[esotericn]

I don't think anyone contests the fact that money increases happiness _up to a point_.

Once you have full financial security though, it becomes quite nonlinear. Outside of bonkers areas, 1 million NW gets you retirement. 10 million NW gets you that plus... toys.

It's a major reason why taxation should focus on the rich (as opposed to the 'well off' e.g. high incomes). They really will not notice it aside from ideological opposition.

[Kaveren]

Taxes already do focus on the wealthy with progressive taxes (in many countries), though. From an American perspective, the top federal income tax bracket is 37%. The top state income tax rate can be anywhere from 0% to 12.3% (California), so in total you can pay up to 49.3% of a potion of your income in taxes.

In America, the top 1% paid 45.7% of total income tax in 2015 [1] (earning 17% of "expanded cash income"), so you're already talking about a rate over proportionally double.

[1] https://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fed...

[ohyes]

There’s no way for taxation to not focus on the wealthy, they have all of the disposable income. You could try raising taxes on the bottom 80% who live their entire lives in debt, but you can’t squeeze water from an stone, and it’s better for wealthy people to not have a French Revolution situation on their hands.

[masonic]

   the wealthy

Income taxation and wealth taxation are not the same thing

[coldtea]

>Taxes already do focus on the wealthy with progressive taxes (in many countries), though.

The tax system provides tons of ways the wealthy can skip taxes, progressive or not.

[nightski]

This is why I truly believe in a consumption/sales tax instead of income tax (aka FairTax). You can build as much wealth as you'd like, but it doesn't do you any good until you spend it. At that point there is no avoiding the tax and it's much easier for the IRS to track.

Even if a black market developed, at some point that money flows back into the economy and is taxed whereas today it does not (aka tax havens and many other schemes).

It's also very logical to be taxed for what you take from society vs. what you give to society. But that's just a minor point.

[barrkel]

Wealthy people don't consume in the way you understand consumption. Wealth, at the higher levels, is almost synonymous with power. It's what amplifies your agency. By owning large organizations, investing in new developments, starting new organizations, controlling organizational output (think media companies in particular), wealth is converted into control over people and to a certain extent, governments.

Wealth gets "consumed" by bad investments. Those "bad" investments might even be considered as expenditure, almost as consumption, by the wealthy, e.g. subsidizing a newspaper - but what does sales tax (or some other consumption tax) look like when it's applied to journalists' salaries? Doesn't really make sense, does it.

[nightski]

I actually understand all of this. But if you are investing in society, then that is different than consumption. That should be encouraged imho.

Actually if you dig deeper into fair tax it is theorized that cost of goods would largely remain the same. this is due to the removal of corporate income taxes altogether. Also companies would not pay any sales tax on goods/services.

[ohyes]

This is even easier to tax dodge because you just pay cash and do stuff off the books.

Regressive taxation schemes don’t take into account the disproportionate advantages that the wealthy get from having sound infrastructure provided by the government.

How does a sales tax properly impact the monopolist who is getting advantages from state sponsored research and educational subsidies?

They also don’t take into account that the wealthy can pay more in taxes without it substantially affecting their quality of life, whereas a poor person it will make a huge difference in their diet and ability to save.

It may be logical on a simple level, but logical at face value doesn’t make it sound public policy.

[nightski]

How do you avoid a sales tax by paying cash? I don't understand that at all.

Sure, the tax can't go back in time and make up for the poor system we have now. But you have to start somewhere - at least we could get on the right track.

[dorchadas]

> How do you avoid a sales tax by paying cash?

Simple: you just make a deal with someone saying that, if you pay cash, they won't report or charge the tax. Maybe you'll even pay them a bit more (but less than it would've cost you with the tax) to do so. With cash, how can you trace it?

But, a sales-tax based system is absolutely awful regardless; it does nothing but hurt those who can least afford it.

[stanleydrew]

The idea is nice, and I'm sure I'm not introducing anything you haven't already considered, but a flat consumption tax is in fact regressive.

The simplest way to think about it I guess is that regardless of wealth, everybody needs a certain number of calories to live. If you are poor and can only afford subsistence, you are paying a much larger portion of your overall wealth just to stay alive.

