Scott Adams: How to Tax the Rich

http://online.wsj.com/article/SB10001424052748703293204576106164123424314.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsForth

by georgecmu • 15 years ago

325 342 15 years ago

online.wsj.com

bluedevil2k3• 15 years ago

I like the "rich" driving lane idea - put up X licenses for auction in each city, let people bid up the price, let the market decide how much time is worth.

tomjen3• 15 years ago

Yeah, thats the thing - I didn't get why his solution was "bad" in that case.

zck• 15 years ago

Possibly so he doesn't have to waste time defending it; the argument will center on whether this kind of thing is a good idea, not whether this specific idea is good.

ry0ohki• 15 years ago

These were kind of proposed in DC (I think they may actually exist in San Diego or somewhere), where you pay a variable rate to use the carpool lanes based on demand. So during rush hour it would cost $6 and 11am on a saturday it would cost $.50.

People didn't like the idea because they would be "Lexus lanes" giving special privileges to the rich. Scott Adams is right that if we really want to solve the budge problems we may need to accept that the people who can help the most may need some sort of special privileges.

Alex3917• 15 years ago

"we may need to accept that the people who can help the most may need some sort of special privileges."

Because no-bid contracts, not going to jail when they commit crimes, real education for their kids, not living in crime zones, food that isn't poison, actual health care, living an extra three years, etc. aren't enough already.

nitrogen3• 15 years ago

Utah recently installed variable-toll express lanes. It seems to me they make overall congestion worse by creating traffic jams at the entrances/exits to these lanes.

jroid• 15 years ago

Why not charge a toll depending on traffic ? As the traffic increases, the toll increases (and vice versa), which will keep the lane fast moving. Not my idea, someone has already implemented this.

georgecmu2• 15 years ago

I always thought that institutionalized speeding would be very successful both in terms of additional revenues and time saved. Right now highway speed limits are set to a sort of common denominator: safest for the worst car and driver on the road. But if you're driving a modern, well-maintained car and are adequately trained, there's no evidence that you'd be unsafe driving 20 mph over the speed limit. So, why not for an extra, non-nominal, fee, raise speed limits on interstate highways to qualified drivers? Of course they'd have to take additional driving lessons, pass extra driving tests to extend their privilege every year, and drive only approved cars, i.e. no 1996 Ford Explorers need apply.

ams61105• 15 years ago

The thing that makes speeding unsafe (up to a point) is not so much the speed itself but the delta between the slowest and fastest cars on the road.

z2amiller• 15 years ago

This already exists in California to some degree. The state offered a limited number of stickers to hybrid cars that allows them access to the carpool lanes with a single driver. The stickers were quickly exhausted and now cars that have the sticker sell at a significant premium. (see http://www.greencarreports.com/blog/1021405_california-hov-l...)

The value of these stickers has probably declined significantly since that article was written, as the stickers are only valid until July 1, 2011.

A few years ago, my boss (CEO) at my last company bought a Prius at a premium for this reason so he could use the carpool lanes during rush hour. The populist/progressive in me thinks that it isn't "fair" that the rich can pay for faster commutes, but the truth is that he probably created many times more wealth than the several thousand dollar sticker premium by having an extra 30-60 minutes of productive work every day.

100k3• 15 years ago

This is pretty much the idea behind congestion charges (for example in London). New York City tried to institute them, but the State Assembly stopped them (basically suburban interests trumped city interests). It would have made a big difference in commute times by lowering traffic congestion and the nice thing is that those that benefit pay.

MrFoof• 15 years ago

There is one fundamental issue to congestion charges however: You are not paying for the ability to use privileged roads, you're paying to use all roads, because under a congestion charge, all roads are considered a privilege.

Carpool lanes work better in this regard. For example, on 93N heading into Boston, you can use 93N for free. If you have at least 2 people in the car (and I think hybrids and EVs are allowed as well), you can use the carpool lane. However, if you were almost always by yourself, but could pay $2000/year to get a placard to drive in the carpool lane, people would certainly pay it. Motorists without passengers are not required to pay to drive on 93N, however any motorist willing to pay ~$8/workday for the convenience therefore has the option -- that may even exclude the rich, just those who live far enough away from Boston and commuter rail stations where they need the drive (or feel the need to) and are willing to pay for a shorter commute time.

