The solution is a progressive wealth tax. Start it at 2% (inflation target) above $100mm and raise it a point at every order of magnitude. 3% at $1bn, 4% at $100bn, 5% at $100bn, 6% at $1tn, et cetera.
There isn't a great reason why OpenAI should be hit with a tax while Andreessen Horowitz and Microsoft are not.
We already have expert consensus on what’s the best taxes, people just don’t like the answer: https://www.npr.org/sections/money/2012/07/19/157047211/six-... (“Three. Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.
Four. Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.”).
At least for me, even income taxes as high as 53% have not discouraged me from trying to make more money. They have made me consider moving.
At some level, certainly at 90%+, the most rational thing to do to make more money is to spend time lowering your tax bill, which is not a particularly beneficial way (to society) of making more money.
But I can't image anyone at an income tax level of say 10% is being actively discouraged from making more money? Like you need it to survive, so choosing to make _no_ money because of taxes seems like a very bad strategy.
Prices are set on the margins, the reason people are paid what they are is because even a relatively small change would cause someone to do something differently. Same theory as why we can be confident raising the price of something a few cents is likely to cause someone to change their decisions - if it wasn't, the seller would raise the price by a few cents.
It isn't obvious what a 10% across-the-market tax will do, but by the nature of prices they are always going to be set near tipping points so it probably is going to cause people to drop out of the workforce or reduce the amount of time they spend working. Maybe tip people into less productive jobs that pay cash. I dunno. How many people and how many hours is an open question but all your imagination is really telling you is that you don't deal with marginal participants in the workforce.
It's better for five people to earn $100k than for one person to earn $500k and four people nothing. That is a societal negative that progressive and marginal income tax discourages.
Why would you want to "discourage consumption" by taxing it? Following the logic in your message.
I know you are just quoting this transcript/article... but you likely have an idea of how this would work since you classify this as the best solution.
Especially interested on how you would progressively tax consumption... How do you apply brackets to the day-to-day purchases? The general answer is to demand people to report their income/savings and the difference is taxed... and rich people will just game this as easily as the income taxes (if not more easily).
I was initially skeptical of removal of income tax, but it's replacement with consumption tax makes sense.
Currently, income is "discouraged" through financial instruments such as Securities-Backed Line of Credit (SBLOC), which are very much only feasible in the realm of the very rich. Some part of this loophole can be offset by corporate tax, but corporate tax is based on profit, not income, incentivising all sorts of unproductive spending behaviour e.g. stock buybacks.
To me, the switch to consumption tax does a couple of things:
1. Instill discipline. Higher spending does not equate to higher productivity. By taxing spending, discipline will be instilled in both the consumer and corporation. With consumption tax, there will be no brackets, rather the amount of tax will be based on what the government policy is. Smoking bad? Higher tax. Soy milk more environmentally friendly? Lower tax.
2. Simplify tax situation with "capital gains". You pay tax upfront, now we don't need to evaluate what happens to the value of the stock, that will be the problem for the next buyer. No loophole for capital gains tax with inheritance.
This argument kind of illustrates why consumption tax is better. It's easy to advocate "lower taxes for everyone!" giving rich people most of the benefit, but it's much harder to advocate for "lower yacht tax!" without pissing off a whole bunch of wage workers.
That article spends most of its time explaining why a progressive consumption tax is obviously the right choice, then basically decries liberals as too dumb to understand it and conservatives as too evil to want it, but spends zero words to explain how a progressive consumption tax might possibly be implemented.
I wonder if people like Dick Cheney and Don Rumsfeld being at the scene of the crime is part of why "people just don't like the answer". Then again, perhaps it is revealing in some way of the answer offered itself.
This is not an expert consensus. It’s one random npr story.
Switching entirely to consumption tax is a billionaires dream. Dropping corporate income tax is a CFO’s dream. (Whoever wrote the line about how reinvested money shouldn’t be taxed is also an idiot. Taxes are on profits. Money reinvested in the business becomes an expense and so is not taxed. What is discouraged through business taxation is sitting on large corporate coffers.)
It's an NPR story with economics experts describing positions that are consensus in their field but politically unpopular.
