(Just an objective comment, I'm not positioning here) this honestly puts the "tax the rich more" in perspective. A tiny tax increment to the rightmost column would provide more money than 100 years of all the other pitiful contributions together.
The vast, vast majority of wealth (to the wealthy) are in form of company ownership, stocks.
So let's say you start taxing the ultra-wealthy based on their assets. They then have the option of:
1) Make the company pay out dividends, so that owners can afford to pay their wealth tax. Not ideal, because what happens during bad years where there's no dividends to be paid out? Or if companies want to re-invest in the company?
2) Sell stocks. Again, not ideal. This would mean that you lose some ownership year by year.
3) Take up personal loans to cover taxes.
etc.
Note, I'm NOT saying that we shouldn't do anything. But this is just the consequence of such assets (stocks) being the dominant asset among the wealthy.
Why is 2 a direction to be avoided? Is it really so bad to prevent an individual from having majority voting rights over a corporation which has power on par with most nation states? I’m not sure a billion dollar cap is the answer here but surely there must be some kind of reasonable ceiling. Is it so bad to think that one individual shouldn’t have majority ownership over a company dominant for the US space program? Or control over major international internet access that’s useful during conflicts? Or major social media platforms which provide algorithmic dials to tweak what information is visible?
I think there’s really only a few solutions to it which all involve some kind of divestiture, it just depends on if you want to target corporations or individuals:
1) a new wave of anti-trust ala Lina Khan and breaking up most major tech companies.
2) passing laws limiting the behavior of, and allowing for the punishment of corporations and group agents as a whole. There’s a lot of philosophical work about how to hold a group accountable for their actions, try searching List and Pettit Group Agency. There’s been a lot of development since then but I’m less aware of it.
3. Caps on decision making power (potentially measured via some weighted stock ownership, or wealth more generally) like suggested above. I agree there would be a lot of second order effects here which are beyond the scope of this comment but I think we’ve clearly gone too far in one direction where single individuals are now essentially funding national party midterms, have increasing power over real world conflicts, and any other of the myriad of corruption issues you can find out in the wild.
Every year I have to come up with the money to pay property taxes on my home based on an unrealized gains valuation. It's one of my largest expenses. I don't even really have the option of just selling some of my home to pay them. Even with this tax people still own homes.
I don't think forcing majority stakeholders to sell their stocks over the years would have your proposed effect. The position of power here is mostly with the CEO of those companies. And that's not gonna change with this scheme.
Honestly, there isn't a clean solution to this problem- or at least none that doesn't come with unpredictable consequences. I think everyone can agree that companies growing too large inevitably become harmful for the society they're enabled by, but there are no previously established solution we can reach for... And every decision you can make will have trade-offs. Also, were pretty late game into free market capitalism. Any changes to the status quo will dis-/advantage someone, and they will utilize the tools available to them to stop you. So such deep cutting changes are beyond unlikely without first descending into complete chaos. Which would likely be worse for the majority of people...
Maybe it's just me, but I don't see much wrong with any of the options above. Most of my assets aren't liquid either, yet I'm still taxed at a much much higher rate (when compared to total assets) than the top. I have to make decisions like "how much will I need good health care coverage next year?", which I shouldn't have to say isn't "ideal" either.
You're taxed on income, like anyone else, but the big difference is that wealthy people get liquid cash through tricks like borrow, spend, die. They also have other ways to gain wealth that don't involve a cash phase.
I'll get hate from some corners on this, but I'm coming to see the wisdom in not significantly increasing the tax rate on the rich, but instead broadening the tax base. For example, count tricks like borrow, spend, die as cash; make stock buybacks illegal; treat compensation in the form of assets as cash income at the valuation price when the transfer happens; count inheritances above $X million as income, cash income.
Wealth tax is not on Assets. It's on Stocks. The top pay the same tax on their personal income. Wealth tax is different. It taxes Ownership of Stocks not Assets.
How are stocks not assets? They're shares of ownership in a company, without personal obligations to that company. They're certainly not liabilities. So what do you think they are?
They are assets from personal perspective yes. But they are in the form of equity in company's balance sheet in which it is invested. Which is why it is on the liability side of the equation (A = L + E).
If you impose a wealth tax on this, which side are you imposing it on? Company or individual investor in the company? You cannot impose a tax on what is technically a liability on the company's books. So you would have to impose on the individual investor. Lets try with an example: assume the wealth tax is 10%. Lets also assume I hold 5 million common stock, pre-seed, in a startup I founded (45% equity). How would the stock be valued? It should be zero. So I pay zero wealth tax. Then I get an investor onboard, who invests say $1 million at 10%, valuing the company at $10 million. Lets assume, because of this capital infusion, my equity gets diluted to 40%. That means I am on paper worth $4 million. I immediately owe 10% of it or $400,000 to tax authorities. Without having made a single cent in revenue. My co-founder would also owe $400,000. We have no money of our own except to use the investment money to pay the taxes. That is $400,000 + $400,000 = $800,000. We are left with only $200,000 in the bank. Before we even started the company.
You might say 10% is too much. Lets reduce the wealth tax to say 1%. Or even 0.1%. Then the entire idea becomes meaningless. Might as well just charge extra corporate tax.
Is this concerning? Can you explain your point a bit more clearly, for the benefit of people like me that don't want individuals to have more power (whether its in "stocks" or "assets") than entire nations?
It is concerning for the simple reason that you have a stake in a company based on a future bet that the company will succeed. There is no guarantee for success. It's because owner has a stake will he/she work towards building a vision for his/her idea that is put into execution. Asset is not tied to any idea whatsoever nor is there any vision to strive towards. Infact the investment itself exchanges stock for introduction of asset (capital infusion). So money is being put into the company by owners or investors in exchange for stake. Beneficiaries of this capital investment will be employees first typically. Only once the company takes off and finds success can owners/investors cash in on their investment that too if they sell their stock. So in effect the rich have their money locked-in.
If you tax stocks, the rich will have no incentive to keep their money locked-in. They will encash and exit to a jurisdiction that allows them to invest their proceeds into stocks again. Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.
What you are asking for won't work in a capitalist society (which is pretty much every society on Earth). The only way out is UBI.
> Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.
What untaxed assets would those be? Are you saying the bank interest would be higher than other investments minus tax?
I am having trouble following your argument to your last conclusion.
Taxed assets are always going to be way lesser than any hypothetical tax on stocks. Lets assume investment is in housing. Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks the way you can collect rent on assets like a residential/commercial property. So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.
> Are you saying the bank interest would be higher than other investments minus tax?
It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?
> Taxed assets are always going to be way lesser than any hypothetical tax on stocks.
This is not a universal truth.
> Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks
You actually can, it's called securities lending.
> So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.
1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).
> It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?
> You actually can, it's called securities lending.
You cannot do that with private companies. It is only restricted to public securities. And even these are not owner/investor stocks (which are locked for a certain period after company goes public via IPO). These are typically fresh stocks issued before company goes public.
> This is not a universal truth.
What is the evidence for it working otherwise? Every Country that has tried Wealth Tax has rolled it back.
> A lesser gain is not a loss.
It is not a capital gains tax (which already exists). Wealth tax is a tax on unrealized gains. It definitely leads to erosion of stock value.
> 1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).
You have just encountered a classic Catch-22 here. Without income, you cannot pay tax. Without paying tax, you have no revenue and hence no income.
paying it out of personal pocket is what I have to do when I pay property taxes on the unrealized value of my home. And I don't have the option to sell partial shares of it. This tax is my biggest expense.
It is not the same thing. Property tax can easily be offset by rental income, unless you are staying in it ofcourse. You cannot rent stocks.
> And I don't have the option to sell partial shares of it
Sure. But you can always rent it out and move to a smaller rental. And it is a good thing you cannot sell partial shares of it. You shouldn't. Imagine selling partial shares/stocks every time you have to pay tax on stocks. You will end up with nothing in a few years.
UBI would mean forever locking in autocratic control by the few owners, reducing the rest of us to depend on the graciousness of those who have time and time again shown they have none. An allowance is not a solution to the power distribution problem.
We cannot claim to live in a democracy while Elon Musk gets to decide whether our allies can use communications or close down entire branches of government.
There's many other solutions you gloss over, from capital controls for the more near-term issue to moving past capitalism for the more long-term systemic fix.
You dont need incentives for the rich. You can just pass laws limiting their options.
UBI can be implemented in a different way. Tax a portion of the profits earned and reserve it specifically for UBI. It is not an allowance either. It is what will keep economy afloat. Else if no one can buy the products/services the rich sell, then their stocks will be worth nothing.
> We cannot claim to live in a democracy while Elon Musk gets to decide whether our allies can use communications or close down entire branches of government.
This can be fixed with laws around lobbying.
> capital controls for the more near-term issue
Capital controls won't solve much because it is a one time exit tax that stakeholders have to pay to move out of the jurisdiction taxing stocks. Those who cannot move will shutdown their companies and invest those proceeds into assets, typically immovable (like land/houses etc), which will drive housing prices up. It has cascading effects that affect the economy in a different way.
This causes displacement of those who cannot afford housing, which will incentivize the rich outside the jurisdiction to buy up assets and then that causes a change in voting structures. The rich can then vote their candidate who will reverse capital controls. Or maybe they won't and keep it that way so they have their own gated society so to speak with no entry for those who cannot afford to be there. You can already see it happening in few places in the World where such controls exist.
> You dont need incentives for the rich. You can just pass laws limiting their options.
You are missing the point. The incentives are for everyone who want to give it a shot at trying to take their idea, implement a vision and then execute on it. Does not mean they will succeed. The tiny percentage who do succeed end up becoming rich. See the number of startups that succeed vs those that failed. You are not disincentivizing the rich by imposing wealth tax. You are disincentivizing the average Joe who wants a shot at making it.
Of course UBI is an allowance. You can't just say it isn't without making an argument. The problem isn't just money. It's ownership. If a few dudes control most productive forces, that is inherently antidemocratic. No amount of trying to pay off the public with some elaborate scheme that doesn't remove their control will fix that.
> This can be fixed with laws around lobbying.
No it can't, and lobbying has nothing to do with the problem of one guy being the petty autocrat on top of his empire rivaling democratic states.
> Capital controls won't solve much because it is a one time exit tax that stakeholders have to pay to move out of the jurisdiction taxing stocks.
Who said that? You've defined your own narrow version of capital controls to then argue against. States could just ban moving capital out of the country. Countries can just pass laws! They don't need to do whatever makes rich people happy.
> You are missing the point. The incentives are for everyone who want to give it a shot at trying to take their idea, implement a vision and then execute on it.
You are missing the point. People do all sorts of stuff for all sorts of reasons. Many companies are founded because somebody saw a real issue and wanted to fix it. Others are founded because somebody found a loophole or a way to extract capital by moving some numbers around or monopolizing something others need.
I would posit that if the only reason somebody opens a company is greed, then maybe that company would be a net-negative for society anyways?
> Who said that? You've defined your own narrow version of capital controls to then argue against. States could just ban moving capital out of the country. Countries can just pass laws! They don't need to do whatever makes rich people happy.
If capital cannot be taken out of country then it can be put in assets mate. I have explained that scenario already.
> If a few dudes control most productive forces, that is inherently antidemocratic. No amount of trying to pay off the public with some elaborate scheme that doesn't remove their control will fix that.
Then have more dudes controlling most productive forces. You have anti-monopoly and antitrust laws for that exact reason.
> If the only reason somebody opens a company is greed, then maybe that company would be a net-negative for society anyways?
It is not greed. Money is a by-product of success and follows success wherever it goes. You cannot dissociate the two.
> Of course UBI is an allowance. You can't just say it isn't without making an argument
It really isn't. It is the same argument as utilities. You individually haven't paid the full amount for construction of road network, bridges, electric grid yet you don't consider it an "allowance" do you? You believe you have contributed your fair share. Yet you still enjoy these utilities wherever you are and for life by only paying for how much you use it. UBI is the exact same thing. Instead of giving you in the form of utilities, you are getting money which you will reinvest back into the economy by choosing what and from whom to buy. Both are assets being dispersed by the Government.
The way Sweden taxes stocks is to give people a choice between two options. They can either tax the total change in ownership value between each year (profit vs loss), or to pay a fixed (lower) tax on the total value regardless of profit or loss.
The first option guaranties that you don't pay more in taxes than you earn on the stocks, and the later has higher risk vs reward. For some reasons, the later seems to be the most popular choice, despite the risk that the owner need to cover the cost of taxes regardless of what happens in the stock market.
Isn't that exactly what we are trying to achieve by re-distributing the wealth, and avoiding that few people have such huge ownership that they have more power than governments ?
We are still living in a middle-age system, where the lords don't own lands but stocks and companies, but they still dictate the laws.
You didn't really highlight how any of this is a problem? Yes, if you sell some of your assets, whatever kind, to pay for taxes then you'll have less assets in the end. That's literally how taxes work.
> Why start a business in this sort of economic environment?
Why take on a job when you have to pay income tax? Because you'll still have much more left over than if you didn't. And this answers your question: because you'll still have much more left over than if you didn't start a business.
The phrase "your success" is doing a lot of heavy lifting here.
You understand that billionaires don't make money from labor right? They get their money from rents and the return on capital. Roughly 5-7% per year, compounding, risk free, for perpetuity.
A nice idea I heard is to introduce a minimum tax rate based on wealth. Let’s say the magic number is 0.5%. Then you say, every individual (over some threshold etc) needs to pay max(normal tax calculation, 0.5% of wealth) .
What I like about it is that it doesn’t penalize people who already pay taxes. It’s a lower bound, not an extra.
What makes me weary about any such tax is that in practice, it seems to target the broad middle class - people who have enough assets to be interesting to the tax man, but who don’t have enough to hide it or avoid taxes.
> What makes me weary about any such tax is that in practice, it seems to target the broad middle class
If you're talking about the "Zucman tax" it explicitely targets the ultra-high-net-worth individuals because that's the population that manages to avoid income tax and thus pay a lower effective tax rate than the rest of the population.
Yes that’s what I was referring to (I couldn’t remember his name).
Still my concern would be that the other Zuck would show he has no income and no assets, while a doctor or coder would end up paying extra tax on their retirement savings.
They can pay with shares into a state fund and the state could even return the voting power. It can be done if we want it. That was in a proposal in French legislation for example, so it's not 100% crazy and to me it seems completely natural.
How is that not the obvious comeback to the argument "wealth is stocks so we can't tax it"? Is there an obvious downside?
> This would mean that you lose some ownership year by year.
What's the problem? It's not like you'll have to sell over 50%. Even then the are schemes for non-voting shares. But when close to 1% of population works for Amazon, maybe forced sharing of ownership isn't a bad idea.
Do you know that if I own a house and can't pay property taxes, it gets repossessed and sold? this is common. Let's apply it to stocks and billionaires too.
Besides any argument about fairness, wealth inequality is highly destabilizing and historically has only been corrected by revolutions, wars, crises etc.
If a few billionaires need to sell stocks to avoid such an outcome, that seems quite desirable to me.
Um, tough, if you want to be a billionaire, you get to sell a tiny fraction of your assets to pay taxes. If they don't want to sell assets, they can pay themselves a larger salary or something. Or, like you said, take loans which is literally what they do to afford their lifestyles, just use that for taxes. I don't really care which.
"Taxing the rich" is literally solving the thing that is a problem today.
The thing is: You cannot eat, or live inside, or get medical treatment from, stocks.
Wealth taxation cannot redistribute the kind of wealth we care about most. At least not by itself.
You need someone to buy the stocks in exchange for labor. So you need to keep the stocks themselves valuable.
As an extreme example, if you'd just take away all the SpaceX and Tesla stock from all shareholders and redistribute them, they would probably be near worthless because you just demonstrated that their value is more or less random.
I think that wealth taxation will only work if you give ironclad guarantees that people that are merely rich or middle-class will never be subject to it. If you can show that a stock is more valuable to, say, a medical doctor, then to the CEO of a hyperscaler, you might have a working system.
The main purpose of wealth tax is not redistribution, but curbing the tide of power concentration.
If large fortunes keep doing 5-7% per year compounding, outpacing the avg. growth rate of economy, wages etc. then we keep ending up with Musk-like figures with such outsized amounts of power and influence that it basically destabilizes democracy altogether.
You can't get rid of these people because they just have too much influence -- i mean, literally buying entire social media platforms. C'mon.
Its really just a question about whether you want society to continue functioning with some semblance of fairness and stability.
Norway has a wealth tax (1.1% nominal, but there are tricks), but we also have almost as bad wealth inequality as the US (by Gini). Wealthy people are furious to the point of fleeing the country because it really is the one tax they can’t (entirely) escape. But it certainly doesn’t “fix” wealth inequality.
The most interesting part of it is how much PR / media storm they (the wealthy) manage to create around this topic. Last election it more or less dominated the media, which I also think backfired on them.
Define "rich" and "tiny". I don't find this visualization particularly useful (especially with the average numbers, which are heavily skewed by the tails).
A better way to look at this data is the sum of wealth for each percentile (https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...) The top 10% (90-99%, ~$67T, >= ~$2M in net worth) owns more than the top 1% (99%+, ~$60T, >= ~$15M in net worth). The top 0.1% own ~$27T.
Any yearly tax that exceeds the "4% rule" will essentially be confiscatory, so let's say that a tax of 1% won't bring out the pitchforks (is that tiny?) On the top 0.1%, that generates about $0.27 T compared to 2026 Federal collection of about $5.2T (on a deficit of about ~$2T) https://www.us-debt-clock.com/data/deficit-by-year
As I pointed out in a comment about solar power in another thread, if that money was spent on installing solar+battery, in about 5-10 years we could have more or less converted the US grid with a 1% wealth tax on the 0.1%. Of course, we could also reverse the recent (2016 and beyond) tax cuts as well, which would help fix the giant gaping hole in the US budget. The stock market would probably take a hit, reducing the wealth of the top whatever by far more than a small tax would.
Many will say that the purpose of this tax isn't just to raise revenue for the US government, but to reduce power of the most wealthy. I personally think that taxing wealth is not going to be effective for doing this, without passing laws that limit the effect of wealth in US politics.
Why couldn't there a wealth ceiling? Let's take $1B per person, everything above that is taxed at 100%. Would it destroy the capitalist dream and people would lose motivation to grow their wealth, or would it stimulate cooperation and wealth distribution?
It is worth noting that, per the Piketty, Saez, and Zucman data, the tax rates of the top 0.1 and 0.01 percent of taxpayers have dropped substantially since the 1950s. The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today. The average tax rate on the top 0.01 percent was 55.3 percent in the 1950s, compared to 40.8 percent today.
Note that those percentages include Federal, state, and local taxes.
I did not say "effective tax" you are moving the goal post.
It is no surprise to me that an organization originally founded by the chairman of General Motors, the president of Standard Oil and their like [0] is able to conclude:
>"The top 1 percent of Americans today do not face an unusually low tax burden, by historical standards."
Which is a wild claim to make.
Nice that you find the somewhat honest footnote, but you're citing what is essentially an opinion piece from a conservative think tank.
You'd probably want to have it be dynamic in some way, as most monetary systems that mostly work tend to have some level of inflation to keep things moving.
Definitely there are many problems to this solution, such as what to do with existing billionaires. If it was up to me, I would say to them "figure it out, the late payment interest will start to accumulate soon". But realistically it could be done over multiple years and in stages to limit the negative effects.
The only thing that might genuinely be hard here is strategic leadership of a company.
Because while some can be transferred into something that is partially worker-owned, not all workers are suited to be given that sort of leverage.
So that might be worth pondering to come up with a solution that makes stuff not collapse. Because the reality of human resources is that the quality is underwhelming.
So when society says a business owner's assets are worth more than $1B they start losing control of the business they built and other people get to tell them how to run their business? That destroys a lot IMO
Or educate, promote or even mandate that a share of a company must be given to the employees of said company.
If you "fool" a hundred thousand individuals to work for a company on a wage and through their work the company ends up been valued at a billion, you become a billionaire. Wouldn't they deserve a bigger cut of the fruit of their labor?
The fastest way to distribute wealth isn't taxes on wealth, it's a better distribution of the wealth generated by labor on the contract that the employee signs.