Actually, the more I think about this, the more I like it. If you are actively working towards eliminating congestion by carpooling, you still get it gratis. If you're reducing emissions by driving an EV or Hybrid, you get it gratis until that allowance sunsets, because you're making a positive impact with your vehicle choice. Yet if you're willing to just pay... hey, we'll let you in too, so that money can go towards improving something. I like this. I'm trying to find how anyone loses with this idea, because you can still use the four lanes on 93 like anyone else does for free.

zdw• 15 years ago

My bad idea: Taxes and number of votes both increase on how "gifted" you are - smarter people would therefore have more say in the government, and have more incentive to make it more efficient and do it's job better.

I have no clue how to measure or implement this.

berntb• 15 years ago

There is a potential another problem, except for how to implement it.

After seeing some strange examples the last few years, I wonder if intelligence is at all correlated to rationality.

(Being rich is, I'd assume, more correlated with rationality than being intelligent. At least the rich, unless they inherited the money, did something right.)

abstractbill• 15 years ago

At any given time the people in power will arrange things so that "gifted" and "smart" means "me, and my friends and family" ;)

TomOfTTB3• 15 years ago

Not to criticize but I think you missed his point. The way I read it the point of the article is this...

We can't force the rich to pay more because they always find a way out of it. We know this because there were days when upper tax rates were 90% but tax revenue was roughly the same because the rich can lobby for loop holes and pay people to exploit those loop holes. The rich will find a way to keep from paying too much in taxes even if they have to buy some backwards little country and form their own nation.

So the only way to get rich people's money is to find something we can give them which makes them feel like they're spending their money for something rather than giving it away.

So the stupid ideas are in the context of "how can we make the rich give us their money?"

pzxc2• 15 years ago

Who is John Galt?

bluedevil2k3• 15 years ago

This is called a meritocracy. One way to implement is to have a test at voting facilities that you must pass in order to vote. I'm fairly certain this violates a majority of the Constitution.

chrismealy• 15 years ago

Why have the rich suddenly became a bunch of babies? What's with all the whining? Having money isn't enough, now they want to be worshipped like feudal lords.

preek• 15 years ago

Where did they start whining? And when did they expect to be worshipped?

ugh5• 15 years ago

Well, it’s the premise of the article, isn’t it? The whole idea is that you need to somehow appease the rich in order to do what’s necessary.

That premise might be wrong but it is the premise of the article.

burgerbrain6• 15 years ago

Do you similarly decry the people who spend extra money at amusement parks to skip lines? Seems like exactly the same thing as this. You pay more: you get more.

teamonkey2• 15 years ago

By skipping the lines at amusement parks, those who don't pay extra have to wait even longer for their turn than they would if that system wasn't in place. So in effect, those who pay more benefit and simultaneously penalise those who do not.

KMStraub4• 15 years ago

I didn't think the author was whining at all--quite the opposite. Whiners endlessly complain about what's wrong and never posit a solution. Mr. Dilbert has quite a few solutions here that are "bad" albeit, but productive thoughts nonetheless. That's progress if you ask me.

bluedevil2k3• 15 years ago

There's a potentially dangerous line that the US is approaching where, factoring in all the exemptions, credits, and deductions, a majority of the population will not be paying income taxes at all. Thus, a majority of the population will be deciding (via their votes) how much and on what the taxes of the minority will be spent.

The only saving grace, if you can call it that, is that the people who actually place the votes (senators and reps) are themselves almost exclusively from that well-off minority.

tptacek6• 15 years ago

This is pretty disingenuous. I've held low-wage jobs, and so have most of the members of my immediate family, and taxes took a serious bite out our paychecks. You are referring to the federal income tax, as many people do in debates like this, but lower-middle class people pay a much greater percentage of their income in payroll taxes than do wealthy people; the "income tax" debate is misleading.

mattmcknight• 15 years ago

That's only because payroll taxes were sold as a retirement plan contribution for yourself. The idea is that you get all of that money back plus interest. Sadly, it's not run that way. People have the let the money be spent on other items for years, and now they are retiring and it's not there.

jmulho3• 15 years ago

A person making $20,000 pays the same US federal payroll tax rate as a person making $100,000 (7.65% in 2010, 5.65% in 2011). This tax pays for Social Security and Medicare (retirement income and retirment healthcare). Federal income tax pays for most of everything else: national defense, public safety, infrastructure, education.

In 2009, 47% of US households paid zero federal income tax. We are close to the point where the voting power of non-tax payers exceeds that of tax payers - the point at which people can make decisions they don't have to pay for.

