The Left is Eating Itself Pt. II

[moda0306]

Is a "wealth tax" inherently socialist?

It is a redistribution of wealth and is socialist by definition, yes.

I do agree with your third paragraph. As someone who gets by partially on dividends, I think it is insane that they is taxed more favorably than sweat equity. It is simply unfair, and I could never be convinced otherwise.

dualstow,

But the redistribution of wealth is happening no matter what, even in a "non" wealth tax. Every other tax is re-distributive, in that it takes dollars that would otherwise be in the hands of consumers/businesses/etc and moves them to the treasury.

I think what makes the wealth tax more "socialist" is its mild focus on egalitarianism, but once again this is only marginally more socialist than high taxes in general. True "Socialism" would purge the "ownership" rights of the upper-classes, outlaw absentee ownership, and would have workers own the means of production. If I'm someone with a net-worth of $50 Million, or even a billion, that latter version of of "socialism" is millions of times more costly than "a wealth tax" as proposed by Warren.

[dualstow]

True "Socialism" would purge the "ownership" rights of the upper-classes, outlaw absentee ownership, and would have workers own the means of production.

Yup. I guess it's all a matter of degrees.

I totally agree with pug's post.
Well, oppressive taxes on business earnings are of course "disincentivizing" -- can I just say discouraging? But, punishing a household for saving as opposed to sales tax on a yacht is especially nefarious.

And, as I wrote earlier, it's not just about those with $50MM. It sets a precedent.

[Kriegsspiel]

"According to the economists who crafted the candidate’s proposal, her plan is meant to discourage the hoarding of wealth by the über-rich."

So let's take the economists (Emmanuel Saez and Gabriel Zucman, from ***Berkeley***) at face value. In the words of Craig Fugate (as quoted in Ted Koppel's book When The Lights Go Out),

Craig Fugate explained [the tools of the government], "which are extortion and bribes. Either I give you grant dollars to get you to do something you would not otherwise do, or I tax you to change behavior for what you will not otherwise do."

What are the behaviors that taxing wealth wants to change? "Hoarding" wealth, or to phrase it in a way that doesn't sound dysfunctional: "being wealthy." The wealthy are overwhelmingly wealthy because they own businesses. Not so much in the form of stocks, but businesses they own because they built them. Or they inherited businesses from their family members who built them. So when they say that the rich are "hoarding wealth" they are really saying "they own business that they built." Discouraging the "hoarding of business equity" doesn't sound like a great thing to me. It will amount to the government taxing business owners an additional 2%.



To paraphrase Steven Pinker, we shouldn't punish people for building businesses and creating wealth. Think about it, what's the natural state of the world? Poverty is what results from entropy, not wealth. Wealth isn't inevitable, it's kinda miraculous in the big scheme of things. If you read about how pretty much anyone becomes wealthy, they're creating something out of thin air. Or rather, out of entropy.

Her plan does not preclude an increase in the capital gains tax, however, or the addition of a death tax on capital gains. It is precisely these untaxed capital gains that have driven the buildup of generational wealth concentrated in the hands of a few dynastic families. link

If you look at history, clans maintained their wealth and status by not allowing their kids to marry outside the clan, or they married strategically. Since we don't do that anymore, I don't even think dynastic wealth is possible. I think the last multi-generational dynasty was the Rothschilds, and even they were the result of a quirk of Ashkenazi Jewish marriage practices in Europe and a tight-knit family structure, which have pretty much been rendered irrelevant. The multi-generational "dynastic" families here in the US aren't even really dynasties. I may be wrong, but it looks to me like each successive generation is becoming less wealthy than the last (I'm looking at families like the Waltons/Rockefellers/Morgans), instead of becoming more wealthy through capital alone, as Piketty/Saez would predict. Somewhat speculative.