Existing taxes are mostly on income, not wealth, and the US has one of the most progressive income tax systems in the world. Confiscating some fraction of Tesla and SpaceX will destroy lots of economic productivity for a one-time bump; it's a worse trade-off than just printing however much money and taking the value through inflation.
Taking a bit more money from the ultra wealthy is not going to stop Tesla and SpaceX. That's just ridiculous. Particularly for those two who only exist due to government subsidies.
At this point, it will probably not stop them, just slow them down, but it will strangle other companies in the crib. How much do you plan to tax the new multimillionaire janitors at those companies?
If government subsidies are the only reason Tesla exists, why did Aptera (v1) and Fisker fail? If SpaceX only exists because of government subsidies, why are Boeing and Lockheed Martin (owners of ULA) worth so much less than SpaceX?
We've seen what happens when people decide to confiscate wealth with promises of good living standards for everyone. It has never delivered on those promises, always lowered median living standards, and usually led to lots of deaths. I can't think of a single example where recovery from a confiscatory regime has taken less than 40 years, except arguably Cambodia, and most of them are still ongoing. Do you want Democratic Kampuchea as a best-case outcome?
> We've seen what happens when people decide to confiscate wealth with promises of good living standards for everyone.
This is how taxes work. I'm not sure why you jumped from one extreme of the US to the other extreme of Cambodia, ignoring the quite normal end successful middle.
Taxes generally do not promise good living standards for everyone. Usually they come with promises of public infrastructure, some kind of safety net, and some other benefits. How did wealth taxes work out for Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands, Luxembourg, and Sweden? They also didn't promise good living standards for everyone, yet still found that wealth taxes were worse than not having them.
It's not confiscating a fraction of Tesla, it's forcing Elon to give up some of his share of Tesla. He doesn't give it to the government, he sells it. To whoever wants to buy.
Could also take dividends, that would be more of a tax on the company itself which is what people usually object to in this discussion. Now the company basically can't grow as fast because it has to satisfy the tax burden for the owner. But that's a choice the owner makes.
No, it's perfectly coherent. You just struggle with reading comprehension. The choice is how you pay the tax. The owner can choose to sell stocks or they can take dividends. Or they can take up a loan or pay themselves a salary or whatever.
The total income from tax increases is relative to the gross income. The gross income of the 1th percentile of earners in the US is ~$3.3 trillion, whereas the gross income of the top 25% is ~$10.3 Trillion. Levying a tax against only the top 25% sans the top 1% would yield more taxes than the inverse. Small increases on large brackets tend to generate significantly more tax revenue than large increases to small brackets.
There is a certain tautology to "tax the rich" - a country can't exactly tax the poor. The poor have no money. Taxes on poor people are more about the principles of fairness and to some extent transparency than because they have the financial resources to contribute meaningfully.
It'd be interesting to do the same graph by real consumption. I bet it'd be much more equal - most of the wealth is tied up in systems that keep the country ticking over and are only providing paper benefits to the owner. Which is why I say "transparency" - once you track what happens in real terms, "taxing the rich" almost certainly becomes "everyone ends up with less". If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream. The person getting the money wasn't consuming anything real.
The primary benefit of massive wealth is power. It's an intangible, but it's very real. It can't be dismissed as paper wealth.
And it's not like taxes destroy wealth. Distributing from the person who owns the ice cream machine to the person buying ice cream puts the money in the hands of the person far more likely to spend it quickly. On ice cream, making the business case for owning ice cream machines better, not worse.
> The primary benefit of massive wealth is power. It's an intangible, but it's very real. It can't be dismissed as paper wealth.
I mean, sure. The follow up thought is after that power has been taxed away then someone else is going to need to be taxed for the raw resources that are needed. If welfare checks start being paid out with intangible benefits it'll lead to loud complaints. That gets to the heart of the problem with taxing the people with truly enormous amounts of wealth, they mostly have power, which isn't much use to someone who needs food and shelter. The tax burden has fall somewhere in the logistics chain that produces the houses and the food (although maybe a long way upstream).
> Distributing from the person who owns the ice cream machine to the person buying ice cream puts the money in the hands of the person far more likely to spend it quickly
I'm not going to disagree with that, but I will point out that this is why they couldn't afford the ice cream machine in the first place. Consuming the seed corn is a road to eventually having no corn.
There is an economic optimum amount of ice cream production and there isn't any reason to believe it isn't being hit under the current system. It isn't obvious if the need is for more or less ice cream machines. Moving ownership of the machine around doesn't obviously change the amount of ice cream produced; and its owner isn't consuming the machine. But a wealth tax on the ultra-wealthy is pulling all those levers on the assumption that making random changes in ownership has to help. It probably won't.
> I'm not going to disagree with that, but I will point out that this is why they couldn't afford the ice cream machine in the first place. Consuming the seed corn is a road to eventually having no corn.
The modern capitalistic system has devised many fabulous ways of enabling people to buy ice cream machines and seed corn without being able to afford it individually. Equity and loans are the two most obvious, there are many more.
That is the main reason that American capitalism has thrived. Because you don't have to be rich to buy ice cream machines.
Absolutely. It's a very effective system for quickly concentrating all the owenership of ice cream machines in the hands of the people who are best at deciding when, where and how much ice cream is needed as measured by profits - even if they personally don't have much when they're starting out. And if there is a better measure than profit I'd like it to be proved up in a country I don't live in because those experiments usually result in ice cream shortages.
The concentrated ownership results in graphs a lot like the one in the linked article.
That seems wildly incorrect. In the US the bottom 50% are closer to ~3% of federal taxes.
The top 1% pay about 38%. The top 0.1% is simply not a lot of people and not helpful for thinking about how much you can juice them in absolute dollar amounts.
Doesn't this just prove the OP's point? The government gets as much money from the top 0.1% as it does from the bottom 50% means that it is getting a lot of their money from the wealthy.
> If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream.
What you're describing is called "Trickle Down Economics", and has led to 50 years of economic failure.
Assuming we're talking about the US, printing money and giving it to wealthy people has been a big contributor to the failure of the last few decades. The US has made a broad-scale effort to disable every form of market-based feedback that tried to replace the leadership class with more competent leaders. If they'd stopped with the upper class welfare then the 1% probably would have less money, but giving them the money then organising to tax it away again is a strategy that is both bizarre and unlikely to be effective. It's too complex and arbitrary.
If we're talking globally, Asia ain't failing. They're big on producing lots of real stuff. Minted a lot of new billionaires.
Kind of makes a point to have a wealth tax. As the top 1% of w2 earners are paying a disproportionate amount of tax relative to too 1% of wealth holders.
That or just raise interest rates to force these people to sell more equity
I think that instead of a wealth tax it makes more sense to change how we tax in relation to the financial instruments the wealthy use.
Capital gains: this should just be income.
Unrealized gains: The argument against wealth taxes are often related to unrealized gains needing to sell blah blah. If you get a loan on your stock value, at that moment the gains should be considered realized and you should be taxed via capital gains (which would be at the level of income tax). Ultra-wealthy use loans against their portfolio to avoid realizing their gains. Make that not possible.
Top salary earners, who do manage to save somewhat for retirement end up getting punished by these wealth taxes as well, especially since, generally, you need money in order to be able to move money around, in order to be able to save money on these sorts of taxes.
They get punished by wealth tax because the crooks who implement wealth tax put the limit at some ridiculous point that ends up impacting "normal people". The whole point of wealth tax is to tax the ultra rich, so you could put the limit extremely high like $5M or even $20M and it wouldn't affect anyone except those who can easily afford it. But they don't do that, I assume because they want people to hate it so they can remove it later.
Is it though? Those same unrealized gains are used by those same alleged paper-billionaires to borrow money and live lavish lifestyles ("Buy, Borrow, Die").
They literally get to eat their cake and have it too.
this is principally why banking exists at all, farmers needed to borrow against a harvest that hadn't yet been planted.
I'd suggest some controls or limits to it, but the lenders assume the risk ( except for all the times the public has had to bail them out) and they're grown up corporations who can decide for themselves.
I should add, that the money they borrow does get taxed when it is spent on the indulgences you make reference to.
Yes, but it isn't taxed federally as income tax, which is the problem we're probably trying to solve.
IE, every dollar I earn gets taxed twice - as income, then as sales tax.
Rich guy only pays the sales tax.
And there's a fundamental difference between "borrow to keep the business running smoothly" and "borrow to buy a mega-yacht". Legally, not so much, as you say, but hell's bells, the super yacht market really shouldn't exist.
Sure, and there's plenty of opportunity to build regular yachts (which are still massively expensive). When I say super-yacht, I mean the 100 meter monstrosities preferred by the likes of Bezos and Zuckerberg. I take no issue with the type of yacht owned by "mere millionaires".
Any normal person can implement the same strategy in any brokerage account.
Regardless, if that's the actual anti-social behavior we should change that tax treatment specifically, versus a broad paper wealth tax with unintended consequences.
If Elon musk can spend $500 million dollars every election year (in addition to everything else he does) the gains aren't unrealised and he can pay $500 million in taxes every year. Really the amount he can afford to pay and should fairly pay, imo at least 3%, would be much higher than $500 million.
Yeah but every time anyone actually does implement a wealth tax they start it at like $500k or some similarly stupidly low amount and then everyone starts (somewhat rightfully) complaining that granny has to sell her house because she can't afford the tax.
It seems to obvious to me, like just start it at something like $5M. Nobody will be affected who can't afford it. It's like they're trying to implement it in a way that makes people hate it.
Netherlands is €60,000 single / €120,000 married before it kicks in; implemented as a 36% yearly tax on assumed 6% returns (e.g. married; have €200k in investments; you owe something like [200-120] * .36 * .06 = €1728). I think there's some nuance for bad years.
In practice its basically an additional 2% "drag" on market returns as its a yearly tax; not capital gains on sale.
Sole reason we turned down a job there. I don't hate the idea of a wealth tax, but having it kick in at €120,000 is nuts. IMO it's not even functioning as a wealth tax, its a barrier to the middle class accumulating even meager non-property wealth.
(I'm sure I have some details wrong, but broad-strokes this is what I remember from when we turned it down a few months ago)
Such a wealth tax surely should be progressive. If I have $500k I'm not necessarily wealthy-wealthy but I'm heck of a lot more wealthy than someone who only has $5k, or even $50k. I could afford to pay something for the sake of being lucky enough to have a have half a million. Someone with $50M could afford to pay much more.
However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth. It seems that wealth tax is often used as an easy fix to "we can't somehow tax the income of high-earning wealthy people because they arrange the legal ownership of their wealth so that it's hard so let's tax their wealth". What should be fixed instead is profits slipping out of the taxable base. In general, a lower but wider tax base is always better than higher spot taxes that encourage people to optimize. Wealth tax is just a slap-on solution that mostly just encourages tax planning.
The inequality of the distribution is the true issue, and indeed not taxing the wealthy enough does accumulates that. A country should be proud to tax widely and moderately, even the highest earning people and businesses. A country can't compete with a tax haven but a tax haven can't compete with a functioning state and society. Working to tax wealthy people more in par to what ordinary people are taxed would work towards a more equal society. Some of the wealthy people would move away but the country should recognize and maintain that it has other factors of appeal than the tax rate.
> However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth.
Income is far more important to people than wealth is. Income is what let's you buy food. Yet we tax income at quite a high rate. Far better to have a mix of both than the current system of having a lot of one and basically none of the other.
I agree it should be progressive. But to me, the point is not to tax normal people who have worked hard and saved up some money. Many, if not most people will save up $500k over the course of their lives. That's not wealth, thats just a financially responsible person, it's one paid off modest house. These people already pay half their salary in tax every year, they are already severely taxed we don't need to tax them more. In fact I think normal people should be taxed less, even relatively high earners like medical doctors for example.
The point of wealth tax, to me, is to tax the obscenely wealthy people. Those few who are worth more than the entire rest of the population combined, while also basically not paying any tax at all despite their fortunes growing by millions or billions every year.
I actually think it would be reasonable to essentially put a "soft cap" on wealth. Like if you're worth several hundred million dollars you literally can't grow your fortune any more because you're just gaining as much as you pay in tax. Instead of one guy owning multiple companies worth billions of dollars he would have to sell shares to pay his taxes, and now many people own the companies instead. This prevents one person from amassing too much wealth and power.
At $5MM farmers are affected. Land is expensive, and it takes a lot of land to farm. At $5k/acre, the old standard 1k acres farm is $5MM, and nowadays that’s probably not enough land to raise a family (only $65k profit), so you really need more land. Estate tax means the kids can’t inherit all the land.
I'm not attached to the random figure I threw out. Put it at $10M then.
That said, if you have $5M invested in a business that makes you $65k a year you're being stupid. Sell the farm, put the money in some safe 5%ish interest vessel like a CD, now you're making $250k doing nothing.
What is the point against wealth tax? That the rich will flee, leaving us.... better off in every possible way?? This is like that episode of futurama where fry befriends the parasites he found at a gas stop
>That the rich will flee, leaving us.... better off in every possible way??
Can you explain why would we be better off when the rich flee?
I see this "we gonna be better off without them" sentiment quite often, but never an explanation how would we be better off? What metrics have you used?
Wouldn't they retain a lot of ability to do that from abroad? A wealth tax targets wealth in your country. We've seen plenty of loopholes for foreign political influence lately and I don't think there are any laws against non-residents holding majority shares in US companies, right?
USSR had no rich and everyone one was poor (except for the party’s apparatus).
So, how would it work here? Why eliminating the rich (whatever is the definition) would achieve a different outcome than that of communist regimes of the past?
This doesn't even make sense. Poverty is a relative term. Poverty requires wealth.
Anyway what little meager juice that these ideological labels had after the cold war is now gone with china as king of the hill.
We can all agree private investment = rapid growth, and state intervention both in terms of social safety nets and actively ensuring fair competition (where that is necessary—banking, anti-trust, food/med production, etc) = stabler economies (or we agreed on this for a few decades after the great depression anyway). It's what the point of the economy is—to serve the disproportionate interests of rich or the collective (one might even say... democratic) interests of people—where there remains substantive disagreement. I hope we can leave this farce behind that how we talk about ideology has any relation to how the terms were actually defined in lieu or acknowledging material reality for a change.
They won't flee. The tax would have to astronomical to offset the advantages of doing business in the US. If that wasn't true, they would have all disclaimed their US citizenship and moved to Monaco already.
This is not the question I asked. I asked how and why would it be better for the rest of us?
For the record, I’m not necessarily opposed to the idea of taxation on the wealthy, but I want to understand why having no rich is better for everyone.
Fair, and I don't believe we'd be better off if they fled. We would be better off if they weren't astronomically wealthy. I don't have a specific number in mind, but "a billion-ish" feels like a reasonable upper bound on wealth.
I'd also note that I would prefer to adjust tax/accounting laws to prevent the accumulation in the first place, not just roll out a blanket "take everything over a billion-ish law" as that feels more like a band-aid than a fix.
Not only rich people affect outcomes of the elections or legislature, unions do as well.
For example, New York’s Health Act failed because teachers unions opposed it on the grounds of “protecting the hard fought contract benefits”. In other words, union leadership realized that with this bill becoming a law unions would be less needed, so they fought for their interests while disregarding interests of others.
> Unions represent the interest of a large group of people, they arrive at policy through debate and consensus.
Well, in this case, how come preventing access to healthcare to NYS residents is in the interest of the teachers? And, why would teachers think that they are the only ones who deserve good health care?
Unless… the unions have no feedback mechanism to ensure that they operate the way you think they operate, and they do what any other politician does — they want to stay in power I exchange for keeping just enough of the voting base like you more than the next guy. So, in this case, it’s perfectly reasonable for a union leadership to fight this law — it simply a preservation of power thing.
>Well, in this case, how come preventing access to healthcare to NYS residents is in the interest of the teachers? And, why would teachers think that they are the only ones who deserve good health care?
I am not familiar with the particulars, but I am sure there is information published by the union explaining their position in more detail.
I reject your suggestion that I am ignorant how unions operate. I have been a member of a union for many years. Larger decisions are decided by voting.
Like democracy, unions are not perfect. But historically unions have been effective at negotiating rights for workers (weekends, 8hour workdays etc.)
I would argue they are one of the few ways labour has been able to impact policy and law.
> I reject your suggestion that I am ignorant how unions operate. I have been a member of a union for many years.
I was a member of a union as well.
> Larger decisions are decided by voting.
After they went through the filter of the leadership, either via the “bargaining committee” or any other form of delegation, selection to which can be based on votes or appointments.
You can Google yourself how teacher unions opposed NYS health care bill, and why they deemed it necessary to justify their position with “protecting the fought for benefits” among other things.
No, they are single individuals who have more speech than me via dollars. They are groups of people. I may have problems with particular unions or particular actions but they’re a million times better than a single illegal immigrant being able to manipulate politics on his own whims.
This article is about American wealth inequality so I’ll assume you’re talking about the US. The US already taxes global income, so moving away is not enough. You could renounce citizenship, but then you lose all the benefits of citizenship and you must pay capital gains an all assets whether you sell them or not.
The “they’ll just leave” argument doesn’t really hold up in this case.
There is not one discussion without this "argument".
But, let's say, they do. And they also have to stay out.
Wouldn't that be.. kinda nice actually?
Your taxes would stay the same either way.
Yes, of course, there would be less luxury spending, but the millions of normal people still exist. And they spend and they produce.
Why not let the ultra wealthy just leave and idk go to mars or something?
Kick them out, seize their assets, run society without them if they do not want to be part of it anyway.
Hey so this isn't true. In places where they have researched this, a small number of people do move, but the additional tax of those who don't completely outstrips what was lost.
They can personally move, but they can't move the source of their wealth. Bezos can move, Amazon can't. Bezos moving away will only reduce his taxes if we let it.
Where are they going to go? If they wanted to go live in a 3rd world country with no taxes, they already would. Everyone is getting tired of their BS and your lame, repetitive arguments.
Part of the problem I have with graphs like this is that they don't differentiate between paper wealth, being able to get a loan against the paper wealth, and hard assets (real estate, vehicles, cash).
Let's take a personal anecdote for an example: I joined a startup when it was early-stage, stayed for a few years, and exercised my stock options when I left. The startup is now "successful", but still private; my shares have also surely been heavily diluted. I have no idea when I'll be able to sell those shares or how much they're really worth. I have no way of turning those shares into quality-of-life improvements for any foreseeable future. Do they make me "wealthy"?
I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff. I think the real problem is how much of the wealth is allowed to stay off public markets. Cargill is worth more than $50 billion and its stock is not available on public markets. The growth in wealth of most AI companies - Anthropic, OpenAI - happened off of public markets, and so none of it trickled into the American middle class by their retirement accounts. Venture capital is keeping companies private for longer because, quite simply, none of the investors need the cash to pay for their cost of living, so they're quite happy to let paper gains continue to live on paper.
If your company has revenues of $X million a year or more, you should be forced to make public financial reports (effectively forcing you to list stock on a public market). Period. I think economists will naturally disagree on how much X should be, and that's fine, but I have little doubt that there should be a line like that, somewhere. Concerns about public markets forcing short-term thinking are a different problem, one addressed by mission-lock implements (Eric Ries's recent book Incorruptible is great here). Public markets ensure that gains in wealth are shared more broadly across the economy and increase tax collection by incentivizing more frequent buying and selling of the underlying stock, since those are taxable events.
> I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff.
Think again. The demand from rich to park wealth in X, Y, Z makes prices go up. Just imagine that the RAM prices fueled by AI spending is a housing market. More money rich have, less affordable the life for the rest is.
And don't forget that speed of their wealth growth is way faster than anyone who sells their labour.
Ah. And we did not even talk about "hidden" wealth thingy... All these numbers are official ones.
I don't think most Americans are thinking about their 401Ks when it comes to corporate behavior. They're thinking about high prices, lower quality, poor service, externalities(pollution and such), low wages, poor working conditions. I don't think public markets will fix those things, and some argue they'd make them worse.
Paper wealth is a real problem (and the financialization of everything has made more paper wealth appear than imaginable) and your "illiquid" stock can cause all sorts of fun when various thing try to force you to mark-to-market something that basically doesn't have a market (I'm sure you'd sell your shares for $1 billion, and be insulted if I offered you $5 total, so they must have some value but good luck finding what that is AND realizing it).