Name your issue: foreign wars, Wall Street bailouts, universal healthcare, bridges to nowhere, prescription drugs for seniors, cash for clunkers. I don’t know about you, but I want the people making those kinds of decisions to have some skin in the game.

It is not at all disingenuous to have concerns about this.

pnathan• 15 years ago

I like the idea of taxing all income at a fixed and flat rate, no exceptions, no exemptions, credits, deferrals, whatever.

It's a terrible idea, but it is also, by definition, perfectly equitable.

argv_empty• 15 years ago

That depends on whether the law of diminishing marginal utility applies to money.

MichaelSalib• 15 years ago

You realize that many of the exemptions, credits and deductions disproportionately benefit well off people, right? I mean, something like the home mortgage interested deduction is off no use to many homeowners because they don't earn enough to itemize deductions. Plus the deduction saves you more money the bigger and more expensive your house is....

_delirium2• 15 years ago

A lot of the decline in lower-end taxpaying has been just due to a decline in how much money they make, though, so it's hard to do much about it without either: figuring out how the lower end can make more money, or actively decreasing the tax system's progressivity.

In the 1970s, the bottom 50% typically earned around 17-20% of total income, and paid around 6-9% of total taxes. Today, they earn around 11% of total income, and pay around 2% of total taxes. With no change in progressivity, sure, that should've been around 3 or 4% rather than 2%, but that's still not much. It's hard to tax income that doesn't exist!

100k3• 15 years ago

I don't think the rich really get anything out of it, but in the Nordic countries, fines increase in proportion to your wealth. I remember reading about a Nokia exec getting pulled over for speeding. His ticket was like $75,000! http://www.npr.org/templates/story/story.php?storyId=1670583

I've often thought some fees should be adjusted for wealth. For example, a quarter a day isn't really enough to get me to take my library books back on time. Maybe for me it should be $2 a day.

wigginus• 15 years ago

I think many European countries adjust the fines to ones wealth:

For example Switzerland: http://www.bbc.co.uk/news/world-europe-10960230

jimmyjim• 15 years ago

And I want to point out that it makes very much sense to have fines adjusted to one's wealth.

When speeding, you're endangering people's lives. There has to be some measure that will make you think twice about speeding the next time around -- if you know that the ticket fine will be a paltry amount to you (relative to your total wealth), that is no deterrent.

dagw• 15 years ago

In Sweden many fines are defined in "dagsböter" or literally "day fines" as opposed to an actual amount. Basically one "dagsböter" is equivalent to one days wages. So the judge decides that you should pay 60 days wages, without actually have to take any stance to how much you actually pay.

klbarry3• 15 years ago

So Eric Schmidt would pay some pennies? (Since he is paid $1 a year :) )

jasonervin• 15 years ago

Proportions are right on. Simple and probably easy get passed by the public... errr well maybe. Very good point.

andreyf• 15 years ago

I think the "power" category is best, but obviously a sensitive topic. What we need is a layered democracy, where the smart people who understand a field and have power to influence laws there (with the advice of experts in whatever fields those laws have side-effects on), but not in a selfish way.

The way congress works now, it's the people with money who influence law, and some of them are doing it either out of self-interest, or in the short-term financial interests of their institutional shareholders (401(k) managers, for example), who don't understand anything about the domain.

TomOfTTB3• 15 years ago

That's the whole point of the article. Taxing the rich doesn't work because they always find a way to subvert the taxes. So we have to give them something they can "buy" rather than taxing them in order to get their money without them fighting us on it.

rst• 15 years ago

But Congressmen and the executive honestly think that they're listening to "the smart people" right now, for the most part. When they consider copyright issues, they listen to the smart people who run record companies and movie studios. When they consider energy policy, they listen to the smart people who run oil companies. (Big oil was in charge of the Gulf oil spill cleanup because the government genuinely didn't have the expertise.) When they consider finance, they listen to the smart people who run the banks. And so forth. Or so they say --- and you can call it rationalization for cashing their lobbyists' large checks, but I think they honestly believe it regardless. After all, these folks do have a record of achievement in their fields, and how else is a Congressman to judge?

