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Taxing Wealth instead of Income

 
weird buffalo
 
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weird buffalo
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20 November 2020 13:48
 

This is already a problem, so it cannot be a problem created by a wealth tax.

You guys seem to be taking the topic and asking “what is the difference between a good tax system and a bad tax system?”

That’s not the question I asked.

 
weird buffalo
 
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weird buffalo
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20 November 2020 13:48
 

double

 
Jefe
 
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Jefe
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20 November 2020 14:09
 
weird buffalo - 20 November 2020 01:48 PM

This is already a problem, so it cannot be a problem created by a wealth tax.

You guys seem to be taking the topic and asking “what is the difference between a good tax system and a bad tax system?”

That’s not the question I asked.

It’s already a problem so it should be considered. If we’re considering system changes, it behooves us to consider how those system changes might improve or help eliminate some of the issues within our current system.  That was my point.

 
 
Poldano
 
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Poldano
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20 November 2020 23:20
 
weird buffalo - 20 November 2020 06:25 AM
Poldano - 20 November 2020 12:24 AM
weird buffalo - 19 November 2020 02:09 PM

Another line of investigation that occurred to me: automation.

Taxing income and encouraging the acquisition of capital pushes companies towards automating their work force.  As long as automated machines are less expensive on income, the economic forces encourages those who own wealth to exclude the working class from the process.  Why pay workers for their labor if you can just own machines that can do that same work?

On the flip side, if ownership of capital is taxed directly, it encourages people to hire workers instead of purchasing machines.

I think the quantities of the various expenses matter a great deal. Any tax on the value of automating machinery would be added to the cost of capital, which already includes amounts for depreciation, maintenance, and the like. If that exceeds the costs associated with human employees, on the basis of comparative productivity, then human labor is more likely to be preferred. If not, then machines will be preferred.

There are also various schemes, already in use for other kinds of property, to minimize the impact of any wealth tax on machinery. Leasing is one of them. If the machinery is actually owned by an offshore concern, then I assume the owner would not be subject to U.S. wealth tax. My assumption is based on my further assumption that a wealth tax on wealth outside the U.S. would be largely unenforceable. This is of course a very basic analysis; situations like these get very complicated very quickly when the legal arms race between taxers and taxpayers (more properly, avoiders) gets started.

I’ve already addressed your argument from complexity as irrelevant.  I’ll explain it again… maybe some day you’ll figure out what I’m saying.

1) An argument based on complexity is one of difficulty of implementation.  Since I’ve already agreed that we aren’t implementing the tax… it’s irrelevant.
2) If an idea is a good idea and useful, then it doesn’t matter how difficult it is to implement.  For example, if curing cancer is useful, then it doesn’t matter how difficult it is to do, we should try to do it.  So arguing that it is too complex is again… irrelevant.
3) It’s boring.  You’re trying to have a discussion about how a tax code is written.  Are you an expert on tax law?  If so, I’m guessing you would have opened with that in your first post in this thread.  Guess what?  I’m not an expert on tax law either.  So, a discussion about the minutia of a hypothetical tax law is boring and stupid… thus also making it irrelevant to our discussion.

You did briefly attempt to address my point in your first paragraph… except you didn’t.  “As long as costs are higher” essentially was your argument… which is my point.  A wealth tax on machines would… increase the costs of machines.  Thus making it more attractive to hire employees.  Leasing would be ineffective, since someone would still own the machines, and thus be liable for their tax burden of ownership.  If both the leasor and leasee were under the wealth cap, that would mean they’re small businesses and of no concern for our tax.

I’m all for some criticism of my idea… but I couldn’t care less about these nitpicky ones.  They’re essentially meaningless to the overall idea of whether an income or wealth tax is better for a capitalistic society.

First, let me clarify my first paragraph by adding a summary I should have thought of: Ultimately, whether machinery is taxed based on its purchase value (wealth tax) or by its productivity (income tax) will make little to no difference. A wealth tax just might incline owners to scrap or sell machinery that is not producing efficiently enough, or to do so sooner than with an income tax, but from my experience businesses are already quite eager to dispose of comparaiively unproductive assets, whether they be mechanical or human.