You also have this with houses in California (and more and more, the entire country) - a family in a house that they pay $x per month on is not likely to really feel different if you tell them the house is worth $250k or $500k or $5m - because the price will likely be "in line" with those around them and so actually getting access to the "wealth" is difficult - the only real way is to move far away.
I feel a big part of the problem is we've made the world great for those who know how to navigate it, but horrible for those who don't (or can't). If you are disciplined from the beginning, always save 10% of what you make into retirement 410(k)s, 10% into rainy-day funds, spend less than 30% on housing, you're going to do quite well - but that's a small portion. Seventy years ago you could be a near literal moron, work at the factory, and live a good life - because the company handled your pension and healthcare without asking you to make decisions that frankly most people aren't capable of making - and it was difficult to leverage yourself to death.
Most people don't give a shit about wealth inequality if they can live a good if humble life without undue stress.
Elon Musk existing doesn't bother me as long as I can provide for my family and feel I'm getting a "decent deal". But if I'm overworked, underpaid, drowning in debt, and prices are rising, his existence is going to be a lot more annoying.
(One of the problems of publicly-traded companies is manager's capitalism - https://ia601506.us.archive.org/26/items/bogle-managerial-ca... - both really come down to nobody actually owning something in the meaning of taking responsibility to the thing, because ownership is so diluted it basically has no meaning.)
As a w2 earner, taxes make me feel shame and rage. Shame knowing how ineffectively my taxes will translate into helping my fellow Americans/my communities/my grandchildren. The rage is for the realization that the most valuable people in our society (our doctors, engineers, small-med business owners) are the ones mainly footing the bill for select greedy and power hungry politicians. I’ll admit I haven’t validated if this is empirically true based on the numbers. It’s just feelings that come up looking at my daughter and knowing some of my taxes probably blew up an entire school of little girls who aren’t much different than her.
This post is currently #1 on /active and #218 on the front page, sitting right beside 1-5 day old posts. This isn't flagged, and while I know HN tries to downrank posts with a low upvote to comment ratio to prevent flamewars, it getting pushed this far down does start looking a bit like someone is tweaking the dials.
Hot take: Maybe not literally eating, but anything > $1B in whatever form (cash, stocks, equity, etc) should be redistributed fairly. At the lowest level, janitors at Tesla are just as important as engineers - if the toilets are nasty and nobody takes care of them then nobody will want to work there. So on top of paying them $15/hour, they should also get some stock.
When you get to $100 million you get a letter from the president congratulating you for winning capitalism and everything after that gets taxed at 100%.
It never occurred to me to render a web page that is partially scrolled down, on load. After decades of browsing the web, this is truly novel to me. Has anyone seen a page do that before?
Not usually a fan of messing with scroll, but what a cool visualization use case for breaking that norm. Taxes and politics aside, kudos to whoever made that design choice.
Since most people’s income comes from salary, it is very easy to read this graph wrong and it is a bit misleading. Say you are some dev who makes $500k per year, but likes to rent, doesn’t drive and is not very bothered with stocks. Their Net Worth - unless I understand this wrong, if I do please correct me - the would around zero, maybe less with student loans, so they would be amongst the poor. Ok, they probably would have a lot of savings in this scenario, but maybe they like to ride on a horse with no name and spend most of their income. Still I would not call them poor.
Does it change the picture? Not really, because Musk et al. are so way beyond everyone else that the graph is extremely top heavy. It is a nice data visualisation regardless.
> In 2011, Michael Norton and Dan Ariely asked more than 5,000 Americans how they thought wealth was split between the five fifths of households, and how they would ideally split it. The Companion spreads those five shares across all 100 percentiles of the 2026 wealth total in a smooth curve (Appendix 3). Many different curves fit five numbers, so these two shapes are only illustrations. The actual bars come from percentile-level data. These two curves do not.
Does factor in the K shaped reality we're entering where if white and blue collar jobs become automated there will be only rent seekers and extreme unemployment?
- Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets.
- Even the LHS of that chart Americans are some of the wealthiest in the world. A lot of the middle class from many other countries would love to be on the LHS of that chart.
- No one is expected to build wealth on a 40 hour minimum wage job. It is the bare minimum and most people get paid more.
- Americans don't want wealth. Our spending habits are abysmal. I suspect if you gave every American $500K the chart would revert back to this in like 12 months
These assets DO offer services to them. The whole point of these assets is to make products that have value to other Americans. If the assets / owners don't do that then their net worth decreases and disappers.
Putting it in the "hands of society" is crazy talk. Government / elected officials are awful at allocating capital, negotiating labor, holding people accountable.
> Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets.
Why would that be worse? What online services are so important that it's better to have them than to lift some people above the poverty line? Rich people spending is the next best thing after taxing them - it distributes their money and provides jobs. It would strictly improve the society if Bezos spent lots of money and folded his servers and warehouses - in so many different ways...
I personally would rather have next day delivery and not waste my time shopping and driving from store to store.
What jobs do you think it creates? You really want all our labor pandering to billionaires? Why would anyone give attention to middle class if the billionaires were forced to spend all their money? How expensive would your life get if the billionaire class redirected all of their wealth toward frivolous consumption.
> Most of that wealth is tied up in assets offering services for americans
Yeah. Like renting a house for a mother of 2 children who will never get her own by selling her labour, while the renter uses her money to buy more units.
Do you think it is wise to have two kids on one income when you can barely make rent? Are we going to hold the mother accountable at all or is society to blame for that situation?
A large portion of billionaire wealth isn't reinvested in productive assets. It comes from holding onto assets like corporate shares and land that grows in value based on the asset's ability to extract profit or rent. Or from distorted (speculative) demand for that asset that is completely detached from its productive output.
Someone like Bernard Arnault is worth around $160B (wealth from luxury brands like Louis Vuitton, Dior, and Tiffany). That paper valuation exceeds the total national wealth of many entire countries:
https://en.wikipedia.org/wiki/List_of_countries_by_total_pri...
How does it keep growing if it isn't invested in productive assets?
Yes he is valuable because he makes a product people want. That is how life works. If you want him to be poor, convince people to buy something other than luxury brands.
But is wealth really material or is it mostly virtual? Musk may be one of the richest men on Earth but he doesn't have a Trillion in his bank account. He holds stock which is potentially worth that amount. But as soon as he were to sell it the price and value would sink and it would be worth much much less. How much less? I don't know exactly but I suspect at least half.
So maybe we should take into account the liquidity of the assets held by these Billionaires. Also, as we've seen with Steve Jobs that if you get cancer it doesn't really matter how much you have in the bank. You'll die the same just like everyone else. All that money won't buy you extra time.
I don’t begrudge anyone in the USA for building a fortune. They had opportunities much the same as my own, they ‘won the game’. Good for them, the challenge is the secret sauce that powers the great economy.
So I oppose taxing that secret sauce away.
Taxing the transfer of great wealth to next generations seems a better thing. Allow the transfer of some degree of wealth, but not all of it. Make the future generations earn their huge wealth, as their ancestors did. Keep the competitive spirit going.
Semi-serious question: if I didn't have to pay any income, property or sales tax I think I could build my fortune. Should we get rid of those?
> the great economy.
Great for who exactly? Certainly less great for the people who have no opportunity to gain wealth, because the currently wealthy don't contribute their fair share, or debatably don't contribute at all.
Would you rather have richer (in real terms) society (including richer lowest decile) with larger wealth inequality or poorer society with smaller inequalities? You might argue that these are not really the only two options and that's fair, but let's assume they are. Surprisingly many people would still opt for second option. Musk was trillionaire, now he no longer is (so inequality decreased) but did it really change anything that we no longer have any trillionaire?
It's not "poorer society with fewer inequalities." That's what they always say. It's never that. A society is not "richer" because the amount of financially backed power is one concentrated set of hands.
Who is it to say what's the ideal wealth ratio between quintiles? I know who, a local communist!
Wealth inequality is a completely pointless metric that tells us nothing about individual quality of life, and is being pushed by the left wing ideologies to serve their agendas.
For example, you could propel yourself into the top quintile by just packing up and moving to Liberia, but that would not increase your quality of life now, would it?
seems to be a general rule of life, some people are just born with the right combination to be really good at a certain game at a certain point in time. The only issue with wealth is that they can influence other games in which they have no ability just the same and that is dangerous for a democracy. Imagine if roger Federer was messing with the elections just because he was the best at tennis. Tech must be one of the few fields where someone believes that they are good at everything just because they made it.
This raises such an interesting question, how much of the wealthiest individuals wealth is due to skill, and how much is because in an unequal system there has to be someone at the most wealthiest point.
I think it's an interesting thought, I'm not sure I have a hot take here or anything. The likes of Jeff Bezos and Elon Musk are clearly good at amassing wealth (and interested in amassing wealth) but I suspect a lot less is attributable to skill than many would think.
So bezos’ parents were in a position to fund him to the tune of hundreds of thousands of dollars, Enron musks dad owns mines, bill gates mom was on the IBM board. It very much has little to do with skill.
I think that's pretty much true- it's worth saying there are other people who have the insane privilege of the three you mentioned who aren't some of the wealthiest people in the world, so there's some kind of explanation needed aside from just privilege, even if that's just "luck".
"Closer" in what sense? Does Elon Musk have a markedly more lavish lifestyle than them? Is his retirement safer? How many politicians are campaigning on investigating, regulating and prosecuting the hundred-millionaires? Do media run scare stories about the drug use and sexual promiscuity of the hundred-millionaires, suggesting that they have children from too many partners?
If you’re saying he doesn’t, that’s a really strong argument for redistribution then, isn’t it? If he don’t need it, let’s spread the love around. And spare me the job creation story.
He doesn't have a markedly more lavish lifestyle than the hundred-millionaires, but I don't want to live in a country where the government takes stuff that it (or some majority) decides the current owners don't need, and you shouldn't want to either. I think the US and world are better off with Elon Musk in control of those companies, and with those companies having lots of capital to work with. A side effect of people agreeing with me (although I'm not invested in those companies directly) is that his paper wealth is huge.
So, no, I don't think "he doesn't act like he needs it" is at all a good argument for redistribution.
You guys must not have a lot of years of experience? My friends groups have a few hundred million dollars each (the junior developers are in the lower hundreds)
We're older. We missed out on the AI boom and the really juicy stock grants. Throw in toys that depreciate in value, tuition for the kids, a couple divorces/trophy wives, etc. and the money goes fast. It's amazing we have anything left at all!
Even hearing from others on this forum helps! Sounds like most people haven’t been nearly as lucky-heavy fortunate as folks in irl circles. Very eye opening, and I appreciate everyone’s anecdotes.
> Most people here probably have around $5-10M in assets
There is no way this is true. FAANG pays well, but that is still an eye popping amount of wealth unless you're an executive or absolute top-echelon engineer.
> Most people here probably have around $5-10M in assets given we’re mostly in tech
Even in a SV world I'm trying to get my head around the logical leap that gets you to this number. Median comp in SV is <500k - that's 20 years in the business to earn $10m ignoring taxes & your actual living expenditure. Obviously we can jump that with equity, but that's still not moving the dial far enough for the "majority" to be up at those heights.
I don't see how we're getting anywhere near these figures without generational wealth (assume this is the answer).
That's ignoring taxes, too. Real take home for a single filer earning 500k in SF is ~$282k. Take out another $48k for median-ish SF rent ($4k*12) and that "$500k" is already south of 250 before most of your bills are accounted for.
Most people in the US would be delighted to have over $200k of gross income, much less after paying for taxes and housing. Your argument seems to suggest that those developers should also be very happy with their incomes.
The argument isn't that they're unhappy, it's that most of them are not decamillionaires, despite what the GP I was responding to seemed to believe. Post I was responding do originally implied that earning 500k for 20 years was enough to make someone a decamillionaire, but edited to account for taxes and cost of living now.
Overall I was attempting to be as generous in my post as possible - I think median software engineering incomes in SV are actually a lot closer to 250k pre-tax, & 20 yoe is far from the median experience level.
I'd be surprised if most SV engineers are even millionaires, & even if they are, the gap from 1m to 2m is not trivial, nevermind 5-10.
Yes, salaries in the EU are generally pretty bad, and then you have high taxes on top. That's a good reason for why I left the place.
(Though to Singapore, not to the US. Salaries are higher than in the EU (though less than in SV), taxes are a lot lower than in either. Quality of life is higher than in the US for me.)
Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
(Or as more likely, you've been in SV since Apple was a twinkle in the garage and your house is worth north of $5m.)
For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
> For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
This is all getting more annoying with capital gains taxes (and inflation, since capital gains taxes are usually levied on nominal gains).
I moved to a place with simpler taxes, including no capital gains taxes.
> If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Depends on how much you want to live off.
> Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
I don't think the original commenter was talking about juniors who just started?
Although looking at Levels.fyi, salaries in London are significantly more than Singapore, and that's with the CoL apparently being higher in Singapore.
You need to look at net salaries after taxes. And for CoL it depends on what your consumption basket is. My cost of living would be higher in London. (I lived in both places.) I don't drive, I don't smoke, I use public transport a lot, and I pay for household help. I do drink beer, which is expensive in Singapore, but it's a small part of my overall budget.
I save a lot of money on 0% capital gains taxes here.
I regularly check London jobs and interview for them, but the numbers haven't made sense so far.
I think your comment strikes at an issue that everyone feels but is hard to articulate - there's true poverty (Appalachia, say) and then there's "working-class poor" which you can try to define but nearly everyone puts themselves into it. Perhaps a better term is "paycheck to paycheck" - by almost any measure, anyone gainfully employed in the USA is rich beyond the world's wildest dreams - but telling a family making $40k a year that they make more than 90% of the world doesn't help.
"by almost any measure, anyone gainfully employed in the USA is rich beyond the world's wildest dreams"
I'm not sure your mental model holds. A lot of Europe has higher standards of living than the USA. And a lot of Asian countries have made huge strides in the last few decades. Also consider the difference between Mississippi and Massachusetts. I wouldn't say that anyone gainfully employed in Mississippi is "rich beyond the world's wildest dreams".
Which even "poorest in Mississippi" is above - but that factoid is entirely useless to basically everyone, and frankly insulting to our poor family in Mississippi.
An awful take from someone who clearly hasn’t studied California itself.
Around 17% of CA residents live below the poverty line, which means MILLIONS of adults that are not students. Elderly are a significant chunk of that number.
> Most people here probably have around $5-10M in assets given we’re mostly in tech.
You would be surprised. Not only because, as you point out, recent graduates often have a negative net worth, but also because people tend to increase their spending in lockstep with their income.
Saving millions takes the intersection of multiple factors: sufficient disposable income, prioritizing investing over lifestyle, long-term discipline to stick to the plan, and luck to keep it all going smoothly.
Well, this was discovered long time ago, by Vilfredo Pareto, this is exemplification of his 90/10 rule. Having said that... We should be more honest here when we talk about wealth.
If one asks "how much, say, Elon Musk, is worth" we see some crazy numbers with kirjillions of zeros. But those are not "his" money, this is how much his companies are estimated to have. Yes, he has large personal fortune, but it is nowhere near those huge billions of billions amounts.
Second, staying with Elon example, his companies are paying people and other companies that pay people, so there is huge army of people who have food in the fridge because of Elon Musk (I've seen some estimates around ~1 million people overall). Again, they are nowhere near to be as wealthy as Elon, but still, they have a decent live thanks to his companies.
It’s not about “cash at hand”, it’s about who owns “stuff”. In days past people knew that the aristocracy owned them, their families, the land they work, and the output of their work by a God given right flowing from the anointed King. It was easy to see too - those people living in palaces up the hill owned everything, you owned nothing.
It’s more hidden now. We all have rights and freedoms and whatnot. But there are still people who “own stuff”, and people who don’t. With shades of gray in between those two extremes. It’s good to be cognizant of the system you inhabit relative to what has existed throughout history so you can make good decisions and position yourself accordingly.
> this is how much his companies are estimated to have
Not even ‘to have’, just ‘to be worth, if all of their shares could be sold at the price of the recent ones’. It’s a number only loosely (albeit obviously positively) correlated with actual spending power.
I used to buy this sort of arguments, but then saw him fork $45B to buy Twitter, on demand, so...
> his companies are paying people and other companies that pay people
Yes, his companies, not him. He's not doing much, except distracting part of his workforce to work on vanity projects such as flying cars or mile-long vaccuum tubes, or spending some of his vast wealth to buy politicians that will further the cause of wealth inequality. Get rid of him, and the system works much better for everyone. Him and others like him.
Elons ownership of those companies is not what puts food in people's fridges, nor is that amount of power concentration a natural, good or even defensible thing.
The whole point is that he shouldn't be able to exert autocratic control over large swathes of the economy and control that many people's lives.
But millionaires only but nice houses and maybe a nice car or two, and send their kids to a nice college. Billionaires invest in companies that create many jobs. Maybe you can argue the houses and colleges create even more jobs, idk.
We've never had this many billionaires, and they've never been this rich. So following your logic, the country should be more prosperous than ever, right?
The US is more prosperous than ever, if you look at the data (inflation-adjusted, median income, for example). But people hate inflation, and so the vibes are that we're not.
The prosperity is NOT evenly distributed, or even distrusted in a shape that follows historical precedent (until you start looking at the gilded age, which was quite problematic!) mid 20th century America had a very healthy middle class that is now rapidly dwindling. Ironically this is often the time period people refer to as "great" but decry the tax policies that made it possible.
The average person (you and me) are much more productive, but have actually lost our share of wages relative to our productivity compared to our parents and grandparents. That extra production we're doing is almost entirely captured by the top 1% of the population, it's literally been taken away from us.
And contrary to our "billionares create jobs" friends, what billionaires do by and large is hoard wealth and power of a scale most people can't even begin to grasp.
We are almost indisputably the most prosperous ever, especially if you index against countries who have taken the approach of preventing or punishing success (UK, France).
this is a very weird perspective that you haven't done even cursory math on, if we're talking a million millionaires... that's a million houses, two million cars, a million tuitions...
has elon musk made it possible for a million people to own houses, cars, and pay tuition? no! does he own multiple houses, cars, private jets, yachts, and other bullshit himself? yes!
he employs maybe 200k people directly? likely a lot less... so we're not even talking quarter of the same economic benefit reach
he also wielded his wealth as power to dismantle government systems single-handedly that lost many people jobs and didn't even scratch the surface of the country's debt
people really need to start thinking critically about billionaires, they are not doing anything for you personally
If you don't accept this particular argument then there are plenty more. This one is just quick and easy to convey.
There are very solid arguments backing up the same general points that require time to communicate and require good faith attempts to understand from the other party. But you probably don't want those either.
"Value creator"
..
You truly don't get it either. People like this are just aggregators. That's it. Magnet. They attract stupidity and power and money, and once they have it, the gravity takes over. That's all it ever was.
They're not "value creators". They're human beings that were given immense opportunities, disproportionately available avenues of luck, and happened to be able to find people to do their labor for them on the backs of the needs of the world.
What the ever living hell do you think the "90% of people" are doing? They're feeding each other and selling houses to each other and stocking shelves for each other because they have to because their labor and money is being stolen from them by this stupid abstraction that they are are "value creators".
This is shorthand for “the total wealth of the richest 0.1% of the population is greater than the total for the remaining 99.9%”, rather than the trivial “the individual wealth of each member of the richest 0.1% of the population is greater than that of each member of the remaining 99.9%”.
I would flatly reject the idea that a just-graduated neurologist with a negative net worth due to loans is “poor”.
Wealth being the integration of gains - consumption over time makes it a poor metric for looking at society as a whole.
Something like 50% of Americans will be millionaires at some point in their lives—upper quintile per this chart, typically later in their earnings years. Almost all of them started “poor” as young adults, per this chart’s definition.
I don't disagree with you. Obviously a doctor can bring in a lot of money. In the same a stock can be valued as the sum all future cash flows w/ a discounted cash flow analysis, a doctor's future income can have a quite high valuation.
That being said, one accident or illness that strips away that doctor's ability to earn, leaving them in a soul crushing amount of debt that can't be discharged via bankruptcy. Their debt obligations are real.
I have, and will always have, a simple rule when evaluating job offers: can I pay my mortgage with that today? No one is feeding your broke neurologist based on future returns.
