Why a Wealth Tax is a stupid idea ...and populism
First I'd like to ask if any others here have ever paid wealth tax, a tax based on the market value of assets that are owned?
I have.
My country once decided that wealth with the market value of over roughly 200 000 USD would be taxed with a 1% wealth tax. The only thing exempt from this wealth tax was homes that people lived in, because otherwise there would have been simply far too many people having to pay the wealth tax (as typically the only wealth people have is their home). Once my grandparents decided to give away their summer place, an old farm house with a small patch of woods and fields, my wealth went well over that 200 000$ line. That is, if there would have been an eager buyer for an old country house without running water and with an outhouse back then that would have paid the market the price, as on a fire sale the estate wouldn't be anywhere close to those values. Real estate deals were and still are very rare there. I was a young student and didn't have much income, and really didn't want to sell part of the land or cut the woods that would take 40 years to grow back. The rent income from the fields was about 50 dollars, which was good considering otherwise, as I'm no farmer, in a few years the tiny fields would be pushing birches and be a coppice. The wealth tax would have been considerable compared to my non-existent income taxes, but I managed to squeeze my wealth either below or very close to the 200 000$ line, so in the end it wasn't a big hazzle for me. In the end the tax was so hated that a new administration THAT EVEN HAD THE SOCIAL DEMOCRATS got rid of it (but didn't, get rid of the inheritance tax, which still can go up to 33%). But the thing told me very clearly that I was labeled being part of 'the hated rich', not a commoner, by leftists.
My personal anecdote shows the problem when estimated wealth, not income, is taxed. I don't object taxing income and taxing larger incomes more than smaller ones. So progresive income taxation, fine. The wealth tax is totally different and very problematic. The arbitrary nature of just how the market value is estimated creates a real problem. Not all wealth creates income annually and not all wealth is divisible. Many occasions a business holder can have no income but have losses, more expenses than income. But for a wealth tax that doesn't matter at all. The biggest losers are people who we call farmers. They are basically millionaires, assuming if they sold everything and thus couldn't then continue at all with their livelyhood, yet their earnings can be similar to an assistant in McDonalds. Hence many times they are left out of the realm of tax...which just makes everything very confusing. Also, just where you put the threshold line of the wealth tax creates a huge incentive not to grow one's wealth over that line. Or simply to hide it. And what ought to be telling is that it's a tax that has been tried in countries like Austria, Denmark, Sweden, Germany, Luxembourg, France and my Finland and then has been abolished. In the Finnish case, and I have to repeat this because it sounds so incredible, with Social Democrats sitting in the administration and holding the chair of the finance minister and then deciding to abolish the tax. This ought to tell just how bad it is, because Finnish government loves taxes,
the social democrats even more.
Yet the tax itself is genuine populism: it is marketed as "ordinary people" against the "rich", it's always marketed as being a tax only for the tiny spec of the filthy rich. They can 'surely' pay for it as they aren't doing their share. Yet the more smaller is the group that the tax is meant for, the more it does send a message of basically what wealth isn't acceptable. It is also very ideological, as this tax is very close in my view to genuine socialist ideology. And it doesn't create wealth.
Now it's interesting that the idea of wealth tax is floated even in the US. I haven't followed it closely, but at least Warren and Bernie Sanders have proposed it. If somebody knows more about this, it would be interesting to hear your comments. All I can say is that if a wealth tax is implemented in the US, the only winners are the tax advisors and the wealth managers, who will have a great new market for their services!
And just how bad the idea is, consider that Donald Trump has proposed it: In 1999, Trump supported a wealth tax more severe than anything Elizabeth Warren is proposing. (Evidence of the populism, I'd say.)
Comments? I guess there are people who have different thoughts than me about the subject.
I have.
My country once decided that wealth with the market value of over roughly 200 000 USD would be taxed with a 1% wealth tax. The only thing exempt from this wealth tax was homes that people lived in, because otherwise there would have been simply far too many people having to pay the wealth tax (as typically the only wealth people have is their home). Once my grandparents decided to give away their summer place, an old farm house with a small patch of woods and fields, my wealth went well over that 200 000$ line. That is, if there would have been an eager buyer for an old country house without running water and with an outhouse back then that would have paid the market the price, as on a fire sale the estate wouldn't be anywhere close to those values. Real estate deals were and still are very rare there. I was a young student and didn't have much income, and really didn't want to sell part of the land or cut the woods that would take 40 years to grow back. The rent income from the fields was about 50 dollars, which was good considering otherwise, as I'm no farmer, in a few years the tiny fields would be pushing birches and be a coppice. The wealth tax would have been considerable compared to my non-existent income taxes, but I managed to squeeze my wealth either below or very close to the 200 000$ line, so in the end it wasn't a big hazzle for me. In the end the tax was so hated that a new administration THAT EVEN HAD THE SOCIAL DEMOCRATS got rid of it (but didn't, get rid of the inheritance tax, which still can go up to 33%). But the thing told me very clearly that I was labeled being part of 'the hated rich', not a commoner, by leftists.
My personal anecdote shows the problem when estimated wealth, not income, is taxed. I don't object taxing income and taxing larger incomes more than smaller ones. So progresive income taxation, fine. The wealth tax is totally different and very problematic. The arbitrary nature of just how the market value is estimated creates a real problem. Not all wealth creates income annually and not all wealth is divisible. Many occasions a business holder can have no income but have losses, more expenses than income. But for a wealth tax that doesn't matter at all. The biggest losers are people who we call farmers. They are basically millionaires, assuming if they sold everything and thus couldn't then continue at all with their livelyhood, yet their earnings can be similar to an assistant in McDonalds. Hence many times they are left out of the realm of tax...which just makes everything very confusing. Also, just where you put the threshold line of the wealth tax creates a huge incentive not to grow one's wealth over that line. Or simply to hide it. And what ought to be telling is that it's a tax that has been tried in countries like Austria, Denmark, Sweden, Germany, Luxembourg, France and my Finland and then has been abolished. In the Finnish case, and I have to repeat this because it sounds so incredible, with Social Democrats sitting in the administration and holding the chair of the finance minister and then deciding to abolish the tax. This ought to tell just how bad it is, because Finnish government loves taxes,
the social democrats even more.
Yet the tax itself is genuine populism: it is marketed as "ordinary people" against the "rich", it's always marketed as being a tax only for the tiny spec of the filthy rich. They can 'surely' pay for it as they aren't doing their share. Yet the more smaller is the group that the tax is meant for, the more it does send a message of basically what wealth isn't acceptable. It is also very ideological, as this tax is very close in my view to genuine socialist ideology. And it doesn't create wealth.
Now it's interesting that the idea of wealth tax is floated even in the US. I haven't followed it closely, but at least Warren and Bernie Sanders have proposed it. If somebody knows more about this, it would be interesting to hear your comments. All I can say is that if a wealth tax is implemented in the US, the only winners are the tax advisors and the wealth managers, who will have a great new market for their services!
And just how bad the idea is, consider that Donald Trump has proposed it: In 1999, Trump supported a wealth tax more severe than anything Elizabeth Warren is proposing. (Evidence of the populism, I'd say.)
Comments? I guess there are people who have different thoughts than me about the subject.
