If everyone would be able to play these tax avoidance schemes I'm sure society would collapse. For big players these are easy schemes and somewhere this untaxed wealth must be recaptured. Just favoring the rich further accelerates the wealth imbalance.
Would it? Or would it just shift demand around? I mean the money is still there, and I don't see any reason the entities with money would lock any more of it up in a "static" manner (e.g. gold bars and piles of cash) than they do now.
But everybody is able to reinvest profits into a business they have, whether that's an industry giant, or a tiny one-man shop. There is no government on planet Earth which considers that to be "tax avoidance". Governments want profits to be reinvested and not paid out to owners, even the most socialist governments you can find.
If you're against this, then you shouldn't talk about taxes. You should rather talk about abolishing private property completely.
Yes, that is the old discrepancy between society in the true sense and society as imagined by libertarians. A few strangers waiting together for the bus do not constitute a community. If the bus is canceled and they organize a carpool, then a community has formed. If you scale this up and replace personal relationships with institutions, you have a useful concept of society.
For libertarians, society is any large gathering of people who interact with each other in some way (or not), even if they rape and devour each other. If you understand society in this way, it cannot collapse (or is constantly collapsing).
That would be the consequence of taxing ownership in companies, since there would be no reason to invest to create big companies. And for industrial society you need big companies. You need giant companies, and taxing owners on the size of the company means that people will not invest their money or effort build industrial scale companies.
The other way to have industrialization is to instead have a command economy, where the government mandates what is to be done.
I agree.
But I'm not convinced by the next paragraph. You present it as if it were a matter of 0 or 1. But I don't see any good reason why taxation shouldn't be used to make adjustments without immediately collapsing the entire incentive structure for investment. Less profit is still profit. If this argument were valid, there would be no large industries in countries that tax companies more heavily than the US.
Thinking about how incredibly many factors have to come together right for a giant business or industry of any kind to be able to exist, I understand that governments are very careful to not poke them with too many sticks. Their products and services exports (and imports) are an incredibly valuable bargaining chip in foreign politics. The only other significant bargaining chip which nations usually have are military threats, and that isn't a pleasant road to travel.
That's been happening for a long time in the US. Staggering military industrial complex. Tens of billions lost in COVID relief. Billions lost in Minnesota due to unchecked privatized social welfare fraud (which has been known about for a decade).
Some mistakes will happen. What we have is unacceptable. If the government can't handle the money responsibly, it has no business collecting the money.
That's more an indictment of the way you (the US) starve your public services of proper regulatory power with the right level of personnel to handle it.
But your Congress voted last year to defund the IRS and the administration are busy gutting the SEC and other regulators.
Oh and government fraud has nothing on the commercial and rent-seeker frauds extracting wealth for no benefit from their positions of control. But anti-trust prosecutions are basically a dead path for rectification.
Blaming the "government" for what happens from obvious policy failures is the fault of the policies and those that set them, not the "government" as some nameless bureaucracy.
>Blaming the "government" for what happens from obvious policy failures
Who creates the policy that fails if not the government? If a supplier kept telling you they'd do something and kept screwing it up at what point do you move them to the bottom of your list for who to call to get stuff?
It's really easy to sit there enveloped in pure ignorance and say "those idiots just need to fund an administrative agency to prevent fraudulent daycare" or whatever but nobody in the US wants to do that because everyone's seen with their own two these sorts of endeavors turn into feeding troughs and revolving doors and rackets that the politicians and politically connected use to run businesses that make money by going through motions that provide little (just enough to keep some political support form useful idiots) value at taxpayer expense. How do you solve such a problem? It's immensely hard and complex.
I'm so sick of ideologues who can't think two steps ahead peddling these sorts of "just do this" simple and wrong solutions.
“New federal data released by the U.S. Centers for Medicare & Medicaid Services (CMS) shows the overall rate of improper payment in Minnesota’s Medicaid program is far below national averages.
In the review released this week, CMS found an error rate of slightly over 2.1%, compared to a national average of 6.1%. The data for the review was compiled before the Minnesota Department of Human Services began implementing new strategies to minimize the risk of fraud and harden its systems against bad actors.”