Second, you’ll probably only get nitpicky criticisms from me, especially on this topic. I’m a believer in the adage, The devil is in the details. I’ve already said several times that I don’t think the tax basis makes a lot of difference to those who want to acquire and hold onto wealth. One of the differences between the two bases is the cost of enforcement, which affects the revenue obtained from the tax. If the tax exists for purposes of raising revenue, then the cost of enforcement matters a great deal, and complexity becomes a practical issue no matter how much you try to get it removed from the discussions. If the tax exists for purposes of reducing the wealth of the most wealthy, then cost and complexity may indeed not matter very much as long as the cost of enforcement does not exceed the wealth drained. I’ve previously expressed skepticism that any tax could achieve that goal without being equivalent to outright confiscation, because many of the most wealthy are wealthy specifically because they are clever at finding ways to obfuscate wealth.

 
 
mapadofu
 
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mapadofu
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21 November 2020 05:50
 

You deciding which ones are “nitpicky” means you get to cherry pick what you respond to.  If you want to fully explore an idea, then fully explore all of the details.

 
weird buffalo
 
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21 November 2020 08:44
 
Poldano - 20 November 2020 11:20 PM

Second, you’ll probably only get nitpicky criticisms from me, especially on this topic. I’m a believer in the adage, The devil is in the details. I’ve already said several times that I don’t think the tax basis makes a lot of difference to those who want to acquire and hold onto wealth. One of the differences between the two bases is the cost of enforcement, which affects the revenue obtained from the tax. If the tax exists for purposes of raising revenue, then the cost of enforcement matters a great deal, and complexity becomes a practical issue no matter how much you try to get it removed from the discussions. If the tax exists for purposes of reducing the wealth of the most wealthy, then cost and complexity may indeed not matter very much as long as the cost of enforcement does not exceed the wealth drained. I’ve previously expressed skepticism that any tax could achieve that goal without being equivalent to outright confiscation, because many of the most wealthy are wealthy specifically because they are clever at finding ways to obfuscate wealth.

But the details don’t matter if it’s not a good idea in the first place.

Analogy: Is it better to get some exercise or to be sedentary?

If we were having the above discussion, what you are doing is talking about the difficulty of running a large gym for profit.  You aren’t telling me whether it’s a good idea to exercise in the first place, but are focusing instead on the cost and maintenance of exercise equipment.  You are talking about the difficulty of maintaining a public pools chemistry.  You are going completely beyond the question in a way that fundamentally ignores the question.

 
weird buffalo
 
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21 November 2020 08:46
 
mapadofu - 21 November 2020 05:50 AM

You deciding which ones are “nitpicky” means you get to cherry pick what you respond to.  If you want to fully explore an idea, then fully explore all of the details.

The “nitpicky” details only matter if the idea is actually implemented.  They don’t tell us if the idea is fundamentally sound in the first place.  See above post about evaluating whether exercise is good for human bodies versus the nitpicky details of public pool chemistry.

Another analogy for you: should we be designing electric cars?

The answer to that question is not to go into details about how tires and roads work.  Because all cars have tires, and all cars drive on roads.  So, answer the question “should we be designing electric cars” with comments about how tires and roads interact with each other tells us nothing about whether the cars using those tires and roads should be ICE or electric.  You’re right in that tires and roads are very important to how cars operate… but that is a problem that needs to be addressed regardless of the propulsion method being used, and is irrelevant to how we should be thinking about propulsion methods.

[ Edited: 21 November 2020 08:50 by weird buffalo]
 
mapadofu
 
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mapadofu
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21 November 2020 09:14
 

A wealth tax that is not implemented provides zero (neither positive nor negative) value to society.  So to the extent you want to focus on that kind of wealth tax the conclusion we can draw is obvious.  Though it’s also pretty obvious you didn’t start the topic with the intent of seriously considering ideas that others might bring up— batting them away as nitpicking details.

