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Comment by pcurve | Hacker News Reader

"All our 401Ks and retirement funds ultimately ends up at groups like Blackstone"

I really think we should abolish tax-deductible/advantageous defined contribution plans like 401k, IRA, Roth, college funds, etc. This automatic investing scheme is giving inordinate amount of power to wallstreet, and force money to chase after equities and securitized products because that's all they know how to 'invest'.

If you're going to invest in stock market, you should make conscious choice to do so using after-tax earnings just like other forms of investment. The only reason why people plow money into these accounts is because of tax benefits.

Take that away and people will find more creative ways to put their money to work.

That could ultimately be a good thing for this country

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i would be slightly more targeted- abolish tax incentives for investment in real estate. investment in real estate is literally rent-seeking, unproductive and is widening inequality , particularly between young and old.

concrete examples: Mortgage tax deduction (up to $2.4mm in loans iirc), low property taxes from Prop 13 leading to lower running cost vs renting, and capital gains carryover upon a sale of primary dwelling and purchase of another one.

I am sure there are more.

I don't think there's a federal capital gains carryover on primary housing. There's an outright exclusion amount on capital gains for sale of a primary house (up to $500K IIRC)

You might be thinking about 1031 exchanges of business assets (including rental properties). IMO, that serves a generally beneficial purpose as compared to the others that you mention.

If by rent-seeking, you mean: using resources to obtain an economic gain from others without reciprocating any benefits back to society through wealth creation.

Then real estate is not "rent-seeking".

Real estate owners take the burden of home ownership off the shoulders of renters. Renteres choose to rent because they have an economic incentive to do so. Instead of a buying a home cash, or putting down a deposit, a renter can use that money for investing in other activities, spending on themselves or their family, or save. Of course, there are many renters who cannot afford a down payment at all. For them, the landlord is playing an even more important role by letting them rent in areas where purchasing would be impossible.

I do agree that most tax incentives for investing should be abolished. But I disagree that real estate is less productive than other types of investing.

In general you're right it's unfair to say that real estate investment is always unproductive and rent-seeking. However for major cities like London with tight supply, the flows of real estate investment that followed QE and zero interest rates haven't been matched by appropriate levels of home building. As a result affordability and ownership levels have reached historic lows, and many more people are becoming 'unwilling' renters, only able to service the financing costs of real estate investors. At this stage it becomes rent-seeking and unproductive, in my view, and there ought to be appropriate policy responses from government.

If you couple that idea with lowering taxes to a 10% flat rate for every single US resident, then I'd support that idea. Until then, the punitive and confiscatory tax policies of the United States Government are such that these potentially risky tax-avoidance schemes are preferable to letting te government steal your money.

It's insane that I got to give the U.S. Government 30% of my earnings from two jobs and I don't even live in the United States! The U.S. And Eritrea are the only countries in the world that tax worldwide income. If I worked less hard, I'd pay less taxes. That's completely backwards. Hard work and risk ought to be rewarded not penalized. So te reason people use these tax advantages accounts is because otherwise they'd be just throwing money down the taxation drain. With a simple and uniform tax policy: 10% of your earnings, no deductions, no credits, then the need for these complex tax advantaged "schemes" would disappear. However, Demicrats would never allow that to happen; they need the tax code as a means to penalize those that wouldn't vote for them in order to give things to those that would. If I hear "fair share" one more f'ing time from someone that pays zero income taxes while living in a rent stabilized apartment watching satellite TV, I'll probably kick a puppy. Meanwhile, it's Satrurday; I have work to which I must get back.

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