"I've thought a lot about this, actually; it was not a casual remark. I think the fundamental question is not whether the government pays for schools or medicine, but whether you allow people to get rich.

In England in the 1970s, the top income tax rate was 98%. That's what the Beatles' song "Tax Man" is referring to when they say "one for you, nineteen for me."

Any country that makes this choice ends up losing net, because new technology tends to be developed by people trying to make their fortunes. It's too much work for anyone to do for ordinary wages. Smart people might work on sexy projects like fighter planes and space rockets for ordinary wages, but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs. Life in the Soviet Union would have been even poorer if they hadn't had American technologies to copy.

Finland is sometimes given as an example of a prosperous socialist country, but apparently the combined top tax rate is 55%, only 5% higher than in California. So if they seem that much more socialist than the US, it is probably simply because they don't spend so much on their military."

http://paulgraham.com/resay.html

(I know that in the US anything even vaguely leftist gets called "socialism", but Thomas Piketty, the author, is a genuine strong supporter of the French Socialist Party, and the focus of the book is explicitly on government action to prevent anyone from getting 'too' rich. I think it's a fair criticism.)

EDIT: To those not familiar with British history, things got really bad during the 1970s. Inflation peaked at 27%. The government went bankrupt and had to go "cap-in-hand" to the IMF for a bailout. Garbage piled up in the streets because the sanitation workers were on strike. Bodies piled up because the gravediggers were on strike... (http://en.wikipedia.org/wiki/Winter_of_Discontent). I don't want to get into an argument about Thatcher, but everyone at all familiar with the history agrees that the country was in a mess.

I find it hard to believe that there would be no facebook if Mark Zukcerberg was worth $15B instead of $30B, or no Apple if Steve Jobs had paid a few billion more in taxes. If money is the ultimate goal, then why are so many billionaires joining Bill Gates in giving their fortunes away?

During Eisenhower's time the top tax rate in the US was over 90%. We didn't become the Soviet Union, gravediggers didn't strike and innovation continued. I don't know if a 90% tax rate is necessarily socialist, but it wasn't the end of capitalism either. The idea that higher taxes stifle innovation is unproven and unproductive. If the super rich were willing to pay just 10% more, perhaps the super poor would have the opportunity to hold up their end of the deal as well. This real estate issue and the other symptoms of income inequality could become manageable problems instead of simmering conflicts.

For instance, consider Mark Zuckerberg. By and large, Mr. Zuckerberg will owe his taxes when he decides to cash out. But why should he cash out? An entrepreneur can build a multi-billion-dollar company up from nothing, earn a comfortable salary doing it, and as long as he is reinvesting all of the business's profits and not cashing out, not pay significant taxes!

Corporate person-hood, and corporate taxes don't really make so much sense.. I'd be in favor of limiting corporations, and pushing for disbursements to the owners... Limiting corporations from holding onto unutilized and under-utilized assets and capitol. Make it work, or give it back to the shareholders/owners.

I think that these things could really simplify legal/tax structures, and reduce a lot of government bureaucracy... Some people just wouldn't work.. more power to them. Some people will want more, and there will be competition in the workforce... I'd also be in favor of either open trade, or trade sanctions with countries that don't have similar environmental protection requirements to our own. Yes, that means that smart phones may double in price, but I think actions like that would help a lot more than simply putting up military bases all over the world.

Plus this whole issue of 'companies returning money to shareholders' is again only favoring the rich. It will be a long time before any significant portion of my income comes from dividends and capital gains. To make money in this way, you have to have a huge amount of capital invested already. Just to prove this point, if you made a very nice 10% per year before taxes on your investments, you would have to have 100,000 invested to make an extra 10,000 per year. If you are only making 50,000 per year, that would take a 20% contribution to your pre-tax retirement account for TEN years before you reached that level of invested capital. Sure, it would happen a little faster because of compounded interest and reinvested earnings, but I think my point is clear.

http://en.wikipedia.org/wiki/Negative_income_tax#Flat_tax_wi...