[ Edited: 21 November 2020 13:45 by mapadofu]
 
lynmc
 
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lynmc
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21 November 2020 15:10
 
weird buffalo - 21 November 2020 08:46 AM
mapadofu - 21 November 2020 05:50 AM

You deciding which ones are “nitpicky” means you get to cherry pick what you respond to.  If you want to fully explore an idea, then fully explore all of the details.

The “nitpicky” details only matter if the idea is actually implemented.  They don’t tell us if the idea is fundamentally sound in the first place.  See above post about evaluating whether exercise is good for human bodies versus the nitpicky details of public pool chemistry.

Another analogy for you: should we be designing electric cars?

The answer to that question is not to go into details about how tires and roads work.  Because all cars have tires, and all cars drive on roads.  So, answer the question “should we be designing electric cars” with comments about how tires and roads interact with each other tells us nothing about whether the cars using those tires and roads should be ICE or electric.  You’re right in that tires and roads are very important to how cars operate… but that is a problem that needs to be addressed regardless of the propulsion method being used, and is irrelevant to how we should be thinking about propulsion methods.

That’s one of the worst false analogies I’ve heard in a long time, comparing “nitpicky details” to wheels on cars.

The benefits of electric cars depend entirely on “nitpicky details”, e.g., if your goal is lowering negative environmental impacts, whether electric cars have a lower environmental cost than gasoline cars.

 
weird buffalo
 
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21 November 2020 21:25
 
mapadofu - 21 November 2020 09:14 AM

A wealth tax that is not implemented provides zero (neither positive nor negative) value to society.  So to the extent you want to focus on that kind of wealth tax the conclusion we can draw is obvious.  Though it’s also pretty obvious you didn’t start the topic with the intent of seriously considering ideas that others might bring up— batting them away as nitpicking details.

Yes or no, do think the outcome of this thread will be a change in US tax policy?

I think the answer is no.  We could speculate on how it should be implemented, but it would be entirely hypothetical.  It would have the real world effect of a debate on who is stronger, superman or the hulk.  If you want to have that debate… go for it.  I’m uninterested.

[ Edited: 21 November 2020 21:27 by weird buffalo]
 
Poldano
 
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22 November 2020 01:33
 

I also disagree that the details only matter if the idea is implemented (just in case it wasn’t already clear). When the idea itself is pragmatic (normative, in philosophical terminology), then the details matter from the start. Implementation of a pragmatic idea shouldn’t happen just because its goal is desirable, the implementation details need to be worked out so that it will be as effective and with the least undesirable side effects as possible before it becomes enacted. My analogy is a computer program; it should be released for shipment not because it has laudatory intent, but because it has a laudatory intent accompanied by substantial evidence that it will work and not cause problems for users.

[ Edited: 22 November 2020 01:36 by Poldano]
 
 
mapadofu
 
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22 November 2020 05:30
 
weird buffalo - 21 November 2020 09:25 PM
mapadofu - 21 November 2020 09:14 AM

A wealth tax that is not implemented provides zero (neither positive nor negative) value to society.  So to the extent you want to focus on that kind of wealth tax the conclusion we can draw is obvious.  Though it’s also pretty obvious you didn’t start the topic with the intent of seriously considering ideas that others might bring up— batting them away as nitpicking details.

Yes or no, do think the outcome of this thread will be a change in US tax policy?

I think the answer is no.  We could speculate on how it should be implemented, but it would be entirely hypothetical.  It would have the real world effect of a debate on who is stronger, superman or the hulk.  If you want to have that debate… go for it.  I’m uninterested.

Analogizing the way you’re approaching this discussion to discussing whether Superman or The Hulk is stronger is perfect.