What we need is a better answer to that question, which has measures for expertise other than "they made a lot of money at it." Unfortunately, it's hard to see anything like Adams's proposal, of explicit preferential treatment for the rich, as being a step in that direction.

frankus• 15 years ago

One thing that at least some rich people will pay for is status symbols (expensive watches, sports cars that will never exceed 100mph, mansions with rooms that are used only a couple of times a year, $500 t-shirts). Status signaling is ultimately a zero-sum positional arms race that can lead to some pretty ridiculous conclusions(1) and doesn't really leave anyone better off (other than, perhaps, luxury goods suppliers).

The bad version of this idea would be a special ID card and/or bumper sticker or t-shirt or watch that was given to top-bracket taxpayers. It would have to be reasonably hard to forge (or at least as hard to forge as, say, a Rolex) and able to be either displayed publicly or flashed discreetly in situations where one wants to assert status.

Another variation could be some kind of property tax where certain sub-neighborhoods would have exceptionally rates, say 100x what the ordinary tax on the land and improvements would be. Then people could signal status by living or staying in those areas. (This is actually not too different than somewhere like Manhattan or San Francisco currently, except the windfall is going to existing property owners rather than the government).

The nice thing about status symbols is that, like fiat currency, they can be rather cheaper to produce than what their value to the status-seeking public is. That is the government could potentially retain a very high seignorage, as it were, on this stuff.

Ultimately it would have to be determined whether the status symbols could be legally transferrable, and what, if any, penalty there would be for forging them.

As an aside, it strikes me that this sort of thing would be extremely similar to fiat currency, maybe identical.

[1](http://www.google.com/products/catalog?client=safari&rls...)

TomOfTTB3• 15 years ago

American Express has built an empire on your "bad idea"

yummyfajitas6• 15 years ago

The problem is that it's hard to create a high status item. Say you invent the "US Govt. Certified Top 0.1% Badge" - do you really think Peter Thiel, John Paulson or Alex Rodriguez will really give a crap?

Taxing existing luxury status symbols could work, and is very likely a good idea. Creating new status symbols is likely to fail horribly.

Also, the tax on certain neighborhoods neglects the very large non-status reason why those neighborhoods are valuable: proximity to something cool. Manhattan is expensive not just because it raises your status to live there, but also because if you work at Goldman Sachs, you are willing to pay $3000/month rent + ridiculous NYC income taxes to avoid a 1 hour commute.

I suppose we could also bring back the Sumptuary laws:

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

awakeasleep• 15 years ago

Would they give a crap? Possibly, when you consider that the badge would symbolize an investment in the infrastructure that supports everyone's lives.

justin• 15 years ago

A special ID that gives you status isn't so hard to imagine: it is basically like the Black Card, which is actually pretty shitty in terms of benefits but rich people (and people who want to appear rich) want anyways because it is a status symbol you can whip out when ever you want.

alsomike7• 15 years ago

My tax plan is to eliminate income tax up to $90,000. After that, income is taxed at 100%. The government awards tax credits for everyone making less than that, so that everyone's salary + tax credits = $90,000.

"But wait," you say "How will we incentivize entrepreneurs if they can't earn more money?" For everyone making over $90,000 (approx. 11% of the population), their pretax salary is used to assign them national ranking that's publicly available, much like a ladder tournament, which could be subdivided into regions, industries, etc.

The rationale for this system is that we use one system - money - for two unrelated social purposes: reducing suffering and establishing status which incentivizes production. In my system, these purposes are less coupled.

The $90,000 number was calculated by dividing the total US income by the number of workers, so this would need to be adjusted yearly. If this system was applied globally, the average salary would be $25,000 which is quite a step up for billions of people. It means that today, humans create enough wealth annually so that every two-parent household on the planet could live like the American middle class.

eavc• 15 years ago

You could maybe reward the wealthy in the same way people currently reward philanthropists -- offer to name things for them.

elai• 15 years ago

The top %0.1 card that basically give's tourist visa-free Permanent Residency status in nearly every country in the world? Kind of like clear/nexus cards for immigration? That would be an awesome 'status' badge.

draz• 15 years ago

sounds like knighthood titles and special last name salutations (I don't speak Polish, but my understanding is that last names ending with a "tzky" indicate some royal/lord designations). Some of these are transferrable.

KMStraub4• 15 years ago

Lots of gems in here. My favorite line: "They also know that any project can get by with 10% less money if there is no alternative."

