Taxing Growth(equitileconversations.com) |
Taxing Growth(equitileconversations.com) |
The problem is that complexity of tax law, the number of loopholes, incentives, refunds....
The really big problem is that people on low incomes do not have an incentive to work because the loss of benefits means they are barely any better off from working. That is a strong argument for UBI, or at least a much slower rate of loss of benefits so people keep more of their income.
There are a lot of imprecise and misleading claims made here, for example:
> people who are talented, people who are wealthy, people who have capital, people who have entrepreneurial skills, they can move.
Talent, wealth, and entrepreneurial skills are not the same thing. Wealth is often inherited, talented people may be employed and not all talents are all that portable. While capital can be moved the assets that it is tied up in cannot - you can see your business and move, but that just means someone else buys your business. A wealthy person does not have to live where their investments are.
There is also a very high effective marginal for high earners in certain circumstances (particular range of incomes, have children). People complain about his as well as the steep loss of benefits. Its very rarely the same people complaining about both.
"I was quoted by a man from Goldman's in the mansion house, that in Hong Kong it cost them $70 to onboard a client. In the UK, it now costs them $10,000 to onboard a client just because of the regulation."
Well I'll be darned!
I'm sure there were other reasons why it failed, but for the people I knew who supported it, claiming it to be a 23% sales tax instead of a 30% sales tax was a hill they were willing to let the whole thing die on (and it did die). Lots of people who casually supported it at first when they heard 23%, lost interest when it was clarified what that really meant. The difference between 23% and 30% isn't all that great but if you're going to overhaul the tax system, trust in those who are doing it is needed.
For the flat tax, which is tax cut for the rich:
> This paper uses data from 18 OECD countries over the last five decades to estimate the causal effect of major tax cuts for the rich on income inequality, economic growth, and unemployment. First, we use a new encompassing measure of taxes on the rich to identify instances of major reduction in tax progressivity. Then, we look at the causal effect of these episodes on economic outcomes by applying a nonparametric generalization of the difference-in-differences indicator that implements Mahalanobis matching in panel data analysis. We find that major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pre-tax national income. The effect remains stable in the medium term. In contrast, such reforms do not have any significant effect on economic growth and unemployment.
It's been a disaster that's lead to wealth consolidation not seen since the gilded age while bringing back old terrible concepts (such as company towns [1]). It's wrecked the middle class.
The fact is, tax isn't what gets in the way of company growth and innovation. It shockingly is actually the opposite. When you have buybacks, low taxes, and easy mergers and acquisitions, it encourages companies to behave in manners not good for the company but good for the owners of the company. That means sending money to stock buybacks, buying out competition, suppressing wages, and cutting corners which overall kill quality. That's because the name of the game is capturing as much money as possible.
High tax and strong corporate regulations like we had in the 50s, 60s, and 70s changes the perspective of companies. If you give a company owner the choice to spend a dollar in taxes or spend it on employee benefits, they'll spend it on employee benefits. But leave a loophole for how they can circuitously capture that dollar for themselves and they'll do that every time.
The tax cut and deregulation era of Reagan, Clinton, Bush, Obama, Trump, and Biden has been a trainwreck that has lead us right up to the problems we have today. Nothing is affordable and the unrestrained capitalism has made it more expensive than ever just to live with everything getting worse year over year.
This guy pretends like the economic policy he's proposing isn't what we've been running and that's why it's so laughable dumb.
I'm not sure about the talent part: unless you're strictly talking about remote work, going to a new country is not what I would think of as "easy".
> Doug explained why a staged path to a 20% flat tax […]
It seems to me that flat taxes ignore the marginal utility of every new dollar of income.
What exactly is having the top income earners keep more money gotten society? It seems like not much besides more inequality (which has probably helped fuel political dissatisfaction):
> This paper uses data from 18 OECD countries over the last five decades to estimate the causal effect of major tax cuts for the rich on income inequality, economic growth, and unemployment. First, we use a new encompassing measure of taxes on the rich to identify instances of major reduction in tax progressivity. Then, we look at the causal effect of these episodes on economic outcomes by applying a nonparametric generalization of the difference-in-differences indicator that implements Mahalanobis matching in panel data analysis. We find that major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pre-tax national income. The effect remains stable in the medium term. In contrast, such reforms do not have any significant effect on economic growth and unemployment.