> Tuesday's show presented the common-sense, no-nonsense Planet Money economic plan — backed by economists of all stripes, but probably toxic to any candidate that might endorse it... There you have it, six major proposals that have broad agreement, at least among economists.
I doubt deleting income tax is a popular view among economists.
Income and payroll taxes have the feature that you always have the money when it's time to pay the tax. That also means they're disinflationary. Whereas property taxes can be inflationary because they may require you to sell assets.
To what end? "Best" implies towards a certain goal. Is the goal economic growth? Or is it a fair society? Those are very different.
For example, if the goal is a fair society, then we should have a wealth tax, to disincentivize wealth equality. (And an income tax isn't so bad either in).
Having only a consumption tax makes sense if the goal is (only) to reduce consumption.
The goal is economic growth, which matters more than anything else. Fun fact: in 1900, Argentina was one of the richest countries in the world, at about 60% of US GDP per capita: https://ourworldindata.org/data-insights/argentina-was-one-o.... Today, Argentina has under 20% of the GDP per capita of the US. The difference is that the U.S. has grown at about 1.7% annually for the past century and change, while Argentina only grew at about 1% annually.
Maybe you're willing to give up 70 basis points in pursuit of a "fairer" society, but that means your grandkids will live in a much poorer society than they'd otherwise live in. This is the trajectory Europe is in currently. Having missed the boat on the Internet, space travel, and now AI, I suspect my grandkids will see a world where people are immigrating from Europe to China the way we see people immigrating from Argentina to the U.S.
GDP per capita is possibly the most worthless, detached-from-reality statistic I've ever seen. Japan has 38% of US GDP per capita; Mississipi, the lowest state, has a significant lead. And yet day-to-day life in Japan is infinitely richer than in even the highest GDP state. A much greater percentage of Japanese people have access to adequate food, housing, and healthcare, with sufficient money left over to enjoy life/hobbies. Perhaps a lower percentage of Japanese people have superyachts. Optimizing for the outcome of a shithole nation where tens of millions are denied access to healthcare, life expectancy is below almost any other developed nation, crime is out of control and the prison population is the highest in the world, etc seems greatly mistaken to me.
This is not "expert consensus", they bought in 5 economics with different political leanings and tried to get them to agree to common points (even though they do not agree with each other politically) and this was what they agreed on. And this was in 2012, 14 years ago. If you do the same experiment again with 100 economists, they might have a widely different plan.
Yes its an interesting article but you can't call it expert consensus and neither does NPR or any of the economists linked in there.
SF housing dropped relative to other high demand locales during COVID. I wonder if this is just a recovery after Austin et al didn’t pan out as alternatives?
I’ve been watching this for decades now. I was hopeful in my 20s that it was just a matter of time before supply would increase. But I’ve learned the hard way, The bay area voters and political apparatus is determined to keep housing as scarce as possible
If you have enough money to inflate the local housing market, you forfeit the right to be upset when people… point out that you are inflating the local housing market.
But I guess that’s to be expected of the modern tech elite. Unlike the financiers of the past they insist on having their cake and eating it too.
Obviously the solution is an ai-funded-house-wealth-tax.
I'm in favor of a politician tax, and an attractive people tax (I'm not worried, I will use my tax receipt for virtue signalling)
> the solution is an ai-funded-house-wealth-tax
The solution is a progressive wealth tax. Start it at 2% (inflation target) above $100mm and raise it a point at every order of magnitude. 3% at $1bn, 4% at $100bn, 5% at $100bn, 6% at $1tn, et cetera.
There isn't a great reason why OpenAI should be hit with a tax while Andreessen Horowitz and Microsoft are not.
Why hasn't AI proposed the ultimate "fair" taxation scheme?
We already have expert consensus on what’s the best taxes, people just don’t like the answer: https://www.npr.org/sections/money/2012/07/19/157047211/six-... (“Three. Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.
Four. Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.”).
At least for me, even income taxes as high as 53% have not discouraged me from trying to make more money. They have made me consider moving.
At some level, certainly at 90%+, the most rational thing to do to make more money is to spend time lowering your tax bill, which is not a particularly beneficial way (to society) of making more money.
But I can't image anyone at an income tax level of say 10% is being actively discouraged from making more money? Like you need it to survive, so choosing to make _no_ money because of taxes seems like a very bad strategy.