Comments (77)
Good explanation. It is a horrible idea. One can be technically wealthy but effectively poor and your farmer example is a good one.
I feel the same way about any inheritance tax. There is actually a homeless guy in my town who recently became very wealthy when his grandmother passed away. The point is not every wealthy person was born in the lap of luxury and privilege.
I don’t like taxation at all but any “tax the wealthy” proposal reeks of envy and animus.
Let them eat cake.
Both Bernie and Warren's Wealth Tax don't really start hitting meaningful numbers until you get into the .01% wealth bracket, whose assets obviously shadow than $200K. Their proposed wealth tax increases sharply as you travel further down the funnel of the ultra-wealthy (i.e. .001% through the top 400 wealthiest Americans). The top 1% of wealth owners also make the majority of their money through owned assets [i.e. wealth], not through [labor] income, so yes, that should be taxed.
How is it that “making money” doesn’t count as “income”? Proceeds from rent, lending, etc, are income (unearned income, but still). Proceed from sales are income. What “money made” is not “income”?
It does, but I was referring to labor income vs. capital wealth.
Seems that libertarian socialists understand the point. Of course these are sales / income / capital gains taxes. And here the discourse and the problems and incentives are closer to the ordinary debate around taxation than with a wealth tax.
I'm not sure from which lands you hail, but it sounds like a tax on wealth above 200k is obviously stupid (200k is nowhere near "rich"; not even visible to the naked eye when compared with the wealth of the "super rich"). Bernie wants a 1% tax starting at wealth above 32 million USD. A wealth tax in America would simply not touch farmers (who are already heavily subsidized), and if you had inherited some lands worth millions, you would have a much harder time gaining sympathy for the situation you were in. I'm straining to make the link between your own anecdote and American wealth gaps + Bernie's plan.
Hoarded wealth doesn't create new wealth, it just helps with winning larger shares of the newly created wealth, and therein lies the problem.
That's how any new tax is introduced.
It's first small and doesn't apply to the commoner. And especially with the wealth tax every time it is marketed that it doesn't matter for the commoner.
So above you were talking about 0,001% of the population, that's 3 280 people (if I count correctly), you are talking about about really a small group of people. Let's just think that the tax was only for them. How do you think that the next wealthiest person, the American 3281st richest guy (likely), would feel? Would the 30 000th richest guy feel secured also? How about the 3 millionth rich guy or girl? Or the 30th millionth rich guy or girl? Top decile wealth is on average still 1,1 million USD, so you are still talking about millionaires. The 30 million are still a small minority.
Quoting VagabondSpectre
The reason why the amount was 200K in USD was that then 5 Finnish marks was 1 USD or so, hence that 200K was 1 million Finnish marks. Hence the tax was deliberately a tax on millionaires. If you got wealth worth a million FIM, why shouldn't you pay? Millionaires ought to pay wealth tax!!! And now a labour union would introduce a wealth tax on everything over 100K euros with the exception, of course, of one's home. Simple reason, the vast majority of people don't have wealth over 100K euros besides their home.
And let's make another thought experiment: Let's assume that everybody had to pay a wealth tax. So if your unemployed and your home is foreclosed, but you still have this minibus (that the government decides is worth 9K) where you sleep, well, have to pay 90$. Wouldn't that sound fair?
Quoting VagabondSpectre
I'm giving you just an example of what a heavily taxed welfare state is like. On the other hand I have free universal health care and have studied in the university a master's degree without having to pay any tuition costs ever. If I would be broke, unemployed and would have no home, the welfare system would provide me small but decent housing. I wouldn't have to beg on the street. So I guess that's a plus. And the conservatives are just fine with all that. What they aren't fine with is a wealth tax.
Anyway, knowing the American system, I think that the tax revenues of a wealth tax would be dismal and likely be squandered of in foreign wars or in a currency crisis when the rich scramble away with their money. So it's not a great idea in my view.
I think your story is of a community that isnt used to what we call "property tax" in the US. Yes, it hurts, but it's very common here and has been for so long that we're used to it. It's the way cities and counties finance roads and schools and all the other outlandishly socialist things we do.
Where I live you have to report any upgrades to your dwelling in case the government needs a bigger cut.
And we also pay sales tax and both state and federal income tax. They tax the hell out of us.
But that tax isn't as high as the wealth tax at all. It's more like a fee.
You see, a tax even as low as 1% can be very high. Just think about if for some reason you would own a van Gogh painting and really liked it. Now, how much is 1% of a van Gogh? 1 million or so?
That is a wealth tax, if the properties are taxed on market value, not on a lower price.
The "tax value" of a property is usually lower than what the house would sell for (unless the market sucks). You can appeal the tax evaluation if you think it's too high. That's what you should have been allowed to do. Your local government should have lowered the value considering the state of the market.
I get what you're saying, but I'm not interested in over-taxation. You're making a slippery-slope argument that cannot aptly be applied to Bernie's plan. Yes, wealth taxes have been poorly coded and implemented in the past, and failed, and yes it would be a bad thing to burden the poor even more than they already are...
Accounting for some amount of inflation, a similar figure to Bernie's opening number would be nearly 100 million Finnish marks (Shirley would have a hard time drumming up sympathy at that level). I agree with the principle that it is unproductive to tax existing wealth, but after a certain threshold of wealth concentration, it becomes unproductive *not* to tax it. The earning power of the middle and lower class isn't going anywhere, while corporate and upper-elite profits have never grown faster.
In short, sometimes when we let the chips fall where they may, things get so screwed up that we need a do-over, whether by vote or by force. Once Besos has a personal wealth of over 1 trillion dollars (probably will never happen because he will start giving it away to charities and causes of his choosing), would you agree with me then?
If we one day find ourselves utterly without lands and viable livelihoods due to the extraordinary concentration of ownership, would you participate in efforts to redistribute wealth? I know this sounds outlandish, but as automation and AI advance, human labor is fast becoming uneconomical. What will we do once Amazon and Walmart no longer require human associates to operate their businesses? Yang proposes a universal basic income (after-all, people people buy less stuff as unemployment and underemployment rise) so that we can carry on existing as we are now, but Bernie's plan seems more direct.
If not wealth redistribution, then what? Even if we amply apply anti-trust measures to the corporations that are essentially more powerful than some nation states, there's still no promise that wealth owned by them will trickle down to the rest of us. I get that impeding on individual ownership rights is a serious action, but I see no other remedy. Wealth creation is not a zero sum game, but it is not an infinite sum game either. In Finland you have universal healthcare, but American's don't. Raising taxes on everyone could pay for it, but this would diminish the earnings of the bottom class even further. A wealth tax on the actually rich could pay for it, among other things (such as education). Is there really so big a difference between slowing the flow of gold to the dragon (income tax) vs reducing the size of its hoard (wealth tax)?
Quoting ssu
Bernie's estimate is something like 4 trillion in 10 years. The rich are always going to scramble away with their money. Always. That's how most of them got rich (not by creating wealth, but by winning and keeping it better). Washington admin failures not withstanding, at least this way the middle and lower classes get something.