States are in dire need of liquidity. Just look at global debt.
Like, sure, you don’t owe growth taxes for a quarter when you didn’t grow. But why should you be refunded just because prior taxable growth isn’t denominated in money in a bank account?
Apparently paying for gas, water, electricity, property taxes, taxes on everything you buy isn’t enough, now you have to “contribute for enabling”. What’s next? Pay because they “enable you to breathe”?
I have low opinions about unbalanced one sided arguments.
If they all had unified in one voice against the administration, Trump might be more constrained. They might not be so hated. If they realized, like Henry Ford, that a strong middle class actually is good for THEM too, all this could be avoided. Instead they’re showing up at Melania screenings while average citizens are getting shot in the streets.
I don’t think they realize the fire they’re playing with my stomping on the social contract that made them so wealth.
Some of them do: https://news.ycombinator.com/item?id=42335797
But the pitchforks are coming for 12 years already. They got accustomed to the sight and even put some measures to redirect the masses so they fight each-other.
Bezos gave $40m to make the movie. It was a way to maintain his companies position. It's standard oligarch tribute to the godfather. See Russia or Hungary for further examples.
The movie cost nowhere near that much to make. Melania got the money. It was her very own little grift, while her husband and his children have been extracting literally billions.
Sadly, I'm far more worried about a thousand people who make a million bucks than I am about one guy who makes a billion.
You don't get to the B number by not being pretty darn shrewd and sociopathic so those guys must be pretty evil but man have the "upper middle class" or "professional managerial class" or whatever you wanna call the "comfortable enough to not think about the harsh economic realities of their ideas" class been an unmitigated disaster for western society over the past 20-70yr depending on how you wanna measure.
I’m genuinely baffled at the incredulous tone here. Yes, that is exactly what should happen: laws, subsidies, and incentives enable a company to grow and flourish. Then, as the company grows, other laws incentivize it to give some of its state-sponsored affluence back to benefit the country.
Like, sure, the execution of that process is often dysfunctional, but the fundamental contract there does not seem like it should be surprising to people: we don’t have (many) socialist state-owned businesses, but the point of a functioning country is still to provide good things to the people living in it. Not to benefit businesses or a tiny sliver of the population.
That’s why we have everything from income taxes to interstate highways: to distribute wealth and resources to (a flawed approximation of, but it’s still the goal) everyone in the country. That’s just how non-corrupt governments are supposed to work!
Then why not tax the military? They are surely the most affluent company of them all, if you take a tally of all their inventory.
If you tax companies based on their size rather than their profits, then you're not going to have any big companies. Any investor or entrepreneur would be a fool to invest in making a big company.
But many endeavours need big companies and big investments. For example power plants. That's a whole lot of value to tax, such affluence! Better redistribute this wealth, and instead have a hundred thousand non-affluent hot dog stands.
> That’s just how non-corrupt governments are supposed to work!
In practice, every government in the world does not tax companies reinvesting their profit into growth.
Narrowly: because they're a utility funded by taxes, not an independent entity benefiting from tax-funded infrastructure. Having a military for defense/power projection/whatnot is one of the infrastructural benefits of being part of a state (and one of the things that a company that grows in that state "owes" the state tax money for--whether that's owed on growth or just capital).
Like, do I personally think my country's military should have a vastly different funding profile, incentives, and behavior? Absolutely. But that doesn't change the fundamental dynamic: $state provides $thing (security, clean water, cheap gas, whatever) that makes being in $state good for many people, people who do well financially within $state owe it money back on the basis that their doing well is at least partially a result of $thing being available to them.
> Any investor or entrepreneur would be a fool to invest in making a big company.
Not true. A growth tax need not be a 100% tax, so growth would still be an advantageous thing to do. Many countries have tax brackets today; that doesn't discourage people from getting rich.
An ugly military troop transport might have the same cost / value as a desirable sports car. Not to mention other types of military equipment. But we wouldn't think about that as affluence. Because we know that military equipment are tools with a purpose.