---

Anyways, I think my main anxiety about these proposals is just how radical they are. No reduction in the scope of government spending, just punishing new taxes. My opinion is that small incremental changes work better than huge ones in the long run. I don't want them to execute some radical new tax plan and have crazy bad consequences as a result. And instead of trying to find more ways to extract wealth from citizens, I think they should be cutting their spending and scope.

So there's that. Come at me bros.

[moda0306]

Moda,

It seems to me that a tax like this disincentivizes production and innovation, just like 90% marginal rates do, which is what makes it so socialist. And why should you be penalized for saving? And wasn't this money already taxed once, as it was earned ? (With the exception of capital gains, which I suppose could be taxed whether or not they are realized, but then that would disincentivize capital investment, a whole other topic)

Every tax will come with potential/likely disincentives. A consumption tax will disincentivizes discretionary consumption, which is the other side of the coin of "production" and "investment" (all things produced are consumed.
All investment produces towards the end of consumption).

So taxes on economic activity (flow) or property/wealth (stock) are going to have a potential muting effect on economic activity.

It seems to me there isn't anything more inherently confiscatory by a wealth tax than a consumption tax. And if you want to debate about incentives, then this is very different than whether it's confiscatory.

[jacksonM]

There's an ongoing debate about whether or not a wealth tax would be constitutional. So I guess we can expect the next supreme court nomination battle to be even uglier than the last one.

[moda0306]

What are the behaviors that taxing wealth wants to change? "Hoarding" wealth, or to phrase it in a way that doesn't sound dysfunctional: "being wealthy." The wealthy are overwhelmingly wealthy because they own businesses. Not so much in the form of stocks, but businesses they own because they built them. Or they inherited businesses from their family members who built them. So when they say that the rich are "hoarding wealth" they are really saying "they own business that they built." Discouraging the "hoarding of business equity" doesn't sound like a great thing to me. It will amount to the government taxing business owners an additional 2%.

But the socialists don't believe they built those business because of hard work, innovation, intelligence or any thing else but privilege. Look at Obama's infamous quote, "They didn't build that."

That had to do with a bridge that wasn't built by the business owner that uses it to engage in business. As he said, "someone else made that happen."

He was not, as conservatives parrot, say that the business owner didn't build his business.

Although I will say that a "business" is built by multiple people. Employees. Vendors. Customers. The owner. And that's just the most directly-involved.

[dualstow]

Where it's feasible, I certainly like the idea of co-ops over places like Walmart.
Communism/Socialsm- all I have to say about it is, they tried it. A little welfare and protection here and there is a good thing, and I believe in some government programs. And regulation. I'm not a libertarian or anarchist, although I find that interesting.

What country has gone full socialist and really made it work?

[moda0306]

But the socialists don't believe they built those business because of hard work, innovation, intelligence or any thing else but privilege. Look at Obama's infamous quote, "They didn't build that."

That had to do with a bridge that wasn't built by the business owner that uses it to engage in business. As he said, "someone else made that happen."

He was not, as conservatives parrot, say that the business owner didn't build his business.

Although I will say that a "business" is built by multiple people. Employees. Vendors. Customers. The owner. And that's just the most directly-involved.

Except that owner takes all the risks. Capital risks, sweat equity risks, lost revenue doing something else risks. What risk do those in favor of redistribution of income take?

They don't take all of the risks. Purchasing anything you don't need comes with the risk of going broke, which means there's risks for consumers. Pollution and other externalities push risks to the surrounding community. The municipality taxpayers (all of them, not just business owners) essentially take on the risk of infrastructure being a boondogle. Employees take plenty of risks to their bodies and finances and families by "going the extra mile" for their boss. Also there is a pretty hefty amount of "Capital Risk" required to have many jobs. A well-maintained vehicle, an education, a wardrobe are a few. They also "risk loss revenue doing something else." Also I'd say that most corporations can handle a modest downturn in demand (by laying off employees) than employees can by that same adjustment. Labor has set itself up to be very exposed to layoffs, as collective bargaining (in the US) is mostly a thing of the past.

