[tengbretson]

> The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtains all his income from labor: To him, a N% wealth tax = 0% income tax for all N. Those with -some- savings are somewhere in the middle.

Productivity comes from labor AND assets though. You need the farmer and the tractor. Why would we create a tax system that encourages people to divorce themselves from having a stake in the means of production?

[zozbot234]

> Productivity comes from labor AND assets though. You need the farmer and the tractor. Why would we create a tax system that encourages people to divorce themselves from having a stake in the means of production?

This is exactly why economic models broadly show that taxing capital assets makes workers worse off in the long run. An abundance of capital means that workers will be more productive on the margin, so their wage will be higher. This extends to the capital-income taxation involved in income taxes: pure labor taxes or consumption taxes are inherently more efficient. There are countervailing effects (taxing capital income works as an effective way of indirectly taxing the unearned value of resource-like assets, or of idiosyncratic skills that happen to correlate with holding more capital-like assets) but they can only roughly justify the current income tax arrangement, not some extra tax on assets.

[smallmancontrov]

Oh good! I was worried that trickle down economics was self-serving nonsense pushed by think tank economists on behalf of their benefactors. Since it is economic fact rather than self-serving fiction, when I review its track record I will find that it caused an upward inflection in real wages, right? Right?

https://wtfhappenedin1971.com/

Oops!

[zardo]

As long as capital doesn't get involved in some kind of highly financialized spiral getting further and further divorced from the real economy, we should be good.

[malfist]

That could never happen here. We have a history of strongly regulating capital and banks. Why look at all the executives we jailed for the 2008 financial crisis!

[zozbot234]

Total labor compensation has in fact grown. Unfortunately, much of the non-wage compensation involves services like healthcare that has become a lot more expensive over time due to burdensome overregulation and an overall lack of price transparency.

[JuniperMesos]

Also the wages of the fairly-large number of people who work in the health care industry itself.

[gruez]

>Since it is economic fact rather than self-serving fiction [...]

You deride the weak justification for trickle down economics, then proceed to link wtfhappenedin1971.com, a site that tries to argue for the reintroduction of the gold standard through a gish-gallop of random charts?

[smallmancontrov]

The gap between productivity and wages is striking, isn't it?

I'm not perfectly aligned with gold bug politics. Their faith in the Kindleberger world is misplaced and their tax aversion can make them useful to my opponents, but at the same time they tend to take the Cantillon Pump and Balance of Payments mechanisms seriously while my traditional allies do not.

No, I don't mind borrowing their charts. Why? Do you have a better go-to link for The Wedge?

[gruez]

>The gap between productivity and wages is striking, isn't it?

It's not. The (in)famous epi.org is flawed for all sorts of reasons, from excluding noproduction/supervisory workers (the highest compensated ones!), to excluding non-wage compensation (eg. benefits), to different deflators for compensation vs productivity. If you adjust for all of that, the chart is unremarkable.

https://www.piie.com/blogs/realtime-economic-issues-watch/gr...

That incidentally, is the exact problem with the site. It presents a barrage of charts, without regard to relevance or rigor, and tries to persuade through sheer volume alone. Yet, if you scrutinize any of them, it quickly falls apart. That's probably why the site doesn't even bother justifying the charts, or even state the thesis, for that matter.

[cyberax]

There are deep problems with _both_ arguments. Your "happy fun chart" does not include negative effects from the _types_ of jobs that are available now.

Nearly all good jobs are now concentrated in dense city cores, in the ever-dwindling set of large cities. This drives up the _cost_ of having these jobs. For example, the median ratio of rent to income is rising: https://www.moodyscre.com/insights/cre-trends/housing-afford...

And this "cost of work" is not only monetary but also psychological and physical (it takes longer to commute). You also don't get nearly the same amount of job security as your parents.

From the epi.org chart - it indeed misses that a lot of stuff is now cheaper. Clothes, electronics, toys and even appliances - they are so cheap that we now treat them as disposable!

[smallmancontrov]

This smells like the think-tank "CEO comp justifies worker underpayment" and "health care inflation is wages" arguments, I'll look into your source but I can't pretend to have high hopes.

As for "gish gallop," right back atcha: those billionaire-funded think tanks firehose a lot of nonsense into the economic discourse (and curricula!)

[_DeadFred_]

What percentage of increased productivity has gone back to the workers as increased financial health during the last say 20 years? Not increased wages. Their increase in end of day actual financial health versus end of day increase in actual financial health of the owning class? Not some Peter/Paul highlighting Peter 'wages have gone up' while ignoring any stealing from Paul 'actual financial health' has gone down metric.