Money makes money in today's world (eg: economies of scale, automation, investment power, interest), and the market does not regulate itself in such a way that it is immune to catastrophe (the catastrophe of economically dispossessed masses, or a world run by corporate super-powers chasing self-interest regardless of any ethical ramifications). The meme that Amazon payed 0 dollars in corporate tax exemplifies this; they have so much influence and sway that they can basically make demands from cities or nations in exchange for the divine mana of jobs. We can try to legislate against them, and in game-like fashion they will still get away with whatever they can. Given the impending economic vulnerabilities of climate change and the end of oil, governments and the working class is set to lose even more bargaining power against them. At some point, the unequal power dynamic between the working class/governments and the super-entities they depend on to maintain the status quo, begins to undermine and insurrect functional democracy (we're already about 90% of the way down that road).
What will give first?
I dont think so. The wealthy would just leave. That's the great weakness of socialism. If it's not global, it will fail.
I think the present nation state complex is going to collapse in a few centuries. It will be a dark age for a while.
As I understand it, the ultra-wealthy (top 0.1% and beyond) don't necessarily have or generate income, earned or not, that can be taxed at high levels to reflect their exorbitant wealth, and that a wealth tax is a more useful tool to in taxing the ultra-wealthy. It's not about "just having wealth", a wealth tax can be implemented for different groups. Sanders' wealth tax begins at $32M and Warren's at $50M with just a 1% and 2% tax to start.
Quoting ssu
Well that's simply not true.
Quoting ssu
lol is this slippy slope slop really going to be your argument against a wealth tax?
Where you see future collapse, I see change and opportunity (an industry shakeout) and corporations likely see this too. For example, whoever can most successfully diversify into the alternatives that climate change and the end of oil demand, will see a market where most of the competition has relatively quickly collapsed, and that they are in the best position to expand and capture a greater overall "market share". I want this adaptive process to occur, but I don't want one or two mega-corporations controlling everything at the end of it. And if one or two mega-corporations is how it has to be for whatever reason, then its stock and stake holders should not be just a small handful of wealthy elite.
So if Amazon et al left quickly enough, they would leave behind their market share (their customers in America) which would create an absolute bonanza for other retail/sales businesses and logistics firms (firms and businesses that create value for the society it serves, rather than trying to create the most value for themselves). Amazon is actually an amazingly efficient business, but the amount of money Besos can extract from it is unethical
Quoting VagabondSpectre
Why do you think it’s unethical?
The short answer is wealth inequality within and without the United States. It gives him incredible power that he can either abuse or waste. He could spend all his money trying to get to space, and even succeed, while others cannot afford chemo therapy.
Something or someone will give...
Probably because Amazon's "innovative" two day delivery service, with which it used in part to capture a nearly 50% market share in e-commerce, was build on brutal working conditions.
But that's not something folk want to talk about.
As with Walmart, there can actually be a very high ethical cost to achieve such low prices...
Quoting Maw
Okay, that’s an answer, which is different from what VagabondSpectre gave which was more about how he spent it. I don’t know what the work conditions are like. What are they that’s brutal?
Ultimately my point is about how it is distributed. One libertarian argument is that societal pressure will force Besos to give most of his money to charity, but this is not at all comparable to the benefits that a significant wealth tax would bring (especially if his charity is all about getting rich people into space).
I understand that. I was wondering what you thought was unethical about how he earned what he did. The problem seems to be about the amount he took from his company, that the amount was unethical.
Ultimately, the compensation and working conditions of associates are closely related to how much money Besos and the Waltons were able to extract in the first place. The amount of money extracted, how it was extracted, and how it was spent all have to do with the distribution of boons and burdens within society. Fairness essentially (which normally isn't very persuasive, unless the disparity becomes especially egregious)...
I don’t understand the obsession with taxation except as some sort of revenge. The government wastes so much of the tax take through its systems and the public have little say where the money is spent.
Wouldn’t it be more effective to shift the focus and pressure from taxation to better wages. If people had better wages and more disposable income they would spend it on what directly benefits them with no middle man. Their spending stimulates the economy. Taxation just shifts the money from one vault to another.
I provided several links to articles in the last few words there.
Thanks. It wasn’t coming up on my screen.
People can either buy from Amazon or not. It's not in the least bit hard to not buy stuff from Amazon and if everyone stopped doing so, the Bezos empire would collapse.
There are many, many inequalities which are the result of huge institutional problems not readily attacked by the common man, but the Amazon fortune is not one of them. It's built entirely on the lazy selfishness of the average citizen, that's what gives him his power, nothing else.
Firstly, that only benefits services which are purchasable. In making money individuals and companies make use of public resources which need to be replenished/maintained at public expense - the health and availability of a pool of potential employees, the environment (air water soil etc.), existing infrastructure, security (police, army)...and so on. Maintaining these in good order costs money but is not generally something private individuals do without collective payments of some sort.
Secondly, there's a massive proportion of the population - children, elderly, unemployed and homemakers who are not the direct beneficiaries of wages. Ensuring their welfare by raising wages puts them at the mercy of individual wage-earners (not all of whom have their best interests at heart), whereas attending to their welfare by taxation at least encourages fairer treatment by an entity over whom they have some control.
Having said that, wealth tax is an utterly stupid idea, and you're right about it being about revenge. If we didn't want these super rich individuals we shouldn't have paid them billions of pounds for their stupid products should we? If you don't like how rich Bezos is, don't buy from Amazon, if you don't like the fact that footballers get paid a million pounds per game, don't watch the game, if you don't like the fact that some Hollywood actor gets paid an obscene amount, don't watch his films. It's ridiculous to be instrumental in making these people so rich and then support schemes designed to get all that money back again. As was said earlier...
Quoting VagabondSpectre
...you'd have to be an idiot not to know that, at yet everyone still lines up to pick up the 'bargains'.
:up:
But right now most of the government's income comes from the top 10 percent of earners: 70 percent of total taxes.
Wouldn't an exodus of the elite leave us a poorer country?
Quoting VagabondSpectre
One of the casualties of peak oil will be plastic. How do you see disposable plastic being replaced?
I see an increase in natural disasters, war, migration, and social unrest: most of the ingredients of the bronze age collapse. That might be why I see collapse, though, ive been reading and thinking about the bronze age for a while now.
I've stated multiple reason just why a wealth tax is stupid populism. The fact that the the tax has numerous structural problems and that many countries have tried it and abolished it (yet NOT abolished progressive taxation, value-added tax, inheritance taxes etc) tells it simply sucks.
One thing I left out, but should be added is the detrimental effect on savings. The important role of what savings have is usually left out in the populist rhetoric where perpetually "the rich just get richer and the poor poorer". A wealth tax curbs savings.
And basically the problems you refer to, Amazon's brutal working conditions etc, aren't about wealth and aren't solved by taxation, but basically how the profits are shared. Jeff Bezos' wealth is a result, not a cause. Here the point is more about real wages lagging, hence basically the US worker not being appreciated as in other countries than anything else. You see, confiscating the wealth of Jeff Bezos and Bill Gates, something over 200 billion (which would lose a lot in price once government would confiscate the stock) would basically meant that the US wouldn't have to borrow money for a few months. Then the state would have blown through those 200 billion or so. Yet nothing would change for the ordinary person.
Wealth tax is simple populism that doesn't work and leaves the real problem, the lagging real wages, unresolved. The US has had real wages not going up for a long time. This is the real problem, not that some Americans own the most successfull corporations in the World. There are billionaires in Sweden and Denmark and even in Finland perhaps, but that genuinely isn't the problem.
