I'm a millionaire who creates zero jobs. Why do I pay less tax than you?

https://www.theguardian.com/commentisfree/2018/apr/17/millionaire-zero-jobs-taxes

by paulpauper • 8 years ago

93 125 8 years ago

mc323• 8 years ago

If this millionaire is not creating jobs, are they not free to pay more taxes than the government sets as minimum to pay?

Go ahead, donate it, make it more useful. Don't let the minimum stop you. I suppose they prefer the government decide where it should be spent. Why not donate to the gov program they prefer themselves? Or Donate to the efficient programs, or donate to the one with ornery staff, if you like. No one will stop them.

thomasmeeks• 8 years ago

They do prefer that, yes.

Retric2• 8 years ago

They want to donate to the general public not the government.

mc323• 8 years ago

What? How does one donate to the general public via tax receipts?

bobbygoodlatte• 8 years ago

This particular straw man argument comes up every time taxes are discussed.

Obviously the marginal effect of one person paying more in taxes is close to zero. There's no hypocrisy in advocating the group pay more collectively without unilaterally taking it upon oneself first.

mc323• 8 years ago

It begins with _I’m a millionaire..._ Not we’re millionaires... or Millionaires should pay more... because otherwise they’d be imposing their personalpreferences and beliefs upon others whom they don’t represent.

zepto10• 8 years ago

There absolutely is. The individual is not advocating that the group pay more collectively. He is advocating that others be forced to pay more.

There is a clear distinction.

If this individual was advocating for people in his position to pay more, he could simply start a campaign for like-minded millionaires to pay more, and perhaps build some infrastructure to support this voluntary donation to the government.

antidesitter7• 8 years ago

Obviously the marginal effect of one person paying more in taxes is close to zero.

Exactly the same as when other people do. Probably more, actually.

petermcneeley2• 8 years ago

For the same reason why there is environmental regulation not just individual ethical choices of companies; Game theory. If those that make the "right" choices bear the burden of those that make the "wrong" choices then this cost will accumulate and produce a power difference.

If you already know this then why ask the question? If you dont then I can recommend you study some games https://en.wikipedia.org/wiki/List_of_games_in_game_theory

wongarsu• 8 years ago

I don't think "I have too much money, take it away" is the right way to look at it. It's more about "the government needs $X to do what we tasked it with doing, isn't it unfair that I pay a smaller share than you"

lwhalen• 8 years ago

Any individual or corporation is free to donate directly to the US General Fund, which is where the vast majority of tax revenue goes: https://www.treasurydirect.gov/govt/resources/faq/faq_public...

In the meantime, I need as much of the money that _I earned_ as the gov't will deign to let me keep. Why? None of your damn business, that's why. I earned it, let me save or spend it as I please, without even more of gov't sticky-fingers rooting around in my damn pie.

vkou2• 8 years ago

So, when a poor person complains that the taxes on the rich are too low, they can be criticised for being a jealous loser, and when a rich person does it, they are a hypocrite?

Who exactly is allowed to advocate for higher taxes on the rich?

bassman9000• 8 years ago

Right now, millionaires and billionaires are building luxury bomb shelters and private islands, high end sanctuaries for the end of days.

Ouch.

HillaryBriss3• 8 years ago

I'm not a millionaire or pro-millionaire, but, um, building luxury bomb shelters is, technically, one way of creating jobs.

buboard• 8 years ago

What's with the old articles?

tptacek• 8 years ago

Ordinarily, reposts of older articles are pretty welcome, but this one would have been marginal (for HN) even on the day it first ran.

scarface743• 8 years ago

I think there is a role for government, but the last thing I want is to give the federal government more money. They have enough in tax receipts to take care of infrastructure, feeding people, providing health care to those who can’t afford it etc.

Why would anyone suggest giving the federal government more money? The states in general do more in general to actually help everyday Americans.

jayess2• 8 years ago

If he's unhappy with how little he's taxed, the treasury would happily cash his check.

cheald3• 8 years ago

Arizona has a line item on your tax return for the "I didn't pay enough" tax. You can elect to pay any amount you'd like over your legal tax burden. Predictably, it's raised a few thousand dollars and hasn't made any significant dent in the state's revenues.