Yes the business owner deserves some for their extra risk. But the way you're posing it is a bit at odds with reality, especially if you're talking about someone with a net worth of $50 Million or more. Or income of $10 Million. Perhaps they built something. Perhaps they inherited it. Perhaps they figured out a way of adding little value while socializing costs, and gaming and exploiting systems around them to "own" and "profit" as much as possible with as little actual skin in the game as possible.

If a business owner uses our modern trade system (and the military that protects it) to exploit global labor at the lowest cost possible and appropriating as many public resources as possible, you can bet I'll sleep ok at night if they have to pay into a wealth tax system.

[moda0306]

Where it's feasible, I certainly like the idea of co-ops over places like Walmart.
Communism/Socialsm- all I have to say about it is, they tried it. A little welfare and protection here and there is a good thing, and I believe in some government programs. And regulation. I'm not a libertarian or anarchist, although I find that interesting.

What country has gone full socialist and really made it work?

It depends how you define "full socialism?"

Democratic state social democracy? (most wouldn't call this "Full Socialism")
Anarcho-syndicalist-ish "socialism" of worker cooperatives (a la Spanish Civil War era)?
Totalitarian State Communism?

I think most "true" socialists would only refer to the second as "full socialism."

I find socialist property/contract theories to be imprecise, goofy, and rife with problems.

Problem is I find capitalist ones to be similarly flawed. Just in a different way.

I probably mostly agree with the ideas that 1) more coops would be cool, and 2) welfare-state regulated capitalism is probably the "Best of both worlds."

I'm also a real sucker for Thomas Paine's ideas around citizens dividends for "the public" who IMO effectively own the land that "owners" should pay them rent for. I also think the idea of foreigners owning vast swaths of a country's natural resources is exploitative on its face and a recipe for disaster.

[Kriegsspiel]

But the socialists don't believe they built those business because of hard work, innovation, intelligence or any thing else but privilege. Look at Obama's infamous quote, "They didn't build that."

That had to do with a bridge that wasn't built by the business owner that uses it to engage in business. As he said, "someone else made that happen."

He was not, as conservatives parrot, say that the business owner didn't build his business.

I do remember that. I knew what he meant, but he sounded like a prick, the way he said it.

Although I will say that a "business" is built by multiple people. Employees. Vendors. Customers. The owner. And that's just the most directly-involved.

The person who starts the business is the first mover. Whoever owns the business deserves the profits of the business. The customers deserve the products they pay for, the vendors deserve the cash he gives them, the employees provide their services for wages. You can say they all contribute their part to "building the business," but only one of those categories deserves the profits of it.

Of course, people can start companies owned by the employees, like the British dude who's name escapes me. If they want. Or a non-profit. It seems business history shows us what the preference is; what motivates people to do it.

[moda0306]

But the socialists don't believe they built those business because of hard work, innovation, intelligence or any thing else but privilege. Look at Obama's infamous quote, "They didn't build that."

That had to do with a bridge that wasn't built by the business owner that uses it to engage in business. As he said, "someone else made that happen."

He was not, as conservatives parrot, say that the business owner didn't build his business.

I do remember that. I knew what he meant, but he sounded like a prick, the way he said it.

Although I will say that a "business" is built by multiple people. Employees. Vendors. Customers. The owner. And that's just the most directly-involved.

The person who starts the business is the first mover. Whoever owns the business deserves the profits of the business. The customers deserve the products they pay for, the vendors deserve the cash he gives them, the employees provide their services for wages. You can say they all contribute their part to "building the business," but only one of those categories deserves the profits of it.

Of course, people can start companies owned by the employees, like the British dude who's name escapes me. If they want. Or a non-profit. It seems business history shows us what the preference is; what motivates people to do it.