With this kind of wealth distribution, there's no point doing any job which services regular people. Everyone should become an informant, bodyguard, lobbyist or propagandist for a rich person. That's going to be the only kind of job that pays in the future.
Look at that last bar; consider just the annual yield or interest payment on that wealth; soon, it's going to be more than all other bars combined. If people understood the situation, they would all stop working and start making lists of who these people are and work for them. That's the only logical (legal) thing to do. Every other job or career is a waste of time.
Yes but I'm thinking about just the yield on that last bar.
Given that the Shiller P/E ratio is now 40 (under 3% of the value of the assets), the yield is actually a pretty small fraction of that last bar... but even then, I'm saying one year's yield could exceed the worth of all the others if things continue.
But IMO, it's already the case that the economy is centered around the free money/proceeds received by top 0.1%. This is why we saw all that nonsense with COVID, DEI, Wokeism, etc... This is what happens when a small number of elites decide to spend a bit of 'spare change' on politics and social activism. Imagine how bad it's going to get after that wealth has compounded in 10 years...
We don't actually live in a representative democracy, we live in a constitutional republic — with things like caps on representatives, the electoral college and gerrymandering, your vote is likely worth a lot less than someone's vote in Ohio or Alaska.
I’m not a one-percenter and my life is great. I don’t even understand why anyone cares about equality. The point is a rising standard of life. Equality isn’t anywhere near my top objectives. Pareto-optimal trades are good. Adding an implicit objective to minimize abs(w_i - w_j) makes many win-win things impossible.
The coordination win that came from “thou shalt not covet” is substantial and we forget it at our own peril.
You should care about equality because inequality tends to make places worse for everybody. Yes that includes those rich people. You can't go to the beach because it's all built full with private resorts. Those rich people can't walk the street and have to live in walled villa's for fear of crime. They also can't easily get married to who they want because they have to hold their assets. Vietnam is poorer than South Africa per capita, but significantly safer and more pleasurable to live. Would you rather be top 10% in South Africa or Vietnam?
What is interesting is that this was true centuries ago too. Life as a noble in the middle ages was stressful as hell and you couldn't even decide on your own lovelife. Read Seneca and the first thing he writes is that Augustus (whom he knew personally) was constantly complaining about his busy life and dreaming of a retirement that never arrived.
Rank order of income inequality (and coincidentally wealth inequality): South Africa > US > Vietnam
Rank order of preference to be top 10% in for me: US > Vietnam > South Africa
So your method does not disabuse me of my belief. It’s quite clear that equality has not made Vietnam more desirable than the US. In fact, there are some 400k foreign born in Vietnam (<1%) vs the US having 15% foreign born (a stark enough difference made worse by forcing foreign-born to be from non-neighbors). So I must reasonably conclude that my rank order is likely shared by others and that others too are not, in fact, lured by equality.
There is an old immortal tweet: cars have windows and go; houses have windows and don’t go; so it’s not the windows that make things go.
If inequality were as critical we’d expect a perfect rank ordering of distant migrant population attempts matching it. The numbers are so vastly different that one cannot conclude equality is of great importance to most.
Inequality by itself doesn't cause bad safety. the following countries have a higher share of wealth controlled by the top 10% than vietnam and also a lower homicide rate: singapore, uae, switzerland, sweden, qatar. that's just off a very quick search i'm sure there are more. Certainly in none of those countries are people hunkering down in private fortified castles for fear of stepping out in public.
This is about wealth inequality, i.e. how far the scale is leaning. This has, as the website explains, some funny effects: looking from the top, you are effectively starving the people that pay you and your descendands. That might work for a few years, but if everyone's hungry it's gonna be heads on pikes no matter how many bunkers you build and how much you pay for personal protection.
You or the farmer you buy food from competes for farmland with Bil Gates.
You or the one providing your house builder with wood competes for lumber forest with Alex Karp.
The list goes on and on.
It appears trough technological innovation the standards of life rise in many ways but trough innequality it can affect the standards/ affordability of our basic needs.
EMA food prices in number of hours of work required to sustain oneself and they have fallen for half a century. Bill Gates has not only been alive for the entirety of that period but he has been leading Microsoft for the majority of it. If this is how the list is (and I’m simply going to judge it by its first element) then it seems to provide stronger evidence against equality being a prime goal, considering wealth equality has dropped during that period.
I'm not going to point at bill gates buying and leasing out loads farmland and attribute to it new corn strains, better pesticides and higher feed conversion chicken breeds.
You may as well be calling for soviet style state controll the way consolidation, top down ownership is and competition mechanics are dismissed or praised depending on the standpoint.
You got it backwards. Bill Gates and Alex Karp don’t pay megamoney for lumber or farm land. They consume a bit more than the average person, but not by the same %age as they are richer.
But everyone else can’t afford basic necessities or furniture anymore. And so being a farmer or a woodworker or whatever becomes a less attractive job, less people will do it, and you will have a harder time finding someone fixing your plumbing. Or pay a premium.
Instead, the ultra-wealthy are demanding extreme luxury, and so a would-be farmer is now a hotel page boy carrying around some rich dudes’ luggage, hoping for a tip.
Bill Gates buys huge amounts of land precisely for ecology: Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils. All ecologists agree that beef/red meat should disappear from our plates if we want to overcrowd the Earth with more equal people, and along with erradicating a hugely deathly disease that is malaria during his lifetime, Bill Gates will also have accomplished that dream too.
I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself.
>Bill Gates buys huge amounts of land precisely for ecology
Yes and he was gonna give a vast share of his wealth away for the good of the many over 5 years and then tripled it. woops. Let us not pretend farmland has not been a good investment in those parts.
Let us be honest. Almost every such good thing he does is a tax credit which polishes his image and legacy. He was a pretty cutroath businessman and there's no reason for me to now paint him with some saintly image.
>Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils.
I can get behind the idea that beef has a bigger carbon footprint due to the fossil fuel fertilisers used to grow their feed as compared to the conversion ratio freaks that modern meat chicken breeds are.
The fact that the methane from their farts is somehow the long term issue I however reject.
And I'd like to point out that without much of both that excrement and fossil fuel based fertiliser we have a famine on our hands so 'overcrowd the Earth with more equal people' doesn't seem like such a fine coherent goal.
>I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself
Explain to me why do you presume I am "his audience".
Almost every such good thing he does is a tax credit which polishes his image and legacy. He was a pretty cutroath businessman and there's no reason for me to now paint him with some saintly image.
Bill Gates has had a major role in more than 120 million extremely poor children not dying of horrible diseases in some of the most destitute places on earth.
But he bundled a browser with his OS thirty years ago, so fuck all that, right?
Then I guess billionaires really should pay less taxes unlike us plebs since they're so much better at picking out and solving the wrongs of the world.
It is good that Microsoft was bribing some african governments because clearly they could use the money so much better saving them from themselves by redirecting that income to the global fund (and tax credits)
Perhaps we should incentivise his veiled land purchases for the common good since on thing obviously absolves of another.
BTW just since you use it for the rethoric. Can I also point out how that major role in 120 million children (by their own estimation and 40mil since 2000 on some other own estimation) includes the work of everyone else donating to, remotely involved with or working in line with his organisation.
You know including my tax money going to the the vaccination drives of Gavi, the WHO, UNICEF, etc
It seems to miss the bit where bill himself attributed the vast majority of such global health and development funding to donor nations.
You think we could get a tax credit for our major role in that?
People care about equality because the absence of it is inequality, and that leads to political control. Even if you live a good life today, it is not guaranteed. Democracy, human rights, all can be eroded if everyone ignores politics and the economy.
If you are trying to buy some place to live, it doesn't just matter how much money you have, it also matters if there are lots of people many times wealthier than you bidding for the same realestate.
More money doesn't create more things to buy or more people making things, its just means more money competing for the same things to buy. Other people having more does diminish your share, of the cake. Yes, we can make the cake larger, but the best way to do that is for more people to get more opportunity to fulfil their potential, by getting a reasonable share to do so.
Wealth imbalances are bad largely because many assets have upper limits on available quantity, ie. the amount of land in most countries is relatively stable. If those assets are hoarded by a relatively small number of people, it's much harder for less wealthy people to become more wealthy. Our entire socioeconomic system is based on the premise that one can work hard and change their lot, so making sure that's actually possible is important for societal stability even if you don't have any religous/moral/ethical qualms about hoarding wealth.
First the premise of our socioeconomic system. I disagree entirely. Our system is premised on the thesis that if you are useful to others, they are willing to reward you for the utility you bring them; and that it is advantageous for us collectively to preserve a rule of law whereby people might interact safely in this way.
One might work hard and fail or one might work lightly and succeed. Bulletball guy certainly worked a lot harder than many product managers I know.
Now the question of assets of limited supply. That’s sound. But that’s a distribution of assets of limited supply problem. It is entirely possible to have great wealth inequality with low land ownership concentration - in the US 67% of people live in owner-occupied housing. Scotland has much higher land ownership concentration - but lower wealth inequality.
So fixed supply asset concentration can exist without wealth inequality - which, to be clear, is the form of inequality I was talking about considering the original post is about it.
You’re probably not one paycheck away from homelessness, and probably have the protection of the legal system provided you don’t upset the wrong people.
But you’re probably one health scare away from it, you just don’t realize it.
Three good reasons to care about inequality itself:
1. Outsized political influence (in theory can be mitigated by laws controlling corporate spending, but obviously those laws themselves are subject to manipulation by the rich and powerful)
2. Distortion in who the economy serves. The beauty of capitalism is that it's a problem-detection and problem-solving system. If a narrow set of people have a huge portion of money, the economy becomes unduly optimized toward satisfying their wants and needs.
3. Despite best efforts, we ultimately must share a lot of the same commons. Even being a billionaire in NYC or San Francisco can't really give you a walk to work or your child's school that feels as safe as it does in a more equal society that takes better care of its unwell and poor.
All 3 points can be blamed on primarily on your govt, not on someone being rich. Even when the rich influence the govt, it's the govt to blame. Aren't they supposed to protect you? Govt, for the people, by the people etc...
The conversation about "why should I care about this" is a conversation about "should anything be done about this." The mechanism by which one would "do anything" about this is called government. So sure.
Do you care about concentration of power in a single person or single family? What happens when you have conflict with someone who has orders of magnitude more purchasing power than you? Do you think it's good or bad for the social order or democracy if one individual is able to exert more power than an entire city or state just based on inherited wealth?
Retirement age keeps increasing, public healthcare keep getting defunded. My tax money is getting used to enrich war mongers and my cost of life keeps increasing as a result of all of that.
Also my constitutional rights are ignored daily.
You understand why I might not be feeling very happy that YOU are doing great?
They’re inextricably linked. The ceiling is being raised by people at the top pillaging from people at the bottom. Sure, in a vacuum, raising the floor without regard for the ceiling might work but in the real world it does not. Capitalists choose to believe that the floor today is better than the floor 20 years ago because even poor people have iPhones but when you look at the actual life people lead, it is getting worse.
If anything, “raising the floor” is the Trojan horse.
Your perspective though depends on thinking the economy/money/whatever is a zero sum game, and if a person's wealth goes up, they must have taken it from somewhere else. In general, wealth is generated by growing the economy.
This isn't to say I don't think some companies/individuals/shareholders have absolutely taken the piss compared to wage earners.
All I want is that a rich person can't strongly direct the government to do things like idk start wars because they happen to own an intelligence/arms manufacturing company or control how food is regulated so their pocketbook grows bigger at the expense of the health of the country and the taxpayer.
I'm not sure why people push this false narrative around jealousy. Well, I could speculate, but that likely wouldn't be helpful.
I have no desire to be rich, certainly not as rich as the far right 1% column. I find that level of wealth nauseating and embarrassing. But regardless, "legitimately earned wealth" is doing a lot of work in that last sentence. Perhaps (doubtful) it's possible to earn that much while being legally legitimate, although that speaks more to how fucked up our system is than anything else, but certainly not possible to do so in a morally legitimate way.
You said it's "certainly not possible to do so" so I'm curious as to what counts by your view. The way you said it implies that other people must necessarily reach a conclusion that largely agrees with you.
Would you be ok to live in a democracy where your vote goes into the garbage bin instead of the voting box? Because that's where it goes if you aren't rich.
(Just an objective comment, I'm not positioning here) this honestly puts the "tax the rich more" in perspective. A tiny tax increment to the rightmost column would provide more money than 100 years of all the other pitiful contributions together.
The vast, vast majority of wealth (to the wealthy) are in form of company ownership, stocks.
So let's say you start taxing the ultra-wealthy based on their assets. They then have the option of:
1) Make the company pay out dividends, so that owners can afford to pay their wealth tax. Not ideal, because what happens during bad years where there's no dividends to be paid out? Or if companies want to re-invest in the company?
2) Sell stocks. Again, not ideal. This would mean that you lose some ownership year by year.
3) Take up personal loans to cover taxes.
etc.
Note, I'm NOT saying that we shouldn't do anything. But this is just the consequence of such assets (stocks) being the dominant asset among the wealthy.
Why is 2 a direction to be avoided? Is it really so bad to prevent an individual from having majority voting rights over a corporation which has power on par with most nation states? I’m not sure a billion dollar cap is the answer here but surely there must be some kind of reasonable ceiling. Is it so bad to think that one individual shouldn’t have majority ownership over a company dominant for the US space program? Or control over major international internet access that’s useful during conflicts? Or major social media platforms which provide algorithmic dials to tweak what information is visible?
I think there’s really only a few solutions to it which all involve some kind of divestiture, it just depends on if you want to target corporations or individuals:
1) a new wave of anti-trust ala Lina Khan and breaking up most major tech companies.
2) passing laws limiting the behavior of, and allowing for the punishment of corporations and group agents as a whole. There’s a lot of philosophical work about how to hold a group accountable for their actions, try searching List and Pettit Group Agency. There’s been a lot of development since then but I’m less aware of it.
3. Caps on decision making power (potentially measured via some weighted stock ownership, or wealth more generally) like suggested above. I agree there would be a lot of second order effects here which are beyond the scope of this comment but I think we’ve clearly gone too far in one direction where single individuals are now essentially funding national party midterms, have increasing power over real world conflicts, and any other of the myriad of corruption issues you can find out in the wild.
Every year I have to come up with the money to pay property taxes on my home based on an unrealized gains valuation. It's one of my largest expenses. I don't even really have the option of just selling some of my home to pay them. Even with this tax people still own homes.
I don't think forcing majority stakeholders to sell their stocks over the years would have your proposed effect. The position of power here is mostly with the CEO of those companies. And that's not gonna change with this scheme.
Honestly, there isn't a clean solution to this problem- or at least none that doesn't come with unpredictable consequences. I think everyone can agree that companies growing too large inevitably become harmful for the society they're enabled by, but there are no previously established solution we can reach for... And every decision you can make will have trade-offs. Also, were pretty late game into free market capitalism. Any changes to the status quo will dis-/advantage someone, and they will utilize the tools available to them to stop you. So such deep cutting changes are beyond unlikely without first descending into complete chaos. Which would likely be worse for the majority of people...
Maybe it's just me, but I don't see much wrong with any of the options above. Most of my assets aren't liquid either, yet I'm still taxed at a much much higher rate (when compared to total assets) than the top. I have to make decisions like "how much will I need good health care coverage next year?", which I shouldn't have to say isn't "ideal" either.
You're taxed on income, like anyone else, but the big difference is that wealthy people get liquid cash through tricks like borrow, spend, die. They also have other ways to gain wealth that don't involve a cash phase.
I'll get hate from some corners on this, but I'm coming to see the wisdom in not significantly increasing the tax rate on the rich, but instead broadening the tax base. For example, count tricks like borrow, spend, die as cash; make stock buybacks illegal; treat compensation in the form of assets as cash income at the valuation price when the transfer happens; count inheritances above $X million as income, cash income.
Wealth tax is not on Assets. It's on Stocks. The top pay the same tax on their personal income. Wealth tax is different. It taxes Ownership of Stocks not Assets.
How are stocks not assets? They're shares of ownership in a company, without personal obligations to that company. They're certainly not liabilities. So what do you think they are?
They are assets from personal perspective yes. But they are in the form of equity in company's balance sheet in which it is invested. Which is why it is on the liability side of the equation (A = L + E).
If you impose a wealth tax on this, which side are you imposing it on? Company or individual investor in the company? You cannot impose a tax on what is technically a liability on the company's books. So you would have to impose on the individual investor. Lets try with an example: assume the wealth tax is 10%. Lets also assume I hold 5 million common stock, pre-seed, in a startup I founded (45% equity). How would the stock be valued? It should be zero. So I pay zero wealth tax. Then I get an investor onboard, who invests say $1 million at 10%, valuing the company at $10 million. Lets assume, because of this capital infusion, my equity gets diluted to 40%. That means I am on paper worth $4 million. I immediately owe 10% of it or $400,000 to tax authorities. Without having made a single cent in revenue. My co-founder would also owe $400,000. We have no money of our own except to use the investment money to pay the taxes. That is $400,000 + $400,000 = $800,000. We are left with only $200,000 in the bank. Before we even started the company.
You might say 10% is too much. Lets reduce the wealth tax to say 1%. Or even 0.1%. Then the entire idea becomes meaningless. Might as well just charge extra corporate tax.
Is this concerning? Can you explain your point a bit more clearly, for the benefit of people like me that don't want individuals to have more power (whether its in "stocks" or "assets") than entire nations?
It is concerning for the simple reason that you have a stake in a company based on a future bet that the company will succeed. There is no guarantee for success. It's because owner has a stake will he/she work towards building a vision for his/her idea that is put into execution. Asset is not tied to any idea whatsoever nor is there any vision to strive towards. Infact the investment itself exchanges stock for introduction of asset (capital infusion). So money is being put into the company by owners or investors in exchange for stake. Beneficiaries of this capital investment will be employees first typically. Only once the company takes off and finds success can owners/investors cash in on their investment that too if they sell their stock. So in effect the rich have their money locked-in.
If you tax stocks, the rich will have no incentive to keep their money locked-in. They will encash and exit to a jurisdiction that allows them to invest their proceeds into stocks again. Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.
What you are asking for won't work in a capitalist society (which is pretty much every society on Earth). The only way out is UBI.
> Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.
What untaxed assets would those be? Are you saying the bank interest would be higher than other investments minus tax?
I am having trouble following your argument to your last conclusion.
Taxed assets are always going to be way lesser than any hypothetical tax on stocks. Lets assume investment is in housing. Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks the way you can collect rent on assets like a residential/commercial property. So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.
> Are you saying the bank interest would be higher than other investments minus tax?
It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?
> Taxed assets are always going to be way lesser than any hypothetical tax on stocks.
This is not a universal truth.
> Rent collected can easily be used to offset property tax on the asset. Now you cannot collect rent on stocks
You actually can, it's called securities lending.
> So the only way to pay tax on stock value (which is assessed by a valuer at that particular point in time) is by either paying it out of personal pocket, taking a loan or selling the stock. None of those options are feasible.
1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).
> It absolutely will. When you tax stocks, you are eroding its value. Why would anyone want to continue to keep their wealth in stocks when they could just cash out and not lose any of that value?
A lesser gain is not a loss.
> You actually can, it's called securities lending.
You cannot do that with private companies. It is only restricted to public securities. And even these are not owner/investor stocks (which are locked for a certain period after company goes public via IPO). These are typically fresh stocks issued before company goes public.
> This is not a universal truth.
What is the evidence for it working otherwise? Every Country that has tried Wealth Tax has rolled it back.
> A lesser gain is not a loss.
It is not a capital gains tax (which already exists). Wealth tax is a tax on unrealized gains. It definitely leads to erosion of stock value.
> 1) Why not. 2) Sounds like someone needs an income (which is already taxed and would have solved much of the tax avoidance).
You have just encountered a classic Catch-22 here. Without income, you cannot pay tax. Without paying tax, you have no revenue and hence no income.
paying it out of personal pocket is what I have to do when I pay property taxes on the unrealized value of my home. And I don't have the option to sell partial shares of it. This tax is my biggest expense.
It is not the same thing. Property tax can easily be offset by rental income, unless you are staying in it ofcourse. You cannot rent stocks.