Edited to add: It's worth noting, though, that you can't produce every possible progressive tax rate curve with this method. It's certainly possible to prefer some curve that is unattainable this way. But a simplistic "a tax flat in dollars is regressive in utility" isn't applicable.

I'm in favor of a much simplified structure, applied evenly, as fairly as possible, and much smaller government needed to operate it. A lot of spending comes down to complicated bureaucracies, reducing those is a big step. Another benefit of a basic income, is it would allow the revocation of a lot of welfare and stimulus programs, and their own layers of corruption and bureaucracy.

I'm also in favor of cutting the overall defense and operations budgets by at least 2/3 ... There's a lot of ways the federal government could be much more effective, and reduce expenditures at the same time.

And although I don't know how much I feel it is the government's place, a baseline healthcare system could even be funded in a much better way than Obamacare. I tend to lean libertarian, but I'm a pragmatist. I just want solutions that are responsible, and have a chance at making things better, while avoiding as much chance for corruption and bureaucracy as possible. Not to mention reducing the footprint of the federal government, and reducing the impact of corporate protectionism along the way.

Corporate personhood (as far as I understand) is required by limited liability, which makes a lot of sense to me. Separating a company's debts from the owners' debts (and preventing creditors from going after the owners of a company when it goes bankrupt) is very encouraging for new and small businesses. The debts of the company become separate from the debts of its owners. It encourages people to start businesses and take loans, not having to worry that they'd lose everything if their startup goes under (at least theoretically).

OMHO one of the biggest arguments for corporate personhood is they are tax paying entities... if you reduce corporations to only allow shared ownership and limited liability, while also limiting the holding of underutilized assets and capital, it would even out. I'm not talking about liability, I'm talking about holdings, taxes and political sway.

While I agree with the idea itself, I don't think you can prevent that realistically. In the end, it's not "corporations" that donate money, but the people in charge of those corporations. If those people (the CEOs, VPs, board members and so on) want to make a donation, they can always do so privately (and most of them certainly have the money to do it).

I feel this is the heart of the issue, that people think of money and wealth as "mine" vs. "not mine." It's the whole American individualism at play, where it's you vs. everyone else, where you getting richer is a Good Thing, even if (or maybe especially if) it increases the gap between you and others.

Whereas a much healthier mindset is "mine" vs. "ours." You have money that belongs to you and you have money that belongs to your community. This community can be a neighborhood, a city, a state or even a country. Once you flip this mental switch, you realize that the taxes you pay are not really taken away from you, but rather shared with everyone in your community (of which you are a part).

I understand that taxation is necessary. I also understand that people like to keep what they earn. I draw this line at half... and I would draw that same line for the wealthiest (who bend current tax law to pay far less than half) to the poorest, who would recieve a basic income (along with everyone else) to subset the half that they earn and get to keep.

How about the internet? The web? Nuclear energy? All of this has been payed for by taxpayers.

EDIT: I am getting a couple of down votes, so I am assuming people are asking for some sources. Most of the research, for internet at least, was actually funded by the department of defense [1]

[1] http://www.internetsociety.org/internet/what-internet/histor...

It's funny how the idea the fact that government provided some early foundations for the Internet somehow awards them full credit for it, doesn't apply to the private inventions such as electricity and the telephone without which the government couldn't have invented the Internet.

First, you're understating the government contribution. DARPA didn't just research network theory. They built a network. TCP/IP was designed under contract. Also, that point undermines the original argument, which is that entrepreneurs are necessary for innovation. Once the technology exists, development is something that can be done with a rate-regulated monopoly. AT&T wired up every person in America under such a regime.

I'm not saying that this would be my preferred model, but its one that works just fine.