The world would be a much better place if there was less quibbling overall.

maeon3• 15 years ago

Tax the rich too much and then they stop creating jobs for all you whiners who can't hold on to your money. The whole notion of taxing the rich more than the poor seems unfair, what makes you worthy of benefits and him worthy of a penalty? Just because he was more responsible and hard working than you were? Americans are not broke, it's the government that is broke and instead of take the negative consequences, they would rather have someone else do it.

spankythemonk• 15 years ago

> Tax the rich too much and then they stop creating jobs for all you whiners who can't hold on to your money.

This is true. You're essentially increasing the tax burden on the entrepreneur class. This means less money spent on business formation, job creation and capital investment. The last thing that the US Economy needs right now. Not only that, but many "rich" might just decide to leave the country and go somewhere where they are allowed to keep the money they earn. What will you tax then?

Taxing the rich is a stupid policy. Look at the unintended consequences. There are two sides to every coin.

The problem with the US economy is simply that there is too much government and it's choking the private sector like a giant parasite killing it's host. CUT GOVERNMENT SPENDING.

vannevar9• 15 years ago

Or the problem might be that wealth is increasingly concentrated in the hands of a few who are vulnerable to groupthink and consequently triggering financial disasters with their incompetence. DISTRIBUTE MORE OF THE WEALTH.

forensic5• 15 years ago

Scott Adams is just talking about moving towards a visible aristocracy. These are the first baby steps.

Soon the rich will have special privileges just like the old days.

viraptor2• 15 years ago

First steps - maybe, but does it really have to be full aristocracy? What if the ideas were just a really simple separate ideas not affecting others in more than 2% of some arbitrary measure for each of them?

If we could offer packages that would be available to everyone but easy to buy at the same time, wouldn't it be good for everyone? For example you can pay $X for the "lexus lane", $X for another privilege, etc. - this way if someone actually wanted the privilege, but wasn't "really rich", they could still get it - not a total aristocracy and noone is forced to do anything.

Private companies have been doing this for a really long time as small benefits. Think about airport/travel if you pay extra: you can get express checkin on the airport, no security queue, better comfort of travel (business class), better quality food, pick-up service on arrival, luggage transport taken care of, complete booking / planning from a third-party. I have never heard of people complaining about "visible aristocracy" when travelling though. Could the taxes work as a payment gateway for small luxury services?

Meanwhile - it doesn't prevent anyone of us from getting the same. Want a better place on the plane? You can still get it without going for the whole "rich person package".

forensic5• 15 years ago

>If we could offer packages that would be available to everyone but easy to buy at the same time, wouldn't it be good for everyone? For example you can pay $X for the "lexus lane", $X for another privilege, etc. - this way if someone actually wanted the privilege, but wasn't "really rich", they could still get it - not a total aristocracy and noone is forced to do anything.

This is completely different because everyone would be eligible for the Lexus Lane. It's very likely that plenty of middle-class people would choose to pay for it. The defining characteristic of an aristocracy is special rights under the law for an elite class. All you're talking about is a service the government is offering with an aim to profit.

Scott Adams on the other hand is talking about restricting to the top 2%. That's what makes it an aristocracy.

I'm not saying a visible aristocracy codified in legislation is bad.

Also I don't think your concept "full aristocracy" has meaning. All aristocracies exist on a sliding scale somewhere between "Lexus Lanes" and "slavery".

Anyway personally I'm not really against a visible aristocracy. I actually think it probably makes sense to recognize power, because at least then there would be accountability.

If Bill Gates, Warren Buffet, and George Soros are unofficial Kings due to their enormous wealth, it's probably actually a good thing to make them official Kings because then they become accountable for getting results. Everyone would know who to blame - King Bill III.

That puts all the incentives in order.

I kind of suspect that our current elected officials are mostly just a trivial front-end for the true deciders who prefer to remain invisible because then they can't get lynched. Making them visible doesn't seem like much of a negative to me.

blahedo• 15 years ago

As I was reading the article, I actually had the thought that establishing a House of Lords would be in line with his "extra vote" power incentive. I don't think I'd advocate it (it's really another Bad Idea), but it's interesting to try to predict how the chips would fall on that one. :)

philwelch5• 15 years ago

Aristocracy is different from this. Generally, aristocracy is both hereditary and disconnected from actual wealth.

In the UK, JK Rowling, even though she is richer than the Queen, is not an aristocrat. She is, in fact, upper middle class. Someone who's born into the aristocracy, even if they're not especially wealthy, is an aristocrat.