> And I don't have the option to sell partial shares of it
Sure. But you can always rent it out and move to a smaller rental. And it is a good thing you cannot sell partial shares of it. You shouldn't. Imagine selling partial shares/stocks every time you have to pay tax on stocks. You will end up with nothing in a few years.
UBI would mean forever locking in autocratic control by the few owners, reducing the rest of us to depend on the graciousness of those who have time and time again shown they have none. An allowance is not a solution to the power distribution problem.
We cannot claim to live in a democracy while Elon Musk gets to decide whether our allies can use communications or close down entire branches of government.
There's many other solutions you gloss over, from capital controls for the more near-term issue to moving past capitalism for the more long-term systemic fix.
You dont need incentives for the rich. You can just pass laws limiting their options.
UBI can be implemented in a different way. Tax a portion of the profits earned and reserve it specifically for UBI. It is not an allowance either. It is what will keep economy afloat. Else if no one can buy the products/services the rich sell, then their stocks will be worth nothing.
> We cannot claim to live in a democracy while Elon Musk gets to decide whether our allies can use communications or close down entire branches of government.
This can be fixed with laws around lobbying.
> capital controls for the more near-term issue
Capital controls won't solve much because it is a one time exit tax that stakeholders have to pay to move out of the jurisdiction taxing stocks. Those who cannot move will shutdown their companies and invest those proceeds into assets, typically immovable (like land/houses etc), which will drive housing prices up. It has cascading effects that affect the economy in a different way.
This causes displacement of those who cannot afford housing, which will incentivize the rich outside the jurisdiction to buy up assets and then that causes a change in voting structures. The rich can then vote their candidate who will reverse capital controls. Or maybe they won't and keep it that way so they have their own gated society so to speak with no entry for those who cannot afford to be there. You can already see it happening in few places in the World where such controls exist.
> You dont need incentives for the rich. You can just pass laws limiting their options.
You are missing the point. The incentives are for everyone who want to give it a shot at trying to take their idea, implement a vision and then execute on it. Does not mean they will succeed. The tiny percentage who do succeed end up becoming rich. See the number of startups that succeed vs those that failed. You are not disincentivizing the rich by imposing wealth tax. You are disincentivizing the average Joe who wants a shot at making it.
Of course UBI is an allowance. You can't just say it isn't without making an argument. The problem isn't just money. It's ownership. If a few dudes control most productive forces, that is inherently antidemocratic. No amount of trying to pay off the public with some elaborate scheme that doesn't remove their control will fix that.
> This can be fixed with laws around lobbying.
No it can't, and lobbying has nothing to do with the problem of one guy being the petty autocrat on top of his empire rivaling democratic states.
> Capital controls won't solve much because it is a one time exit tax that stakeholders have to pay to move out of the jurisdiction taxing stocks.
Who said that? You've defined your own narrow version of capital controls to then argue against. States could just ban moving capital out of the country. Countries can just pass laws! They don't need to do whatever makes rich people happy.
> You are missing the point. The incentives are for everyone who want to give it a shot at trying to take their idea, implement a vision and then execute on it.
You are missing the point. People do all sorts of stuff for all sorts of reasons. Many companies are founded because somebody saw a real issue and wanted to fix it. Others are founded because somebody found a loophole or a way to extract capital by moving some numbers around or monopolizing something others need.
I would posit that if the only reason somebody opens a company is greed, then maybe that company would be a net-negative for society anyways?
> Who said that? You've defined your own narrow version of capital controls to then argue against. States could just ban moving capital out of the country. Countries can just pass laws! They don't need to do whatever makes rich people happy.
If capital cannot be taken out of country then it can be put in assets mate. I have explained that scenario already.
> If a few dudes control most productive forces, that is inherently antidemocratic. No amount of trying to pay off the public with some elaborate scheme that doesn't remove their control will fix that.
Then have more dudes controlling most productive forces. You have anti-monopoly and antitrust laws for that exact reason.
> If the only reason somebody opens a company is greed, then maybe that company would be a net-negative for society anyways?
It is not greed. Money is a by-product of success and follows success wherever it goes. You cannot dissociate the two.
> Of course UBI is an allowance. You can't just say it isn't without making an argument
It really isn't. It is the same argument as utilities. You individually haven't paid the full amount for construction of road network, bridges, electric grid yet you don't consider it an "allowance" do you? You believe you have contributed your fair share. Yet you still enjoy these utilities wherever you are and for life by only paying for how much you use it. UBI is the exact same thing. Instead of giving you in the form of utilities, you are getting money which you will reinvest back into the economy by choosing what and from whom to buy. Both are assets being dispersed by the Government.
The way Sweden taxes stocks is to give people a choice between two options. They can either tax the total change in ownership value between each year (profit vs loss), or to pay a fixed (lower) tax on the total value regardless of profit or loss.
The first option guaranties that you don't pay more in taxes than you earn on the stocks, and the later has higher risk vs reward. For some reasons, the later seems to be the most popular choice, despite the risk that the owner need to cover the cost of taxes regardless of what happens in the stock market.
How would losing ownership be a bad thing?
Isn't that exactly what we are trying to achieve by re-distributing the wealth, and avoiding that few people have such huge ownership that they have more power than governments ?
We are still living in a middle-age system, where the lords don't own lands but stocks and companies, but they still dictate the laws.
You didn't really highlight how any of this is a problem? Yes, if you sell some of your assets, whatever kind, to pay for taxes then you'll have less assets in the end. That's literally how taxes work.
You are not selling Assets but Stocks. Stocks come under Equity not Assets.
We are talking about people here, not corporate accounting. Stocks are financial assets.
Stocks are still owned by people who have a stake in the company. They are not owned by the company.
Edit: Again, stocks are not financial Assets.
Why start a business in this sort of economic environment?
Work hard, so that the government can redistribute your success?
Or you have the problem of businesses slowly losing their owners, who then stop caring about their clients or community.
What is the result of these taxes? Where does the money go? Does it lead to more economic activity or less?
We already have income tax. Why start a business in this sort of environment? Work hard, so that the government can redistribute your success?
Amazingly, people still start businesses.
> Why start a business in this sort of economic environment?
Why take on a job when you have to pay income tax? Because you'll still have much more left over than if you didn't. And this answers your question: because you'll still have much more left over than if you didn't start a business.
If taxes are high enough, they will disincentivize work.
I'm on disability, and if I make over $1000 a month, anything over $1000 gets taxed at 75%.
Do you think I work enough to make over $1000 a month? Do you think I'd scrub toilets for $20 per hour and take home only $5?
Hint: after $1000, I either get paid cash or don't work
Sure. If a wealth tax was set at 99% it'd be dumb. But this is not itself an argument against all taxes.
Why do anything in life?
The phrase "your success" is doing a lot of heavy lifting here.
You understand that billionaires don't make money from labor right? They get their money from rents and the return on capital. Roughly 5-7% per year, compounding, risk free, for perpetuity.
A nice idea I heard is to introduce a minimum tax rate based on wealth. Let’s say the magic number is 0.5%. Then you say, every individual (over some threshold etc) needs to pay max(normal tax calculation, 0.5% of wealth) .
What I like about it is that it doesn’t penalize people who already pay taxes. It’s a lower bound, not an extra.
What makes me weary about any such tax is that in practice, it seems to target the broad middle class - people who have enough assets to be interesting to the tax man, but who don’t have enough to hide it or avoid taxes.
> What makes me weary about any such tax is that in practice, it seems to target the broad middle class
If you're talking about the "Zucman tax" it explicitely targets the ultra-high-net-worth individuals because that's the population that manages to avoid income tax and thus pay a lower effective tax rate than the rest of the population.
source: https://gabriel-zucman.eu/files/report-g20.pdf
Yes that’s what I was referring to (I couldn’t remember his name).
Still my concern would be that the other Zuck would show he has no income and no assets, while a doctor or coder would end up paying extra tax on their retirement savings.
They can pay with shares into a state fund and the state could even return the voting power. It can be done if we want it. That was in a proposal in French legislation for example, so it's not 100% crazy and to me it seems completely natural.
How is that not the obvious comeback to the argument "wealth is stocks so we can't tax it"? Is there an obvious downside?
> This would mean that you lose some ownership year by year.
What's the problem? It's not like you'll have to sell over 50%. Even then the are schemes for non-voting shares. But when close to 1% of population works for Amazon, maybe forced sharing of ownership isn't a bad idea.
Do you know that if I own a house and can't pay property taxes, it gets repossessed and sold? this is common. Let's apply it to stocks and billionaires too.
I don't understand the problem.
Besides any argument about fairness, wealth inequality is highly destabilizing and historically has only been corrected by revolutions, wars, crises etc.
If a few billionaires need to sell stocks to avoid such an outcome, that seems quite desirable to me.
Yes if you tax people's wealth they will own less stuff. I see no reason why #2 isn't ideal.
Why is 2 not ideal? That is exactly what should happen.
Wealth concentration is a problem because wealth concentration is power concentration.
Why should a few dudes have autocratic control of entire industries?
If you force them to sell off their stakes over time through a wealth tax, you make the economy more democratic.
Um, tough, if you want to be a billionaire, you get to sell a tiny fraction of your assets to pay taxes. If they don't want to sell assets, they can pay themselves a larger salary or something. Or, like you said, take loans which is literally what they do to afford their lifestyles, just use that for taxes. I don't really care which.
"Taxing the rich" is literally solving the thing that is a problem today.
You know what is actually not ideal?
Having hordes of people in poverty while we bend over backwards to not inconvenience the rich with "selling stocks" to pay taxes".
The thing is: You cannot eat, or live inside, or get medical treatment from, stocks.
Wealth taxation cannot redistribute the kind of wealth we care about most. At least not by itself.
You need someone to buy the stocks in exchange for labor. So you need to keep the stocks themselves valuable.
As an extreme example, if you'd just take away all the SpaceX and Tesla stock from all shareholders and redistribute them, they would probably be near worthless because you just demonstrated that their value is more or less random.
I think that wealth taxation will only work if you give ironclad guarantees that people that are merely rich or middle-class will never be subject to it. If you can show that a stock is more valuable to, say, a medical doctor, then to the CEO of a hyperscaler, you might have a working system.
But somehow these rich people take loans of real money that they buy real things for. So it looks like you could eat or live from stocks.
The main purpose of wealth tax is not redistribution, but curbing the tide of power concentration.
If large fortunes keep doing 5-7% per year compounding, outpacing the avg. growth rate of economy, wages etc. then we keep ending up with Musk-like figures with such outsized amounts of power and influence that it basically destabilizes democracy altogether.
You can't get rid of these people because they just have too much influence -- i mean, literally buying entire social media platforms. C'mon.
Its really just a question about whether you want society to continue functioning with some semblance of fairness and stability.
Norway has a wealth tax (1.1% nominal, but there are tricks), but we also have almost as bad wealth inequality as the US (by Gini). Wealthy people are furious to the point of fleeing the country because it really is the one tax they can’t (entirely) escape. But it certainly doesn’t “fix” wealth inequality.
The most interesting part of it is how much PR / media storm they (the wealthy) manage to create around this topic. Last election it more or less dominated the media, which I also think backfired on them.
While they like to make a lot of noise, data shows that only a tiny fraction of wealthy people actually leave in response to wealth taxes.
https://www.forbes.com/sites/teresaghilarducci/2025/12/29/do...
Define "rich" and "tiny". I don't find this visualization particularly useful (especially with the average numbers, which are heavily skewed by the tails).
A better way to look at this data is the sum of wealth for each percentile (https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...) The top 10% (90-99%, ~$67T, >= ~$2M in net worth) owns more than the top 1% (99%+, ~$60T, >= ~$15M in net worth). The top 0.1% own ~$27T.
Any yearly tax that exceeds the "4% rule" will essentially be confiscatory, so let's say that a tax of 1% won't bring out the pitchforks (is that tiny?) On the top 0.1%, that generates about $0.27 T compared to 2026 Federal collection of about $5.2T (on a deficit of about ~$2T) https://www.us-debt-clock.com/data/deficit-by-year
As I pointed out in a comment about solar power in another thread, if that money was spent on installing solar+battery, in about 5-10 years we could have more or less converted the US grid with a 1% wealth tax on the 0.1%. Of course, we could also reverse the recent (2016 and beyond) tax cuts as well, which would help fix the giant gaping hole in the US budget. The stock market would probably take a hit, reducing the wealth of the top whatever by far more than a small tax would.
Many will say that the purpose of this tax isn't just to raise revenue for the US government, but to reduce power of the most wealthy. I personally think that taxing wealth is not going to be effective for doing this, without passing laws that limit the effect of wealth in US politics.
Also, it doesn't have to be tiny at all.
Why couldn't there a wealth ceiling? Let's take $1B per person, everything above that is taxed at 100%. Would it destroy the capitalist dream and people would lose motivation to grow their wealth, or would it stimulate cooperation and wealth distribution?
This was the situation post WWII in most western countries.
In the US, the top federal rate was around 90% through the 1940s and early 1960s, then 70% through the 1970s.
https://taxpolicycenter.org/briefing-book/how-do-federal-inc...
Income isn't wealth. Like you could tax Sergei Brin 1,000,000% of his annual salary and he'd be fine (he earns 1 dollar a year).
Income isn't salary either. I'm pretty sure he earns a lot more than that.
This is such a tired talking point. Effective tax rates were nowhere near that high.
https://taxfoundation.org/data/all/federal/taxes-on-the-rich...
I found this footnote particularly interesting:
It is worth noting that, per the Piketty, Saez, and Zucman data, the tax rates of the top 0.1 and 0.01 percent of taxpayers have dropped substantially since the 1950s. The average tax rate on the 0.1 percent highest-income Americans was 50.6 percent in the 1950s, compared to 39.8 percent today. The average tax rate on the top 0.01 percent was 55.3 percent in the 1950s, compared to 40.8 percent today.
Note that those percentages include Federal, state, and local taxes.
I did not say "effective tax" you are moving the goal post.
It is no surprise to me that an organization originally founded by the chairman of General Motors, the president of Standard Oil and their like [0] is able to conclude:
>"The top 1 percent of Americans today do not face an unusually low tax burden, by historical standards."
Which is a wild claim to make.
Nice that you find the somewhat honest footnote, but you're citing what is essentially an opinion piece from a conservative think tank.
[0] https://en.wikipedia.org/wiki/Tax_Foundation
You'd probably want to have it be dynamic in some way, as most monetary systems that mostly work tend to have some level of inflation to keep things moving.
But yes. Something like that.
Definitely there are many problems to this solution, such as what to do with existing billionaires. If it was up to me, I would say to them "figure it out, the late payment interest will start to accumulate soon". But realistically it could be done over multiple years and in stages to limit the negative effects.
The only thing that might genuinely be hard here is strategic leadership of a company.
Because while some can be transferred into something that is partially worker-owned, not all workers are suited to be given that sort of leverage.
So that might be worth pondering to come up with a solution that makes stuff not collapse. Because the reality of human resources is that the quality is underwhelming.
So when society says a business owner's assets are worth more than $1B they start losing control of the business they built and other people get to tell them how to run their business? That destroys a lot IMO
For what? Benefiters go back to spend with the rich again. You just made some politicians rich
What if we didn't just tax them, but made the whole system fairer so money was distributed more evenly even without the government as a middle man?
Increase wages.
Taxing the rich tends to do that. Or, at least when we did tax the rich, wealth distribution was better (though still far from ideal, IMO).
Or educate, promote or even mandate that a share of a company must be given to the employees of said company.
If you "fool" a hundred thousand individuals to work for a company on a wage and through their work the company ends up been valued at a billion, you become a billionaire. Wouldn't they deserve a bigger cut of the fruit of their labor?
The fastest way to distribute wealth isn't taxes on wealth, it's a better distribution of the wealth generated by labor on the contract that the employee signs.
Imagine a system where 1/10 companies makes 12 times the investment over a year, but 9/10 fold with your investment gone.
A rich person can afford to split their wealth 10-ways, meaning they get a 20% ROI every year.
9/10 workers don't get shit, while one does.
What we want instead is everyone benefiting.
Existing taxes are mostly on income, not wealth, and the US has one of the most progressive income tax systems in the world. Confiscating some fraction of Tesla and SpaceX will destroy lots of economic productivity for a one-time bump; it's a worse trade-off than just printing however much money and taking the value through inflation.
Taking a bit more money from the ultra wealthy is not going to stop Tesla and SpaceX. That's just ridiculous. Particularly for those two who only exist due to government subsidies.
At this point, it will probably not stop them, just slow them down, but it will strangle other companies in the crib. How much do you plan to tax the new multimillionaire janitors at those companies?
If government subsidies are the only reason Tesla exists, why did Aptera (v1) and Fisker fail? If SpaceX only exists because of government subsidies, why are Boeing and Lockheed Martin (owners of ULA) worth so much less than SpaceX?
And even if it does stop them... so what? Are they actually that interesting compared to good living standards for everyone?
We've seen what happens when people decide to confiscate wealth with promises of good living standards for everyone. It has never delivered on those promises, always lowered median living standards, and usually led to lots of deaths. I can't think of a single example where recovery from a confiscatory regime has taken less than 40 years, except arguably Cambodia, and most of them are still ongoing. Do you want Democratic Kampuchea as a best-case outcome?
> We've seen what happens when people decide to confiscate wealth with promises of good living standards for everyone.
This is how taxes work. I'm not sure why you jumped from one extreme of the US to the other extreme of Cambodia, ignoring the quite normal end successful middle.
Taxes generally do not promise good living standards for everyone. Usually they come with promises of public infrastructure, some kind of safety net, and some other benefits. How did wealth taxes work out for Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands, Luxembourg, and Sweden? They also didn't promise good living standards for everyone, yet still found that wealth taxes were worse than not having them.
It's not confiscating a fraction of Tesla, it's forcing Elon to give up some of his share of Tesla. He doesn't give it to the government, he sells it. To whoever wants to buy.
Could also take dividends, that would be more of a tax on the company itself which is what people usually object to in this discussion. Now the company basically can't grow as fast because it has to satisfy the tax burden for the owner. But that's a choice the owner makes.
"it's forcing Elon to give up some of his share of Tesla [...] But that's a choice the owner makes."
That probably seemed more coherent before you put it into words.
No, it's perfectly coherent. You just struggle with reading comprehension. The choice is how you pay the tax. The owner can choose to sell stocks or they can take dividends. Or they can take up a loan or pay themselves a salary or whatever.
The total income from tax increases is relative to the gross income. The gross income of the 1th percentile of earners in the US is ~$3.3 trillion, whereas the gross income of the top 25% is ~$10.3 Trillion. Levying a tax against only the top 25% sans the top 1% would yield more taxes than the inverse. Small increases on large brackets tend to generate significantly more tax revenue than large increases to small brackets.
Can we just get rid of these bots?
There is a certain tautology to "tax the rich" - a country can't exactly tax the poor. The poor have no money. Taxes on poor people are more about the principles of fairness and to some extent transparency than because they have the financial resources to contribute meaningfully.
It'd be interesting to do the same graph by real consumption. I bet it'd be much more equal - most of the wealth is tied up in systems that keep the country ticking over and are only providing paper benefits to the owner. Which is why I say "transparency" - once you track what happens in real terms, "taxing the rich" almost certainly becomes "everyone ends up with less". If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream. The person getting the money wasn't consuming anything real.
The primary benefit of massive wealth is power. It's an intangible, but it's very real. It can't be dismissed as paper wealth.
And it's not like taxes destroy wealth. Distributing from the person who owns the ice cream machine to the person buying ice cream puts the money in the hands of the person far more likely to spend it quickly. On ice cream, making the business case for owning ice cream machines better, not worse.
> The primary benefit of massive wealth is power. It's an intangible, but it's very real. It can't be dismissed as paper wealth.
I mean, sure. The follow up thought is after that power has been taxed away then someone else is going to need to be taxed for the raw resources that are needed. If welfare checks start being paid out with intangible benefits it'll lead to loud complaints. That gets to the heart of the problem with taxing the people with truly enormous amounts of wealth, they mostly have power, which isn't much use to someone who needs food and shelter. The tax burden has fall somewhere in the logistics chain that produces the houses and the food (although maybe a long way upstream).
> Distributing from the person who owns the ice cream machine to the person buying ice cream puts the money in the hands of the person far more likely to spend it quickly
I'm not going to disagree with that, but I will point out that this is why they couldn't afford the ice cream machine in the first place. Consuming the seed corn is a road to eventually having no corn.