In the above chart the times when the growth has been negative has been the time when the American worker has lost prosperity.
Or how about this one? Just check where the US is and compare it to my country Finland. Yes, you do have lower unemployment:
And I think the reason is this. Once the workforce refrains from collective bargaining and labour unions don't have a say, then the employers have a field day:
The truth is that the collective bargaining and labour unions aren't a political statement and don't have to be a political instrument of the left. For example, all the officers and non-commisioned officers of the Finnish Armed Forces belong to a labor union and I can guarantee that none of them is a leftist sympathizer, a social democrat or a communist. I'm not a socialist, but it's obvious that some kind of collective bargaining is good in the labor market. And that creates wealth and prosperity to the middle class and the real way to fix this problem.
Prosperity isn't created by a wealth tax.
Does it really?
Quoting VagabondSpectre
Yet that firms don't pay taxes or can avoid taxes, has nothing to do with a wealth tax. The trend has been especially in the IT companies to grow the share prices than to pay dividends. A good way to stop this would be to put limits to stock buy backs. Not to create a wealth tax.
Besides, the US had one of the most highest corporate tax rates in the World. Trump brought it down to 21% from 35%. That's still a bit more higher than here (20%).
I guess I'm not seeing the need for that then. If they're not using their wealth to extract wealth from others (which would thus count as income), then I don't see the harm that needs to be discouraged or remedied with the tax. I also don't see why they would care to amass huge quantities of stuff that's not of any use to them (if it's not generating them any income, and it's clearly far more than they could be personally using themselves). It seems like if it weren't generating income, they would sell it off to fund something they can actually use.
Quoting Maw
That's why I don't really object to those proposals in practice, even if I may disagree with the principle of a wealth tax. Those policies only put a very small burden on a very small number of people who can easily bear it, so it's not anything worth getting upset about. I still don't agree with the principle behind it though. I 100% agree with taxing property income (rent and interest), as highly as we can, but just taxing property itself seems wrong.
So if you own a van Gogh painting worth 100 million USD, you'll have to pay annually half a million dollars to the US government just for fun of owning it, by Warren's example.
If you get an annual return on investment of 5% to your 100m wealth (whatever it would be), which is an OK return, the tax pushes up your capital gains taxes (somewhere like 23,8% I presume) on your income +10% I guess.
With the Bernie model owning a 100m van Gogh will cost you 1,18 million annually.
And if you later decide to sell the goddam painting and van Gogh is out of vogue (perhaps because he's a white male or something) and get only 31,99 million or it is shown to be a forgery, tough luck! You won't get your tax money back (without having a great lawyer).
Quoting Pfhorrest
Some people do live in rental homes, hence if you raise taxation on rents too high the rental market won't work and you will have an excessive demand on rental housing (as nobody thinks of becoming a landlord.) Taxation has many consequences, and sometimes quite unintended consequences.
And this kind of thing is why I'm against a wealth tax in principle, but on my list of high-priority problems in the world, the struggles of people who can afford hundred-million dollar paintings are pretty low, so in practice I really don't care all that much compared to much bigger fish that can hopefully by fried by the same people proposing these policies.
Quoting ssu
Most people live in rental homes, or else in homes "bought" with rented money (which would be effected similarly). And what will happen to all that housing that used to be owned by landlords and rented out to people? The landlords can't profit off renting it out anymore, and aren't getting any use out of it themselves, so they'll want to sell it off, but nobody else is going to be buying housing to rent out to anyone else, the only people buying housing will be the people who need housing to live in, who would have otherwise have been renting. But they can only buy if that housing is sold on terms that they can afford, which is entirely up to the sellers. So everyone who owns rental housing will have two choices: either sit on their useless property and get no profit out of it, or continue collecting a monthly check for a long while at the cost of eventually not owning the property anymore. Which do you think they will choose? And who do you think benefits from this, people with enough money to buy extra houses to rent out for profit, or people who otherwise wouldn't be able to buy and would be stuck paying indefinitely for a place to live?
This is not an unintended consequence, this is the intended consequence. People paying money for something should end up owning it, and people who get paid for something should lose ownership of it. The principle injustice of capitalism is that the rich get paid just for owning the things the poor need to use, which keeps the rich owning more and more and keeps the poor from ever escaping that.
If the elite are indeed vacuuming up most of the wealth that is created in America, then their departure would have the long term benefit of creating opportunity for those left behind. Having a bunch of rich people is nice because they spend money, but if they don't pay taxes (and if the money they spend is just quickly half-lifed back into corporate coffers anyhow), it's not that advantageous.
So what if the top 10% of earners (which is a much broader category than income over 32 million) pay 70% of the taxes (they have more than 70% of the total wealth, after-all) [hide]
Quoting frank
We can go back to glass and recycle-culture if necessary, but really there are all sorts of possible technologies that we can and likely will discover. Using biological engineering to grow organic and bio-degradable mass packaging is one promising technology. But you're right to worry: if we don't get a plastic replacement then we will have to overhaul the way we distribute goods (it will need to be completely decentralized).
Regarding societal collapse, I choose to remain optimistic.
Assuming that being a massive chip leader within a modern market can be used as an asset to capture a greater share of the business and profits that are being conducted within it, then yes, a wealth tax does address the concentration of the means of wealth creation. It's pretty much implicit in a debt and fiat centric economy.
Quoting ssu
IT companies grow stock prices because it makes no sense for them to waste cash on dividends, they're all growth and that requires reinvestment (which is one of the ways that companies keep their retained earnings/capital gains figures low, thereby dodging the tax man). (companies give dividends to make their stocks more appealing and bolster their market cap, but it also tends to mean they have no real good investments/expansions to make).
Limiting stock buybacks is interesting, but it's only a half step; ideally the people via the government would have their own stake in the ultra-massive companies that tacitly run the economy, and reap the vast majority of the rewards.
Quoting ssu
I don't see how having a high corporate tax is meaningful if it can be so easily mitigated. And if the government itself had a stake in Amazon, then the dividends and stock growth would benefit them either way.
It's either this, or we're going to eventually give up so much power to so few individuals and corporations that we will eventually have to go through a massive round of anti-trust actions (which, I'm pretty sure, will fuck the markets up more than a reasonable wealth tax ever could). I don't know exactly how best to do this wealth redistribution, but short of change to our current trajectory, I don't see any other feasible option to avoid that unrest and failure territory that @frank is afraid of.
sounds right to me. or put it in a museum and it cost them nothing but $20 a visit. I think most people in favor of a wealth tax would share this sentiment? That doesn't make it right, but it is such a different perspective that they will never be convinced by any sort of argument that suggests it is right for individuals to possess that much.
You're not making much sense here, but many people do get it wrong.