This thread might change my mind - maybe I’d come away thinking it’s a really good idea, or hopelessly futile, or maybe get directed to some serious policy research on the topic— you know,  I could could learn or grow by being exposed to, and taking serious consideration of, other people’s insights.

 
weird buffalo
 
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22 November 2020 07:03
 
Poldano - 22 November 2020 01:33 AM

I also disagree that the details only matter if the idea is implemented (just in case it wasn’t already clear). When the idea itself is pragmatic (normative, in philosophical terminology), then the details matter from the start. Implementation of a pragmatic idea shouldn’t happen just because its goal is desirable, the implementation details need to be worked out so that it will be as effective and with the least undesirable side effects as possible before it becomes enacted. My analogy is a computer program; it should be released for shipment not because it has laudatory intent, but because it has a laudatory intent accompanied by substantial evidence that it will work and not cause problems for users.

Using the analogy of the computer program:
I am asking if the computer program should be built in the first place.
You are asking what our debugging method should be.

If we aren’t going to build the computer program, our debugging method is irrelevant.  There’s nothing to debug.  You want to START by debugging the program before there’s anything to debug.  We haven’t determined that the program should exist at all.

 
weird buffalo
 
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22 November 2020 07:08
 
mapadofu - 22 November 2020 05:30 AM
weird buffalo - 21 November 2020 09:25 PM
mapadofu - 21 November 2020 09:14 AM

A wealth tax that is not implemented provides zero (neither positive nor negative) value to society.  So to the extent you want to focus on that kind of wealth tax the conclusion we can draw is obvious.  Though it’s also pretty obvious you didn’t start the topic with the intent of seriously considering ideas that others might bring up— batting them away as nitpicking details.

Yes or no, do think the outcome of this thread will be a change in US tax policy?

I think the answer is no.  We could speculate on how it should be implemented, but it would be entirely hypothetical.  It would have the real world effect of a debate on who is stronger, superman or the hulk.  If you want to have that debate… go for it.  I’m uninterested.

Analogizing the way you’re approaching this discussion to discussing whether Superman or The Hulk is stronger is perfect.

This thread might change my mind - maybe I’d come away thinking it’s a really good idea, or hopelessly futile, or maybe get directed to some serious policy research on the topic— you know,  I could could learn or grow by being exposed to, and taking serious consideration of, other people’s insights.

The insights so far don’t tell me if the core idea is worthy of implementation.  I’m not necessarily convinced that a wealth tax is the way to go either, but I am questioning it’s existence, not its implementation.  Is it a worthwhile thing that should exist (and therefore we should be concerned with how it is implemented), or is it a useless idea to begin with.  Does the idea itself have merit?

If I asked you “should we research a cure for cancer”?  Would you respond about the core idea, or would you start by considering how difficult it would be?  Would the idea of curing cancer being difficult change your mind on the overall value of doing so?

And this gets to the other aspect… if it is a worthwhile idea… then dealing with difficulty of implementation is worth the effort.  So again… starting off with “how difficult” doesn’t tell us if it is a worthwhile idea.  At best it tells us what bar the idea must meet to be worthy, but it doesn’t tell us if whether it is.

Is it worth the effort to get really good at basketball in order to get a scholarship or play in the NBA?  If you ONLY discuss how hard it will be to train, you will never figure out the answer.

[ Edited: 22 November 2020 07:26 by weird buffalo]
 
lynmc
 
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22 November 2020 07:53
 

Using the analogy of the gasoline vs electric car, suppose your goal is reduce environmental impacts.  Nitpicky details would be what size car, energy producing efficiency and so on.  Saying one car is electric and the other is gasoline doesn’t give any data to decide whether one should build electric cars.  Are the electric cars huge energy-guzzling hulks whereas the gasoline cars tiny, efficient ones?  What about environmental costs at the electricity producing plant, are they more or less than doing it in the gasoline engine?  What about the environmental impacts of electric batteries?  And will people buy the electric cars?

Now, you can make a claim that there is an electric car design that meets the goal of having less environmental impact and is therefore a good idea, but without some effort into answering the nitpicky details, you have no basis for answering the question.

 
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