[ishansharma]

Couldn’t agree more. I read all his essays in my early 20s and became a huge fan. Not just startup advice wise, but general big picture stuff wise too.

Then I saw his recent tweets and especially the essay about wealth tax, I was a bit disappointed. But as you said, his position is well earned. But I don’t see any useful real life advice from him anymore.

[elevenoh]

>Then I saw his recent tweets and especially the essay about wealth tax, I was a bit disappointed.

Why? He points out [the non obvious to many fact] that wealth tax kills compounding.

And this is something to seriously consider.

[ishansharma]

It’s my opinion but that was a very one sided view. And I need to read more on this but I don’t think the way he pointed it out is how anyone is proposing wealth tax.

[ghufran_syed]

What's the opposing view, other than "they are rich, they can afford it + we really need the money for $good-things"? I'm not sure if you are disagreeing with the math or making a separate point about why we should do it anyway?

[darkerside]

I truly don't know the answer on whether the wealth tax is a good idea (and there probably isn't a single right answer). But, that sure is a shitty way of saying, "I don't understand, can you explain your viewpoint to me?"

[ghufran_syed]

I think it's an accurate summary of the arguments in favor of a wealth tax. But I would really like to hear if there are other arguments that can't be characterized that way. But it's hard to be persuaded when no-one actually presents the argument, and instead just criticizes the tone.

[abvdasker]

There were multiple prominent politicians with serious wealth tax proposals running in the 2020 Democratic Party primary. If you want implementation details I would suggest that you read their proposals.

As for an "argument" it's really no different than any other political position in that it boils down mainly to what you personally value.

I've observed at least two distinct value systems which can both lead to supporting a wealth tax.

1) Maybe you believe in helping the marginalized and creating a more equitable society. Perhaps you believe it is insane and obscene that multi-millionaires and billionaires walk past tent cities of homeless people every day in the streets of San Francisco. Maybe you care about the well-being of other people and recognize that what is good for them is usually good for yourself.

2) Or maybe you believe that tax policy should optimize efficiency as a facilitator of economic growth. You recognize that the diminishing marginal utility of wealth and the runaway inequality in America presents a problem of inadequate aggregate demand and threatens the entire economy. Maybe you've done the math and realize that the US government must raise revenues to have any hope of staving off an eventual sovereign debt crisis.

From what I've seen, the people opposed to a wealth tax usually believe something else.

[darkerside]

I'm happy to present one as an example. If be happy to continue discussing it past that as well, as long as you are willing to converse and not argue.

Wealth in the hands of a few becomes static. Jeff Bezos can only buy so many jets. When you leave it there, the entire economy stagnates.

[qppo]

The point of the wealth tax is not to secure funding for "good things" but to intentionally sabotage the accumulation of wealth.

[gonehome]

What PG describes is basically what's proposed - the main difference is that most American proposals have a floor before it kicks in.

That floor is pretty high depending on the proposal ($30-50 million), but that doesn't stop the problem of equity ownership being eaten away over time when a lot of your worth is tied up into a successful company (like Bezos).

You also get other incentive problems with things like angel investing. If someone is at the wealth cap they're less incentivized to risk money when they'll either lose it because the investment fails, or lose it because it gets eaten by the wealth tax.

Other proposals have low floors where you just have the problem of a lot of wealth getting taken.

In general it's good for a society to incentivize wealth creation/growth and still protect the lower bound of society. A wealth tax dis-incentivizes wealth creation - and for what? It just comes across to me as a 'hate the rich' policy that creates perverse incentives.

Disclosures so people don't think there's hidden motivated reasoning here:

- I'm nowhere near the wealth cap and probably never will be

- I think trump is an idiot and the republican party is a disaster

- I voted for Hillary and will vote for Biden.

I still think the wealth tax is a bad idea and bad policy.

[Reedx]

> It just comes across to me as a 'hate the rich' policy that creates perverse incentives.

Indeed, wealth tax sounds good because there are problems with income inequality and it's currently fashionable to hate the rich. But that's about where it ends, while second-order effects are ignored or at least not taken seriously.

Andrew Yang was one of the few high-profile Democrats brave enough to push back on it.