That may be ok with you, but for a lot of people it's not.

Something like a wealth- or income-based tax credit would possibly correct this, although poor people are also less likely to know how to take advantage of such tax breaks.

[mpreda]

A flat consumption tax would be regressive if the two extremes (rich vs. poor) would buy the same goods; but they don't. The very poor buy cheap food, the very rich buy diamonds and services ("dog walking", "garden design", "personal trainer"). Not to mention the two buying different kinds of habitation, in different locations, at very different price-points.

[stanleydrew]

This is all true but doesn't invalidate the point unless the rich and poor are spending the same proportion of wealth/income on these various categories.

The fact that the rich can afford to save more of their income proves that isn't true.

A more pedestrian proof would be that even if I make 10 times as much money as someone else, the most expensive gallon of milk I can buy is still only double or triple what a poor person would pay.

[nightski]

Fairtax has a prebate to cover all tax for essentials (everyone, poor or wealthy, gets a "check" at the beginning of the month). You theoretically only pay tax on non-essential items.

[eeZah7Ux]

> It's also very logical to be taxed for what you take from society vs. what you give to society. But that's just a minor point.

Not so minor! Taxing based on how money are spent is very reasonable (but goes again consumerism).

It also ties very well into resource-based taxation. (see https://en.wikipedia.org/wiki/Polluter_pays_principle )

[coldtea]

>This is why I truly believe in a consumption/sales tax instead of income tax (aka FairTax). You can build as much wealth as you'd like, but it doesn't do you any good until you spend it. At that point there is no avoiding the tax and it's much easier for the IRS to track.

That would be even less fair. For a rich person, spending (even with luxuries in) is a small percentage of their income.

For a poor person rent for a small apartment, plus food, plus basic clothing for the kids basic healthcare, etc eats most of their income (or all in most cases).

Rich people also don't need to spend as much. For most of their fortune, they can accumulate and wait. For the rest, they can arrange all kinds of schemes (e.g. their car is leased by their company, not them personally, and so on) to appear not to spend themselves.

Plus, a lot of what they do is buying influence, which you can do with political donations, "charity", and other such things, that are low or not taxed (and in some cases, are even tax deductible).

[nicoburns]

This makes it sound like double is a big proportion. But given how much of the wealth the rich control, I'd expect it to be closer to 80 or 90% of tax coming from the rich. They just don't need it.

[pmiller2]

I agree. The top federal tax rate at one time was over 90%, and some economists believe it should be that high again. See https://www.nber.org/papers/w20601 for instance.

[_kxbd]

Since you said "expect", this comment isn't directed at you specifically.

But let's say someone is advocating for that 80%-90% tax-rate on income:

1. Why should I try to make more money if I'm going to be taxed at 80%-90%, forking over such a massive sum of my money as to make it mostly worthless?

2. Even if this advocate believes the rich don't need the money, what makes the government entitled to take the vast majority of their income? That was money the rich income earner made for themselves. I'd argue that it should be their decision how to spend the majority of it.

I'd argue that advocating for seizing such a high amount of money is very anti-capitalist. It's not really a government's position to regulate how much wealth someone "needs" when you have a high degree of freedom.

[nicoburns]

1. Yes, why should you try to make more money if you already have that much? There's more to life than money, and I'd argue that incentivising people already earning millions to optimise for making more money is probably not good for society.

2. What makes them entitled to that money in the first place? Surely nothing other than the economic system which is grounded in a democratic negotiation. You may be interested to know that other languages don't use the word "earn" for income. For example, Spanish uses "ganar" which means "win". Just because you complete a task for which you are rewarded with money by our current economic system doesn't mean you have earned it (see also: people who think things are immoral just because they're illegal)

Sure, it's anti-capitalist. Why do you think that is a bad thing? I believe it's the government's role, because that extra freedom granted to the rich is taking what I consider to be far more important freedoms away from the poor.

[sovietmudkipz]

That seems like it would decentivize being rich pretty dramatically. The truth is that many rich people are the main movers of the economy, generating positive value for everyone (versus rent seeking). If you decentivize being rich you decentivize generating value.