InclinedPlane• 15 years ago

Whether it's a hereditary or mercantile aristocracy, it's still an aristocracy. A hereditary aristocracy would be worse, certainly, but that doesn't mean a mercantile aristocracy would not be very, very bad.

nostrademons5• 15 years ago

I wonder if we're headed towards a hereditary aristocracy as well, because of assortative mating. People tend to marry others in the same social class; rich marry rich, smart marry smart, and highly-educated marry highly-educated. And then they tend to pass on those advantages to their children. It doesn't take all that many generations before that becomes entrenched and it becomes impossible to jump from one class to another.

forensic5• 15 years ago

You're just noticing the difference between a 1000 year old aristocracy and a burgeoning one.

Aristocracy always begins with a way to define the elite. Over time social mobility will decline and people will start to notice that it's mainly the children of elite who become elite. Eventually this will lead to the belief that only the children of elite can be elite. Once this belief is entrenched, it's natural for the new reality to be codified in law.

Do remember that even in England there was social mobility. If you performed a great service for King and Country you would be granted land and title.

Social mobility exists in all societies. Just some more than others. In America we are observing the emergence of a natural aristocracy - a story as old as history itself.

sliverstorm• 15 years ago

On the other hand, a mild aristocracy does seem better than the nation crumbling under debt.

forensic5• 15 years ago

I agree, but then again I've always been a monarchy-sympathizer.

kanamekun• 15 years ago

The US Government could give out badges for every $1m in taxes you pay... then the rich could level up every April 15th.

estel• 15 years ago

An achievements system for taxes, you say? Do I get Gamerscore? :D

klbarry3• 15 years ago

This is not bad at all. I feel like the government should use game theory everywhere - for the poor they want to succeed and teach themselves, for the rich paying taxes, etc. It's proven to work in so many situations.

philwelch5• 15 years ago

Quibble: "Game theory" refers to scenarios like prisoner's dilemma and so forth, not to gameplay mechanics.

KMStraub4• 15 years ago

My "bad" thought: The rich work hard because they're running out of time. The poor work less because they have too much time to waste.

KMStraub4• 15 years ago

Disclaimer: I am poor.

sunsu• 15 years ago

"The hole is too big to plug with cost cutting or economic growth alone."

Say's who? Take a look at the 2011 budget: http://www.nytimes.com/interactive/2010/02/01/us/budget.html

The biggest pieces of the pie are things we are UNWILLING to cut (not incapable of cutting)! Its time for us to make some difficult decisions about what cuts we should make instead of relying on other peoples' money to solve other peoples' problems.

1010011010• 15 years ago

Exactly. If we rolled back overall spending to where it was in 1999 and curtailed the military (stopping the two big wars, closing assorted bases).

A decade without real economic growth should be matched with a decade of no government growth.

btipling• 15 years ago

Democrats will have to be the one to do it too. Republicans don't have the credibility. It's the Nixon in China thing where a Republican can open dialog with a communist leader but a Democrat would appear to be socialist for doing so.

3pt14159• 15 years ago

Says the former comptroller-general of the US. http://en.wikipedia.org/wiki/I.O.U.S.A. Cutting out the military now might fix today's deficit (and it should happen) but that baby boomer time bomb is ticking.

aj700• 15 years ago

Communism sucks, so there's no alternative to the 0.1% (winner) takes all (80%) system that we've got.

Of course we have a "vampire squid on our face" (GS) but it seems to be necessary to allow technological progress and the industrialisation of the rest of the world

We have scarcity now, but it won't last. Money will be abolished. The question is how do we spend money now to bring about the end of scarcity sooner. Well conspicuous consumption and luxuries are probably no help.

scrod• 15 years ago

>Communism sucks, so there's no alternative to the 0.1% (winner) takes all (80%) system that we've got.

Wow, thanks for making things so clear. I had no idea that the alternative to our emerging world of total corporate feudalism was straight-up dictatorial Stalinism! Who'd-a thunkit?

mgkimsal2• 15 years ago

His idea about a 10% cut across the board is so common-sense - I've heard it before - yet we never ever hear this from anyone in Washington (not that I've heard, anyway). Why not?

10% may seem extreme - fair enough - but why not 2%? Could we try one year where every federal department has 2% less to spend than they did the year before? 2% isn't a lot, and would go a long way toward each dept rooting out their own 'waste/fraud/abuse', instead of making govt larger by adding oversight processes and staff.