HillaryBriss3• 8 years ago

Why would anyone suggest giving the federal government more money?

so government can directly employ people who don't currently have jobs. this will create a money multiplier effect as those workers go out and spend their new paychecks, which puts more cash in the hands of other workers in the economy, who then spend some of it, and so on and so on. in this way, GDP grows.

that's an answer. i'm not sure it's a great answer, but it's an answer i've heard an awful lot.

another answer is so the federal government can build large infrastructure projects (like an interstate highway system or Hoover dam), the theory being that this will pay off richly for society and the economy later on.

scarface743• 8 years ago

Again, the government has more than enough money to invest in infrastructure. How much money does the federal government spend on the military that doesn’t go into helping the people who actually serve/have served and lines the pocket of the private military industrial complex? How much is it spending on being “tough on crime” and the “war on drugs”?

Why shouldn’t we make it easier for private industry to compete -for instance by not making the US the only industrialized country where your insurance is tied to your company?

Why not increase the earned income tax credit and make it easier to be distributed during the year. That would encourage work and it was something that was historically supported by both Republican and Democratic administrations.

The way things are going lately, I have a lot more trust in private industry than the federal government.

lern_too_spel9• 8 years ago

Why would anyone suggest giving the federal government more money?

So other groups have to give tbe federal government less money. The article was pretty clear about that.

scarface743• 8 years ago

There is always the crazy idea of the government spending less.....

lsd5you• 8 years ago

I'm not really sure why job creation is the appropriate moral metric. At the end of the day people who get wealthy generally are 'leveraging' (to be polite) the work of others. i.e. They are taking the profit from the work of others. If you can do something which is directly wealth creating without employing anyone then arguably you are more entitled to the money you earn. Ceteris paribus.

Not an argument that can be settled here, but the moral argument for job creators has to be that it is not a near zero sum game (i.e. it is not the case that if you don't create jobs then someone else will) and that they are systemically important. That is if we remove (magically/without shock) some of the current crop of job creators we would end up with an economic depression and as such they are an important societal good.

klausjensen• 8 years ago

In 2010 in Denmark there was an initiative done for people wanting to pay more in taxes - people who claimed in the public debate, that they really wanted to pay more.

The tax department opened up a bank account, that people could pay in extra taxes for, if they wanted. If you felt like you should pay more, you could.

Two years later, the initiative was shut down - having accumulated about 15000USD (fifteen THOUSAND) - in a country with 5.5M inhabitants.

A lot of people want OTHERS to pay more in taxes and some people SAY they should pay more in taxes to score some cheap karma-points. Almost nobody ACTUALLY want to pay more in taxes.

lkbm• 8 years ago

I don't believe I am able to pay enough to make a difference.

I believe that if all people of my income paid more, we could make a difference.

I support all people of my income, including me, paying more taxes and opposed me alone paying more taxes.

The evidence you've provided does not provide significant support to your conclusion.

Here's what WOULD support your conclusion: If given the choice between someone who would increase taxes for people of my income or keeping them the same/lower (ceteris paribus), I voted for the latter. If I'm voting for the former, that straight up contradicts your position.

Guess how I vote. Guess how the author votes.

NotAnEconomist2• 8 years ago

I think your point support theirs, actually.

You don't want to pay more in taxes -- you don't believe it would make a difference, despite knowing how numbers work, and knowing that it literally would. I suspect you mean that the marginal difference for the government doesn't justify the loss for you.

That's fair, but it's exactly GP's point: you don't want to pay more taxes, because you don't care when there's no reward for you personally; instead, you want millions of people to pay more taxes for your benefit.

rosege• 8 years ago

I think this partly comes down to what country you live in - If I lived in a Scandinavian country where it seems like people get pretty good value for their tax dollars I would be ok with paying a higher tax rate. If I lived in the USA where tax dollars are wasted on wars in the Middle East and building useless walls I would want to pay as little as possible.

jazzyk• 8 years ago

I don't believe I am able to pay enough to make a difference.