There is an economic optimum amount of ice cream production and there isn't any reason to believe it isn't being hit under the current system. It isn't obvious if the need is for more or less ice cream machines. Moving ownership of the machine around doesn't obviously change the amount of ice cream produced; and its owner isn't consuming the machine. But a wealth tax on the ultra-wealthy is pulling all those levers on the assumption that making random changes in ownership has to help. It probably won't.
> I'm not going to disagree with that, but I will point out that this is why they couldn't afford the ice cream machine in the first place. Consuming the seed corn is a road to eventually having no corn.
The modern capitalistic system has devised many fabulous ways of enabling people to buy ice cream machines and seed corn without being able to afford it individually. Equity and loans are the two most obvious, there are many more.
That is the main reason that American capitalism has thrived. Because you don't have to be rich to buy ice cream machines.
Absolutely. It's a very effective system for quickly concentrating all the owenership of ice cream machines in the hands of the people who are best at deciding when, where and how much ice cream is needed as measured by profits - even if they personally don't have much when they're starting out. And if there is a better measure than profit I'd like it to be proved up in a country I don't live in because those experiments usually result in ice cream shortages.
The concentrated ownership results in graphs a lot like the one in the linked article.
> better measure than profit
Exactly. We should be taxing profit less and wealth more.
> Consuming the seed corn is a road to eventually having no corn.
That's what it means to be poor. You have to eat first. You don't have the choice to not eat so you can save the cost for something else.
Id say you CAN tax the poor (by wealth), and apparently they are contributing almost same absolute amount like the top rich :
Rough estimates for federal taxes
Top 0.1% Share of federal taxes ~10–12% Approx ~$550–650B
Bottom 50% Share of federal taxes ~10–13% Approx ~$520–680B
source : quick claude query
That seems wildly incorrect. In the US the bottom 50% are closer to ~3% of federal taxes.
The top 1% pay about 38%. The top 0.1% is simply not a lot of people and not helpful for thinking about how much you can juice them in absolute dollar amounts.
Doesn't this just prove the OP's point? The government gets as much money from the top 0.1% as it does from the bottom 50% means that it is getting a lot of their money from the wealthy.
> If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream.
What you're describing is called "Trickle Down Economics", and has led to 50 years of economic failure.
Assuming we're talking about the US, printing money and giving it to wealthy people has been a big contributor to the failure of the last few decades. The US has made a broad-scale effort to disable every form of market-based feedback that tried to replace the leadership class with more competent leaders. If they'd stopped with the upper class welfare then the 1% probably would have less money, but giving them the money then organising to tax it away again is a strategy that is both bizarre and unlikely to be effective. It's too complex and arbitrary.
If we're talking globally, Asia ain't failing. They're big on producing lots of real stuff. Minted a lot of new billionaires.
> a country can't exactly tax the poor.
Reality would like a word with you...
a country can't exactly tax the poor.
Tell me you've never met a modern Republican without telling me you've never met a Republican.
Kind of makes a point to have a wealth tax. As the top 1% of w2 earners are paying a disproportionate amount of tax relative to too 1% of wealth holders.
That or just raise interest rates to force these people to sell more equity
I think that instead of a wealth tax it makes more sense to change how we tax in relation to the financial instruments the wealthy use.
Capital gains: this should just be income.
Unrealized gains: The argument against wealth taxes are often related to unrealized gains needing to sell blah blah. If you get a loan on your stock value, at that moment the gains should be considered realized and you should be taxed via capital gains (which would be at the level of income tax). Ultra-wealthy use loans against their portfolio to avoid realizing their gains. Make that not possible.
From 2014 to 2018 Bezos effectively paid a 1 % tax rate.
[dead]
There are two versions of wealth taxes for nonliving people that make a lot of sense:
This is so very very relevant.
Top salary earners, who do manage to save somewhat for retirement end up getting punished by these wealth taxes as well, especially since, generally, you need money in order to be able to move money around, in order to be able to save money on these sorts of taxes.
They get punished by wealth tax because the crooks who implement wealth tax put the limit at some ridiculous point that ends up impacting "normal people". The whole point of wealth tax is to tax the ultra rich, so you could put the limit extremely high like $5M or even $20M and it wouldn't affect anyone except those who can easily afford it. But they don't do that, I assume because they want people to hate it so they can remove it later.
If your point is that it costs money to "move money around" to "save money on these sorts of taxes" you've missed the point of having a wealth tax...
Tax on wealth - or in reality tax on unrealised gains is absurd, it's a tax on a cat in a box.
Is it though? Those same unrealized gains are used by those same alleged paper-billionaires to borrow money and live lavish lifestyles ("Buy, Borrow, Die").
They literally get to eat their cake and have it too.
this is principally why banking exists at all, farmers needed to borrow against a harvest that hadn't yet been planted.
I'd suggest some controls or limits to it, but the lenders assume the risk ( except for all the times the public has had to bail them out) and they're grown up corporations who can decide for themselves.
I should add, that the money they borrow does get taxed when it is spent on the indulgences you make reference to.
Yes, but it isn't taxed federally as income tax, which is the problem we're probably trying to solve.
IE, every dollar I earn gets taxed twice - as income, then as sales tax. Rich guy only pays the sales tax.
And there's a fundamental difference between "borrow to keep the business running smoothly" and "borrow to buy a mega-yacht". Legally, not so much, as you say, but hell's bells, the super yacht market really shouldn't exist.
Counter point: the (super) yacht industry employs a huge number of skilled workers who take immense pride in their craft (pun intended).
Sure, and there's plenty of opportunity to build regular yachts (which are still massively expensive). When I say super-yacht, I mean the 100 meter monstrosities preferred by the likes of Bezos and Zuckerberg. I take no issue with the type of yacht owned by "mere millionaires".
Any normal person can implement the same strategy in any brokerage account.
Regardless, if that's the actual anti-social behavior we should change that tax treatment specifically, versus a broad paper wealth tax with unintended consequences.
Only theoretically. Normal people don't have the assets to pull it off.
If Elon musk can spend $500 million dollars every election year (in addition to everything else he does) the gains aren't unrealised and he can pay $500 million in taxes every year. Really the amount he can afford to pay and should fairly pay, imo at least 3%, would be much higher than $500 million.
Yeah but every time anyone actually does implement a wealth tax they start it at like $500k or some similarly stupidly low amount and then everyone starts (somewhat rightfully) complaining that granny has to sell her house because she can't afford the tax.
It seems to obvious to me, like just start it at something like $5M. Nobody will be affected who can't afford it. It's like they're trying to implement it in a way that makes people hate it.
That’s the deal. You are asking the hand to tax itself and for sure it’s going to make sure the rest of the body feels the pain.
That’s why it is extremely difficult to make even modest improvements in a dug-in system.
Netherlands is €60,000 single / €120,000 married before it kicks in; implemented as a 36% yearly tax on assumed 6% returns (e.g. married; have €200k in investments; you owe something like [200-120] * .36 * .06 = €1728). I think there's some nuance for bad years.
In practice its basically an additional 2% "drag" on market returns as its a yearly tax; not capital gains on sale.
Sole reason we turned down a job there. I don't hate the idea of a wealth tax, but having it kick in at €120,000 is nuts. IMO it's not even functioning as a wealth tax, its a barrier to the middle class accumulating even meager non-property wealth.
(I'm sure I have some details wrong, but broad-strokes this is what I remember from when we turned it down a few months ago)
Such a wealth tax surely should be progressive. If I have $500k I'm not necessarily wealthy-wealthy but I'm heck of a lot more wealthy than someone who only has $5k, or even $50k. I could afford to pay something for the sake of being lucky enough to have a have half a million. Someone with $50M could afford to pay much more.
However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth. It seems that wealth tax is often used as an easy fix to "we can't somehow tax the income of high-earning wealthy people because they arrange the legal ownership of their wealth so that it's hard so let's tax their wealth". What should be fixed instead is profits slipping out of the taxable base. In general, a lower but wider tax base is always better than higher spot taxes that encourage people to optimize. Wealth tax is just a slap-on solution that mostly just encourages tax planning.
The inequality of the distribution is the true issue, and indeed not taxing the wealthy enough does accumulates that. A country should be proud to tax widely and moderately, even the highest earning people and businesses. A country can't compete with a tax haven but a tax haven can't compete with a functioning state and society. Working to tax wealthy people more in par to what ordinary people are taxed would work towards a more equal society. Some of the wealthy people would move away but the country should recognize and maintain that it has other factors of appeal than the tax rate.
> However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth.
Income is far more important to people than wealth is. Income is what let's you buy food. Yet we tax income at quite a high rate. Far better to have a mix of both than the current system of having a lot of one and basically none of the other.
> You'd be taxing something you want citizens to have: wealth.
Disagree with the premise. I want people with less than $50m to have more wealth, and people with more than $50m to have less wealth.
I agree it should be progressive. But to me, the point is not to tax normal people who have worked hard and saved up some money. Many, if not most people will save up $500k over the course of their lives. That's not wealth, thats just a financially responsible person, it's one paid off modest house. These people already pay half their salary in tax every year, they are already severely taxed we don't need to tax them more. In fact I think normal people should be taxed less, even relatively high earners like medical doctors for example.
The point of wealth tax, to me, is to tax the obscenely wealthy people. Those few who are worth more than the entire rest of the population combined, while also basically not paying any tax at all despite their fortunes growing by millions or billions every year.
I actually think it would be reasonable to essentially put a "soft cap" on wealth. Like if you're worth several hundred million dollars you literally can't grow your fortune any more because you're just gaining as much as you pay in tax. Instead of one guy owning multiple companies worth billions of dollars he would have to sell shares to pay his taxes, and now many people own the companies instead. This prevents one person from amassing too much wealth and power.
At $5MM farmers are affected. Land is expensive, and it takes a lot of land to farm. At $5k/acre, the old standard 1k acres farm is $5MM, and nowadays that’s probably not enough land to raise a family (only $65k profit), so you really need more land. Estate tax means the kids can’t inherit all the land.
> At $5MM farmers are affected.
Farmers—as in, the land-owning famers—are generally wealthy people.
I'm not attached to the random figure I threw out. Put it at $10M then.
That said, if you have $5M invested in a business that makes you $65k a year you're being stupid. Sell the farm, put the money in some safe 5%ish interest vessel like a CD, now you're making $250k doing nothing.
And, you’d better pin it to inflation, or in 50 years, you’re back to the same granny problem.
Good point!
What is the point against wealth tax? That the rich will flee, leaving us.... better off in every possible way?? This is like that episode of futurama where fry befriends the parasites he found at a gas stop
>That the rich will flee, leaving us.... better off in every possible way??
Can you explain why would we be better off when the rich flee? I see this "we gonna be better off without them" sentiment quite often, but never an explanation how would we be better off? What metrics have you used?
Either you buy into the rich as job creators (myth) or you see them as parasites extracting all spare capacity and wealth from society.
Wouldn't they retain a lot of ability to do that from abroad? A wealth tax targets wealth in your country. We've seen plenty of loopholes for foreign political influence lately and I don't think there are any laws against non-residents holding majority shares in US companies, right?
USSR had no rich and everyone one was poor (except for the party’s apparatus).
So, how would it work here? Why eliminating the rich (whatever is the definition) would achieve a different outcome than that of communist regimes of the past?
This doesn't even make sense. Poverty is a relative term. Poverty requires wealth.
Anyway what little meager juice that these ideological labels had after the cold war is now gone with china as king of the hill. We can all agree private investment = rapid growth, and state intervention both in terms of social safety nets and actively ensuring fair competition (where that is necessary—banking, anti-trust, food/med production, etc) = stabler economies (or we agreed on this for a few decades after the great depression anyway). It's what the point of the economy is—to serve the disproportionate interests of rich or the collective (one might even say... democratic) interests of people—where there remains substantive disagreement. I hope we can leave this farce behind that how we talk about ideology has any relation to how the terms were actually defined in lieu or acknowledging material reality for a change.
They won't flee. The tax would have to astronomical to offset the advantages of doing business in the US. If that wasn't true, they would have all disclaimed their US citizenship and moved to Monaco already.
This is not the question I asked. I asked how and why would it be better for the rest of us?
For the record, I’m not necessarily opposed to the idea of taxation on the wealthy, but I want to understand why having no rich is better for everyone.
Extraordinary claims, etc
Fair, and I don't believe we'd be better off if they fled. We would be better off if they weren't astronomically wealthy. I don't have a specific number in mind, but "a billion-ish" feels like a reasonable upper bound on wealth.
I'd also note that I would prefer to adjust tax/accounting laws to prevent the accumulation in the first place, not just roll out a blanket "take everything over a billion-ish law" as that feels more like a band-aid than a fix.
> adjust tax/accounting laws to prevent the accumulation in the first place
Yes, I agree with this one. Some sort of reform on estate and inheritance is long overdue.
That, and something to "force" payment in cold-hard cash instead of stock.
They’d stop meddling in elections for at least one notable illegal immigrant billionaire
Not only rich people affect outcomes of the elections or legislature, unions do as well.
For example, New York’s Health Act failed because teachers unions opposed it on the grounds of “protecting the hard fought contract benefits”. In other words, union leadership realized that with this bill becoming a law unions would be less needed, so they fought for their interests while disregarding interests of others.
So, unions should go as well?
Unions represent the interest of a large group of people, they arrive at policy through debate and consensus.
Allowing people to nominate representatives to argue policy is the foundation of representative democracy.
> Unions represent the interest of a large group of people, they arrive at policy through debate and consensus.
Well, in this case, how come preventing access to healthcare to NYS residents is in the interest of the teachers? And, why would teachers think that they are the only ones who deserve good health care?
Unless… the unions have no feedback mechanism to ensure that they operate the way you think they operate, and they do what any other politician does — they want to stay in power I exchange for keeping just enough of the voting base like you more than the next guy. So, in this case, it’s perfectly reasonable for a union leadership to fight this law — it simply a preservation of power thing.
>Well, in this case, how come preventing access to healthcare to NYS residents is in the interest of the teachers? And, why would teachers think that they are the only ones who deserve good health care?
I am not familiar with the particulars, but I am sure there is information published by the union explaining their position in more detail.
I reject your suggestion that I am ignorant how unions operate. I have been a member of a union for many years. Larger decisions are decided by voting.
Like democracy, unions are not perfect. But historically unions have been effective at negotiating rights for workers (weekends, 8hour workdays etc.)
I would argue they are one of the few ways labour has been able to impact policy and law.
> I reject your suggestion that I am ignorant how unions operate. I have been a member of a union for many years.
I was a member of a union as well.
> Larger decisions are decided by voting.
After they went through the filter of the leadership, either via the “bargaining committee” or any other form of delegation, selection to which can be based on votes or appointments.
You can Google yourself how teacher unions opposed NYS health care bill, and why they deemed it necessary to justify their position with “protecting the fought for benefits” among other things.
No, they are single individuals who have more speech than me via dollars. They are groups of people. I may have problems with particular unions or particular actions but they’re a million times better than a single illegal immigrant being able to manipulate politics on his own whims.
Gonna make a law preventing them from moving away first? Your idea has been tried before. It reduces total tax receipts.
This article is about American wealth inequality so I’ll assume you’re talking about the US. The US already taxes global income, so moving away is not enough. You could renounce citizenship, but then you lose all the benefits of citizenship and you must pay capital gains an all assets whether you sell them or not.
The “they’ll just leave” argument doesn’t really hold up in this case.
There is not one discussion without this "argument".
But, let's say, they do. And they also have to stay out. Wouldn't that be.. kinda nice actually?
Your taxes would stay the same either way. Yes, of course, there would be less luxury spending, but the millions of normal people still exist. And they spend and they produce.
Why not let the ultra wealthy just leave and idk go to mars or something? Kick them out, seize their assets, run society without them if they do not want to be part of it anyway.
Seems unlikely all these people would give up living where they were socialized. Where was it tried before and fleeing observed?
I found a study saying the effect was minuscule in Norway, Sweden and Denmark https://taxjustice.net/wp-content/uploads/2024/08/Taxing-ext...
Hey so this isn't true. In places where they have researched this, a small number of people do move, but the additional tax of those who don't completely outstrips what was lost.
They can personally move, but they can't move the source of their wealth. Bezos can move, Amazon can't. Bezos moving away will only reduce his taxes if we let it.
Where are they going to go? If they wanted to go live in a 3rd world country with no taxes, they already would. Everyone is getting tired of their BS and your lame, repetitive arguments.
Moving from America? They'd still owe taxes.
Part of the problem I have with graphs like this is that they don't differentiate between paper wealth, being able to get a loan against the paper wealth, and hard assets (real estate, vehicles, cash).
Let's take a personal anecdote for an example: I joined a startup when it was early-stage, stayed for a few years, and exercised my stock options when I left. The startup is now "successful", but still private; my shares have also surely been heavily diluted. I have no idea when I'll be able to sell those shares or how much they're really worth. I have no way of turning those shares into quality-of-life improvements for any foreseeable future. Do they make me "wealthy"?
I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff. I think the real problem is how much of the wealth is allowed to stay off public markets. Cargill is worth more than $50 billion and its stock is not available on public markets. The growth in wealth of most AI companies - Anthropic, OpenAI - happened off of public markets, and so none of it trickled into the American middle class by their retirement accounts. Venture capital is keeping companies private for longer because, quite simply, none of the investors need the cash to pay for their cost of living, so they're quite happy to let paper gains continue to live on paper.
If your company has revenues of $X million a year or more, you should be forced to make public financial reports (effectively forcing you to list stock on a public market). Period. I think economists will naturally disagree on how much X should be, and that's fine, but I have little doubt that there should be a line like that, somewhere. Concerns about public markets forcing short-term thinking are a different problem, one addressed by mission-lock implements (Eric Ries's recent book Incorruptible is great here). Public markets ensure that gains in wealth are shared more broadly across the economy and increase tax collection by incentivizing more frequent buying and selling of the underlying stock, since those are taxable events.
> I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff.
Think again. The demand from rich to park wealth in X, Y, Z makes prices go up. Just imagine that the RAM prices fueled by AI spending is a housing market. More money rich have, less affordable the life for the rest is.
And don't forget that speed of their wealth growth is way faster than anyone who sells their labour.
Ah. And we did not even talk about "hidden" wealth thingy... All these numbers are official ones.
I don't think most Americans are thinking about their 401Ks when it comes to corporate behavior. They're thinking about high prices, lower quality, poor service, externalities(pollution and such), low wages, poor working conditions. I don't think public markets will fix those things, and some argue they'd make them worse.
If I have to read the phrase "paper wealth" one more freaking time...
Paper wealth is a real problem (and the financialization of everything has made more paper wealth appear than imaginable) and your "illiquid" stock can cause all sorts of fun when various thing try to force you to mark-to-market something that basically doesn't have a market (I'm sure you'd sell your shares for $1 billion, and be insulted if I offered you $5 total, so they must have some value but good luck finding what that is AND realizing it).
You also have this with houses in California (and more and more, the entire country) - a family in a house that they pay $x per month on is not likely to really feel different if you tell them the house is worth $250k or $500k or $5m - because the price will likely be "in line" with those around them and so actually getting access to the "wealth" is difficult - the only real way is to move far away.
I feel a big part of the problem is we've made the world great for those who know how to navigate it, but horrible for those who don't (or can't). If you are disciplined from the beginning, always save 10% of what you make into retirement 410(k)s, 10% into rainy-day funds, spend less than 30% on housing, you're going to do quite well - but that's a small portion. Seventy years ago you could be a near literal moron, work at the factory, and live a good life - because the company handled your pension and healthcare without asking you to make decisions that frankly most people aren't capable of making - and it was difficult to leverage yourself to death.
Most people don't give a shit about wealth inequality if they can live a good if humble life without undue stress.
Elon Musk existing doesn't bother me as long as I can provide for my family and feel I'm getting a "decent deal". But if I'm overworked, underpaid, drowning in debt, and prices are rising, his existence is going to be a lot more annoying.
(One of the problems of publicly-traded companies is manager's capitalism - https://ia601506.us.archive.org/26/items/bogle-managerial-ca... - both really come down to nobody actually owning something in the meaning of taking responsibility to the thing, because ownership is so diluted it basically has no meaning.)