"I think the wealth tax is an idea, in spirit, that makes sense, given the wealth distribution. But in practice it would have massive implementation problems. There would be capital flight, wealthy people would renounce their citizenship. And the bigger problem isn’t even the money. It’s the annual inventorying of their assets. The truly wealthy in this country have zero interest in submitting to an annual audit of all of their assets. They barely know what all their assets are. And the last thing they’re going to do is report them every year and then pay a toll. So you would have massive compliance problems. And to me there are better ways to make this economy fair, though I understand the spirit of it and the intent of it. But I agree that it would be somewhere between problematic and a disaster in practice."

https://www.cnbc.com/2019/10/02/andrew-yang-wealth-tax-plans...

[mattmanser]

Easy ways to stop that, start with a huge tax on your wealth when you renounce citizenship.

They built the wealth on the back of their nation, on the back of the infrastructure, education, laws and blood of their ancestors, no good reason they should keep it when they choose to leave.

It's the fundamental basis behind tax. 95% tax on any wealth over, say, $500k on renouncing citizenship, total forfeit if found to be hiding assets, done.

[felipemnoa]

>>Easy ways to stop that, make it illegal to take your wealth when you renounce citizenship.

If you have to come up with ways to stop people from fleeing your country instead of too many people wanting to enter your country then you probably have a problem. And no, I don't think it is as easy as you say. Simple sounding solutions like this can have huge disastrous consequences.

[hkai]

See, I always thought that socialism degenerates into tyranny.

My socialist country didn't even allow people to travel - to prevent capital flight and brain drain - and now you are proposing to basically close borders to some people until you buy your own freedom.

That's scary as hell and a return back to 1920s.

[marcinzm]

Why is disincentivizing the accumulation of massive wealth in a small subset of the population bad for society? What is the advantage to society of an individual accumulating tens of billions of dollars worth of wealth?

[gonehome]

It's dis-incentivizing wealth creation in general and taking ownership away from people that build companies.

There's a compelling argument that growth (that accounts for human rights and protecting the environment) is the best way to help the most people the fastest: https://press.stripe.com/#stubborn-attachments.

Policy that dis-incentivizes wealth creation creates perverse incentives that limit growth.

We're better off with policy that limits how wealth can be leveraged into political power, and policy that helps protect and improve the lower bound of society. That said, I think it's likely reasonable to limit how wealth can be passed down generations (to prevent things like dynastic wealth, but that's a separate issue and I don't know enough to really comment on it).

Wealth creation isn't zero-sum, just because someone builds a business and creates wealth doesn't mean they're taking it from others. We want a society where people are incentivized to create and grow wealth as much as they can (within bounds for environment protection and human rights), not just to some arbitrary cap before it gets taken by the government.

All of the above ignores real modern examples that directly leverage their wealth to do things that would not be done otherwise (Elon Musk: SpaceX, Tesla, Neuralink, Boring # Bezos: Amazon and Blue Origin # Gates: Health and Public Policy). I think the general argument in favor of growth is better than these specific examples though because it's a more systemic argument about incentives for the structure of a society rather than relying on individuals and their choices.

There's also the implementation issues (which are real), but I'm not going to argue that bit just because a lot of good ideas are hard to implement but still worthwhile. The wealth tax though I think is both a bad idea and hard to implement. The bad idea bit is more important.

[ywei3410]

> Wealth creation isn't zero-sum, just because someone builds a business and creates wealth doesn't mean they're taking it from others.

It absolutely is zero sum - but not from the point of money, but from the point of view of another finite resource; human labour and talent.

The fact that someone has more wealth than someone else means that the market will value their time/spend more than someone who is poor.

Think about it this way, if you see money as a way for society to allocate resources - is the fact that you own more wealth than someone else mean that you can should be able to direct more of where the resource spend of human labour is?

How many talented engineers work at Rolls Royce to create £250,000 cars which would be better put to use elsewhere? How many software engineers work at startups funded as a moonshot for the wealth of the founders work on CRUD apps where they could be working on something like scientific or educational tech? How much chemical engineering talent do we sink into cosmetics?

Your cited examples prove the point above - the only reason why those examples exist is at the whim of those who have wealth. What about less savoury examples of the use of wealth such as Academi or Palantir?

[ouroboros1]

Billionaires often make compelling arguments for why they should get to keep their money (Paul Graham and Elon Musk being two examples).