I would agree with you for the most part if you didn't have the following confounding factors:

- Business owners appropriating public resources then selling them back to folks for profit, rather than having to pay the public to use them.
- Business owners polluting.
- Business owners using legal constructs to sheild themselves from liability
- Business owners who use state demand or guarantees or contracts to bouey their business
- Business owners who use intellectual property laws to unfairly benefit them.
- Business owners who use our military protection to build a value chain that involves exploited foreign labor and resources
- Business owners sourcing or selling products from/to other business owners who do any of the above.
- Business owners who lie to their employees or customers about the nature of their arrangement.
- Business owners who try to monopolize their industry through legal fictions.

Also, you can say the exact same thing about any other type of taxpayer. An employee... a consumer... an exporter to the U.S... a liquor purchaser. Taxation is confiscation of money from a private citizen. No matter how this occurs, someone's being "robbed" right? There's a lot of robbing going on, and it's not all the state. Pollution is theft. Appropriating common resources is theft. Dealing in stolen goods is theft.

[moda0306]

Except that owner takes all the risks. Capital risks, sweat equity risks, lost revenue doing something else risks. What risk do those in favor of redistribution of income take?

They don't take all of the risks. Purchasing anything you don't need comes with the risk of going broke, which means there's risks for consumers. Pollution and other externalities push risks to the surrounding community. The municipality taxpayers (all of them, not just business owners) essentially take on the risk of infrastructure being a boondogle. Employees take plenty of risks to their bodies and finances and families by "going the extra mile" for their boss. Also there is a pretty hefty amount of "Capital Risk" required to have many jobs. A well-maintained vehicle, an education, a wardrobe are a few. They also "risk loss revenue doing something else." Also I'd say that most corporations can handle a modest downturn in demand (by laying off employees) than employees can by that same adjustment. Labor has set itself up to be very exposed to layoffs, as collective bargaining (in the US) is mostly a thing of the past.

Yes the business owner deserves some for their extra risk. But the way you're posing it is a bit at odds with reality, especially if you're talking about someone with a net worth of $50 Million or more. Or income of $10 Million. Perhaps they built something. Perhaps they inherited it. Perhaps they figured out a way of adding little value while socializing costs, and gaming and exploiting systems around them to "own" and "profit" as much as possible with as little actual skin in the game as possible.

If a business owner uses our modern trade system (and the military that protects it) to exploit global labor at the lowest cost possible and appropriating as many public resources as possible, you can bet I'll sleep ok at night if they have to pay into a wealth tax system.

Either you don't own your accounting firm, or don't have any employees, or both. Otherwise, you wouldn't think this way. Does the secretary at your firm deserve a cut of the profits? I mean, you might reward her with a 401k match, but how about the actual profits? Did she invest in the building, pay rent/utilities, build the business from scratch (or buy it from the previous owner), pay for/go to school ($+lost years), study for the CPA exam? If not, I would maintain she has no claim on any profits.

You were making very specific and untrue statements about the nature of risks being taken. That was what I was referring to. I didn't say his secretary deserved more than what she negotiated for in wages. I said your narrative about risk was bunk.

[dualstow]

Taxation is confiscation of money from a private citizen. No matter how this occurs, someone's being "robbed" right? There's a lot of robbing going on, and it's not all the state. Pollution is theft. Appropriating common resources is theft. Dealing in stolen goods is theft.

The thief on the street is not going to buy you a pair of socks with the money he took from your wallet, but the state, in theory at least, is supposed to pave your roads with their takings.

"Pollution is theft" -- now you're getting all fancy. Yes, the textile mills dyed the river purple, but we seem to be mostly going in the right direction. (Not sure about gold extraction). We've got regulation, we've got that carbon credit crap, and Zinke is out of office. Progress.

[moda0306]

Taxation is confiscation of money from a private citizen. No matter how this occurs, someone's being "robbed" right? There's a lot of robbing going on, and it's not all the state. Pollution is theft. Appropriating common resources is theft. Dealing in stolen goods is theft.