300 years of thinking has established that copyright is the best way to sustain ongoing creation of knowledge and thought, yet the same crowd seem pretty fine gutting that 300 years of understanding because of their judgement that their desired use case for today outweighs the cost to society of lost future knowledge creation, so they seem plenty happy to ignore established thought when it benefits them.

[zozbot234]

People at the bottom end of the income scale are sharply deterred from holding any meaningful amounts of savings, because this can exclude them from 'means tested' benefits. This is effectively a disguised ~100% "wealth tax" that hits many among the most heavily disadvantaged and marginalized. We're essentially telling people that they have to be living literally hand-to-mouth before they're deemed to deserve any kind of broader social support.

[smallmancontrov]

The party that abhors wealth taxes for billionaires is the same one that lobbies them into place for the poor.

[ryandrake]

The current system without wealth taxes already largely divorces labor from equity stake. Unless you're one of the relatively few tech or office workers who get equity compensation or have a large savings rate, you currently don't have much of a stake in any means of production.

[tengbretson]

I'm not disputing the claim that few people are able to save and invest into having a stake in the means of production.

However, if your goal is to increase stakeholdership, how would a policy that explicitly disincentivizes that behavior fix anything?

[smallmancontrov]

Why do I get the feeling that you would never field the structurally identical complaint against disproportionately taxing labor and consumption, even though that's a much more prominent feature of our current tax policy?

In any case, taxes do not go into a black hole, no matter how much the right likes to encourage this self-serving fiction. Taxes generally get spent down the economic ladder and move people up the economic ladder, increasing their marginal propensity to save. People must have money if you want them to save money.

Even more concretely: reversing the policies which dissolved the middle class might reasonably be expected to restore the middle class, or at least slow their demise.

[svachalek]

How does it disincentivize "stakeholdership"? Are people expected to say, please don't make me rich, because I'd have to pay 1% of it?

[notahacker]

Well for a start it pressurises asset holders to sell their assets.

But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low effective tax bills relative to mere workers, which means that there's a lot less cause for concern about those workers not owning their means of production

[gruez]

>Well for a start it pressurises asset holders to sell their assets.

Even assuming this is true, then what? Do you think the average joe is going to suddenly buy alphabet or meta stocks because bill ackman or ken griffin sold their shares to buy bigger yachts?

[notahacker]

Perhaps you could direct this strawman upthread, to the person who implied that to enable the average joe to obtain a share in the means of wealth creation it would be necessary for the HNW individuals who currently own it to be able to maintain that ownership without paying tax on it...

All I pointed out was that at the margin, HNW individuals needing to liquidate 1% of their portfolio every year (and also HNW individuals not being disincentived from realising their capital gains as under the current system) actually works in favour of people trying to buy shares in means of production (by increasing liquidity and lowering prices), as well as obviously against wealth concentration.

There are arguments against wealth taxes that are actually credible, like those concerning capital flight, but this thread seems like a magnet for bad ones. Like, AMZN valuation dropping slightly at the margin from Bezos at al's forced divestment of portions of their stock actually being a bad thing for the economy as a whole is a defensible position; the utopian scenario involving delivery drivers ending up with a decent sized stake in Amazon somehow being impeded by wealth taxes isn't....

[tengbretson]

> Well for a start it pressurises asset holders to sell their assets.

To whom are the selling? The buyers would be only those that can make efficient enough returns to offset this tax due to their existing systemic advantages, like economies of scale or regulatory lobbying. This would accelerate consolidation.

> But the point isn't to increase stakeholdership so much as to stop privileging stakeholders with very low effective tax bills relative to mere workers

At this point I think there is ample evidence that policy in this country does not move forward without the consent of these so-called privileged stakeholders. If you take that as a given, why would you support handing these people an economic machine gun to point at your future self?

[notahacker]

> To whom are the selling? The buyers would be only those that can make efficient enough returns to offset this tax due to their existing systemic advantages, like economies of scale or regulatory lobbying. This would accelerate consolidation.

You don't need "systemic advantages" to earn more than 1% average annual return on your wealth. And strangely enough, not paying tax on their wealth accumulation whilst everyone else pays it on their earnings and trades doesn't reduce prospective buyers' advantages...

> At this point I think there is ample evidence that policy in this country does not move forward without the consent of these so-called privileged stakeholders. If you take that as a given, why would you support handing these people an economic machine gun to point at your future self?

Using pretty phrases like "economic machine guns" doesn't somehow make an argument of the form that wealth taxes somehow make wealthy people more powerful actually make sense.

[frmersdog]

>The buyers would be only those that can make efficient enough returns to offset this tax

Or people who aren't wealthy enough to have to pay it.

[thrance]

Regular people have less and less savings to buy "stakes in the means of production". Capital is getting more and more concentrated in fewer and fewer hands: the top 10% of the country owns almost 80% of it all. Wealth needs to be taxed and redistributed.