For at least a year after I started on the internet in Dec 1991, any use of the internet for "commercial activity" was disallowed (and did not happen enough for a person to notice it). Spam had not been invented yet; the entire marketing profession seemed unaware of the existence of the internet; the main form of promotion I can remember is announcements of academic and technical conferences; it was OK to make a "work wanted" post on Usenet only if you wanted to become an employee ("W-2") -- contractors ("1099") and one-man consulting shops were prohibited from using the internet to look for clients.

Although a few private-sector companies (UUNET for example although started as a non-profit in 1987 became a for-profit in 1989) were influencing the internet at this time, the influence was minor compared to the influence of governments, governmental contractors (notably BBN and Mitre) and universities.

And again, the internet was already very valuable and very able to enrich people's lives -- provided that those people were willing to use command-line interfaces.

Just because government money was involved doesn't mean the government developed the technologies, nor that profit wasn't a prime motive.

Who said this? I was merely pointing out that "new" technology, as appeared in the quote I responded to, it actually usually kickstarted by taxpayer money. I am not interested in where it went from there.

Said what exactly? The comment you were responding to is titled "How can you dismiss socialism so casually?"

> I am not interested in where it went from there.

Well, that's awfully convenient, isn't it? If we only consider technology that's developed by the government it's much easier to reach the desired conclusion.

That was pretty good incentive to pipeline money to Bell Labs or the PARC: http://www.slate.com/blogs/moneybox/2012/07/24/xerox_parc_an...

And look where that got us.

Steve Blank's "Secret History of Silicon Valley" [1] reveals just how heavily the Silicon and other semiconductors in Silicon Valley depended on DoD funding, and SV likely wouldn't be where it is without that funding. Parenthetically, 'Secret History' is also just plain fun and fascinating to watch.

The plumbing of the internet exists because of DoD's ARPA (now DARPA) project to connect and share expensive computing resources.

Entrepreneurs may be part of the equation, but ignoring the significant government role in the technology we have seems likely to lead to wrong conclusions.

[1] http://steveblank.com/secret-history/ [2] "Where Wizards Stay Up Late: The Origins Of The Internet ", Katie Hafner

It is true that the NIH conducts basic research that often identifies biologic targets, but there is a huge difference between discovering a lead compound and actually bringing it to market. That difference is about $1B. That money has to come from somewhere and the free market is a great place to get it.

The golden years of British innovation where in the 50s and 60s all right but 1850s and 1860s, maybe even earlier. By the end of the WWII Britain was a shade of its former self completely eclipsed by the US. Although to be fair, tax policy probably wasn't the decisive factor.

England / the UK is a mess at the moment. They are heavily in debt. They keep on cutting benefits to the poor and allowing the rich to pay even less tax. According to your argument everything should be getting better because of this, but I assure you it is not.

Debt is high, but the key metric of net debt as a proportion of GDP is decelerating and is forecast by the Office of National Statistics to level out over the next few years and be falling within 3-4 years. [2]

The UK has made cuts to social and welfare budgets, but these cuts are actually smaller than across the Eurozone. Social spending has risen faster since 2000 in the UK than anywhere in the OECD. [3]

There are still issues with wealth disparity (poor vs rich and South-east versus the rest of the country), tax avoidance (mainly corporate), and challenges with reforming the welfare state so that benefits are there for the those that genuinely need whilst not creating a disincentive to those that work. However, saying the UK is mess at the moment, is do dismiss the facts.

[1] http://news.sky.com/story/1238991/imf-sees-uk-growth-remaini...

[2] http://www.bbc.co.uk/news/business-25944653

[3] http://www.telegraph.co.uk/news/politics/10574376/Graphic-Br...

The main measure of an economy is GDP per capita. Apart from cyclical fluctuations, the main drivers of GDP per capita are are investment and productivity.

In the UK both of these are below that of the major developed economies.

As for the current growth of the economy-all is not well, as there is a large current account deficit, which is being funded by borrowing from overseas and is not sustainable.

Do we have rubbish piling up on the streets, dead people piling up not being buried? Do we have rolling power cuts due to strikes? Are we all on a 3 day week? Massive inflation and interest rates?