I donate money and goods to a couple, carefully selected, charities every year. Having volunteered for them on a couple of occasions, I can definitely tell you my relatively modest help DID make a big difference to at least a few families.

I am not forcing anyone else to be charitable, yet there are many people who give (much more than I do).

There are two problems with your thinking:

- the return on our taxes paid in the USA is very, very low - we pay only a bit less in taxes then people in Europe, yet the infrastructure is crumbling, there are lots of desolate/mentally ill people in the streets, etc.

- you seem to want to FORCE people to pay more tax for your noble causes. Guess what - not everyone will agree with you what they are. That's why taxes should be limited to defense, law enforcement, public infrastructure, standardization, etc.

skh10• 8 years ago

I think my wife and I should pay more in taxes. I also feel that I shouldn't die on my sword and voluntarily pay more in taxes whilst others in my income bracket don't. There is nothing contradictory in this. But suppose you think it is hypocritical of me to think tax rates should be higher for people like me while not voluntarily paying more in taxes. At most you can conclude that I'm a hypocrite.

My hypocrisy does not detract from the veracity of the belief that taxes should be higher for people like me. That belief is correct/true/valid or wrong independent of my hypocrisy.

golemotron2• 8 years ago

That's bad reasoning. Every dollar you give helps people. What other people do doesn't affect that. So, yes, hypocrisy. You just don't want to pay more.

NotAnEconomist2• 8 years ago

The only reason you don't pay more in taxes is because you don't like the feels of not keeping up with the Joneses?

Okay, but I don't regard you as an sort of moral actor for that: you intentionally don't do something you readily admit would make the situation better, out of your emotional needs, while politicking to force everyone to do the thing you're not actually willing to do yourself.

So no, I simply don't believe you: I don't think you believe you should pay higher taxes, I think you believe other people in your income bracket should, to run society the way you envision. If somehow that didn't apply to you, but applied to every one, well that would be just fine wouldn't it?

I originally didn't agree with GP, but the posts like yours trying to refute it are actually bringing me around to that position -- because they're deeply morally compromised, full of special pleading, and so on.

MarkSweep• 8 years ago

Perhaps willing your estate to the state would be a way to resolve this hypocrisy? While you are alive you don't put yourself at a disadvantage and can act as an investment manager for your future donation to the government. Once you die, you will no longer have anything to lose by donating everything you have left to the government. Obviously if you have heirs it becomes a bit more complicated.

Having thought about this a bit more, the idea of "not being taxed enough" is not necessarily about raising revenue for the government. They don't need to take your money to tax you, they can just print money and tax everyone with inflation. The point of taxing the "rich" more is to level the playing field. It is prevent power from concentrating in people who are not democratically accountable. So in that case, donating your estate will not achieve that goal.

tomxor• 8 years ago

A lot of people want OTHERS to pay more in taxes

If "a lot of people" is simply the 99.9%, and "Others" are the super rich 0.1%... I'm pretty sure the 99.9% would massively benefit... and the "others" would probably still be extremely rich.

IkmoIkmo3• 8 years ago

Almost nobody ACTUALLY want to pay more in taxes.

That's a silly conclusion.

I'll gladly vote for a policy measure that benefits a group of people at the expense of a group of people among which I find myself.

But I won't vote for a policy measure that benefits a group of people at the expense of just myself and nobody else. In that case, I would prefer a straight up donation of my own choosing. As such, this Danish bank account would see no money from me.

mikestew• 8 years ago

Almost nobody ACTUALLY want to pay more in taxes.

I don’t want to pay more taxes. I want myself and those in my peer group to pay more taxes. Your referenced experiment proved little other than that a few of the Dutch don’t understand game theory (or are just really philanthropic).