Prices are set on the margins, the reason people are paid what they are is because even a relatively small change would cause someone to do something differently. Same theory as why we can be confident raising the price of something a few cents is likely to cause someone to change their decisions - if it wasn't, the seller would raise the price by a few cents.
It isn't obvious what a 10% across-the-market tax will do, but by the nature of prices they are always going to be set near tipping points so it probably is going to cause people to drop out of the workforce or reduce the amount of time they spend working. Maybe tip people into less productive jobs that pay cash. I dunno. How many people and how many hours is an open question but all your imagination is really telling you is that you don't deal with marginal participants in the workforce.
It's better for five people to earn $100k than for one person to earn $500k and four people nothing. That is a societal negative that progressive and marginal income tax discourages.
Why would you want to "discourage consumption" by taxing it? Following the logic in your message.
I know you are just quoting this transcript/article... but you likely have an idea of how this would work since you classify this as the best solution.
Especially interested on how you would progressively tax consumption... How do you apply brackets to the day-to-day purchases? The general answer is to demand people to report their income/savings and the difference is taxed... and rich people will just game this as easily as the income taxes (if not more easily).
I was initially skeptical of removal of income tax, but it's replacement with consumption tax makes sense.
Currently, income is "discouraged" through financial instruments such as Securities-Backed Line of Credit (SBLOC), which are very much only feasible in the realm of the very rich. Some part of this loophole can be offset by corporate tax, but corporate tax is based on profit, not income, incentivising all sorts of unproductive spending behaviour e.g. stock buybacks.
To me, the switch to consumption tax does a couple of things:
1. Instill discipline. Higher spending does not equate to higher productivity. By taxing spending, discipline will be instilled in both the consumer and corporation. With consumption tax, there will be no brackets, rather the amount of tax will be based on what the government policy is. Smoking bad? Higher tax. Soy milk more environmentally friendly? Lower tax.
2. Simplify tax situation with "capital gains". You pay tax upfront, now we don't need to evaluate what happens to the value of the stock, that will be the problem for the next buyer. No loophole for capital gains tax with inheritance.
The problem with consumption tax is that it's regressive. Poor(er) people are hit harder with such a tax.
Depends what is being taxed. Staples could be excluded, while luxury items taxed more heavily.
Senate argument: "This poweryacht is necessary for my donor's livelihood of entertaining billionaires"
This argument kind of illustrates why consumption tax is better. It's easy to advocate "lower taxes for everyone!" giving rich people most of the benefit, but it's much harder to advocate for "lower yacht tax!" without pissing off a whole bunch of wage workers.
I’m not classifying it as the best solution. I’m quoting an NPR article describing the consensus view of economics experts.
But as I understand it, the reason is that consumption taxes have the least distortion in terms of deviating from the efficient behavior in the no-tax scenario: https://www.weforum.org/stories/2019/09/using-tax-to-tackle-...
That article spends most of its time explaining why a progressive consumption tax is obviously the right choice, then basically decries liberals as too dumb to understand it and conservatives as too evil to want it, but spends zero words to explain how a progressive consumption tax might possibly be implemented.
This reminds me of a rather odious napkin.
https://americanhistory.si.edu/collections/object/nmah_14392...
I wonder if people like Dick Cheney and Don Rumsfeld being at the scene of the crime is part of why "people just don't like the answer". Then again, perhaps it is revealing in some way of the answer offered itself.
This is not an expert consensus. It’s one random npr story.
Switching entirely to consumption tax is a billionaires dream. Dropping corporate income tax is a CFO’s dream. (Whoever wrote the line about how reinvested money shouldn’t be taxed is also an idiot. Taxes are on profits. Money reinvested in the business becomes an expense and so is not taxed. What is discouraged through business taxation is sitting on large corporate coffers.)
It's an NPR story with economics experts describing positions that are consensus in their field but politically unpopular.
> Tuesday's show presented the common-sense, no-nonsense Planet Money economic plan — backed by economists of all stripes, but probably toxic to any candidate that might endorse it... There you have it, six major proposals that have broad agreement, at least among economists.
I doubt deleting income tax is a popular view among economists.
Income and payroll taxes have the feature that you always have the money when it's time to pay the tax. That also means they're disinflationary. Whereas property taxes can be inflationary because they may require you to sell assets.