The UK is turning the corner after the disastrous spend spend spend! Socialism of the last decade.

That's a very polite way of acknowledging that the UK government ran a massive deficit-funded spending campaign throughout one of the fattest and longest boom cycle in history.

The UK competes with many other places for where the rich want to live. France has had a disaster with their recent proposed 75% tax rate.

The same goes for entrepreneurs - would you register your startup in the USA if the tax rates, especially on capital gains were massively higher than elsewhere? It's also a question of VC capital - would they let you.

It's better for the USA to get it's cut of Facebook's success rather than drive Facebook into a tax haven and get nothing.

And the race top the bottom continues.

Wages going down for the majority, while a few get a lot richer is hardly what I would describe as progress.

Please don't buy into the propaganda. I think you are confusing invention with smart packaging and marketing what was already developed. None of the technology we see today were bootstrapped by individuals or private investors. As a counter argument I will direct you to this talk.

http://www.ted.com/talks/mariana_mazzucato_government_invest...

Even though the USA pays the most in the world for it's military, I was surprised how little of the GDP it actually was.

It's poor example considering that Finland is not a socialist country, they have the same capitalistic economy and democratic government that US and most of Europe have.

To avoid discouraging savings, the wealth tax could be progressive. The tax on the average citizen's savings is negligible but rentiers pay a substantial portion.

I think an inheritance tax is especially important to prevent the formation of generational wealth.

Property tax is a sort of wealth tax. It goes to fund local services that the occupants of that house presumably consume, though.

Doesn't the estate tax fully cover this case?

Also see the zero-sum fallacy (http://lesswrong.com/lw/2gd/fight_zerosum_bias/). "Some people being richer necessarily means I am poorer."

Not any more it isn't.

Two similar apartments on opposite sides of the same street can have significantly different market rents just because they are in different boroughs, and those boroughs have vastly different council taxes. The classic example in London used to be Wandsworth vs. Lambeth.

Council tax, although based on properties, is meant to be a tax on residents, to put towards local services like police and rubbish collection. It was created after a previous tax (dubbed the 'poll tax'), which taxed each individual, regardless of the size of their abode, caused protests.

[0] http://en.wikipedia.org/wiki/Window_tax

Fundamentally, wealth can only be created against the backdrop of social order. If you gave Zuck $10 million, far more capital then he started Facebook with, and sent him to Somalia, he would not be a billionaire today. He would've been killed and his money taken. Any business he built would've been taken from him. Because he's not skilled in war, and without social order that's the only skill that matters.

Each person equally contributes to the social order, and therefore each person has equal say in the structure of that society. That's the basis for liberal democracy. If people feel that inequality undermines the social order, they are entitled to do something about it.

Sure. But if they're proposing cures worse than the disease, we should try to talk them out of it, not just play on their feelings of "unfairness" to win political battles.

For tl;dr of that book, by the same author, is here: http://www.vanityfair.com/society/features/2011/05/top-one-p...

- What other solutions to the problem of wealth being used for political influence have been proposed?

- Would lobbying/fundraising reform be a better focus, rather than attempting to make everyone, regardless of their contribution to the economy, have equal amounts of wealth?

- When was the last time nationwide wealth equality was proposed? What were the results? What about previously? What about before that?

We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth.

Only if by 'we' to mean the top 20% of American society.

The median worker's wages have been essentially stagnant since 1970: http://www.nytimes.com/imagepages/2013/01/13/opinion/13green...

Moreover, inflation has been uneven: food (including in restaurants) and electronics have plummeted, but the costs of education and healthcare have skyrocketed, and housing has skyrocketed in areas with good job opportunities. It's easy to cut back on new electronics and restaurants, but a lot harder to cut back on housing and healthcare. Cutting back in education gets your stuck in a poverty trap.

So things don't necessarily look so bright for the median worker, especially after 6 years of persistently high unemployment.