Ayn Rand explores a world where the rich value creators go on strike when people and the government “loot” and plumber their wealth, through regulations and restrictions in her economic dystopian book Atlas Shrugged.

I mention this merely to suggest we could be careful about overtaxation ‘because they’re rich and won’t miss it.’ We ought to discuss the boundary where we go too far and steer very clear of that boundary.

[matthewmacleod]

If you decentivize being rich you decentivize generating value

There’s no real evidence to support that. Why must gross overcentralisation of capital be the only way to invest in productive activity?

[cryptica]

>> Ayn Rand explores a world where the rich value creators go on strike when people and the government “loot” and plumber their wealth

If the rich went on a strike today; within a couple of years, they'd all be replaced by a different batch of newly rich people and the economy would be right back where it was before... Then after maybe a few more years, the economy would be in a better shape than it has ever been.

For every rich person, there are hundreds of even more talented people just waiting for an opportunity to take their place.

There have been many cases in history where all the rich people in a country lost their wealth and then they were replaced by a completely new class of rich people; Germany after WW2, Russia after the collapse of the USSR...

[nicoburns]

I don't agree with this at all. I don't think we have a talent shortage. You are correct that this would reduce incentives for the rich (although would it really be by that much - they would still have a huge incentive to maintain a high wealth level than a lower one).

But if the capital were sensibly redistributed (I advocate for spending some on things like univeral healthcare, and then directly sharing the rest out) it would also enable a vast group of people to take entrepreneurial risks that are not in a position to do so now.

[jemfinch]

The top 1% of income earners, perhaps, but not the top 1% of wealth, which largely pays only a 15% long-term capital gains tax.

[dorchadas]

> which largely pays only a 15% long-term capital gains tax

Before or after it was gutted earlier this year?

[jemfinch]

Oh, it's 20% now for gross income over $425,801? I guess that brings it almost to the rate paid on regular income by earners who make $38,701 per year.

[barrkel]

Progressive taxes focus on income, not on wealth.

Very few people get wealthy from income (in part because it's taxed so heavily). Usually, wealth comes from capital growth.

Wealth taxes focus on wealth. Unfortunately, it's very hard to reliably tax wealth because making wealth tax efficient is highly incentivized at every level: not just offshore vehicles, tax exiles etc., but also governments trying to encourage investment effectively subsidize wealthy people increasing their wealth.

[marcosdumay]

You are creating a straw-men. The GP clearly wasn't talking about the top 1%.

[Kaveren]

> "It's a major reason why taxation should focus on the rich (as opposed to the 'well off' e.g. high incomes). They really will not notice it aside from ideological opposition."

I don't understand what the srawman you think I was making is supposed to be. The quote is what I was replying to. He was referring on taxation focusing on the rich (not the well off). My original reply was commenting on that.

Is the strawman supposed to be that 1% is too high a bar of entry to be considered rich? Or something else?

[marcosdumay]

Financial security is a much higher bar than 1%.

[amai]

That is why I opt for a wealth dependent income tax. If your wealth is already very high you basically won’t notice a higher tax on your income :https://politics.stackexchange.com/questions/9421/why-not-ha...

[lhnz]

Are you speaking from personal experience or is this just what you've heard elsewhere?

I've still not reached the point where more money hasn't increased my happiness, however I'm definitely making far more than an above-average wage in London.

I think a great number of people could be happier with more money assuming they have good ideas on how they can spend their money to improve their lives.

[esotericn]

From personal experience.

The step change for me was financial independence.

It's not about income, but wealth.

A basic example - the difference between a 50K a year job and a 200K a year job is enormous if you have no wealth.

If you are FI, then other factors like the nature of the work, the hours, the location and so on are far more important.

Because once you're there, it becomes clear that money has far less value than time - you only need enough of it to do the things you want to do (of course, if the things you want to do require a lot of money, that's a possible case...)

[buboard]

Money is a tool to buy time. More money makes that time more fun, but I agree, the best use of money is to buy time.