I disagree with their point of view because:

1. My neighbour having enough food to eat and a warm house is a form of wealth FOR ME.

2. If wealth that is generated is taxed, this means that it is harder to accumulate wealth, this means that the people that do manage to accumulate wealth have better qualities than the people that do so in a tax free environment. And thus they make better decisions about how to allocate their money.

3. Billionaires are not accountable to anyone for how they spend their wealth. This is fine if they are all like Musk. But they are not. Of the countless number, only two are trying to build rockets to Mars. Counter examples are Osama Bin Laden and the guys who funded the NRA. If the wealth is taxed then it is fought over in a shared space in which we all have a say, no matter how small.

I like the argument that Rawls made in "A theory of Justice", where he said that when you are deciding how to make a fair society you should think from a perspective in which you do not know what role you will have in that society.

[marcinzm]

>We're better off with policy that limits how wealth can be leveraged into political power

Has there ever been a case in history where a society has successfully limited the political impact with those of disproportionately immense wealth?

edit: >There's a compelling argument that growth (that accounts for human rights and protecting the environment) is the best way to help the most people the fastest:

I'd prefer to be an average or below person in most of Europe (free healthcare, free education, 6 weeks of paid vacation, various other benefits, low crime, etc.) rather than America. Yet America values growth a lot more than Europe.

[ABCLAW]

>Wealth creation isn't zero-sum, just because someone builds a business and creates wealth doesn't mean they're taking it from others. We want a society where people are incentivized to create and grow wealth as much as they can (within bounds for environment protection and human rights), not just to some arbitrary cap before it gets taken by the government.

You're right that wealth creation isn't zero sum, but studies make this point a bit more nuanced than your argument would suggest.

Historical analysis of growth appears to indicate that equality and growth in America have been largely correlated on a decade by decade basis until the last 20-30 years. It was only in the most recent cycle of international growth that this link appears to have been broken.

So it's not simple enough to pretend that pro-wealth and pro-growth policies are one and the same; the opposite appears to have been the case until very recently.

[ishansharma]

I agree with most of your comment and it's making me rethink some of my opinions. But is this accurate:

> Wealth creation isn't zero-sum, just because someone builds a business and creates wealth doesn't mean they're taking it from others.

I'd say that's exactly the model that some of the startups are taking. Uber and Lyft come to mind. A part of their wealth is coming from the pockets of workers who have to work for lower wages than before and get hit by depreciation that they didn't account for when earning.

[navd]

Because then you incentivize people to seek status.

[darthrupert]

I wonder how he reacts to the knowledge of one of the wealthiest countries having a wealth tax. Switzerland. It's below 1%, progressive, though. 2-6% (as Sanders suggested, I think?) would probably be much more harmful.

[cinntaile]

He points out that a wealth tax compounds. It doesn't kill compounding, it just diminishes its effect in the same way that the TER for a mutual fund does.

[clusterfish]

> "wealth tax compounds"

And that's a rather misleading way to characterize the effects of wealth tax. When you think of compounding you think of compound interest, where compounding means the actual interest ends up being MORE than what you might expect (numYears * annualInteredtRate * baseAmount) because baseAmount grows every year due to compounding.

On the other hand, the wealth tax "compounding" works in the opposite direction, because baseAmount is reduced, not increased, by the tax over time, so the "compounding" aspect of the tax actually REDUCES the amount of tax you pay compared to a baseline where you didn't consider this effect, i.e. (numYears * annualTaxRate * baseAmount)

I don't think this choice of words was accidental on PG's part, as he chooses his words very carefully. He just chose to weaponize his words this time to push his political opinion, to make wealth tax seem worse than it is, which is something I've sadly come to expect from his twitter, but never noticed leaking into his essays before.

[jedberg]

> Why? He points out [the non obvious to many fact] that wealth tax kills compounding.

His analysis was deeply flawed to the point of being disingenuous. For one, it assumed that your wealth never grows once you get it. And for two, it completely forgot that there is a baseline on the wealth tax (the current proposal is at $50M).

So no, it doesn't kill compounding, it just shrinks it a bit.

[cma]

Unless our lightcone starts growing faster than polynomially, compounding can't happen for very long.

[andrewprock]

"Suppose you start a successful startup in your twenties, and then live for another 60 years."

Yes, let's just assume this is true. Please!