And I do not mean "2% less than what we'd projected to increase our budget by next year". I mean if your department had a budget of $1,000,000, you only get a budget of $980,000 this year. Shaving 2% off a 3.5 trillion budget would be - what? - 70 billion? While that doesn't quite get us out of the mess we're in, it's a good start.

_delirium2• 15 years ago

For small percentages, I'd say that's actually the most common budget-cutting proposal. Politicians want to save money, but don't want to propose any actual services or programs be cut, so they tend to instead propose that every department should "find waste" equal to 1-3% or something. See: http://news.google.com/archivesearch?q=%22percent+across+the...

steveklabnik• 15 years ago

> Why not?

You're asking the people who are receiving the money to make the rules that they get less of it.

I think it's fairly obvious.

mgkimsal2• 15 years ago

sort of, but not really. the people making the rules - proposing and approving budgets - don't get the money themselves. They do get power by apportioning it out though.

BUT... if everyone had their relative power reduced equally by truly 'across-the-board' cuts, there would't be any real change in the 'my budget is bigger than yours' contests that undoubtedly go on.

jeffreyrusso• 15 years ago

The ultra wealthy have done a great job of engineering the system to control how much they pay in - so why do we think incentivizing them would work? It may take time, but every perk that could potentially be offered at a premium would be just one more race to the bottom.

ubasu• 15 years ago

Some of these already exist

1. Time: e.g There are already carpool lanes where you can ride by paying an extra fee. Even otherwise, if you are rich enough, you can just pay the fine, which would be the added tax.

5. Power: Rich people already have power by having access to lobbyists or to the appropriate media. If you are rich enough, you can fund a movement on your own.

Others don't make sense in a democracy where everyone is presumably equal, e.g. writing thank you notes to richer people for being kind enough to participate in the functioning of the country. As another comment said, this is like moving toward a visible aristocracy.

Also, it is mostly not true that the country doesn't go to war unless the middle class majority is on board.

law2• 15 years ago

"Just paying the fine" undermines the entire argument about saving time. When a cop pulls you over for illegally driving in the carpool lane, he's not going to run out of his car, hand you the ticket, and run back. He's going to keep you there for fifteen minutes, because he wants to waste your time. It's just not worth it.

Regarding power, I think you're overestimating how rich these people are. The people in the highest federal income tax brackets aren't making over a million a year. For 2010, the highest federal tax bracket is 35% for above $375k/year. It's 33% for over $170k. Just for reference, if you're married, filing jointly, and you're both engineers making $90k or something, you would be in the 33% tax bracket. Certainly these people don't have access "to lobbyists or to the appropriate media."

megaman8215• 15 years ago

I think the best solution would be to get rid of income taxes and just have sales and property taxes.

Taxing the rich a higher rate is always going to seem unfair to them because the only way those taxes can be lessened is by making less money. Taxing $2 million house at a special rate is a different story, it seems fair because if you don't want to pay the tax you live in a more modest house. Luxury cars, fur coats, yachts, etc. can all have different sales tax rates and they still become a status symbol many of the rich are willing to pay for but not being forced to pay for.

yummyfajitas6• 15 years ago

This is considered by many to be unfair because consumption inequality is not as large as income inequality.

Peter Thiel may be 10,000-100,000x richer than me, but I'd be very surprised if he consumes even 1000x more than I do.

megaman8215• 15 years ago

The consumption tax doesn't have to be a flat tax. You pay more tax for a pack a cigarettes than a pack of paper.

Peter Theil makes about 200x more a year than the average person, but he doesn't have to consume 200 times more than the average person if all the items he wants to buy are at a much higher tax rate. They only way to avoid the tax is to not buy luxury items, and if a billionaire wants to live the life of a guy making 50k a year, let him have at it.

Vivtek3• 15 years ago

But a combination of a consumption tax with a very progressive property tax would probably work rather well, especially if "property" is extended to include assets of all kinds and not just real estate.

loumf• 15 years ago

One huge problem with this is for people that have already built up savings based on taxed income -- mostly those in or near retirement. If we move over to consumption based, they are now going to live in a far worse tax environment then they planned for or that is fair (it's a kind of double-taxation to tax your income higher while earning income and then your consumption when you are mostly consuming, but not earning)

Not insurmountable, but it needs to be addressed, because it's a large voting block.

Also, we'd need a much better way to enforce it than we currently have. Taxes like these are trivial to dodge and hard to prove.

megaman8215• 15 years ago

Retirees are the people in the worst situation but it can be helped a little by not collecting taxes on the IRAs and refunding the tax on the Roth IRAs.