We see enormous flourishing in society whenever labor is given more power for whatever reason (usually mass deaths) because this increases the amount of resources which flow towards raising children, who then become productive members of society. In times of weak labor power, average people are squeezed tight and less resources flow to children, which fucks shit up.
I think we are seeing that right now in the U.S. - education is nickle and dimed to shit, wages aren't enough to support children, let alone let them flourish, and the general "vibe" is so bad that people don't even want to have kids.
Meanwhile rich people are richer than ever.
This leads to the erroneous assumption that making the rich less rich will make the poor less poor. That's obviously not the case.
> Now, let me just quote some statistics. We have the most successful tech sector in Europe. The reason why is we are outside the Digital Markets Act, the Digital Services Act, and the AI Act, which are three European acts which heavily constrain tech growth in the EU. As a result, the thing that I call the flat-white economy ...
Digital Markets Act (2022), Digital Services Act (2022) and AI Act (2024) - these regulations are obviously totally different to the UK versions - Digital Markets, Competition and Consumers Act (2024), Online Safety Act (2023).
The reason why something was worthy of a book in 2015 is something that happend in 2022 / 2024, the car in the car section must be a delorean. There are a lot of good reasons, making stuff up makes me wonder about the validity of the remainder of the arguments.
I'm sure they're talking about the 8 million dollar Porto Embargo or whatever, but I would love one day to hear a podcast discussing the genius of the Toyota Corolla. Safe, affordable, available, reliable. I've had friends with Toyotas that were about to fall off their base from road salt rust but the engine and transmission still worked perfectly.
Pretty amazing that you can be of modest or lavish means and still own a really solid car that everyone can fix. A lot funner than hanging out in the repair shop waiting for a specialist to fix a blown turbo headgasket.
That and other things that are transforming it into a nanny state make it a hell no.
But yeah, it's nice you are lowering taxes and regulations on those who fall in line.
Some of the ideas bring us back to the Brexit debate. Being outside the EU allows a freedom of action but, depending how far deregulation and law taxes are taken, that also means retaliatory barriers from the EU, which is still the largest trading partner (41% of exports, twice the volume to the 2nd export market, which is the US).
When Elon Musk says the only way to solve the US debt crisis is through automation and AI to boost GDP, it makes no sense. Government revenue has less and less to do with output and more to do with taxes on labor, so automation will make the problem worse. I'm not saying we shouldn't automate things, but that the ideas of cause->effect when it come to money are not very well thought out - yes, including my own.
We will have to drastically change the tax base if automation really takes off. Every individual company or industry is rushing to flush out their workers but someone has to make money to buy their products eventually and I doubt they'll enjoy the level of taxes needed to maintain an economy if they all manage to dump their employees at the same time.
* Prosperity gospel (as if developed economies have slow growth for want of just one more tax break on the wealthy. Just one more! That'll fix it right up!)
* Laffer curve invoked without any attempt to determine where on it current policy lies
* Saving the whales is killing the economy (they were spiders in this example -- point for satire?)
* Trying to sneak financial deregulation under the skirts of the above
* Opaque economic growth model with self-serving result presented as factual
* The rich will leave (as if the pressure isn't coming from their pumped assets and a firesale wouldn't fix this)
* Tut-tutting about debt to pretend at fiscal conservatism
* 100% attention on upper class concerns, 0% on lower class concerns
* Upper-class conservative-coded hobby talk free of any concern that it might give away the above
I think they were earnest and just wildly out of touch, though, given all the allusions to 15 year old economic discussions. That's when these memes were at their peak. They simply don't understand the credibility hit they have taken since then. I'd love to see a conversation between them and Gary Stevens. These memes are his origin story.
not true:
https://data.worldbank.org/indicator/NY.GDP.PCAP.CN?location...