[Izkata]

Personal anecdote time - I have, three times. Some of it I think is just easy to forget over the years, simply because it's not repeatable. And like the post eventually gets to, it's pretty indirectly tied to money, but all relies upon it:

* About two months after getting my first full-time job, actually seeing my savings go up.

* After buying a place and moving in, something that wasn't possible without having enough money. Note that moving out of my parents' house and into a rented apartment didn't do it, but buying did.

* Upon paying off my mortgage, doing some math and realizing early retirement through financial independence was actually a possibility.

[coldtea]

>I've still not reached the point where more money hasn't increased my happiness

Depends on the persons age and maturity level too. At some point shiny new cars and other trinkets are not really what makes you happy...

Besides, if you're making a wage (whether way above average or not) you might not still be quite that independent that more money makes no difference (or draw your happiness from competing in the race)...

[rifung]

> Depends on the persons age and maturity level too. At some point shiny new cars and other trinkets are not really what makes you happy...

I don't know if I agree with that. Just because those things don't make you happy doesn't mean there aren't other things you can do with money that make you happy. Or maybe I just haven't matured enough yet?

At least I think I am at the point I don't care too much about having a fancy car or nice house.

Still, the thing that I have found to increase my happiness the most is giving it to someone else and seeing someone be really grateful. If I had more money I could do the same thing but to more people probably.

And probably just knowing that I have enough money that I don't need to worry would increase my happiness significantly. Even better would be that my parents don't have to work.

[coldtea]

>Still, the thing that I have found to increase my happiness the most is giving it to someone else and seeing someone be really grateful. If I had more money I could do the same thing but to more people probably.

Well, that's not money then, that's helping others. One can help other people with no or little money too.

[vageli]

I agree completely. I think much joy can be found in new experiences, though, which money certainly enables.

[eeZah7Ux]

Very few meaningful experiences require significant amount of money.

[vageli]

Again, I agree in principle. But to give a concrete example, my girlfriend and I recently missed a leg of a flight while en route to Europe. Totally our fault. If I didn't have a comfortable amount in savings this would have been a disaster. Instead, within a few minutes, we had accommodations in our layover country and a train booked to our final destination (all at fairly exorbitant prices compared to if we had booked in advance). But maybe this is just an example of alleviating financial anxiety versus enabling meaningful experience.

Also, "significant amount of money" is terribly subjective. I know people to whom $100 is a significant amount of money.

[barrkel]

An average wage will leave you pretty unhappy in London. London has a lot of wealthy people, which is distinctly different to high income, and it has a fair number of high income people too.

I think being a big fish in a small pond has a lot to say for itself in terms of mental satisfaction about one's place in the world. It's relative, unfortunately: someone else must be worse off for you to feel relatively better off.

It takes a lot of income to make a meaningful dent in your self-perceived place on the ladder in London, if your ladder includes things like owning a home in a safe area within reasonable distance of transport.

[howlgram]

I think there are different plateaus, for money there'll will be a point where it stops being as important as quality of social life, or quality of the work you do to earn it. However if you clear these plateaus I think you go back to money being the big factor.

[vvanders]

DHH hits this pretty well, I don't have the exact link off hand but the difference for him from tons of net worth was not nearly what he was expecting. Once your basic needs are met community + fufilling work are generally what has an outsized impact.

[ip26]

I've still not reached the point where more money hasn't increased my happiness

What about the point where increased work stesses outweigh additional gains? Personally, I may be hitting that point.

[da02]

If it's not too personal, how many hours per week do you work? How many works of vacation per year?

[hnmonkey]

What's your definition of 'bonkers areas?' Can you show how 1 million net worth gets someone retirement? It seems to me that if you're retiring on 1 million dollars you're going to run out of money pretty easily unless you're living off rice and beans. And in many places with just $40k a year (assuming a 4% withdrawal of the 1 million) you might not be able to even cover your mortgage/rent/property taxes/bills not even factoring in food/healthcare/entertainment. These days people who retire can potentially live another 20 years or so and 1 million in the bank won't cover it at all.

[esotericn]

1 million is obviously intended to convey an order of magnitude, but I'll bite, because it works anyway, I live something like it.