The thief on the street is not going to buy you a pair of socks with the money he took from your wallet, but the state, in theory at least, is supposed to pave your roads with their takings.

"Pollution is theft" -- now you're getting all fancy. Yes, the textile mills dyed the river purple, but we seem to be mostly going in the right direction. (Not sure about gold extraction). We've got regulation, we've got that carbon credit crap, and Zinke is out of office. Progress.

Pollution SEEMS to be going in the right direction, using certain measures... although idk if the population of Bangladesh will agree with that in 15-20 years. And that doesn't speak to the permanent damage done to people and families all throughout the years as members of the working class that weren't able to profit off the pollution.

[Kriegsspiel]

They don't take all of the risks. Purchasing anything you don't need comes with the risk of going broke, which means there's risks for consumers.

Pollution and other externalities push risks to the surrounding community.

Yes, it seems fair to punish people for that. Those are bad things. Taxing net worth 2% is punishing someone for doing something good: forming, or at least not wasting, capital.

The municipality taxpayers (all of them, not just business owners) essentially take on the risk of infrastructure being a boondogle.

That's a whole 'nother can of worms. Municipalities seem to make really fuckwitted decisions.

Employees take plenty of risks to their bodies and finances and families by "going the extra mile" for their boss. Also there is a pretty hefty amount of "Capital Risk" required to have many jobs. A well-maintained vehicle, an education, a wardrobe are a few. They also "risk loss revenue doing something else."

So you're in favor of letting everyone deduct the cost of their vehicle and other expenses, right?

Also I'd say that most corporations can handle a modest downturn in demand (by laying off employees) than employees can by that same adjustment. Labor has set itself up to be very exposed to layoffs, as collective bargaining (in the US) is mostly a thing of the past.

A series of employment articles on Business Insider made the point that households no longer are completely unemployed now, mostly due to gig economy jobs like Uber, or part time jobs. So most people aren't unemployed, they're under-employed. Also, the employee-employer power dynamic goes both ways too. An employee can leave an employer in the lurch too.

Yes the business owner deserves some for their extra risk. But the way you're posing it is a bit at odds with reality, especially if you're talking about someone with a net worth of $50 Million or more. Or income of $10 Million. Perhaps they built something. Perhaps they inherited it. Perhaps they figured out a way of adding little value while socializing costs, and gaming and exploiting systems around them to "own" and "profit" as much as possible with as little actual skin in the game as possible.

If a business owner uses our modern trade system (and the military that protects it) to exploit global labor at the lowest cost possible and appropriating as many public resources as possible, you can bet I'll sleep ok at night if they have to pay into a wealth tax system.

Again, I don't think it's smart to increase rich people's taxes this high, I think it will have bad consequences.

[Kriegsspiel]

David Tepper leaving New Jersey is an example of a bad outcome I wouldn't want to risk.

[moda0306]

David Tepper leaving New Jersey is an example of a bad outcome I wouldn't want to risk.

Ha you sure it was taxes and not... you know.. NEW JERSEY!!??

But seriously... easy enough. If someone wants to literally leave the U.S. as a taxing jurisdiction, you levy a 40% one-time wealth tax on them.

[Kriegsspiel]

David Tepper leaving New Jersey is an example of a bad outcome I wouldn't want to risk.

Ha you sure it was taxes and not... you know.. NEW JERSEY!!??

Poor New Jersey, they take so much shit. Even from Bloodhound Gang:

We rock Philadelphia Baltimore Las Vegas Indianapolis
Louisville Atlanta New Orleans and Minneapolis
Houston Tucson Phoenix Buffalo
Tulsa Mobile Albuquerque Wichita and Orlando
Portland Salt Lake City Memphis Washington D.C.
Charlotte Oklahoma City Little Rock and Milwuakee
Cleveland Tampa Norfolk Dallas Raleigh Hartford Cincinnati
Boston Nashville Kansas City Chattanooga and Miami
Honolulu Richmond Austin Pittsburgh San Antonio
Baton Rouge and Anchorage and Birmingham and Toledo
Denver Detroit Dayton Spokane Fresno
And Jacksonville Colombus Springfield New York Sacramento
Los Angeles St. Paul St. Louis San Francisco
Madison Knoxville Seattle San Jose and San Diego
Jackson Omaha Des Moines Boise Providence Chicago
But no where in New Jersey that's the only place we won't go

But seriously... easy enough. If someone wants to literally leave the U.S. as a taxing jurisdiction, you levy a 40% one-time wealth tax on them.