IkmoIkmo3• 8 years ago

People from Denmark are Danish, people from the Netherlands are Dutch :)

afterburner• 8 years ago

There is a line every year in Canadian income tax forms that lets you contribute to paying down the national debt. Not sure how much they collect; you don't get a tax benefit from it.

ip26• 8 years ago

A lot of people want OTHERS to pay more in taxes

Or perhaps people want everyone, including themselves, to pay more taxes. A fair, equitable, and shared burden.

If it's just you, you feel like a sucker being taken advantage of.

lordnacho6• 8 years ago

Well obviously you can't buy a new hospital if your neighbour doesn't also contribute.

What they should have done is make a rule that says if I pay into this special account, everyone else's tax rate goes up.

See what happens then.

wutbrodo2• 8 years ago

Both you and apparently Denmark don't understand how basic collective action problems work. The point is that individual action is often insufficient, while coordinated action isn't. It's entirely consistent to want a coordinated rule that hurts you individually but not want to take the corresponding individual action. Hell, there's even situations in which it would be rational for _every_ party to want a rule constricting their individual actions without it being rational to take that action individually (ie with no guarantee that the rest of the group isn't defecting).

If you're familiar with the prisoner's dilemma, which is a toy, two-party example, there's a massive difference between coordinating cooperation and unilaterally taking the cooperate action.

antidesitter7• 8 years ago

We’re discussing “government budget” here. The marginal revenue brought by that extra payment is exactly the same as when everyone else pays it.

deogeo• 8 years ago

By that logic, everyone wants the tax rate to be 0%, and the penalty for murder to be a stern talking to. If you think you should go to prison for murder, you're free to do so!

didgeoridoo• 8 years ago

The only thing that does create jobs is consumer demand for products and services that people can make and provide, not my investment dollars.

And what is being “demanded”? Products and services that are the result of investments made earlier in time. Consumer demand is the inherent PAYOFF of successful investment. Consumers demand more, faster, cheaper, better. None of that comes without investment first.

This guy sees investment as leeching off the productive economy. Probably because he has only ever been on the “money-shuffling” side of things, rather than standing in the shoes of a business owner who needs to raise capital to create something new.

That capital comes from either loans or equity, both of which require 1) substantial sums of latent savings in the economy, and 2) money-shufflers to find allocation opportunities (capital does not yet, alas, allocate itself).

Investment is the LAST thing we should tax. Consumption (especially of positional and rivalrous goods) is the first.

Joeri2• 8 years ago

That’s one way of looking at it. Here’s another way.

Consumption is what drives the economy, not investment. You can invest all you want in a giant rubber duck factory, if nobody wants to buy giant rubber ducks your investment will be worthless. Investors either gamble where demand will occur or create it artificially through marketing, but in neither of those circumstances is consumption the direct result of investment.

The last thing you should tax is consumption, since it is the fuel for all other economic activity. Less consumption, less everything else. Also, taxing consumption tends to be a regressive tax policy in practice, which leads to economic inequality and reduced quality of life.

IMHO what should be taxed is income in all forms, whether out of labor or out of investment, since that’s the most fair. Consumption should not be taxed. Additionally tax rates should be progressive since there are many engines of inequality in the economy and we need a bit of counterbalance to that.

vkou2• 8 years ago

Mind you, taxing consumption is also the only way that we can avoid a runaway environmental disaster. 3% growth year over year is not sustainable in perpetuity.

We need to figure out how to transition to a steady state, or a shrinking economy.

lordnacho6• 8 years ago

Surely it it chicken and egg?

Even if everyone wants to have rubber ducks in their lives, if everyone is hunting-gathering (thus no saving or investment) there won't be a way to finance the factory.

Aunche• 8 years ago

Consumption is what drives the economy, not investment.