First of all, there's a lot of people that are tenants out of necessity than choice starting with students or young people and those who simply cannot afford to buy a home where they want to live. On the other hand all those who rent apartments/flats/houses are doing so voluntarily as they can opt to sell their properties or invest in something else. And if the prices are at all time low, they don't have to sell their houses. They can even opt to have their property empty for a while: if the market is at bottom, why sell there? (This is reality: at low prices only those who are forced to sell do that.) Hardly property is useless. All this should make you understand how rental housing market works, so your idea that "the only one buying housing will be the people who need housing and these are those who would rent" doesn't reflect reality. If there's not enough supply rental housing, it's the people on the demand side who are either forced to buy a home (and not rent) or then just to wait and hope they could afford an own home. And no new homes for rent will appear, because there's no incentive for people to become landlords. This will also impact the demand for building new houses. So go in line for those government housing programs. Why can this prevail?
Usually the real estate that is rented for long term typically stays rented, hence rental prices change far less than housing prices (obviously because all rented have a price, the rent, whereas only a few houses/flats are sold at a time). Where the change happens is in new housing. Do people buy real estate with the intent of putting it for rent or not? If it's taxed higher than other investments, then they can opt to invest somewhere else. (And if every investment is taxed restrictively, there's the option of not making investments and just sit on your wealth.) Hence the consequences of high taxation to the markets might take some time to show.
This is one of the typical things that those who hate markets don't understand: the market is dynamic and trying to simply deny the existence of the markets will not get you anywhere. It's as counterproductive as to fight inflation with price controls that don't have any resemblance to the "black market" prices: just as bakers won't make bread if the ingredients to make the bread cost more than what you get with the official price of bread, so do landlords react to highly punitive taxation...but opting not to be landlords.
Then the same people don't think that markets work don't understand that the solution is to give incentives to be landlords. Here again they don't understand the markets. If it's a good and easy investment to become a landlord (which btw. needs a huge amount of institutions to work properly, where the government is very important), then there will be all those 'greedy' people willing to do it. They will boost housing construction and then there will be enough rental apartments to choose from.
That the housing markets don't work is very typical to Third World countries: there's a huge demand for housing, yet the lousy housing available in cities are in the prices of the First World and the only new building is done for the top end customers.
A bit off from the topic, but in the same manner as with the wealth tax, ignorance of the dynamics of the economy breed bad ideas, that at first may look benign and effective.
I'm actually a big fan of a more or less 100% inheritance tax due to the consequences of inheritance inequality. But I won't go into that now.
I think the real issue isn't revenge or vindictiveness but the realization the exorbitant wages some managers make is out of proportion (talk about the entitlement generation). And that had to do with the short term profit pursuit of stock holders and the absence of liability for directors and shareholders alike for shitty policies. But also not what I'll go into now.
The idea that if you invest capital you have the right to profits ad infinitum is, in my view, misplaced. Capital markets' fundamental function is to bring together borrowers and lenders. Corporations originally didn't have a perpetual character nor a profit motive - investors did of course have such a motive. But their return was a consequence of the corporation fulfilling it's stated goal. Like building a bridge leading to improved trade for the tradesman.
The whole day trading (or high speed trading nowadays) has little to do with the fundamental function of capital markets and is just wealth extraction at the expense of the real economy.
In other words, looking at wealth tax misses the point. The problem is a fundamental imbalance in the system where "aggregate demand" is diffuse individuals who rarely pursue anything with singular purpose but the capitalist production is focused, monied and the corporation lives forever. The deck is stacked against regular people who don't have a substantive portfolio of financial instruments or real estate. The only way to solve that is a fundamental retake on the corporation but as if that's going to happen at an international scale. Not likely.
Nevertheless, I've been thinking about an alternative but it's not something I want to share in public. :wink:
I was hoping you would comment, so thanks for the information.
The Dutch model seems far more reasonable than the Finnish version (or a Bernie version), especially if it took into account something like the financial crisis. Are there exceptions and obvious loopholes for example on how your assets are counted? (Usually there are, after all, politicians are usually rich too)
Quoting Benkei
Wealth tax isn't an answer to any of these questions, as you said.
Quoting Benkei
This would be an interesting topic.
So you don't believe that people inheriting the savings of their parents is a good thing and hasn't contributed to the prosperity of your country?
As I said earlier, if it were about this realisation, then why wouldn't those doing the realising do what was within their power to curb such excessive wealth accumulation? I presume we're talking about the same population right? You don't see the dissonance in people suggesting that governments should restructure their entire taxation system (with all the potentially unforseen consequences) to curb the super-rich, but they themselves aren't even prepared to enter a different Web address to find their next Disney-themed plastic toast extractor and toothpick 2-in-1 landfill-destined piece of crap.
So this is much more a political issue than about personal agency.
I don't accept that excuse for one minute. People spend on average nearly an hour a day just on Facebook. The idea that they haven't time to check out other suppliers than Amazon is just not feasible.
Quoting Benkei
Yes, but these changes have not been homogeneous across companies. I buy my Internet services from a cooperative, for example. They don't have an increasing gap between wages and productivity because they're worker-owned. It's not hard to switch supplier. It takes about half an hour to set up (half the average Facebook time) and it costs about £2 more a month (less money than the average spend on junk food, for example). What, on your list of concerns of the average person, is preventing them from switching?
The same can be said for Microsoft, Facebook, Amazon, Google... These are not the traditional issues where capitalists own the means of production and can effectively monopolise supply of essential goods. These are luxury items or services where the company does not have any ownership over the means of production.
It's not about what you find acceptable or not it's how people are motivated or not. They are motivated to clickbait in their timeline and that's a reality that doesn't care about your moral judgment.
Of course I'd also rather see a much more politically active, economically savvy and critical citizenry. But that's putting the bar too high. I wouldn't be surprised a large segment of the population isn't even aware of the wage-productivity gap and, for many, if they are aware they have been spoonfed market evangelicism that they don't question it.
Quoting Isaac
Good for you.
Quoting Isaac
We're neither cavemen nor did capitalists historically monopolise essential goods (at least, not most of the time). The companies' financial statements you mention beg to differ about the ownership of the means of production. Apart from Facebook, none of them have a intangibles-to-total asset ratio above 10%. Facebook's 15%. Alphabet has about 2% total intangible assets, .5% is patents. Amazon's is 7%. etc.
Plenty of ownership of production then.
Exactly. That's the point I'm making. If people are not even sufficiently motivated about the accumulation of wealth in a minority of of companies to do something as simple as switch supplier, then it seems a stretch at the least to suggest that those same people are sufficiently motivated by the exact same concern that they'd be prepared to alter the structure of the economy.
All I'm looking for is a relatively consistent model of motivation. People act in a fairly greedy and selfish manner in their consumer choices, so it seem prima facae reasonable to assume the same motivation behind their choice of preferred taxation regime.
Why would you suggest that people are suddenly motivated by a strong sense of fairness in the economic structures when it comes to taxation preferences when they can't even be bothered to pick an ethical supplier?
Quoting Benkei
No. Their assets are not the means of production of their services (at least not in the sense in which they can be monopolised). The services they provide are facilitated by the Internet, which they do not, and cannot, own.
Somone wanting to produce their own car must first purchase a factory and all the machinery. Only capital can do this, so only those with capital can do this. Anyone can set up Facebook. It just requires some Internet space. The entire reason why Mark Zuckerberg is as rich as he is is consumers knowingly and preferentially making him rich. Anyone who didn't want him to become that rich could have used one of the other social media services, or set up their own.