The issue is whether the tax increases the Democrats are proposing make America less like a place wealthy people want to live in. I want America to continue to be a place that attracts desirable people, like wealthy business owners, and I think taxing the shit out of them is the opposite of that.

[sophie]

Discouraging the "hoarding of business equity" doesn't sound like a great thing to me. It will amount to the government taxing business owners an additional 2%.

Stop and think for a moment about what a 2% tax on the value of a business really means. Many businesses make profits in the single digits compared to their business value. Example: a small fry landlord who owns a house or two and rents them out. You're doing well if you net 5% over the purchase price. Of that 5%, let's say 1% goes to income taxes, leaving 4% profit. Half that goes to the government under the new wealth tax. Thus, it's actually a 50% tax. Pretty hefty to be putting on someone who may only be making, say, $100K/year off their house rental business.

If the person doesn't clear 5% or has a bad year, they still owe the wealth tax, pushing them into net loss territory. Note that when you're first starting a business, profits are usually slim to none. How many small businesses would thus be destroyed by a wealth tax, resulting a reduction in jobs & future tax base of the business and its employees? I bet if you looked into it, you'd find out that a wealth tax may actually cost more than it gathers in.

I can think of more ways in which a wealth tax is destructive. And, that's how it's being advertised too, as a way to destroy wealth in order to make non-savers feel better about not having savings. Kind of a nasty way to run a country, if you ask me.

[Xan]

Also, how would you compute the value of a small business? It's a hard problem. The only real way to do it is to sell it. If the government is going to make up a number and then tax based on it, then that is going to be a huge mess.

[Kriegsspiel]

After considering it a bit more, it seems likely that Warren and O-C are taking a page out of the Trumpbook and making an outrageous opening bid, which they will walk back later on to look reasonable.

BTW sophie you really reveal yourself as a New Yorker with rental numbers like those

[dualstow]

That’s true for Robin Hood and true for Richard the Lionheart’s usurper, but I don’t think it’s true for Richard himself. We need *some* tax, don’t we?
I don’t think fair taxation is theft.

[Libertarian666]

That’s true for Robin Hood and true for Richard the Lionheart’s usurper, but I don’t think it’s true for Richard himself. We need *some* tax, don’t we?
I don’t think fair taxation is theft.

Taxation is taking money by force or threat of force under the purported authority of an organization that calls itself "government".

So yes, all taxation is theft; the only difference between that and other theft is who does it and what their excuse is.

Read "The Constitution of No Authority" by Lysander Spooner for a longer explanation.

[Kriegsspiel]

There are about 24,500 injection drug users in San Francisco — that’s about 8,500 more people than the nearly 16,000 students enrolled in San Francisco Unified School District’s 15 high schools
. . .
While City Hall solidly supports the free syringe program, the proliferation of needles on city sidewalks and parks was a major issue in Mayor London Breed’s mayoral election last year — one she promised to clean up.

The first step was spending an extra $1.8 million last year to retrieve needles. That resulted in 500,000 more syringes being dropped off in new kiosks or picked up by special cleanup crews compared to 2017... Meanwhile, needles are still making their way into the city’s parks and onto the sidewalks. link

The headline photo is a cop checking up on a disoriented addict who passed out on a bed of needles on the sidewalk.

[dualstow]

who passed out on a bed of needles

Like an Indian yogi?