That's true, but it's missing the point. Investment allows people to fund projects that drive up consumption. It may not be "as important" as labor, but it still helps the economy. If the capital gains tax is too high, rent seekers will just find a safer alternative to way to park their money that is even less economically productive, like renting out real estate.

caymanjim• 8 years ago

The author almost certainly pays way more tax than I do. He probably pays a much lower tax rate (I'll assume 20% long-term capital gains), but because he's a millionaire and I'm a middle-class wage-earner, his 20% is vastly more than my 40%. And while he may not create jobs directly, he almost certainly spends a lot more than I do, and is thus responsible for indirectly creating far more jobs than I, and that's without even accounting for the jobs created indirectly by his investments.

trymas• 8 years ago

Wasn't it proved that trickle-down economics does not work?

jayess2• 8 years ago

This assumes that he's just paying capital gains. I'm sure much of his income is from dividends or other ordinary income, which is taxed much higher than the average person.

HillaryBriss3• 8 years ago

... the jobs created indirectly by his investments.

but i think this is one of the key issues of the article. the author claims that investment does not create jobs.

also, in absolute dollar terms the author may spend more than you, but in percentage-of-income terms he's spending less. and I think maybe that percentage difference is another key point the author makes, given how much wealth is tied up in the hands of the rich.

I mean, I think the author believes that wealthy people pouring almost all of their money into various investments -- as opposed to middle class and poor people spending all or almost all of their money on goods and services -- is not a very strong way to create domestic jobs.

IMHO, this is not a complete accounting of the situation. I mean, US people are spending -- we're spending big time. but where are all the jobs? the US has this giant trade deficit. a helluva a lot of jobs are in overseas manufacturing. so, we can force billionaires to spend all of their income every year on goods and services -- but how many domestic jobs is that going to create if what they buy is expensive Euromade yachts and New Zealand real estate?

it's almost like we need more than just tax policy, it's like we need some kind of domestic industrial policy

chris_mc• 8 years ago

The problem is that every normal person is just a temporarily embarrassed millionaire, so they don't want to raise taxes on themselves in the future. This is not more evident elsewhere than here on HN, where everyone is a possible startup billionaire.

cheald3• 8 years ago

That's actually not quite as incorrect as we might intuit; we talk about the top 1% and earnings quintiles and such as though they're static fixtures, but mobility in and out of those positions is actually pretty robust.

https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-...

TL;DR:

It turns out that 12% of the population will find themselves in the top 1% of the income distribution for at least one year. What’s more, 39% of Americans will spend a year in the top 5% of the income distribution, 56% will find themselves in the top 10%, and a whopping 73% will spend a year in the top 20% of the income distribution.

The reverse side of that phenomenon applies, as well - a significant portion of the population will find themselves in the _bottom_ part of the distribution at some point in their lifetimes, as well.

matte_black• 8 years ago

I'm sick and tired of hearing this refrain. It assumes people have no internal values and just vote for things based on how it will personally benefit them, which is not true.

People can and do vote for things that give no benefits to them if it aligns with their concept of fairness. In this case, if you believe a person deserves to keep as much of their income as possible, you will vote for lower taxes, because it feels right.

IkmoIkmo3• 8 years ago

I mean, there's several answers to this.

The most fundamental one is this: capital is mobile, people are not.

If you increase taxes on capital, it will flow to a lower-tax jurisdiction relatively quickly. A decent legal system and financial infrastructure is necessary, but the hurdles aren't as great.

But if you increase taxes on salaries, people will be hesistant to leave for personal reasons (e.g. friends, family), cultural reasons, security reasons etc.

As such, tax competition between jurisdictions on capital is much more fierce than it is on labour. This is typically why you see lower taxes on capital.

The other reason is that labour tends to be viewed by part of the voter base as a normal tax, and capital as a double tax. i.e., if you earn $100k a year and save much of it after taxes, you now have capital to invest. And getting that capital taxed again is sometimes viewed as even less popular, a sort of tax ontop of tax, particularly as these wealthy people are more mobile and can more easily choose a lower tax jurisdiction.

As for the notion that his capital doesn't create jobs, I don't know if that is true. Fact is that if people like him withdrew their capital from the market, rather than invest it, you'd see many financially-constricted companies that would bin their expansion plans, cancel their investments in R&D, withdraw from new products and markets etc, and on the whole, generate far fewer jobs. It's essentially what the credit crisis looked like. The notion investments like his aren't creating jobs seems erroneous.