The point about Internet services, most software, entertainment (sport, film etc) is that they present a different model to traditional manufacturing. Manipulation of the client is the main goal, rather than ownership of the means of production. Recognising this is, I think, important, and treating the consumer as a well meaning but downtrodden class doesn't do that.
Wouldn't we expect to be right back where we started in the long term? In the meantime, people are without jobs, banks are foreclosing on homes, the stock market is plunging.
I'm not saying rich people are what keeps us stable. I'm saying that a wealth-ectomy (surgery that removes wealthy people from a society) is going to create turmoil. Any sort of surgery would create turmoil. People living on the edge will be hurt the most.
At this point, not doing anything will also create turmoil as Medicare goes bankrupt sooner than estimated due to Trump's tax cut. That issue should be in the headlines, not Trump's latest fart.
Quoting VagabondSpectre
Both glass and recycling are incredibly energy intensive. Right now a lot of our glass is made with natural gas. Natural gas will be depleted about the same time as petroleum.
Quoting VagabondSpectre
That's cool. I don't really think of it as optimism/pessimism. It's just looking at the situation mechanically.
I don't hate markets. I love markets. I think rent (including interest) distorts markets away from what we would naturally expect of them, and creates the problems that people wrongly blame markets themselves for. The naive expectation of a market is that those with less wealth will trade their labor to those with more wealth, who in turn will trade that wealth away for the leisure of not having to labor, and so wealth flows from where it is concentrated to where it is not, until the poor no longer have to labor in excess of their ongoing consumption (because they have all the non-consumables goods they need), and the rich can no longer afford to rest on the labor of others (because they no longer have an excess of goods to sell off), and only those who continue to do more of value for others can continue to live a more luxurious lifestyle than others. Markets are supposed to be a great equalizer, as Adam Smith expected it. Instead, in reality, those who have sufficient wealth can rest in indefinite luxury on unearned income from that wealth, and those with insufficient wealth must labor indefinitely just for the continued privilege of using someone else's property to do the work they need to survive. Why does that happen instead of what Adam Smith expected? I say the answer is rent, including rent on money i.e. interest.
And you completely miss the point about housing rent in particular. My concern is precisely for people who have to rent out of necessity and can't afford to buy. Most people rent out of necessity because they can't afford to buy, especially if we include everyone who rents money, i.e. mortgages, with which to "buy" as collateral for that borrowing. And paying that rent prevents them from saving money or building equity to get to out of that loop; millions upon millions of people are stuck renting their entire lives unable to ever get to a point where they don't have to keep paying just to keep what they already have (a roof over their head). The world I want is one where once you've paid for housing long enough, you get to stop. Where everyone who "can't afford to buy" can afford to buy and doesn't have to rent, because buying has been made as cheap as renting. I think the very existence of rent distorts the market to make it so that owning is more expensive, because if you own an extra house you can get free money from people who need it to live in, which makes buying extra houses attractive to rich people, which inflates the price above what poor people can afford, forcing those people into renting from the rich people who bought all the housing out from under them.
I can address the whole slew of complicated objections I'm sure you have that I've heard a zillion times before, but this thread isn't the place for that.
Taxing the wealthy makes perfect sense. We've done it before (in the US) and we had much better growth and better quality of life. Mainly the corporate sector and the wealthiest Americans should pay more. Close the loopholes and the tax havens, etc.
Also -- and this rarely gets mentioned -- tax INTANGIBLE ASSESTS. Which we don't do. We tax the interest made on them, that's all. So if you own 1 million in stocks you pay 0 dollars, 1 million dollar house you pay taxes on it. It's insane, and we know the reasons why this is the case.
Given the level of income inequality in this country (and the world), it's time to give up on these neoliberal fantasies, the fantasies of Ayn Rand, free markets, libertarianism, etc.
Tax the wealthy. It's been done before and it works. There are no alternatives, unless we can snap our fingers and change the entire economic system.
Quoting Pfhorrest
How does it distort? Interest is the price of money, extremely important issue. That there wouldn't be a price for the use of land or built structures sounds very strange, if you otherwise do favor the price mechanism of markets to barter or central planning.
Quoting Pfhorrest
Wealth only effects one's potential to buy products and services. And those with skills that are in higher demand usually get wealthier than others. So it is truly naive to think that those with more wealth won't trade their labor, but just sit idly by with their wealth.
Quoting Pfhorrest
And so it has been when the markets work. They work far better than centralized planning of the economy. In fact, the idea that a tiny cabal of righteous and ideologically pure people have this God-like wisdom to plan everybody else's economic behavior and how a complex system like an economy works is one the saddest stories in human development. And also the reason why monopolies are bad.
Quoting Pfhorrest
This "realism" sounds quite a idealist version of a Malthusian argument of there being this larvae, the rentier class, just idly being there as a parasite to the people who work. And the juxtaposition to those that have 'indefinite luxury' and those with 'insufficient wealth' is along those ideological lines.
In the world of Malthus basically all societies were still very agrarian and basically there wasn't anything else to invest in than in estates and agricultural production. In a modern economy agricultural production is a small cog in the wheel where the service sector is in an important role. So owning land isn't the only thing that rich people can do.
Quoting Pfhorrest
Paying rent isn't the problem. This problem, which is especially real in the Third World, is really about a banking and financial sector, that doesn't work well. Put it simply: when a financial sector doesn't work, the only person you can get a loan is a mobster who is a loan shark and normal banks serve only the elite.
The simple fact is that when the financial sector works well, there actually isn't a huge gap between buying a flat and paying back the loan and the interest and renting a flat. It is just as expensive or even less expensive than renting one. Here if you rent a large two room or a normal three room apartment, you could with the same money buy a smaller flat of your own and pay similar amount some years and then have the flat for yourself. Hence renting a huge flat or a one family home is extremely rare, as typically people opt to buy a home.
Quoting Pfhorrest
I'm confused. This doesn't make any sense.
Owning is more expensive than...?
Are you saying that simply people ought to live in a home free? Which other things are free? How do you define where and what type of home people can live for free? Who's incentive is to build houses if there isn't any price? Or I didn't get your point (which can happen).
Another question: how does people investing in an extra house (to put it on rent) would increase the price of housing??? Have you ever heard that reality developers or construction companies build house based on DEMAND? If people want to invest in real estate, then MORE houses are built. How can more supply make then the prices go up? Again there is this fallacy of the economy being stagnant.
Yet this fallacies and beliefs are real and shows the ignorance of the public discourse. When investing in real estate is de facto discouraged, there obviously isn't much investment projects going on. When the government doesn't see any private investment on the housing sector, it simply assumes there wouldn't and could not be more. Hence many times this goes into a vicious circle where there isn't much private developing going on even if there is demand for more housing, hence government housing is seen as an answer. Yet this typically doesn't correct the mismatch as building with tax income is expensive. With small supply of rental flats and huge demand for them the rents naturally go up, which then is battled by even more restrictions. Which then discourage people even more from becoming the hated landlords. This happens usually because of the public discourse. People complain that the rents are too high and the lines are long to public housing, and the norm leftist response is to say that the government will build more and put a stop to price increases by regulation.
And if you are thinking of real estate booms (like the US had before the financial crisis), the reason why prices go up is because the finance sector goes into this loaning frenzy pushing everybody more money. Which is another phenomenon.