The same for the value which is locked in within any giant corporation. Of course a large industry is going to have expensive equipment and lots of other investments, which nobody thinks of as "affluence". That is exactly what the money of billionaires is. They own a share of all that ugly equipment, which has no use outside of a big company.
It's like in a combustion engine. Oil has to be added for the engine to work. But over time, dirt particles, metal abrasion, soot, and combustion residues accumulate in the oil, overwhelming the oil filter and reducing its lubricating ability. If you don't reset it to a “healthy” basic state at regular intervals, it gets so bad that it prevents the engine from operating and ultimately even destroys it.
Does the massive wealth inequality we see today cause problems that lead to the erosion of society itself? I would say yes, definitely. Of course, it is frustrating for these people when the money they have generated is taken away from them. But let's look at it realistically: if someone has $100 billion and $99 billion is taken away from them, they are still in a situation where they lack nothing financially.
At some point, you've played capitalism through to the final level. And then you should put down the controller and go outside to listen to the birds chirping instead of frantically chasing after the growth of a number that, due to its sheer size, no longer has any concrete meaning, apart from the fact that there may be two other people whose numbers are bigger or who are hot on your heels.
On a side note. Yes, the massive wealth inequality is eroding society. But billionaires aren't the source of this problem. They are outliers, freaks if you so will.
The real problem is the massive wealth inequality is the gigantic prices of real estate and rent, created by the monetary system being based on real estate instead of productivity. That means it is very hard for a person to claw and scratch her way to equality if they're not born with real estate or gets that benefit at an early age. For most, their irredeemable mistake in life was choosing to be born in the wrong decade.
At the same time a huge percentage of the population who has never made any effort in life and generally have no talent or any admirable qualities, get great wealth and comfort by having been born at the right time.
For every billionaire there is a a hundred thousand of the kind of person described above. Most of us have them not far away, and they have a hundred fold bigger impact on our lives than any billionaire. And at least many billionaires have at least accomplished or done - something - in their life.
> At some point, you've played capitalism through to the final level. And then you should put down the controller and go outside to listen to the birds chirping instead of frantically chasing after the growth of a number that, due to its sheer size, no longer has any concrete meaning, apart from the fact that there may be two other people whose numbers are bigger or who are hot on your heels.
Wouldn't building a rocket to go to Mars for example be such an endeavour, which is bigger than chasing the imaginary dollar number? Or the philanthropic endeavours of other famous billionaires? Or even exacting political influence in the shadows, which is probably something all known and unknown billionaires do?
Rents are expensive because real estate is expensive. Real estate is a good store of value. The massive accumulation of surplus wealth among a small portion of society has led to an increased demand for stores of value. Someone looking for a house to live in competes not only with others who want to live in it, but above all with the super-rich who want the property as a store of value. That's why real estate is expensive.
> Wouldn't building a rocket to go to Mars for example be such an endeavour, which is bigger than chasing the imaginary dollar number?
That's conceivable. But I don't see the space science fiction of Le Guine or Asimov being realized in the activities of Musk and Bezos. To me, the whole thing seems more like an awkward dick measuring contest. The awkward situation with Shatner was a good example of how hollow and superficial this whole thing is. These people could go down in history as benefactors and heroes of humanity. But they don't have the guts for that. Either they launch rockets or go to the gym or sit with Joe Rogan or try to undermine democracy and replace it with a neo-feudalist hell.
Edit: I agree with you that we don't necessarily have to focus on the billionaires who are so prominent in the public eye. Below them, there is a larger class of super-rich people who have their fortunes managed for them, never lift a finger in their entire lives, and yet still attract an ever-increasing share of society's overall wealth.
SpaceX has done a huge amount of engineering work in making the cost to get mass into orbit significantly cheaper, more reliable, and more routine. Elon Musk is, on a personal level, because of the sort of company he chose to build after becoming wealthy, absolutely responsible for bringing humanity closer to a future imagined in space science fiction.
If an owner takes out profit, they are punished with high income taxes. So they reinvest in their business, and this is what the government wants because it creates jobs, innovation, products and services, and tax income.
So they've been doing what they have been forced to do by the government. And as a consequence their companies are worth a lot.
Now the government wants to tax them on the company value?