That doesn't mean I'm a fan of low capital taxes, by the way. But tax reform is incredibly complex because it requires essentially all countries around the world to work together, to give up some control over an important component of sovereignty (taxation), to restrict tax competition somewhat. There's been a lot of decent work in that regard already by the way in the past few years, with the worst aggressive tax planning and tax havens being dealt with (e.g. BEPS), which allows countries to implement more sensible taxes on capital without worry of their tax base shifting abroad.

_up• 8 years ago

People are not that mobile yet! A lot of people now wish to be more mobile and Upwork "thinks" half the existing jobs are being remote in 15 years. Though they have a huge incentive to be massively biased.

NeedMoreTea• 8 years ago

Wasn't always so, even in my short lifetime, so I guess it's a nice sound bite. Capital controls were a normal, and expected, thing between countries.

The US of A started throwing its weight around to break down Bretton Woods got us to now. (Oversimplified for brevity)

Go back to pre WW1 and people were fully mobile with few countries having border controls or passport/visa requirements but most having capital controls.

riazrizvi• 8 years ago

Capital doesn’t create jobs

Actually he claims

Investing doesn’t create jobs

So he’s denying the effect that a company can raise more capital if it has stronger demand for its shares. And he’s denying the incentive of stock for employee compensation, which consequently creates jobs just like cash.

So I’m going to file this under “rich guy doesn’t understand the system that made him rich”. I also worked on Wall Street, and it doesn’t automatically imbue you with an understanding of all things economic. You have to explicitly study to gain expertise.

sjg007• 8 years ago

You have to invest that money somewhere and the place with the best infrastructure to get what you need built matters more than the taxes you may pay on the profit.

ergothus• 8 years ago

While your logic seems sound, I feel like the last 10-20 years have involved simply not investing it.

I have no particular explanation nor suggestion based off of that, but I know I've read a lot of articles about companies simply sitting in large bankrolls.

RhysU• 8 years ago

But tax reform is incredibly complex because it requires essentially all countries around the world to work together, to give up some control over an important component of sovereignty (taxation), to restrict tax competition somewhat.

Not a single country in such a consortium would permit industry-level collusion among private enterprises to similarly inflate prices. If it's disgusting if the airlines do it, it is disgusting if the West does it.

adolph• 8 years ago

The central point is that investment income is treated differently tax-wise than working-at-a-job income. If you have a large enough kitty you can live off investment income.

I wonder how a higher tax rate for investment income would change the pools of money available to startups? Would more of it flow to other asset classes, like tax-free but lower returning municipal bonds? Would it make no difference?

marris• 8 years ago

Dear Mr. Millionaire,

As someone with a significant amount of wealth, you have the option to spend it entirely on yourself. For example, you could have consumed all of it already, enjoying non-stop parties, expensive toys, buying the temporary, albeit intense, adoration of an entourage etc. Thank you for not doing those things.

Instead, you have invested this capital. You have put it into a variety of investments, each with their own risk-reward profile. I am hopeful that as you grow wealthier, you will become more charitable, both by donating more wealth to help others, and also by accepting a lower rate of private return (or higher private risk) for investments that have a bigger social return (e.g. biotech investments, space exploration, etc). Even there, I hope you exercise some prudence and a portfolio approach, since it doesn't help anyone ex post if you lose all your money developing an invention that doesn't work.

In the meantime, we (society) are grateful for your concern, but would probably rather that you did not dump more money into our tax coffers. If you want to give money to the people, give money to the people, Give Directly style.

And if you still feel that the government is necessary to solve some of the problems that are bothering you, spend it instead to incentivize better government, or to design and build a government that allocates each tax dollar more efficiently as the years go by.

