on its fair market value, therefore to also subject the unrealized gains within the estate to income tax would be double taxation, which is to be avoided. The flaw is that the exemption from the estate tax is relatively high (something like $13,000K), so there would not be any double taxation is most cases, but it's treated that way nonetheless.
One inherits free money - and pay inheritance tax of it. In order for capital to be free, capital gains tax needs to be paid.
And the general idea to protect against "double taxation" is meaningless. All money are constantly being taxed again and again.
Regardless. Inequality in itself is really bad, and Americans do feel the consequences.
If you can defer the repayment of the loan until after death, capital gains are eliminated.
Debasement is an invisible tax and its effects far outweigh individuals bypassing taxes.
This thread is about the fair taxation of AI, if any.
The current interest on our national debt is greater than our military spending.
So if you increase taxes some people think it would just be throwing it into the money fire of Washington.
There needs to be a lot of changes in D.C.: term limits in congress, citizens united needs to be repealed, erc etc
For quite some time, my mortgage interest was larger than my principal.
That didn’t make it fiscally irresponsible.
https://www.marketplace.org/story/2025/07/14/how-our-debt-cr...
During Clintons term this turned around to being a 2.3% surplus in 2000. Just 25 years ago the US was spending less than it was taking in tax.
The Bush came in and that surplus became a 3.3% deficit by 2003, and then the GFC crashed it to 9.8%.
While Obama was in, it crawled back from 9.8% deficit to 3.1% by 2016 - same value as before the GFC
Since then it's gone back to 6% of GDP
Even the $18B ($450/capita) vs $1.8T ($5,300/capita) looks pretty small for a state that large.
Odd that.
The government is fiscally irresponsible by design, because the government is ran by the plutocrats with all the incentives to give themselves more money at the cost of everyone else.
You know, exactly that span of time that everyone agrees on being really prosperous.
Owners of capital and means of production have succesfully gamed the system and most of the tax burden falls on us middle class idiots that pay taxes on our work.
Of course, the question then is who is consuming the production, but we're not quite there yet.
But, of course, in such a society, the people who don't own the robots - i.e. most of us - become "economically unnecessary".
So the government is going to fix this, right? Right...?
The top 1% pay 40% of the Federal income tax.
As a libertarian, I find the whole requirement for workers to secure an accountant and file individual income taxes under threat of retaliation silly. Individuals should be free to engage in activities like working for an employer, taking care of their kids or aging parents, or having sex, without paying tax to the government. Taxes should be levied on companies and robots, not humans doing everyday things.
The employer knows exactly how much they are paying each employee, and they already have accountants on staff. Why create "bullshit jobs" just for employees to file this same exact information again?
So yeah, we shouldn't wait for AI to replace workers, to abolish the individual income tax for individuals. It should have been done a long time ago. Employers can pay the tax (as they do with FICA). And in fact, we're going to have to have a tax regime that taxes robots, which would become the primary economic actors soon anyway. If corporations can have legal personhood, surely robots can too LMAO.
This is also a slippery slope. As slippery as taxing individuals, property etc.
( It's another large conversation as to the best ways to sustain the govt)
The crucial difference is between the governments actually run by the people, and the governments that claim to "represent" them.
If capital holders don’t actually deploy that capital and compete with each other, then you don’t have a capitalist system anymore. You have a feudal system, where asset holders extract resources through rents, rather than capital deployment and risk taking.
When every industry is on a multi-decade streak of consolidation, when McDonalds is about land speculation rather than serving food, farming is about land ownership rather than growing food, airlines are about credit cards rather than transportation, it's not unreasonable to believe that a substantial amount of capital is being deployed towards rent-seeking rather than economically useful risk taking.
The modern rulers rely more on brainwashing and less on direct oppression for this exact reason. Not that the latter doesn't happen, mind you, but I also can't think of any modern day regime that is sustained solely by force, without some measure of popular support.
Give unto Caesar that which is his, and let God handle the rest. The base case for the inductive proof is alarming, and I can’t see it ending well.
Additionally, for the projectile velocity at the time the gambeson-like garment the Aztecs had available was surprisingly effective.
Then it should be asked to give a part of it for free. Not necessarily money by the way.
And so you can easily turn that argument around: the workers who actually produce the useful things are, for some reason, taxed higher than the owner who didn't lift a finger to produce anything, but is entitled to all the profits by virtue of being the capital owner.
Capitalism works when a market works; capitalism fails when a market fails. Healthcare is a great example, because there’s an obvious and inherent imbalance in demand vs supply. Firefighting is another great example. These also have externalities to the community as a whole that everyone gets, even when you don’t pay/need the service; so it makes sense to make everyone pay (taxes). Even if you never have a child, even if you send your kids to private school, you live in a society that could only exist because of a (formerly, relatively) high standard of public education. So everyone pays for schools.
The idea of government bureaucrats lining their pockets is also (formerly, relatively) ridiculous: who would get into US government bureaucracy to make money? They are all (formerly, relatively) doing it almost uniformly because they believe in the mission, because they would almost all make more money going private.
I often ask myself whether that is ethical or not. But in the end, it’s not the tooling that’s unethical. Productivity increases are good for everyone, under normal circumstances.
It’s the fact that all the gains are being collected by the already uber-wealthy that’s wrong.
When the product succeeds and you get offers to exit, would you sell to the uber-wealthy? They will exploit your user's data and collect the gains.
Those are the questions you should be honestly asking yourself when considering your own ethics. What's your price?
So if I'm reading your comment right, you think it would be ethical under normal circumstances, but also believe we don't live under those normal circumstances? In that case i think the answer you're looking for is: it is not ethical to develop these tools under the current circumstances.
