I agree with you that it isn't practical right now to get rid of billionaires. However, I don't think that it's some kind of economic theorem. The reasons that socialism failed are complex, and pure capitalism failed as well (think Gilded Age), which is why everyone lives in a mixed economy. It is reductionist to say that the 1976 IMF Crisis was caused by the tax rate instead of excess spending, monetary policy, and structural aspects of the economy. As a counterexample, postwar US had a 92% tax rate and did OK: http://www.slate.com/articles/news_and_politics/the_best_pol...

IMHO, most economies aren't able to raise the effective tax rate because the wealthy can add loopholes or shuffle their wealth elsewhere. This isn't an economic problem, but a political problem. Is there a political will to close loopholes and restrict the movement of wealth? Do people frame wealth in terms of freedom or in terms of societal obligations?

The problem is not the existence of rich people. The problem is that some people are getting poorer. The two are not always linked.

In other words, inequality can be a sign of good (upward mobility, vibrant economy) as well as bad (poor people getting poorer).

Fixing the latter is important. "Fixing" the first is harmful.

Any solutions should focus on giving the average and the poor the ability to improve their situation. Reducing the number of rich should never be the goal.

I don't think an income tax that punishes people for making too much money is the right way to go about it. How about instead of punishing people for being rich, discourage the filthy rich from spending money on the frivolous. For instance, set up a luxury tax on expensive cars, private jets and jet fuel, first class transportation and primary residences and hotels that are way above the average value for an area. On the other end, have tax credits (not just a tax deduction) for contributing to charitable causes, or for taking business risks that drive innovation.

I think it might be great to encourage the rich to spend as much as possible. Don't the expensive cars, private jets, and first class transportation support whole networks of businesses, and provide employment?

Yes, but you also need to look at the products of those people's labor and other things that labor could be used for. Do we need more people building and crewing luxury yachts, or building and operating hospitals and sheltered accommodation? In both cases people are paid to do work, but the products of that work are very different.

But in practice much of the wealth of super-wealthy people is actually either tide up in the value of the businesses that they own, which are often doing economically valuable things, or is invested in useful enterprises (shares), or funds useful activities (bonds). It's not as though the net wealth of Warren Buffet is all being thrown on hookers and blow.

There are already ways to direct the spending of the wealthy towards more productive uses, such as consumption taxes on luxury goods. But if they take their wealth to other countries with laxer consumption taxes, there's no a lot we can do about it. So we're back to the libertarian argument. At some point you get into questions of freedom and individual rights.

The problem is not that their are rich people buying nice things.

The problem is when poor or middle class people are unable to improve their situation or lose ground.

The only time rich people are a problem for poor people is when rich people are able to corrupt government to tilt the playing field their way. This is a problem of corrupt politicians and lack of anti-corruption law.

I think people underestimate how many economic difficulties are not caused by economic effects, but by corrupt politicians who are permitted to stack the deck against the average person as a way to fund their campaigns or rack up post-governance favors.

Not that much. For an average rich person, most of their assets are not spend for living/luxury, and they can't realistically be unless said rich are extremely extravagant.

So, unless they are actively invested in some sort of productive scheme, they are just sitting there (e.g. as huge estates, savings etc.).

In any case, it's much better for the economy to have a large middle class, than the equivalent money in fewer rich persons.

The thing about the rich is they can hire people to make loopholes out what you just described and the financal incentive to do so.

>If you raise the marginal tax rate to 99%, then you get rid of billionaires

No, you don't, because billionaires's source of money is almost always capital gains. They don't give a shit about income tax.

> High-tax Sweden has as many billionaires per capita as the US

The first thing they all did was move their incorporations out of Sweden

All the more reason for leveling the playing field.

And that reason is . . .?

Companies and individuals that manage to game the tax system should be subject to an individual tax that also works retroactively, so they don't have an advantage over companies and individuals that went with the system instead of against it. Taxes could be much lower, if only everyone paid his dues.

I don't think it's possible to have a country without rich people, relatively speaking.

In every country we seen have some sort of power hierarchy, therefore unequal distribution of wealth.

To my knowledge, there's been no country that said "no rich people." Yes marginal rates have been very high in the past - sometimes it had no effect (UK example - though it only went up to maximum 50% marginal tax rate), sometimes it coincided with large times of expansion (US had marginal tax rates as high as 94% and hovered around 90% between 1944 and 1964).

Further, there's never been proof it "kills your economy." I've never met a phenomenally wealthy person who said "well, if tax rates go up to x%, that's when I stop working." These folks LIKE working, money is great, but it's not their driver. And, even if they DID stop working, would it be the worst thing in the world? Honestly - do we really think there's only one Gates, Zuckerberg, Ellison, Page, etc?