When do markets work, in your view? Any examples? I see mixed economies, all over the world and throughout history. All involve a very strong state intervention.
The price is the purchase price. "To have a right to use something" and "to own something" should be the same thing. The point is for the users of things to be the owners of those things, instead of some people using things owned by others and others owning the things that everyone else uses.
Quoting ssu
In a truly free market, without rent and interest, yeah. The exact problem is that that's not true: that wealth can just "generate" more wealth not by being spent but just by being lent. You said earlier:
Quoting ssu
But that's not how actual wealth is created, that's just how wealth enables one to extract more wealth from the productive economy. If you'd actually read Wealth of Nations you'd understand that the reason why economies aren't zero-sum is because it's not simply the quantity of stuff in the economy but the distribution of it that constitutes the wealth in the economy: if I have a gazillion pencils and no paper, and you have tons of paper but no pencils, we can make the very same stuff worth more by trading some pencils for some paper so that we each now have the ability to write whereas before neither of us did. Trade is what actually creates new wealth; lending just siphons off of that.
Quoting ssu
All else being equal, yes. The problem is that all else is not equal, and you can get (and stay) wealthier just by starting out wealthier, despite being less productive a worker than people who started out poorer and, despite their greater productivity, remain poorer.
Quoting ssu
True, but the underlying mechanism of lending productive capital is unchanged. This is actually an analogy I make a lot: rent and interest are the remnants of feudalism, adapted to a modern economy. In a feudalistic, agrarian economy, serfs lived and worked on land that belonged to someone else, and had to give much of the product of their labor to that landlord for the privilege of living and working there. In a modern economy, there are more types of capital besides land, and we usually work upon one lord's capital while living on another's, but still a big chunk of the product of our labor goes to the first "lord" (the employer) and then a huge chunk of what we "get to keep" goes straight to paying another (the literal landlord, or else the bank).
Quoting ssu
Yes, it is. And banks don't solve the problem, because interest is rent on money and has all the same problems. Borrowing money isn't any better than borrowing housing.
Quoting ssu
Maybe that's true in places where land is dirt cheap and three-room apartments are "normal". When you live in the middle of nowhere and supply is virtually infinite relative to demand, these problems are easily overlooked. But in places where people actually live, where there is a crunch, all these flaws show through.
My parents have spent their entire lives paying for housing and still own no housing to show for it, despite having paid over that time more than the current cost of a house. I have spent my entire life paying the lowest rent I can possibly find (in the area where I was born and raised and where my entire life is so don't just say "why did you move somewhere expensive" or "why don't you just move back somewhere cheap"), saving and investing at ridiculous rates (currently up to over a third of my take-home income) trying to save up enough money for a down payment on anything available for purchase such that the interest alone (which is, again, rent on money) wouldn't exceed my existing rent, so that I can actually finish paying off a house before I die and not spend my entire life having to pay just for the privilege of having somewhere to sit and stave to death in peace.
I have never wanted to rent. I have always wanted to own. I have always lived in the place I want to continue living. But owning within my lifetime has always been out of reach. Even now that I make more than 75% of people in the country do. I don't even live in a big city, I live in a trailer park surrounded by farms and ranches out on the edge of civilization (within walking distance of national forest), and I would settle for anywhere within commuting distance of here, but there isn't anything affordable for hundreds of miles. I have to save up hundreds of thousands of dollars of down payment just so that interest alone on the cheapest available home doesn't make owning more expensive than renting. And the vast majority of people are poorer than me, and live in places more densely populated than my hometown, so this isn't just a "me" thing, this is a huge systemic problem affecting billions of people.
Quoting ssu
Than it otherwise would be. If you own two houses, you can live in one and rent the other out for free money. That makes owning houses attractive to people who otherwise wouldn't be interested in owning more houses, people who already have a house of their own, people who generally have a lot more money than people who don't yet have a house and need one to live in. So with more rich people interested in buying additional houses as "investments" (free money machines, not actual investments), the price of those houses goes up way above what it would be if the only people buying were people who need a first home to live in.
And so the people who would be the buyers otherwise, the people who need a first home to live in, are priced out of that, and forced to rent a tiny studio apartment or a bedroom in someone else's house, or if they're rich like me, a plot of land on which to park an oversized vehicle vaguely resembling a reasonable one-bedroom apartment. (One still two small for two people to live in, leaving me approaching 40 years of age and 10 years of a serious relationship and still unable to get married because we can't afford a place we could live in together).
Quoting ssu
PEOPLE. BUY. HOUSES. TO. LIVE. IN.
I don't want to continue this conversation. Ideological capitalists like you simply can't conceive of any heterodox economic model, and just writing this reply has sucked up my entire day so far. I've had this conversation a million times, and the only people who ever get it are the people who already got it, so I don't want to have it again.
Wealth taxes have been implemented in different countries in various ways, at varying wealth levels and with differing limitations, etc. Hand waving it because some countries have abolished it (while others have retained it), is...silly to say the least. And regarding savings, I'm afraid I don't have that much concern over people who will still have multi-millions if not billions of dollars in assets after tax. The wealth tax proposed by Sanders and Warren are not "detrimental" to the savings of anyone it effects.
You are just attacking an abstract of the wealth tax of your own conception. That's fairly ridiculous concerning there are numerous ways the policy can be proposed and formed.
Quoting ssu
Increasing wages can only get so far when 1% of the US population own over 40% of the wealth, while the bottom 80% own less than 10%. Fortunately, we can do both. You can continue to attack a wealth tax as "populist", but none of the types of taxation you mentioned are able to adequately address the growing inequality due because of asymmetric asset ownership, which is why a wealth tax is the only tax that properly addresses American inequality and can curb extreme wealth accumulation. 1% of Americans own 50% of all US stocks, and the richest 10% own 84%.
This is so goddamn dumb, no one has just a $100M Van Gogh painting as their only asset. What an exceptionally embarrassing argument, for a long list of reasons.
An embarrassing argument, Maw.
It is a simple example that people would understand the problem of wealth taxation compared to income taxation and to notice the problem when that wealth doesn't automatically create a steady annual income flow. Yeah, people don't own just a Van Gogh. But they surely can (and some do) basically own just a ranch or a farm somewhere, which would make them 'fabulously' wealthy if they sold it and assuming there would be that buyer around.
A good example of that wealth taxes aren't so simple was given by Benkei about Netherlands and the example of how there the taxation is done. And that during the financial crisis the tax officials understood how punitive it comes to be when nearly everybody doesn't make the 4% return on investment.
Quoting Maw
It is fairly ridiculous argument when my example was real, something that genuinely happened to me personally with wealth taxation in my country. I talk of own personal experience. You don't.
You're the one talking about a campaign gimmick to please the left done by few candidates that likely won't get it passed legislation even if they did win the election. That not all of the Democrat candidates are for this purposal tells a lot. So who is ridiculous here?
That's really a big topic to discuss and worth another thread.
I don't buy the anarcho-capitalist fantasies they give, but basically many times what is called a mixed economy is actually a market economy with working institutions. Laws and regulations have to work. Yet they aren't so easily complied with. It starts with the basics like theft isn't a transaction and it isn't tolerated. Sounds easy, but actually isn't.