I can't dig up a source for that part right now, but it's out there in the CPI statistics.

This kind of language is exactly why you think only 20% of Americans are wealthier than our parents and grandparents. Money ≠ wealth. Compare the number of people today who have access to washers, dryers, irons, microwaves, a kitchen, cars, cell phones, and so on to previous generations. Even if wages have remained stagnant the average standard of living is almost always increasing. You can even live in an apartment, own many or all of those items I listed, and still be classified as living in conditions of poverty.

I'm not saying poverty doesn't exist. But I am saying the definition of poverty is constantly being adjusted because humans are so great at creating more wealth. Instead of an absolute metric for poverty or a standard of living, we use a subjective one that changes as humans acquire more wealth.

If you haven't already, I'd highly recommend Paul Graham's essay "How to Make Wealth"[1]. He covers this subject very well.

[1] http://www.paulgraham.com/wealth.html

But on inflation adjusted income, job opportunities, and retirement age and social security benefits the baby boomer generation was likely the peak. Trust me, the likelihood that we are just going downhill from now is quite high.

>They despise "inequality" and wealth. Maybe. I despise Kim Il Song. He is wealthy and his country has inequality.

people pretend that wealth does not increase the cost of living for the poor, but it does. And the poor should not be penalized for this.

Even the village idiot should have a place to sleep, though the very valuable Einstein bought all the houses.

Some people want to think that a village idiot doesn't deserve to live a miserable life because he is a village idiot.

You're certainly pulling a lot of strawmen here. Come to think of it, almost reminds me of Fox News. They have a habit of demonizing the other group, just to make themselves feel better.

Thank you for being the better person and not joining in.

The idea that he would think that a village idiot deserves to live a miserable life is entirely in your head, and quite at odds with the second paragraph of his comment.

I was trying to say that the inequality and "hatred" towards inequality and wealth(both claims unsubstantiated, with emotionally charged language)he is attributing to "socialists"(used as almost a slur in his text, also, wrong, social democracies are the wealthiest systems around) is in his head. You are the one misrepresenting my argument.

And just because we have it "better", doesn't mean everyone has at least a reasonable standard of living. Einstein should be earning a lot more, but a village idiot also deserves to not live in dire poverty.

To provide a counterpoint: We already exist in the society you describe. You can choose to not pay your taxes and the government won't protect your assets from being seized. Now logically, under your system the person with the greatest military might would be able to seize your assets and defend them him/herself (or pay taxes). However, as the entity with the biggest military might will always be the government, ipso facto we have exactly the same situation as we do under the current law, where the government will start seizing assets if you don't pay your taxes...

The only alternative in a might-makes-right kind of libertarian society, is that individual entities (rich people/corporations/etc) start gathering enough military might to challenge the government and hence keep their tax money to themselves.

So best case scenario, we end up with a detente where the government and the hypothetical powerful force agree not to fight. Due to economies of scale, I'd be willing to bet that the cost of maintaining such a force is waaayyyy more than any taxes levied. Given that this force also gives the owner the ability to tell the government to go away, they'll have effectively declared independence and started their own little dictatorship (whether corporate or otherwise). The only difference is that nobody gets to vote for the new corporate overlords. They just have to obey or leave (until there's nowhere to flee to). This kind of libertarianism is better called neo-feudalism.

Worst case scenario, we have regular open warfare in our own back yards. What a great society to live in, where we're all just trying to stab each other in the back. Progress and civilization indeed...

Therefore the right of the government to enforce taxation for the betterment of society as a whole is absolutely essential to having a "civilization" at all. Those who cannot remember the past are condemned to repeat it.

/rant over :p

http://en.wikipedia.org/wiki/Georgism

There's a foundation of some sort in San Francisco that introduced it to me. It's a quite interesting idea. The TLDR is capitalism for what you produce, and socialism for natural resources.

I'd like to see it tried out somewhere if it hasn't been already.

This is a very strange economic theory you've got going here.