> so actually getting access to the "wealth" is difficult
reverse mortgages are not hard to get
That doesn't actually get you access to the wealth, it gets you access to debt which is not the same thing.
They are fungible.
As a w2 earner, taxes make me feel shame and rage. Shame knowing how ineffectively my taxes will translate into helping my fellow Americans/my communities/my grandchildren. The rage is for the realization that the most valuable people in our society (our doctors, engineers, small-med business owners) are the ones mainly footing the bill for select greedy and power hungry politicians. I’ll admit I haven’t validated if this is empirically true based on the numbers. It’s just feelings that come up looking at my daughter and knowing some of my taxes probably blew up an entire school of little girls who aren’t much different than her.
Why has this suddenly disappeared from the front page? It’s not flagged.
Must have interfered with SV reality distortion field.
This post is currently #1 on /active and #218 on the front page, sitting right beside 1-5 day old posts. This isn't flagged, and while I know HN tries to downrank posts with a low upvote to comment ratio to prevent flamewars, it getting pushed this far down does start looking a bit like someone is tweaking the dials.
TIL about /active. Interesting, thank you.
@dang: care to explain what this is about?
Why don't the humans from the left 99% simple eat the humans from the right 1%?
I'm with it, but "let them eat musk" just sounds icky.
Eat you musk.
Hot take: Maybe not literally eating, but anything > $1B in whatever form (cash, stocks, equity, etc) should be redistributed fairly. At the lowest level, janitors at Tesla are just as important as engineers - if the toilets are nasty and nobody takes care of them then nobody will want to work there. So on top of paying them $15/hour, they should also get some stock.
When you get to $100 million you get a letter from the president congratulating you for winning capitalism and everything after that gets taxed at 100%.
Then go and spend it on what? On the rich again. Go and learn economics dude.
It never occurred to me to render a web page that is partially scrolled down, on load. After decades of browsing the web, this is truly novel to me. Has anyone seen a page do that before?
Not usually a fan of messing with scroll, but what a cool visualization use case for breaking that norm. Taxes and politics aside, kudos to whoever made that design choice.
Federal reserve does not count salary into Net Worth as far as I can see: https://www.federalreserve.gov/econres/files/Networth%20Flow...
Since most people’s income comes from salary, it is very easy to read this graph wrong and it is a bit misleading. Say you are some dev who makes $500k per year, but likes to rent, doesn’t drive and is not very bothered with stocks. Their Net Worth - unless I understand this wrong, if I do please correct me - the would around zero, maybe less with student loans, so they would be amongst the poor. Ok, they probably would have a lot of savings in this scenario, but maybe they like to ride on a horse with no name and spend most of their income. Still I would not call them poor.
Does it change the picture? Not really, because Musk et al. are so way beyond everyone else that the graph is extremely top heavy. It is a nice data visualisation regardless.
So.. when I google "median income eu vs US" I get some completely different figures: $51k / $64k-65k median for the US, and €21k in the EU.
So the median household in the US has 3 working adults? Is $211k household according to that page.
I think you are looking at wealth vs. income?
It shows an "ideal" distribution. How did they calculate it?
https://dreamagainusa.org/method
> “What we think” and “Ideal”
> In 2011, Michael Norton and Dan Ariely asked more than 5,000 Americans how they thought wealth was split between the five fifths of households, and how they would ideally split it. The Companion spreads those five shares across all 100 percentiles of the 2026 wealth total in a smooth curve (Appendix 3). Many different curves fit five numbers, so these two shapes are only illustrations. The actual bars come from percentile-level data. These two curves do not.
Does factor in the K shaped reality we're entering where if white and blue collar jobs become automated there will be only rent seekers and extreme unemployment?
I wouldn’t of expected median household at $220k, avg American doesn’t even make half that
Wealth. It's mostly price of the house for median people
This is a graph of household wealth, not household income. Most of the wealth of the median household is home equity.
Misleading. The root problem is not that people have found a way to flock around the money spigot, the problem is the money spigot itself.
Fix the money, fix the world. IYKYK
A contrarian view:
- Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets. - Even the LHS of that chart Americans are some of the wealthiest in the world. A lot of the middle class from many other countries would love to be on the LHS of that chart. - No one is expected to build wealth on a 40 hour minimum wage job. It is the bare minimum and most people get paid more. - Americans don't want wealth. Our spending habits are abysmal. I suspect if you gave every American $500K the chart would revert back to this in like 12 months
The same wealth could be tied up in assets that are _owned_ by the americans and offer services to them.
Services that have an incentive to serve said americans, because it is them who own them.
You are completely right that this capital is super useful for society. It would just be infinitely more useful if it was in the hands of society.
These assets DO offer services to them. The whole point of these assets is to make products that have value to other Americans. If the assets / owners don't do that then their net worth decreases and disappers.
Putting it in the "hands of society" is crazy talk. Government / elected officials are awful at allocating capital, negotiating labor, holding people accountable.
Idk I feel like your opinions are "crazytalk" as you say.
So who is right? is it the real person with a real identity attached to it, or is it the 7 month old account pointing nowhere?
I guess we'll never know.
> Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets.
Why would that be worse? What online services are so important that it's better to have them than to lift some people above the poverty line? Rich people spending is the next best thing after taxing them - it distributes their money and provides jobs. It would strictly improve the society if Bezos spent lots of money and folded his servers and warehouses - in so many different ways...
I personally would rather have next day delivery and not waste my time shopping and driving from store to store.
What jobs do you think it creates? You really want all our labor pandering to billionaires? Why would anyone give attention to middle class if the billionaires were forced to spend all their money? How expensive would your life get if the billionaire class redirected all of their wealth toward frivolous consumption.
> Most of that wealth is tied up in assets offering services for americans
Yeah. Like renting a house for a mother of 2 children who will never get her own by selling her labour, while the renter uses her money to buy more units.
Yes she needs a house, and can rent one from 1000s of different rental owners willing to provide her that service.
What's the issue?
This is a low effort strawman.
This is someone's lived reality.
Do you think it is wise to have two kids on one income when you can barely make rent? Are we going to hold the mother accountable at all or is society to blame for that situation?
What does 'holding the mother accountable' look like to you? Some kind of punishment, that her children also suffer from?
I don't think that procreation should be a right only afforded to the wealthy. This seems incredibly unhealthy for both humanity and for the planet.
So now you are slut-shaming as an economic policy?
Disagree.
A large portion of billionaire wealth isn't reinvested in productive assets. It comes from holding onto assets like corporate shares and land that grows in value based on the asset's ability to extract profit or rent. Or from distorted (speculative) demand for that asset that is completely detached from its productive output.
Someone like Bernard Arnault is worth around $160B (wealth from luxury brands like Louis Vuitton, Dior, and Tiffany). That paper valuation exceeds the total national wealth of many entire countries: https://en.wikipedia.org/wiki/List_of_countries_by_total_pri...
How does it keep growing if it isn't invested in productive assets?
Yes he is valuable because he makes a product people want. That is how life works. If you want him to be poor, convince people to buy something other than luxury brands.
Writer doesn't appear to know the difference between income and wealth.
Every year there are fewer povvos in the world, and we're just getting started.
I see a lot of "temporarily embarrassed millionaire" in this thread.
But is wealth really material or is it mostly virtual? Musk may be one of the richest men on Earth but he doesn't have a Trillion in his bank account. He holds stock which is potentially worth that amount. But as soon as he were to sell it the price and value would sink and it would be worth much much less. How much less? I don't know exactly but I suspect at least half.
So maybe we should take into account the liquidity of the assets held by these Billionaires. Also, as we've seen with Steve Jobs that if you get cancer it doesn't really matter how much you have in the bank. You'll die the same just like everyone else. All that money won't buy you extra time.
Some more background/making-of from Jeff Atwood:
Suffering as a Feature
https://blog.codinghorror.com/suffering-as-a-feature/
great stuff, thanks for putting it together
I don’t begrudge anyone in the USA for building a fortune. They had opportunities much the same as my own, they ‘won the game’. Good for them, the challenge is the secret sauce that powers the great economy.
So I oppose taxing that secret sauce away.
Taxing the transfer of great wealth to next generations seems a better thing. Allow the transfer of some degree of wealth, but not all of it. Make the future generations earn their huge wealth, as their ancestors did. Keep the competitive spirit going.
Semi-serious question: if I didn't have to pay any income, property or sales tax I think I could build my fortune. Should we get rid of those?
> the great economy.
Great for who exactly? Certainly less great for the people who have no opportunity to gain wealth, because the currently wealthy don't contribute their fair share, or debatably don't contribute at all.
Seeing who owns Y Combinator, I’m sadly unsurprised that it was flagged.
It’s not flagged. Yet it does seem to be artificially pushed down, even if it is very active: #2 on https://news.ycombinator.com/active
As someone who spends a lot of time reading HN, I would really like an explanation. So if @dang or any other mod reads this…
yeah I was really surprised to see this post which has 240 points and over 200 comments within 3 hours got pushed to the third page of hn
... aaand it's gone.
Would you rather have richer (in real terms) society (including richer lowest decile) with larger wealth inequality or poorer society with smaller inequalities? You might argue that these are not really the only two options and that's fair, but let's assume they are. Surprisingly many people would still opt for second option. Musk was trillionaire, now he no longer is (so inequality decreased) but did it really change anything that we no longer have any trillionaire?
You don't get it.
It's not "poorer society with fewer inequalities." That's what they always say. It's never that. A society is not "richer" because the amount of financially backed power is one concentrated set of hands.
That's it. That's the tweet.
> You don't get it. [...] A society is not "richer" because the amount of financially backed power is one concentrated set of hands.
No, you don't get it. Read again my post - I've explicately said that EVERY decile is richer.
Your hypothetical "but if unicorns were real, would they win the Derby?" is a distraction.
It’s not though because even though inequality is increasing, everyone is getting richer including bottom decile.
Who is it to say what's the ideal wealth ratio between quintiles? I know who, a local communist!
Wealth inequality is a completely pointless metric that tells us nothing about individual quality of life, and is being pushed by the left wing ideologies to serve their agendas.
For example, you could propel yourself into the top quintile by just packing up and moving to Liberia, but that would not increase your quality of life now, would it?
I find comments like this perplexing. If it's meaningless, I'd like to trade places on the graph with Elon, please.
Tax consumption not wealth. Like high percentage for 2nd homes. Yachts. Bentleys. Stuff like that.
Who cares about paper millionaires. Just tax consumption not paper wealth.
The problem with that is that consumption doesn't scale remotely as fast as wealth. Wealth would still continue to concentrate.
Just tax the fucking top 1%
It's crazy the hundred millionaires in the top 0.1% are closer to a homeless person than Elon musk.
seems to be a general rule of life, some people are just born with the right combination to be really good at a certain game at a certain point in time. The only issue with wealth is that they can influence other games in which they have no ability just the same and that is dangerous for a democracy. Imagine if roger Federer was messing with the elections just because he was the best at tennis. Tech must be one of the few fields where someone believes that they are good at everything just because they made it.
This raises such an interesting question, how much of the wealthiest individuals wealth is due to skill, and how much is because in an unequal system there has to be someone at the most wealthiest point.
I think it's an interesting thought, I'm not sure I have a hot take here or anything. The likes of Jeff Bezos and Elon Musk are clearly good at amassing wealth (and interested in amassing wealth) but I suspect a lot less is attributable to skill than many would think.
So bezos’ parents were in a position to fund him to the tune of hundreds of thousands of dollars, Enron musks dad owns mines, bill gates mom was on the IBM board. It very much has little to do with skill.
I think that's pretty much true- it's worth saying there are other people who have the insane privilege of the three you mentioned who aren't some of the wealthiest people in the world, so there's some kind of explanation needed aside from just privilege, even if that's just "luck".
"Closer" in what sense? Does Elon Musk have a markedly more lavish lifestyle than them? Is his retirement safer? How many politicians are campaigning on investigating, regulating and prosecuting the hundred-millionaires? Do media run scare stories about the drug use and sexual promiscuity of the hundred-millionaires, suggesting that they have children from too many partners?
If we taxed him a little more i might be able to afford a tiny violin to play to mourn his unfair treatment
If you’re saying he doesn’t, that’s a really strong argument for redistribution then, isn’t it? If he don’t need it, let’s spread the love around. And spare me the job creation story.
He doesn't have a markedly more lavish lifestyle than the hundred-millionaires, but I don't want to live in a country where the government takes stuff that it (or some majority) decides the current owners don't need, and you shouldn't want to either. I think the US and world are better off with Elon Musk in control of those companies, and with those companies having lots of capital to work with. A side effect of people agreeing with me (although I'm not invested in those companies directly) is that his paper wealth is huge.
So, no, I don't think "he doesn't act like he needs it" is at all a good argument for redistribution.
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> Most people here probably have around $5-10M in assets given we’re mostly in tech
Nothing against you OP but this the perfect highlight how out of touch HN can be from the reality.
Yeah. In my circle, everyone using HN is worth at least $25-35M. Liquid.
Except for one guy, but he's 16 and will probably be the richest on paper once his AI agent startup's pre-Seed Series Z closes.
You guys must not have a lot of years of experience? My friends groups have a few hundred million dollars each (the junior developers are in the lower hundreds)
We're older. We missed out on the AI boom and the really juicy stock grants. Throw in toys that depreciate in value, tuition for the kids, a couple divorces/trophy wives, etc. and the money goes fast. It's amazing we have anything left at all!
Stepping outside and travelling really gives you a perspective on how much of a bubble online forums are.
Even hearing from others on this forum helps! Sounds like most people haven’t been nearly as lucky-heavy fortunate as folks in irl circles. Very eye opening, and I appreciate everyone’s anecdotes.
I thought this was a setup to a joke when I read it.
> Most people here probably have around $5-10M in assets
There is no way this is true. FAANG pays well, but that is still an eye popping amount of wealth unless you're an executive or absolute top-echelon engineer.
Yeah talk about out of touch, does OP have that much? I’ve been in tech for 10 years, don’t have anywhere close to 5 million.
> I’ve been in tech for 10 years, don’t have anywhere close to 5 million.
You're doing it wrong!
You're out of touch if you think that's any sort of realistic answer.
I guess it depends on how old you are.
> Most people here probably have around $5-10M in assets given we’re mostly in tech
Even in a SV world I'm trying to get my head around the logical leap that gets you to this number. Median comp in SV is <500k - that's 20 years in the business to earn $10m ignoring taxes & your actual living expenditure. Obviously we can jump that with equity, but that's still not moving the dial far enough for the "majority" to be up at those heights.
I don't see how we're getting anywhere near these figures without generational wealth (assume this is the answer).
If you're saving 100k per annum and getting a 10% ROI, 20 years brings you to 6.3m.
Obviously even in SV "most people" have not already finished doing this.
Definitely not salary. But over the past ten years GOOG has 8x in value, for example.
That's ignoring taxes, too. Real take home for a single filer earning 500k in SF is ~$282k. Take out another $48k for median-ish SF rent ($4k*12) and that "$500k" is already south of 250 before most of your bills are accounted for.
Most people in the US would be delighted to have over $200k of gross income, much less after paying for taxes and housing. Your argument seems to suggest that those developers should also be very happy with their incomes.
The argument isn't that they're unhappy, it's that most of them are not decamillionaires, despite what the GP I was responding to seemed to believe. Post I was responding do originally implied that earning 500k for 20 years was enough to make someone a decamillionaire, but edited to account for taxes and cost of living now.
Yup, exactly.
Overall I was attempting to be as generous in my post as possible - I think median software engineering incomes in SV are actually a lot closer to 250k pre-tax, & 20 yoe is far from the median experience level.
I'd be surprised if most SV engineers are even millionaires, & even if they are, the gap from 1m to 2m is not trivial, nevermind 5-10.
> Most people here probably have around $5-10M in assets given we’re mostly in tech.
Maybe if you are in SV. I know this post is about the US but tech in EU definitely doesn’t put you in the 10m€ bracket
Yes, salaries in the EU are generally pretty bad, and then you have high taxes on top. That's a good reason for why I left the place.
(Though to Singapore, not to the US. Salaries are higher than in the EU (though less than in SV), taxes are a lot lower than in either. Quality of life is higher than in the US for me.)
Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
(Or as more likely, you've been in SV since Apple was a twinkle in the garage and your house is worth north of $5m.)
For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Anyway, off to buy some $10 bananas.
> For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
This is all getting more annoying with capital gains taxes (and inflation, since capital gains taxes are usually levied on nominal gains).
I moved to a place with simpler taxes, including no capital gains taxes.
> If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Depends on how much you want to live off.
> Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
I don't think the original commenter was talking about juniors who just started?
Although looking at Levels.fyi, salaries in London are significantly more than Singapore, and that's with the CoL apparently being higher in Singapore.
You need to look at net salaries after taxes. And for CoL it depends on what your consumption basket is. My cost of living would be higher in London. (I lived in both places.) I don't drive, I don't smoke, I use public transport a lot, and I pay for household help. I do drink beer, which is expensive in Singapore, but it's a small part of my overall budget.
I save a lot of money on 0% capital gains taxes here.
I regularly check London jobs and interview for them, but the numbers haven't made sense so far.
Nowhere BUT the US puts you in that bracket.
"before i joined FAANG i was poor"
I dont think that's in the books for everyone
> Most people here probably have around $5-10M in assets given we’re mostly in tech
Some European making 3k/month net probably wept reading this.
I think your comment strikes at an issue that everyone feels but is hard to articulate - there's true poverty (Appalachia, say) and then there's "working-class poor" which you can try to define but nearly everyone puts themselves into it. Perhaps a better term is "paycheck to paycheck" - by almost any measure, anyone gainfully employed in the USA is rich beyond the world's wildest dreams - but telling a family making $40k a year that they make more than 90% of the world doesn't help.
"by almost any measure, anyone gainfully employed in the USA is rich beyond the world's wildest dreams"
I'm not sure your mental model holds. A lot of Europe has higher standards of living than the USA. And a lot of Asian countries have made huge strides in the last few decades. Also consider the difference between Mississippi and Massachusetts. I wouldn't say that anyone gainfully employed in Mississippi is "rich beyond the world's wildest dreams".
No idea how accurate their numbers are, but the "median income of the world" is something like $10-12k https://www.zippia.com/advice/average-income-worldwide/
Which even "poorest in Mississippi" is above - but that factoid is entirely useless to basically everyone, and frankly insulting to our poor family in Mississippi.
I have a box full of cables, that's what I have.
Me too! Actually a few :)
An awful take from someone who clearly hasn’t studied California itself.
Around 17% of CA residents live below the poverty line, which means MILLIONS of adults that are not students. Elderly are a significant chunk of that number.
https://www.ppic.org/publication/poverty-in-california/
https://calbudgetcenter.org/resources/young-californians-fac...
If someone works for 50 years, and earns 100'000$ per year, he will have 5 million dollars at the end.
If he manages to not spend anything, like on housing, or food.
Not sure about that "most people here". Maybe in SV? Not in Europe.
If I were to liquidate my whole existence, I'd probably end up at maybe 300k€? Maybe? And that is already rather high up here in Germany.
Alas, yes, salaries in Germany are pretty bad.
It does - in truly german fashion - make one wonder how efficient that SV machine is.
The ratio of getting shit done per dollar seems a bit low. Even with Germany continuing to be.. uh.. not exactly on top of its game.
This really only applies to certain class of SV people who've ridden the tech wave by arriving at the correct time.
I'm not sure it applies to SV either. Like definitely some, but not even most.
I’m in NYC and I don’t make that kind of money.
> Most people here probably have around $5-10M
I expect most people here to certainly be nowhere near that.
> Most people here probably have around $5-10M in assets given we’re mostly in tech.
You would be surprised. Not only because, as you point out, recent graduates often have a negative net worth, but also because people tend to increase their spending in lockstep with their income.
Saving millions takes the intersection of multiple factors: sufficient disposable income, prioritizing investing over lifestyle, long-term discipline to stick to the plan, and luck to keep it all going smoothly.
>Most people here probably have around $5-10M in assets given we’re mostly in tech.
In yen perhaps.
If not yen I for sure have that in Iranian currency I guess
Jaw dropping that you would think that, even in SV. Many people in tech are losing their jobs to AI, many cannot afford a home.
