Stanford's Hoover Inst: "The Wealth Tax: Recipe for Economic Disaster"Lionaire [video] | Hacker News Reader

Stanford's Hoover Inst: "The Wealth Tax: Recipe for Economic Disaster"Lionaire [video]

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2 pointsstmw6 comments

The Hoover Institute is notoriously biased in favor of the already wealthy. I'm taking this with an enormous grain of salt.

Well, I'd wager most of the people who are advocating for the wealth tax have already felt economic disaster. Many economic disasters.

During the dot-com bust, my 401k was cut in half. How is that for a wealth tax?

Cut in half again during the great recession of 2008. How is that for a wealth tax?

Dipped during COVID. Another wealth tax.

Inflation went up when Trump applied the first round of tariffs. Inflation is the ultimate wealth tax.

Went up again when he invaded Iran. Another round of wealth tax.

I saw him in a video saying that he had to sign the "memorandum of understanding" because if he didn't there would be a world-wide depression. So I'm bracing for another round of wealth taxes.

Taxation permanently reduces your assets and acts as a very heavy brake on compounding.

Asset fluctuations have little similarity with taxation... Did you sell low, or did your investments eventually recover value?

But, once you retire and start drawdowns, then the fluctuations start to matter because you are doing the opposite of dollar cost averaging.

The point that taxation is qualitatively different from having your 401k's value cut in half is well taken. But it sure was a "very heavy brake on compounding", though---even at 8%, it takes 9 years do recover a 50% loss.

But inflation is most definitely a wealth tax, don't you agree? And here is the kicker--if we raise taxes enough to close the deficit (as Clinton did in the 90's) the inflation rate will go down. By enough to recoup a big chuck of the wealth tax in the first place.

My worries are 1: demographics and 2: zero-sum scarcity thinking (as shown in any thread discussing wealth taxes).

It seems obvious the New Zealand economy as a whole (even ignoring government tax and expenditure) will not be able to afford to pay for future retirees almost regardless of their savings.

We have a temporary fix of high immigration (30% of our population) which is a great sticky-plaster for our demographic shortfall, however immigrants also retire and vote so eventually that wheel falls off.

When the economics of New Zealand really begins to belly up, our government will have to take absolutely everything it can get its hands on - any retirement savings will be the first target.

Most people I know now inherit nothing from their parents. Most people now end up selling their homes to pay for retirement costs (care and medical). The old government deal promising healthcare and a pension is broken because it is unaffordable.

People have a scarcity mindset, and zero-sum thinking appears to be the most common way to think. Fairness is irrelevant if everyone rationalizes that anyone better off than them must have achieved that immorally. Voters will support taxing anybody that saved for retirement. Creating new wealth is seen as impossible.

I think inflation is kinda irrelevant so long as investment returns can outpace it (and drawdowns). Future taxes are more relevant - anti-compounding.

Perhaps we can invent a new form of economy but I worry the future will be similar to the present.

In New Zealand our government fails to understand wealth creation via technology or business innovation. California seems to be heading towards the same downwards belief system. In theory our government could encourage startups. In practice our politicians have little incentive to support business growth or technology invention.

It is simply because politicians sell to voters. Most voters don't want to understand the basics of economics or growth. Very few people have any grasp of complex economic systems - HN commenters generally don't. Voters are sold on outcomes that are against their own interests. Catchphrases like "socialise the losses" matter far more than the reality of engineering or infrastructure.

I'm not sure how we escape our individual stupididy, nor do I have much idea of how we can collectively work towards better outcomes for everyone.

chuckle it is oddly reassuring to hear somebody's worries and complaints, Especially when from a country like New Zealand--apparently, New Zealand is so great that even our billionaires want to move to move there.

There are plenty of resources to support retirees, even in the face of declining population. After all, people have been paying into the system their whole lives---what did the government do with all that money? Making New Zealand richer. Over the last 30 years, your GDP has quadrupled, and yet your population grew by less than 2 million people.

If our parents could support our grandparents with 1/4th of the GDP, our kids can certainly afford us in the future, when the GDP will be even higher.

Workers these days are incredibly productive. Trying to get everybody scared is just creating a false problem. True, instead of sending the dollars to defense contractors and billionaires (Its amazing how the U.S. was suddenly able to spend another trillion on the Iran war, eh? Always plenty of money for that.)

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