There were declines in 2009 andd 2020, for reasons that out to be fairly obvious, but overall consistent growth
> that also means retaliatory barriers from the EU, which is still the largest trading partner (41% of exports, twice the volume to the 2nd export market, which is the US
However, trade with the EU was declining as a proportion of total trade even before Brexit, is exaggerated by transshipment, and does not have as significant benefits as trading with economies with different strengths (i.e. more comparative advantage)
[1] https://www.ons.gov.uk/economy/grossdomesticproductgdp/times...
[2] https://tradingeconomics.com/united-kingdom/gdp-per-capita
> However, trade with the EU was declining as a proportion of total trade even before Brexit
Yes, it has slightly declined, probably because of Brexit. The point is that it is one thing to say that we are "free" to do as we please, but the reality is not so simple if that means taking a massive hit on 41% of our exports! This is the whole Brexit story.
Gunna need to inflation adjust that one bud, its not decline, but it is not great.
https://data.worldbank.org/indicator/NY.GDP.PCAP.KN?location...
That's very much not true, and it's also a tale as old as HN at this point. Since I started commenting on HN in 2010 sometime, the quality had stayed more or less the same, and hasn't drastically dropped in quality like Reddit has done as it grew. Also, the amount of comments that complain that HN is turning into Reddit seems to have stayed at the same level of frequency too, fwiw.
Is it actually 41%? Is it a massive hit? What is the economic impact of small trade frictions on a declining proportion of exports. The main reason for the decline is not Brexit, it is that the EU is a declining proportion of the world economy because Europe is the slowest growing region of the world.
> This is the whole Brexit story.
No, it really is not. Similar economies in the EU are doing about as badly as the UK so you cannot blame Brexit
> So at best economic growth barely exceeds population growth but overall it's flat to down.
One of the replies to my comment links to a graph at constant currency and is shows low growth so you might stretch to flat/stagnant, but definitely not down.
Yes, currently 41% of UK exports go to the EU.
The point is that we have a deal with the EU for access. But that might change. If we went low tax/low regs the EU may very well retaliate by putting barriers to trade with us. This would seriously hurt our exports (a "big hit"...). Hence, reality of being "free to do what we want" outisde of the EU is not so simple.
This is the whole Brexit story because that has been the debate of "freedom" vs "alignment" and issues of access to EU market since the Brexit referendum.
> but definitely not down.
The graph shows a decline, as said and repeated... Obviously not over the long term but I never suggested that.
If you pick a time period over which that is true. That proves what exactly? European economies did badly in 2023?
> If we went low tax/low regs the EU may very well retaliate by putting barriers to trade with us.
The same applies to any free trade agreement, or exporting anywhere, as the US has recently proved.
The EU would also lose from higher trade barriers.
I object to the observation "wealth isn't zero sum" being used to sop up every possible objection to the way the system currently works.
Taking more money from the poor makes them more poor.
Taking more from the rich 'harms' them less because of the margin utility of money: taking $1k from someone making $160k is qualitatively different from someone making $60k. Taking 20% from someone making $160k ($32k) is qualitatively different than taking 20% from someone making $60k ($12k).
So if you want to have X revenues for funding government, you can take it from those who have more marginal need of it, or those who have less.
It not even related to the original comment I replied to about becoming rich the exoense of the poor...
I.e., to take money from those who have (more) money.
It still debunks the post I replied to.
its not great, but very similar to the closest comparable economies: https://data.worldbank.org/indicator/NY.GDP.PCAP.KN?end=2024...
Do you have something constructive to discuss on the topic of the article?
Because its wrong. Look at the graph. it shows some years of decline (Covid and the 2008 financial crisis) but overall there has been growth over the long term.
If you are now claiming "growth has been too low" I agree that the UK's economy, like other western European economies, has been stagnant with only 7% growth over the last decade.
On the other hand, I think this chart shows a clear long term trend all the same: https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?end=2...
I don't know why you are doing that (using narrowest possible interpretation of what I wrote to "prove me wrong" and "debunk") but you are not commenting anything constructive or substantial.
The UK economy (in common with other European economies) did badly in 2023 which proves what exactly?
Again, what are you trying to achieve by attacking me so disingenuously?