You're looking at the tower above but maybe you should look at the valley below.
Well, this was discovered long time ago, by Vilfredo Pareto, this is exemplification of his 90/10 rule. Having said that... We should be more honest here when we talk about wealth.
If one asks "how much, say, Elon Musk, is worth" we see some crazy numbers with kirjillions of zeros. But those are not "his" money, this is how much his companies are estimated to have. Yes, he has large personal fortune, but it is nowhere near those huge billions of billions amounts.
Second, staying with Elon example, his companies are paying people and other companies that pay people, so there is huge army of people who have food in the fridge because of Elon Musk (I've seen some estimates around ~1 million people overall). Again, they are nowhere near to be as wealthy as Elon, but still, they have a decent live thanks to his companies.
It’s not about “cash at hand”, it’s about who owns “stuff”. In days past people knew that the aristocracy owned them, their families, the land they work, and the output of their work by a God given right flowing from the anointed King. It was easy to see too - those people living in palaces up the hill owned everything, you owned nothing.
It’s more hidden now. We all have rights and freedoms and whatnot. But there are still people who “own stuff”, and people who don’t. With shades of gray in between those two extremes. It’s good to be cognizant of the system you inhabit relative to what has existed throughout history so you can make good decisions and position yourself accordingly.
Don’t do the First Name Last Name thing and then get the ratio wrong.
> this is how much his companies are estimated to have
Not even ‘to have’, just ‘to be worth, if all of their shares could be sold at the price of the recent ones’. It’s a number only loosely (albeit obviously positively) correlated with actual spending power.
I used to buy this sort of arguments, but then saw him fork $45B to buy Twitter, on demand, so...
> his companies are paying people and other companies that pay people
Yes, his companies, not him. He's not doing much, except distracting part of his workforce to work on vanity projects such as flying cars or mile-long vaccuum tubes, or spending some of his vast wealth to buy politicians that will further the cause of wealth inequality. Get rid of him, and the system works much better for everyone. Him and others like him.
Elons ownership of those companies is not what puts food in people's fridges, nor is that amount of power concentration a natural, good or even defensible thing.
The whole point is that he shouldn't be able to exert autocratic control over large swathes of the economy and control that many people's lives.
this is such a tired argument, we'd probably be better off splitting musk into a million millionaires than having it all bottlenecked into one person
But millionaires only but nice houses and maybe a nice car or two, and send their kids to a nice college. Billionaires invest in companies that create many jobs. Maybe you can argue the houses and colleges create even more jobs, idk.
We've never had this many billionaires, and they've never been this rich. So following your logic, the country should be more prosperous than ever, right?
The US is more prosperous than ever, if you look at the data (inflation-adjusted, median income, for example). But people hate inflation, and so the vibes are that we're not.
The prosperity is NOT evenly distributed, or even distrusted in a shape that follows historical precedent (until you start looking at the gilded age, which was quite problematic!) mid 20th century America had a very healthy middle class that is now rapidly dwindling. Ironically this is often the time period people refer to as "great" but decry the tax policies that made it possible.
The average person (you and me) are much more productive, but have actually lost our share of wages relative to our productivity compared to our parents and grandparents. That extra production we're doing is almost entirely captured by the top 1% of the population, it's literally been taken away from us.
And contrary to our "billionares create jobs" friends, what billionaires do by and large is hoard wealth and power of a scale most people can't even begin to grasp.
We are almost indisputably the most prosperous ever, especially if you index against countries who have taken the approach of preventing or punishing success (UK, France).
this is a very weird perspective that you haven't done even cursory math on, if we're talking a million millionaires... that's a million houses, two million cars, a million tuitions...
has elon musk made it possible for a million people to own houses, cars, and pay tuition? no! does he own multiple houses, cars, private jets, yachts, and other bullshit himself? yes!
he employs maybe 200k people directly? likely a lot less... so we're not even talking quarter of the same economic benefit reach
he also wielded his wealth as power to dismantle government systems single-handedly that lost many people jobs and didn't even scratch the surface of the country's debt
people really need to start thinking critically about billionaires, they are not doing anything for you personally
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Splitting Musk into a million pieces? That's certainly an idea.
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But how can we tease people and instill them hate if we're being reasonable with arguments?
If you don't accept this particular argument then there are plenty more. This one is just quick and easy to convey.
There are very solid arguments backing up the same general points that require time to communicate and require good faith attempts to understand from the other party. But you probably don't want those either.
Now a chart with the value created. 90% of people also don't create any value, that's the thing.
"Value creator" .. You truly don't get it either. People like this are just aggregators. That's it. Magnet. They attract stupidity and power and money, and once they have it, the gravity takes over. That's all it ever was.
They're not "value creators". They're human beings that were given immense opportunities, disproportionately available avenues of luck, and happened to be able to find people to do their labor for them on the backs of the needs of the world.
What the ever living hell do you think the "90% of people" are doing? They're feeding each other and selling houses to each other and stocking shelves for each other because they have to because their labor and money is being stolen from them by this stupid abstraction that they are are "value creators".
Ugh.
How would you define value creation?
> 90% of people also don't create any value
Isn't it weird that the people that don't create value are also the people with all the money, though?
>the top 0.1% is richer than the 99.9%
Outstanding observation.
This is shorthand for “the total wealth of the richest 0.1% of the population is greater than the total for the remaining 99.9%”, rather than the trivial “the individual wealth of each member of the richest 0.1% of the population is greater than that of each member of the remaining 99.9%”.
I would flatly reject the idea that a just-graduated neurologist with a negative net worth due to loans is “poor”.
Wealth being the integration of gains - consumption over time makes it a poor metric for looking at society as a whole.
Something like 50% of Americans will be millionaires at some point in their lives—upper quintile per this chart, typically later in their earnings years. Almost all of them started “poor” as young adults, per this chart’s definition.
I don't disagree with you. Obviously a doctor can bring in a lot of money. In the same a stock can be valued as the sum all future cash flows w/ a discounted cash flow analysis, a doctor's future income can have a quite high valuation.
That being said, one accident or illness that strips away that doctor's ability to earn, leaving them in a soul crushing amount of debt that can't be discharged via bankruptcy. Their debt obligations are real.
I have, and will always have, a simple rule when evaluating job offers: can I pay my mortgage with that today? No one is feeding your broke neurologist based on future returns.
With this kind of wealth distribution, there's no point doing any job which services regular people. Everyone should become an informant, bodyguard, lobbyist or propagandist for a rich person. That's going to be the only kind of job that pays in the future.
Look at that last bar; consider just the annual yield or interest payment on that wealth; soon, it's going to be more than all other bars combined. If people understood the situation, they would all stop working and start making lists of who these people are and work for them. That's the only logical (legal) thing to do. Every other job or career is a waste of time.
What do you think is happening right now? Where did that wealth come from? We are already all working for them.
>> Where did that wealth come from?
Clearly, the money printers. How else could there be such an enormous gap between those last two bars?
I think it is already way bigger than the other bars combined right?
Yes but I'm thinking about just the yield on that last bar.
Given that the Shiller P/E ratio is now 40 (under 3% of the value of the assets), the yield is actually a pretty small fraction of that last bar... but even then, I'm saying one year's yield could exceed the worth of all the others if things continue.
But IMO, it's already the case that the economy is centered around the free money/proceeds received by top 0.1%. This is why we saw all that nonsense with COVID, DEI, Wokeism, etc... This is what happens when a small number of elites decide to spend a bit of 'spare change' on politics and social activism. Imagine how bad it's going to get after that wealth has compounded in 10 years...
We already do work for them. They're the ones who own all the corporations.
That's what most corporate jobs are . Us just working for the oligarchs.
Do you also flat out reject the idea that it is raining because there will be sun later?
I reject that we should craft tax policy on the idea that young people with significant human capital and low current wealth are “poor”!
Who is suggesting to tax the human capital of these people?
Tears fell through my eyes.
Certain people think wealth inequality is bad. Maybe that is the wrong way to look at it. Just look at all that opportunity.
Are you suggesting we rob people?
Opportunity doesn't pay my bills.
Democracy working as intended: people keep voting freely, people keep getting what they want.
“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” -- H.L. Mencken
Shoot yourself in the head or cut your wrists with a knife?
Those are your choices. Choose freely!
Is the US two party system democracy working as intended?
We don't actually live in a representative democracy, we live in a constitutional republic — with things like caps on representatives, the electoral college and gerrymandering, your vote is likely worth a lot less than someone's vote in Ohio or Alaska.
Calling the USA a democracy when you don't even have a right to get a work permit to actually vote is insane.
not democracy, but capitalism
I’m not a one-percenter and my life is great. I don’t even understand why anyone cares about equality. The point is a rising standard of life. Equality isn’t anywhere near my top objectives. Pareto-optimal trades are good. Adding an implicit objective to minimize abs(w_i - w_j) makes many win-win things impossible.
The coordination win that came from “thou shalt not covet” is substantial and we forget it at our own peril.
You should care about equality because inequality tends to make places worse for everybody. Yes that includes those rich people. You can't go to the beach because it's all built full with private resorts. Those rich people can't walk the street and have to live in walled villa's for fear of crime. They also can't easily get married to who they want because they have to hold their assets. Vietnam is poorer than South Africa per capita, but significantly safer and more pleasurable to live. Would you rather be top 10% in South Africa or Vietnam?
What is interesting is that this was true centuries ago too. Life as a noble in the middle ages was stressful as hell and you couldn't even decide on your own lovelife. Read Seneca and the first thing he writes is that Augustus (whom he knew personally) was constantly complaining about his busy life and dreaming of a retirement that never arrived.
Rank order of income inequality (and coincidentally wealth inequality): South Africa > US > Vietnam
Rank order of preference to be top 10% in for me: US > Vietnam > South Africa
So your method does not disabuse me of my belief. It’s quite clear that equality has not made Vietnam more desirable than the US. In fact, there are some 400k foreign born in Vietnam (<1%) vs the US having 15% foreign born (a stark enough difference made worse by forcing foreign-born to be from non-neighbors). So I must reasonably conclude that my rank order is likely shared by others and that others too are not, in fact, lured by equality.
There is an old immortal tweet: cars have windows and go; houses have windows and don’t go; so it’s not the windows that make things go.
If inequality were as critical we’d expect a perfect rank ordering of distant migrant population attempts matching it. The numbers are so vastly different that one cannot conclude equality is of great importance to most.
Inequality by itself doesn't cause bad safety. the following countries have a higher share of wealth controlled by the top 10% than vietnam and also a lower homicide rate: singapore, uae, switzerland, sweden, qatar. that's just off a very quick search i'm sure there are more. Certainly in none of those countries are people hunkering down in private fortified castles for fear of stepping out in public.
This is about wealth inequality, i.e. how far the scale is leaning. This has, as the website explains, some funny effects: looking from the top, you are effectively starving the people that pay you and your descendands. That might work for a few years, but if everyone's hungry it's gonna be heads on pikes no matter how many bunkers you build and how much you pay for personal protection.
>The point is a rising standard of life.
You or the farmer you buy food from competes for farmland with Bil Gates. You or the one providing your house builder with wood competes for lumber forest with Alex Karp.
The list goes on and on.
It appears trough technological innovation the standards of life rise in many ways but trough innequality it can affect the standards/ affordability of our basic needs.
EMA food prices in number of hours of work required to sustain oneself and they have fallen for half a century. Bill Gates has not only been alive for the entirety of that period but he has been leading Microsoft for the majority of it. If this is how the list is (and I’m simply going to judge it by its first element) then it seems to provide stronger evidence against equality being a prime goal, considering wealth equality has dropped during that period.
Yes and yields have gone up, etc.
I'm not going to point at bill gates buying and leasing out loads farmland and attribute to it new corn strains, better pesticides and higher feed conversion chicken breeds.
You may as well be calling for soviet style state controll the way consolidation, top down ownership is and competition mechanics are dismissed or praised depending on the standpoint.
If Bill Gates offers megamoney for farmland, and Alex Karp offers megamoney for lumber, then it encourages the creation of more farmland and lumber.
You got it backwards. Bill Gates and Alex Karp don’t pay megamoney for lumber or farm land. They consume a bit more than the average person, but not by the same %age as they are richer.
But everyone else can’t afford basic necessities or furniture anymore. And so being a farmer or a woodworker or whatever becomes a less attractive job, less people will do it, and you will have a harder time finding someone fixing your plumbing. Or pay a premium.
Instead, the ultra-wealthy are demanding extreme luxury, and so a would-be farmer is now a hotel page boy carrying around some rich dudes’ luggage, hoping for a tip.
Just to be sure. Are you being sarcastic?
Bill Gates buys huge amounts of land precisely for ecology: Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils. All ecologists agree that beef/red meat should disappear from our plates if we want to overcrowd the Earth with more equal people, and along with erradicating a hugely deathly disease that is malaria during his lifetime, Bill Gates will also have accomplished that dream too.
I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself.
>Bill Gates buys huge amounts of land precisely for ecology
Yes and he was gonna give a vast share of his wealth away for the good of the many over 5 years and then tripled it. woops. Let us not pretend farmland has not been a good investment in those parts. Let us be honest. Almost every such good thing he does is a tax credit which polishes his image and legacy. He was a pretty cutroath businessman and there's no reason for me to now paint him with some saintly image.
>Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils.
I can get behind the idea that beef has a bigger carbon footprint due to the fossil fuel fertilisers used to grow their feed as compared to the conversion ratio freaks that modern meat chicken breeds are. The fact that the methane from their farts is somehow the long term issue I however reject. And I'd like to point out that without much of both that excrement and fossil fuel based fertiliser we have a famine on our hands so 'overcrowd the Earth with more equal people' doesn't seem like such a fine coherent goal.
>I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself
Explain to me why do you presume I am "his audience".
Almost every such good thing he does is a tax credit which polishes his image and legacy. He was a pretty cutroath businessman and there's no reason for me to now paint him with some saintly image.
Bill Gates has had a major role in more than 120 million extremely poor children not dying of horrible diseases in some of the most destitute places on earth.
But he bundled a browser with his OS thirty years ago, so fuck all that, right?
Then I guess billionaires really should pay less taxes unlike us plebs since they're so much better at picking out and solving the wrongs of the world. It is good that Microsoft was bribing some african governments because clearly they could use the money so much better saving them from themselves by redirecting that income to the global fund (and tax credits) Perhaps we should incentivise his veiled land purchases for the common good since on thing obviously absolves of another.
BTW just since you use it for the rethoric. Can I also point out how that major role in 120 million children (by their own estimation and 40mil since 2000 on some other own estimation) includes the work of everyone else donating to, remotely involved with or working in line with his organisation. You know including my tax money going to the the vaccination drives of Gavi, the WHO, UNICEF, etc It seems to miss the bit where bill himself attributed the vast majority of such global health and development funding to donor nations.
You think we could get a tax credit for our major role in that?
People care about equality because the absence of it is inequality, and that leads to political control. Even if you live a good life today, it is not guaranteed. Democracy, human rights, all can be eroded if everyone ignores politics and the economy.
If you are trying to buy some place to live, it doesn't just matter how much money you have, it also matters if there are lots of people many times wealthier than you bidding for the same realestate.
More money doesn't create more things to buy or more people making things, its just means more money competing for the same things to buy. Other people having more does diminish your share, of the cake. Yes, we can make the cake larger, but the best way to do that is for more people to get more opportunity to fulfil their potential, by getting a reasonable share to do so.
Wealth imbalances are bad largely because many assets have upper limits on available quantity, ie. the amount of land in most countries is relatively stable. If those assets are hoarded by a relatively small number of people, it's much harder for less wealthy people to become more wealthy. Our entire socioeconomic system is based on the premise that one can work hard and change their lot, so making sure that's actually possible is important for societal stability even if you don't have any religous/moral/ethical qualms about hoarding wealth.
First the premise of our socioeconomic system. I disagree entirely. Our system is premised on the thesis that if you are useful to others, they are willing to reward you for the utility you bring them; and that it is advantageous for us collectively to preserve a rule of law whereby people might interact safely in this way.
One might work hard and fail or one might work lightly and succeed. Bulletball guy certainly worked a lot harder than many product managers I know.
Now the question of assets of limited supply. That’s sound. But that’s a distribution of assets of limited supply problem. It is entirely possible to have great wealth inequality with low land ownership concentration - in the US 67% of people live in owner-occupied housing. Scotland has much higher land ownership concentration - but lower wealth inequality.
So fixed supply asset concentration can exist without wealth inequality - which, to be clear, is the form of inequality I was talking about considering the original post is about it.
You’re probably not one paycheck away from homelessness, and probably have the protection of the legal system provided you don’t upset the wrong people.
But you’re probably one health scare away from it, you just don’t realize it.
Three good reasons to care about inequality itself:
1. Outsized political influence (in theory can be mitigated by laws controlling corporate spending, but obviously those laws themselves are subject to manipulation by the rich and powerful)
2. Distortion in who the economy serves. The beauty of capitalism is that it's a problem-detection and problem-solving system. If a narrow set of people have a huge portion of money, the economy becomes unduly optimized toward satisfying their wants and needs.
3. Despite best efforts, we ultimately must share a lot of the same commons. Even being a billionaire in NYC or San Francisco can't really give you a walk to work or your child's school that feels as safe as it does in a more equal society that takes better care of its unwell and poor.
All 3 points can be blamed on primarily on your govt, not on someone being rich. Even when the rich influence the govt, it's the govt to blame. Aren't they supposed to protect you? Govt, for the people, by the people etc...
The conversation about "why should I care about this" is a conversation about "should anything be done about this." The mechanism by which one would "do anything" about this is called government. So sure.
Thank you for sharing your insight.
Do you care about concentration of power in a single person or single family? What happens when you have conflict with someone who has orders of magnitude more purchasing power than you? Do you think it's good or bad for the social order or democracy if one individual is able to exert more power than an entire city or state just based on inherited wealth?
Quality of life is going down my friend.
Retirement age keeps increasing, public healthcare keep getting defunded. My tax money is getting used to enrich war mongers and my cost of life keeps increasing as a result of all of that.
Also my constitutional rights are ignored daily.
You understand why I might not be feeling very happy that YOU are doing great?
Volunteer at a soup kitchen or a food bank near you.
> my life is great. I don’t even understand why anyone cares about equality
Who do you want to educate from that position? You or others?
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They’re inextricably linked. The ceiling is being raised by people at the top pillaging from people at the bottom. Sure, in a vacuum, raising the floor without regard for the ceiling might work but in the real world it does not. Capitalists choose to believe that the floor today is better than the floor 20 years ago because even poor people have iPhones but when you look at the actual life people lead, it is getting worse.
If anything, “raising the floor” is the Trojan horse.
Your perspective though depends on thinking the economy/money/whatever is a zero sum game, and if a person's wealth goes up, they must have taken it from somewhere else. In general, wealth is generated by growing the economy.
This isn't to say I don't think some companies/individuals/shareholders have absolutely taken the piss compared to wage earners.
Nice way to put it.
>I don’t even understand why anyone cares about equality.
Because most people are (IMO wrongfully) jealous of the rich. They have a problem with the rich even if it's legitimately earned wealth.
All I want is that a rich person can't strongly direct the government to do things like idk start wars because they happen to own an intelligence/arms manufacturing company or control how food is regulated so their pocketbook grows bigger at the expense of the health of the country and the taxpayer.
I'm not sure why people push this false narrative around jealousy. Well, I could speculate, but that likely wouldn't be helpful.
I have no desire to be rich, certainly not as rich as the far right 1% column. I find that level of wealth nauseating and embarrassing. But regardless, "legitimately earned wealth" is doing a lot of work in that last sentence. Perhaps (doubtful) it's possible to earn that much while being legally legitimate, although that speaks more to how fucked up our system is than anything else, but certainly not possible to do so in a morally legitimate way.
What counts as morally legitimate?
That's for each person to decide on their own.
I'd much rather everyone think deeply about this question than merely hope we all come to the same conclusion.
You said it's "certainly not possible to do so" so I'm curious as to what counts by your view. The way you said it implies that other people must necessarily reach a conclusion that largely agrees with you.
> They have a problem with the rich
Would you be ok to live in a democracy where your vote goes into the garbage bin instead of the voting box? Because that's where it goes if you aren't rich.