I'll use GBP to begin with and convert back to USD at the end, because I'm in the UK.

10K GBP a year is more than I currently spend on life. This excludes rent. I'll get to that.

300K at a 3.33% withdrawal gets you that.

Another 300K to buy a home outright. Sod the mortgage, you have 1M net worth, do that if you think you can beat HPI with investments. This is doable in most of the UK. In many areas you'd get something really rather nice for that.

That's 600K GBP or 768K USD, in total. That actually gets you a better standard of living than my current one, forever (I don't own a home).

A bit left over. So we'll spend another 5 grand a year 'cos we can. 166K GBP required at 3.33% withdrawal, 766K in total. Still not 1M USD.

In London (I live here) you'd probably want 750K for the house (you can do cheaper but if you have this money to begin with you probably wouldn't). That would bring it to very roughly 1.5-2M total. I think it's fair to consider London a "bonkers area".

When I say retirement I mean early retirement, sorry, I'm lazy.

It's kind of odd to me to explain this over and over because it seems like most people just don't do the math. If you have annual minimum wage x 25 in the bank then you are in a position to work fairly infrequently. If you have annual minimum wage x 50 you can probably sustain a basic existence indefinitely. Above that you're looking at More Toys.

[hnmonkey]

I would have to argue that your situation is a complete outlier and extremely unusual, especially in London which is one of the most expensive places on earth. You're also saying that you've excluded rent to get to your 10K a year number in London but that's a huge part of what you pay I'd imagine so why would you exclude that?

Do you not need to pay taxes on anything, including on the house you've purchased? Do you not need to pay for utilities? What if you are talking about a couple? What if you're talking about a family with kids? Do you not have a cell phone or internet service?

I think you have to explain this over and over because your numbers don't make sense for an actual person and maybe only make sense in a very unusual situation (yours). Blaming it on people not doing the math is pretty hand-wavy. And, more than likely I would say if these numbers do work for anyone they're probably on the youngish side and haven't built up a large amount of things they have to pay for yet.

Let's say you're in the US in an average-ish city and not even one of the most expensive ones. And, let's give you the benefit of the doubt that you've paid off your $300k house. Congrats, you now have to pay homeowners insurance at let's say $600 (on the cheap side) a year. You have to pay taxes on your house as well at let's say $8,000 a year. You've retired early so you don't get medicare or medicaid yet so you need health insurance at let's say on the cheap side $400 a month for $4800 a year. You need food too but let's say you don't eat a ton and only spend $50 a week (That's $7 a day which would be impressive). That's another $2600 a year. I imagine you like having electricity in your house and running water. Probably another $200 a month for that and $30 for gas. That's another $2760 a year. Let's say you've got a cheap phone and cheap internet and combined that's only $100 a month. That's another $1200 a year. This doesn't factor in any form of entertainment/leisure, gas for your car, car insurance, car maintenance, home maintenance, or anything frivolous and I've certainly forgotten many things.

Grand total of $19,960 a year assuming you've paid off the house, which most people haven't if they haven't gotten close to retirement age. And that's just for 1 person. If you're talking a couple then the number grows a lot. If you have kids you support then the number grows massively. And if you've invested your 1 million and get interest on that you're paying tax on that as well, which would cut into your savings.

I'm not saying it's not possible of course, but your claim that 1 million net worth gets you retirement is not really super credible for most people. And at the end you say that if you have annual minimum wage x 25 in the bank you can work fairly infrequently but your original argument was that you could retire. Retiring means you don't have to work for the rest of your life, not that you have a nice buffer and cushion.

[ryanmccullagh]

Why has taxes only significantly affect low to middle income people/families?

[esotericn]

If you are not financially independent then taxation (on income and consumption) directly reduces your ability to get to such a state.

If you are financially independent then it reduces the number, or type of activities/goods you can partake in or buy.

I offer without proof the claim that being free in the economic sense is a far greater determinant of happiness.

[mtgx]

Because 30% tax off a $1,500 a month salary is a lot worse for your chances of survival/living a decent life vs if you had a salary/income of $15,000+ a month.