> To convert between wealth and income tax rates, you have to divide by the rate of return on capital. The conversion rate of 20 comes from assuming that the risk-free rate of return is 5%.
This seems to only be true for people whose income entirely comes from their wealth, rather than their labor. The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtains all his income from labor: To him, a N% wealth tax = 0% income tax for all N.
A much more interesting formula would be how to convert between income and income tax - you'd think it worked according to the superficial bracket system, but in fact, it works along the lines of going to 0 at the top.
P.S. a wealth tax is a property tax. They have existed in the US since before the income tax (which was originally considered unconstitutional by its opponents).
There's a related calculation you can do -- what percent of your net worth is your employability? Take your salary, divide by 0.05 (or multiply by 20) -- if you had that much additional wealth earning 5%, you could replace your job's income.
For most people their ability to earn is by far their largest asset. You can kind of get a feel for how difficult it is to bootstrap into generational wealth if you think about the math -- it takes time to replace that earnings portion of your own balance sheet, and even more to well replace it; a lot has to go right in the interim.
Paul the billionaire ignoring that billionaires often don't pay any income tax at all. Come on man, we're not stupid just because we don't own superyachts.
This seems like such a poor understanding of reality. If you want to rank order people who contribute net taxes, you would put billionaires at the top, as they not only pay taxes themselves, but their businesses pay taxes, and their employees pay taxes, and their customers potentially pay taxes (VAT) as well.
The bottom of the list would be anyone who works for the state, as they are a massive net tax negative, followed by benefits recipients and pensioners, followed by low income workers, followed finally by the middle classes.
Are you sure you want that to be your guiding principle?
> People usually become billionaires via having “super-powers,” i.e., very unusual abilities, at least within some context.
If you count luck, maybe.
> But what if most billionaires had super-powers of the traditional comic book sort, like x-ray vision or an ability to fly, etc.? That is, what if people with physical super-powers earned billions in the labor market by selling the use of these powers? Would folks be just as eager to tax them to reduce unfair inequality?
Yes, I would.
> But if those few very rich folks had real physical super-powers, we would be a lot more afraid of their simple physical retaliation. They might be very effective at physically resisting our attempts to take their stuff.
Yes, and this is why a lot of superhero movies involve fighting the greedy superpowered villain.
>Would folks be just as eager to tax them to reduce unfair inequality?
>Yes, I would.
What motivates this? Do you get off on it? Did the smart, tall, athletic, popular boy at school get with the girl you fantasized about?
Why can't you just leave people be? Why is their health, wealth, and happiness something that you feel justified in 'correcting'? Or do you know it's not justified but you just enjoy spreading misery?
this is some of the most insipid dreck i've read in a long time. the only thing illuminated here is the author's complete lack of understanding regarding ability and worth and total inability to think beyond a system imposed upon him by others. i think the kids would say he's "billionaire glazing".
> To convert between wealth and income tax rates, you have to divide by the rate of return on capital. The conversion rate of 20 comes from assuming that the risk-free rate of return is 5%.
This seems to only be true for people whose income entirely comes from their wealth, rather than their labor. The math doesn't math for someone on the other extreme end of the spectrum who has zero savings or investments and obtains all his income from labor: To him, a N% wealth tax = 0% income tax for all N.
A much more interesting formula would be how to convert between income and income tax - you'd think it worked according to the superficial bracket system, but in fact, it works along the lines of going to 0 at the top.
P.S. a wealth tax is a property tax. They have existed in the US since before the income tax (which was originally considered unconstitutional by its opponents).
There's a related calculation you can do -- what percent of your net worth is your employability? Take your salary, divide by 0.05 (or multiply by 20) -- if you had that much additional wealth earning 5%, you could replace your job's income.
For most people their ability to earn is by far their largest asset. You can kind of get a feel for how difficult it is to bootstrap into generational wealth if you think about the math -- it takes time to replace that earnings portion of your own balance sheet, and even more to well replace it; a lot has to go right in the interim.
I think 1% wealth tax should be a replacement for income tax. That way only the wealthy will pay taxes.
Paul the billionaire ignoring that billionaires often don't pay any income tax at all. Come on man, we're not stupid just because we don't own superyachts.
https://www.propublica.org/article/the-secret-irs-files-trov...
It's clear from the way paulgraham talks about the subject that they not only don't know the answer, but don't even realize there's such a question.
You can tell from the way they talk about the subject that they don't understand what they're talking about.
Please make higher quality posts -- what in specific do you think pg has missed or does not understand?
Imagine, poor person, if you had to pay an additional 20% in income tax! That would not be fair!
Fuck off paul. Billionaires aren’t paying anything in income tax when they should be paying 60 or even 90.
So, yes, let’s hit them with a 5% wealth tax.
This seems like such a poor understanding of reality. If you want to rank order people who contribute net taxes, you would put billionaires at the top, as they not only pay taxes themselves, but their businesses pay taxes, and their employees pay taxes, and their customers potentially pay taxes (VAT) as well.
The bottom of the list would be anyone who works for the state, as they are a massive net tax negative, followed by benefits recipients and pensioners, followed by low income workers, followed finally by the middle classes.
Are you sure you want that to be your guiding principle?
This just isn't true, unless you're the president.
Who is the single largest taxpayer in US history? I'll wait while you google it.
If you want to understand why someone would even propose taking from the rich and complain about inequality, this post titled "Inequality Talk Is About Grabbing " is illuminating: https://www.overcomingbias.com/p/inequality-is-about-grabbin...
> People usually become billionaires via having “super-powers,” i.e., very unusual abilities, at least within some context.
If you count luck, maybe.
> But what if most billionaires had super-powers of the traditional comic book sort, like x-ray vision or an ability to fly, etc.? That is, what if people with physical super-powers earned billions in the labor market by selling the use of these powers? Would folks be just as eager to tax them to reduce unfair inequality?
Yes, I would.
> But if those few very rich folks had real physical super-powers, we would be a lot more afraid of their simple physical retaliation. They might be very effective at physically resisting our attempts to take their stuff.
Yes, and this is why a lot of superhero movies involve fighting the greedy superpowered villain.
Right, as presented, these people are closer to Lex Luthor than Superman.
>Would folks be just as eager to tax them to reduce unfair inequality?
>Yes, I would.
What motivates this? Do you get off on it? Did the smart, tall, athletic, popular boy at school get with the girl you fantasized about?
Why can't you just leave people be? Why is their health, wealth, and happiness something that you feel justified in 'correcting'? Or do you know it's not justified but you just enjoy spreading misery?
this is some of the most insipid dreck i've read in a long time. the only thing illuminated here is the author's complete lack of understanding regarding ability and worth and total inability to think beyond a system imposed upon him by others. i think the kids would say he's "billionaire glazing".
> If you want to understand why someone would even propose taking from the rich and complain about inequality,
Because they want to take back what was taken from them.