No, literally. If you have wealth, cash, moolah, you can buy products and services. The rich can do that more than poor. What you can earn with your labor is a different thing.
Quoting Pfhorrest
Why?
If then trade is so good and renting so bad, what is so wrong with renting something than buying? If I travel to a foreign country where I would want to explore the surroundings with a bicycle, why would I have to buy a bicycle and then sell it a week later? I theoretically could do that, but renting a bicycle would less difficult.
The same if true if people genuinely have the option of a) renting a flat and b) going to the bank and get a loan that they can afford in buying a flat. If the financial markets work, then both of the options would be reality for people.
Quoting Pfhorrest
And if your wealthier, typically you get better education, better possibilities and so on. Social mobility is very important for a society. Without it, there's huge underlying problems.
Quoting ssu
Quoting Pfhorrest
It isn't dirt cheap. I was talking about Helsinki. The highest prices are equivalent of something like Paris. The reason why the prices are so high is because the interest rates are historically so low. Still, a cleaner can buy a small flat quite close to the city center. Of course the reason is that a cleaner get's multiple times the income of a cleaner in a poorer country. Same job, totally different income.
Quoting Pfhorrest
And this is a problem quite generally in every poor country.
It is a genuine cause for povetry, for a country to lag behind, for there not to exist a large wealthy middle class. The fact is that then the financial sector simply doesn't work. If an ordinary person working in an ordinary job cannot go to the bank, cannot get a loan and cannot pay that loan back and still live decently, the financial markets in the economy simply don't work! If ONLY the rich can get loans with a decent interest, then simply the market doesn't work.
Simply put, when there is no option other than to rent for people who work, then the entire society has a huge problem.
If by "working institutions" you mean massive state intervention, I agree. That's as "mixed" as you're going to find.
Why should it be massive? Or what do you define massive?
Would you say in Switzerland the state intervention is massive? Some would say so. I wouldn't. I think the country is an example that libertarianism and social democracy coexisting and that in reality things don't go along ideologically pure lines idealists cherish.
You said "only" before. I'm denying that "only". Here you don't say "only", so that's a completely different statement I'm not objecting to. Wealth effects other things besides that, not only that.
Quoting ssu
I already explained this but let me try to be more clear about it. If someone has much more of something than they need and someone else has much less of it than they need (both "needs" as determined by each person's own assessment of themselves), the normal expectation would be the poor person would work for the rich person in exchange for some of whatever that is (or work for someone else for money to trade for it, same thing in principle, money is just a medium facilitating multi-party trades), until the poor person has as much as they need or the rich person doesn't have more than they need anymore. But if rent is an option, instead of that exchange of labor for property, the rich person can only offer a temporary use of the property in exchange, so after the whole transaction is over, the original property has been returned to the rich person, and the payment for its use remains with the rich person, so the rich person now has more than they started out with, and the poor person has less. You might say why doesn't the poor person go to someone else who will sell to him instead, but it's in every rich person's interest to have this kind of "I win at your expense" arrangement, so as classes, the rich, who are the ones with the power to dictate what arrangements are available, will prefer those that leave the poor paying them continuously for the temporary use of things, rather than the poor eventually getting richer and no longer having to work for the rich just to get the money they need to pay the rich.
Quoting ssu
Why would it have to be less difficult? Rentals are already more complex arrangements than sales, and sales can be made more complex to simulate rentals if that's what people actually want. The same business that rents you a bicycle (gives you a bicycle to use for so long as you continue making periodic payments for the continued use of it, and you have to keep paying those payments until you return it) could instead just as easily sell and buy used bicycles on installment (so they give you a bicycle and so long as you continue to make periodic payments until it's paid off you can keep using it, or if you don't want to keep using it you can bring it back and they'll rebuy it, for a lower price of course, much of which will simply go to cancelling out your remaining debt for the purchase). The difference is that if you do want to keep the bicycle indefinitely, you can just finish paying it off, and not end up owing for its use indefinitely. And if you don't like the difference between that business's sale and repurchase prices, you're free to sacrifice the convenience they offer to find a better buyer elsewhere, so market forces (great thing eh?) will force the difference between sale and repurchase price to be worth the convenience.
Quoting ssu
I'm not in a poor country. I'm in the richest state in the richest country in the world (by GDP). It's the people in the piss-poor states who can easily buy huge tracts of land that nobody else wants, who generally think it's everyone else's fault for "choosing" to have been born in the places where most people are born because those are the places most people live.
Quoting ssu
And who or what is responsible for those financial markets working or not working? It's in the interest of the wealthy for them to "not work" like that (which is working according to plan from their perspective), and the wealthy are the ones with the wealth being lent out, who can dictate the terms on which it is lent. Why would they want anyone to be able to own outright and stop paying them rent or interest? Who is going to stop them? And most to the point, wouldn't stopping them be -- gasp -- socialist interference in the "free" market"?
To be clear, I am proposing "stopping them", but by removing the state protection of the arrangements that allow them to do this (invalidating contracts of rent and interest eventually, but working up to that by increasingly taxing rent and interest income including a negative tax on rent and interest expenses), rather than by adding state enforcement of prohibitions against it (such as by legally mandating interest rates be kept below a certain percent). My way seems more libertarian, more free-market.
(Also, mandating interest rates be limited doesn't necessarily help, if the price of the properties being lent out can just skyrocket so even a small interest rate on a ridiculously overpriced property is still prohibitively expensive).
(On a parallel note, a part of me wonders if the state government of California likes policies that lead to skyrocketing property values, not only because the rich who own that property therefore profit, but because the people directly voted in a constitutional amendment limiting property tax rates, so the only way the government can get more tax is if the properties are worth more).
Quoting ssu
At least we can agree on that.
Yes.
In my opinion, libertarian ideas of "free markets" is pure fantasy. They've never existed.
In your opening post you asked:
Quoting ssu
Yeah, clearly you haven't been following it closely, but it's obvious now you're only interested in hearing comments about it insofar as it's viewed negatively.
I answered how their proposals aren't at all similar to the example you provided in the opening post. It's not similar to Benkei's example. It's has nothing to do with just owning an expensive ranch, or farm, or a Van Gogh painting. Your only counterargument was just an asinine slippery slope, and when I pointed the fallacy out, all you could do was once again complain that such a tax is just "populism", refer to wealth taxes from other countries that are completely dissimilar to Warren and Sanders' proposals, and that increasing wages and strengthening unions would suffice (as if the USA can't do both). All while ignoring the broader issue of profound wealth inequality in the USA and how it's engendered.
So since you've decided to come full circle I think I'll just see myself out of this little circle jerk you're having with yourself.
Your comments, apart from saying "Increasing wages can only get so far when 1% of the US population own over 40% of the wealth, while the bottom 80% own less than 10%." have been quite in line with your ordinary condescending attitude, like "This is so goddamn dumb", "exceptionally embarrassing argument", "this little circle jerk you're having with yourself", which is normal fashion to you. Still, I've responded to your arguments if you give them.
Quoting Maw
The only difference is the level where the tax starts. There's genuinely no other difference. And in the Finnish example, the wealth tax started when you basically with our currency had people who's wealth was over a million, i.e. millionaires.
Quoting Maw
Benkei gave an example of an implementation of a wealth tax.