Wouldn’t that mean that it’s unethical to work on anything that improves productivity? AI, in particular?
As long as (almost) all the benefits/wealth generated by your work is captured by the 0.1%?
Because that’s the case right now.
https://taxfoundation.org/data/all/federal/latest-federal-in...
How about the rich say that 50% of the economy should pay their fair share?
What it would impact is how easily these people could influence the political system and get themselves out of trouble.
At $400 billion net worth, Elon Musk could retire one hundred thousand times. He literally wrote multi-million dollar checks to various politicians and ran an illegal pay-for-votes scheme in Pennsylvania. And he'll face zero consequences for it.
It's not like he has all that in money in his bank account, it's ownership of companies, their value is not real until someone else is willing to pay.
You have a vendetta against a guy, for grievances, some legitimate, and want the law to change, specifically to get him, because you hate what he says. You also want to nationalize his businesses, that he built, that he did not have to build, that now employ 140,000 people, that he did not have to employ, with those 140,000 people almost all being high income earners paying higher tax rates when they may not have otherwise, out of your hate.
I would call that greed and a despicable position.
On that note, it's also completely pointless. If you were to literally liquidate every billionaire in America, every single one, and somehow got current market rates for every single stock share, 100% tax rate beyond $1B... we would cover the deficit for 3 years. With everyone else still paying taxes. Then we're back to square one, running a $2T deficit every year with no billionaires to liquidate. It's entirely catharsis that accomplishes nothing. If such a tax were even passed, we wouldn't make it to the next election cycle before it's a problem again.
It would certainly impact their willingness to do the company-building that creates all those innovations and jobs.
With such a rule, Tesla wouldn't exist, no electric cars, no SpaceX, no cheap advanced launch tech; basically most of the modern world would be choked in the crib by taking away the incentive to build it.
Some people really are exceptional and there are very few of them.
How many Einsteins do you think are just kicking around? How many Robin Williams's or Tom Hanks's?
How many Kobes? We know not many because there's a huge search to find more.
There aren't 20 more Elons waiting in the wings there. Or 20 more Jensens. And so on.
It's actually far more rational as a society to pay the one guy who can create 100B his 10B for it.
And the last thing we need is 20 more Elons.
1% of Americans control 30% of the wealth of the nation, and apparently 12% of property.
It's more than reasonable that people with that much wealth to their name pay the vast majority of the taxes, as it used to be.
From a nation building perspective, there's no reason to allow a couple hundred people to wield 52,000,000,000,000$ worth of assets. It means the economy has gotten far too clumpy and needs some redistribution. This isn't even really all that anti-capitalist. Capitalism can't survive long term without budding up against a government that regulates it.
In any case, it seems a bit bizarre to me that the wealth is distributed so unevenly. Do you believe those 3 million people work so hard that their value is that much higher than the combined output of 297 million people?
But it's a lot nearer to someone at the 90%ile wealth of about $2m than the kind of power that those with $1b, let alone centi-billionaires, have. You're talking top level entertainers (actors, sportmen etc)
They don't get money through income! They get most of it through capital gains or unrealized capital gains which are taxed at special low rates and zero rates respectively.
It's transparently self-serving and completely indefensible -- though I'm sure you'll try.
How exactly do you propose that they pay their fair share when they literally do not have the money or assets to do so? Are you proposing modern day slavery? Perhaps people selling their family? I'm curious what happens if you take this line of thought to it's actual conclusion.
I don't think people should be able to vote on massive tax increase laws, if it doesn't also increase their own taxes in some way.
3 years of not taking out debt, while still needing everyone else to pay current rates. Then you're back to square one. Sans billionaires and sans any major capital investment anywhere.
Maybe different depending on area, like $20,000 a year to live in NYC but only $2,000 per year to live in a rural village.
If you can't afford the fee that's OK, it just means you have to live outside of the developed areas and don't benefit from any services provided by the government. But you are free to set up a tent in the woods and live off the land.
Someone with $1b of assets gets far more value from a modern stable western society than someone with $10k of assets
Bottom 50% only 2% of wealth
50% of the economy my ass, these takes don't even pass basic accounting logic these days
> Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.
> Four: Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.
Our fundamental problem is not that we don't tax Jeff Bezos. It's that we don't tax the people who have multiple boxes of Chinese goods coming from Amazon to their houses every day.
I suppose we do things how we do because taxing income is a lot easier to do progressively than taxing consumption.
You can't meter how many times someone has been out to eat or how many gallons of gas they have put into their car, but you can more easily track what their employer puts in their bank account.
For example, let's introduce 35% consumption tax, but introduce $1k/year UBI and extra 30% on income between $0 and $30k, then additional 20% on income between $30k and $60k, and then 10% on income between $60k to $100k, and 0% on any income above that.
Then, if you make $30k, your gross take home pay is actually $30k + $1k + 30% * $30k = $40k, and if you make $200k, your gross take home pay is $200k + $1k + 30% * $30k + 20% * ($60k-$30k) + 10% * ($100k-$60k) = $220k.
At the same time, if you make $30k, if you spend all of it on consumption, you pay 35% * $40k = $14k in taxes, so your net take home pay after taxes is $40k-$14k = $27k. On the other hand, if you make $200k and consume all of it, you pay $77k in consumption tax, and your net take home pay is $220k - $77k = $143k. All very progressive.
Now, the person making $200k is highly incentivised to avoid some of this tax, and instead of consuming all of it, he might only want to consume half of it, and invest the other half. This is great, because then the other half will (hopefully) get invested in a productive activity, so that in future there's even more production.