Georgism style property taxes are only due on the sale of the property so also have the money available then.
To what end? "Best" implies towards a certain goal. Is the goal economic growth? Or is it a fair society? Those are very different.
For example, if the goal is a fair society, then we should have a wealth tax, to disincentivize wealth equality. (And an income tax isn't so bad either in).
Having only a consumption tax makes sense if the goal is (only) to reduce consumption.
The goal is economic growth, which matters more than anything else. Fun fact: in 1900, Argentina was one of the richest countries in the world, at about 60% of US GDP per capita: https://ourworldindata.org/data-insights/argentina-was-one-o.... Today, Argentina has under 20% of the GDP per capita of the US. The difference is that the U.S. has grown at about 1.7% annually for the past century and change, while Argentina only grew at about 1% annually.
Maybe you're willing to give up 70 basis points in pursuit of a "fairer" society, but that means your grandkids will live in a much poorer society than they'd otherwise live in. This is the trajectory Europe is in currently. Having missed the boat on the Internet, space travel, and now AI, I suspect my grandkids will see a world where people are immigrating from Europe to China the way we see people immigrating from Argentina to the U.S.
> The goal is economic growth, which matters more than anything else.
That sounds like an argument for human slavery
False. The consensus is that slavery hurts economic growth.
And is not sustainable with finite and contested resources.
> The goal is economic growth, which matters more than anything else.
To some people, but not everyone. It doesn't make sense to give unqualified "bests" without these kinds of caveats.
I don't personally share this view. I don't think growth or wealth are inherently good.
GDP per capita is possibly the most worthless, detached-from-reality statistic I've ever seen. Japan has 38% of US GDP per capita; Mississipi, the lowest state, has a significant lead. And yet day-to-day life in Japan is infinitely richer than in even the highest GDP state. A much greater percentage of Japanese people have access to adequate food, housing, and healthcare, with sufficient money left over to enjoy life/hobbies. Perhaps a lower percentage of Japanese people have superyachts. Optimizing for the outcome of a shithole nation where tens of millions are denied access to healthcare, life expectancy is below almost any other developed nation, crime is out of control and the prison population is the highest in the world, etc seems greatly mistaken to me.
> Taxes discourage whatever you're taxing, but we like income, so why tax it?
How about to discourage the development of extreme income and/or wealth inequality? Or do you want to encourage them?
This is not "expert consensus", they bought in 5 economics with different political leanings and tried to get them to agree to common points (even though they do not agree with each other politically) and this was what they agreed on. And this was in 2012, 14 years ago. If you do the same experiment again with 100 economists, they might have a widely different plan.
Yes its an interesting article but you can't call it expert consensus and neither does NPR or any of the economists linked in there.
Because it’s an oxymoron.
SF housing dropped relative to other high demand locales during COVID. I wonder if this is just a recovery after Austin et al didn’t pan out as alternatives?
Coming soon?
"AI sector's job layoffs lead to dampening of San Francisco house prices"
Anything except building more housing, it seems. We'll see how the recently passed housing bill goes however.
I’ve been watching this for decades now. I was hopeful in my 20s that it was just a matter of time before supply would increase. But I’ve learned the hard way, The bay area voters and political apparatus is determined to keep housing as scarce as possible
Some YIMBY laws have passed, but it takes time to build things.
For example, it looks like the 25-story Marina Safeway can't be stopped, though they're still trying.
Berkeley has quite a few new buildings, though.
They're working on it:
Plans for nearly 4,000 homes over Safeways divide Bay Area residents
https://skybrian-links.exe.xyz/post/871
"These sentiments were palpable"
I'm confused what to do with a source that shows this as its first words.
It's abrupt because I didn't copy the entire article, just quoted a few paragraphs. I changed it to an ellipsis.
[flagged]
I don’t see the prejudice or jabs? The article seems pretty factual to me.
Are the prejudice and jabs in the room with us? Perhaps you could excerpt the quotes of the article you found offensive?
If you have enough money to inflate the local housing market, you forfeit the right to be upset when people… point out that you are inflating the local housing market.
But I guess that’s to be expected of the modern tech elite. Unlike the financiers of the past they insist on having their cake and eating it too.