Thank you.

smileysteve2• 8 years ago

Both parties and failed research result in jobs and markups going to externalities, bar tenders, servers (people), researchers, fabrication materials, whiskey distillers, etc.

linkmotif2• 8 years ago

The idea the governments spend money productively is mind bending and against everything I see every day in the United States. Go figure, maybe it’s different in Europe, but I can’t imagine that people who can’t make it in the private sector—and that’s really all government is, people who otherwise can’t make it in a competitive market environment—would somehow be efficient and productive in the public sector.

http://historymatters.gmu.edu/d/5030/

Personally I’d rather the rich hoard wealth than pay taxes and thereby justify the idea that planned command economies lead to anything good.

petermcneeley2• 8 years ago

I think peter thiel tends to see this in quite an open minded way. It might have worked before but it really doesnt work well Now. (https://youtu.be/FDkhfm6CYjE)

linkmotif2• 8 years ago

See what? (Thanks for the link)

rayiner• 8 years ago

The central premise of the article, that preferencing capital gains doesn’t create jobs, is hotly debated. Even some pretty liberal economists agree that capital gains should be taxed lower than ordinary income: https://slate.com/business/2012/09/mitt-romney-s-effective-t...

Lower capital gains rates are also not an American invention. It’s a feature of almost every Western European tax code. Sweden’s capital gains tax rate is half of the top ordinary income rate.

smileysteve2• 8 years ago

The tax code could have been rewritten last year to eliminate the corporate income tax, but require full income taxes on capital gains (potentially with some discounts or taxes on long term / short term)

Corporate taxes + lower capital gains taxes are double taxation on the same earnings; but also serve to very much politically obfuscate who pays the taxes, consumers, businesses, or the profiteers - which, while fungible - could drastically simplify the tax code.

koolba2• 8 years ago

Take it from me: I am an investor. I have not actually worked in years. I let my money make me money. Over the past year, do you know how many jobs I’ve created? Zero. The only thing that does create jobs is consumer demand for products and services that people can make and provide, not my investment dollars.

Investing does great jobs because businesses need capital to grow, and growth leads to more employment. Not employing people directly does not mean the money didn’t lead to some job creation. It’s just harder to quantify.

matchagaucho• 8 years ago

This article is mostly correct as applied to service based businesses. The "old men" in U.S. power today made their money building tangible things, so those are the jobs they understand and want to bring back through tariffs.

Companies outsourcing IT functions just happen to be outside the purview of taxes and tariffs. But that's no guarantee long-term.

cherrygarcia• 8 years ago

What are some arguments against chaneling all forms of taxes into sales tax? To me that seems the simplest way to ensure everyone is contributing, regardles of how or where the money is made.

cheald3• 8 years ago

The primary argument against consumption taxes is that they're regressive on a percentage-of-income basis, as your spending as a percentage of total income tends to drop as your income increases (it's worth noting, though, that payroll taxes are already functionally regressive, as the percentage of income from non-payroll sources rises with total income). The other is that you generally tax things you want to disincentivize, and since aggregate demand is the primary driver of economic growth, you want to be careful to not dent it too badly. You could make it progressive by refunding a baseline amount annually, but people have to effectively carry the outlay until tax time.

The primary argument for them is that the wealthy have a higher marginal propensity to consume, so it acts as a functional wealth tax, and can't be easily evaded through income restructuring. It would be strictly progressive on an absolute basis, and may marginally incentivize investment over consumption.

jeffbax• 8 years ago

"…not only is the corporate tax rate on overseas profits just half the normal rate (10.5% versus 21%)"

Never mind that the US is one of what two? countries that tries to tax their companies sales (and citizen income) based on activity abroad?

Say what you will about more progressive income tax policy, capital gains, or tech companies dodging due to the nature of software, but the US has had the highest effective corporate tax rates in the world and was definitely driving offshoring.

A corporate tax rate of 0% is very much an increasingly non-fringe goal as opposed to raising revenue through other means. It's a testament to the US laws and business health it has as many companies remaining despite the tax disadvantage.

I'm a millionaire who creates zero jobs. Why do I pay less tax than you?

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