A sales tax my be slightly harder to collect but there will be a lot less people to collect it from. As the IRS, I'd rather deal with a few million merchants than hundreds of millions people.

pmorici• 15 years ago

Are the rich actually taxed at a higher rate? The first x dollars of income are taxed at the same rate for everyone aren't they?

megaman8215• 15 years ago

Kinda, they reach a higher tier of taxes. For example, money above $200K is taxed at a higher rate than $1 to $200K. So their first $200K is taxed just like everyone else's money up to $200k. By taxing the rich, everyone means increasing the tax rate at the highest tiers.

ams61105• 15 years ago

The people who build yachts, $2MM homes, luxury cars, etc. might see that as "unfair"

te_platt2• 15 years ago

Eliminate all federal taxes and print the money needed for government operations. Effectively this becomes an inflation tax. Automatically it affects the wealthy in direct proportion to their wealth as opposed to their most recent earnings. No loopholes, no games, no misallocation of resources for tax breaks.

100k3• 15 years ago

Interesting idea, but already the reason we are so concerned about government debt when inflation is so low and the economy is so bad is that inflation hurts the rich, and they control the discourse. I do not think they would go for a superinflation senario like this.

benohear8• 15 years ago

This would hit people with savings in cash (or bonds), i.e. the middle class. The rich tend to have assets (or foreign holdings) which should be largely inflation-proof.

va_coder• 15 years ago

..and old people on fixed income.

tbrownaw• 15 years ago

Approximately nobody holds physical cash these days, and I expect bank accounts would still pay interest like they do now (and higher interest if there was higher inflation). Bonds would also pay higher interest, you can see they're already priced to include expected inflation by looking at inflation-protected ones.

te_platt2• 15 years ago

I admit to not taking my own idea here too seriously but still want to add a couple of points.

There would only be inflation if the amount of money printed exceeded the production of new goods and services. Could congress control how much they spend? Not too likely but it's not very likely now and at least this way everyone including the poor would have a reason to resist excessive spending. Would the production of new goods and services increase? I think so.

There would be other benefits as well, including: 1. Eliminating the costs of compliance with tax law. 2. Eliminating the costs of collecting the tax. 3. Severely cutting back the power of congress to control through tax policy.

Devilboy• 15 years ago

Nothing stops the middle class from buying gold instead of keeping their money in a cash account. Once you change the system the people will adapt.

mooism2• 15 years ago

Doesn't affect the wealthy that much because they hold more of their wealth in property, shares, etc, rather than in bank accounts.

And everyone would switch to using euros.

dantheman2• 15 years ago

Inflation hurts the poor and the middle class the most since their savings are not in inflation protected assets - land, stock, etc...

wanderr• 15 years ago

Ask Brazil how that strategy worked out.

mseebach• 15 years ago

> No loopholes, no games, no misallocation of resources for tax breaks.

Bonds, currency and commodities?

jbooth2• 15 years ago

Don't we already have this? If you have lawyers, accountants and possibly lobbyists, you have an entirely different relationship with the gov't than normal people.

jakevoytko• 15 years ago

The best ideas in this framework would use sliding rewards. But they will never happen.

Take the HOV lane idea. Giving the top 1% access to HOV lanes is political suicide. But awarding hours for a special fast lane, linked to the infrastructure-based taxes you pay, sounds fairer. The family of 4 making $60K a year gets a few hours they can use when they need them, tax-exempt employees get nothing, and a CEO gets more hours than she can realistically use in a year.

But opponents would say you're giving advantages to those who are "ahead." Talented-yet-poor people have less time to strike it rich. It's a Catch 22 - you need time to make money, and money to get more time, and you have neither when you start anew.

This cuts to the heart of optimizing nations for the individual, versus optimizing for the nation as a whole. I'm not sure the answer is straightforward, or if the two answers are mutually exclusive.

gabrielroth• 15 years ago

The HOV-lane idea starts out in the wrong place. If you want to raise money from apportioning a scarce resource (in this case space on the road), you use prices, not taxes.

Congestion charges have become very popular and successful in London—it's too bad Bloomberg's attempt to install them in New York failed.

seabee3• 15 years ago

> Congestion charges have become very popular and successful in London

Popular and successful with who, exactly? I don't know a single person that likes it. Traffic was reduced for a few years but now it's just as bad as ever. And the cost of public transport continually rises above inflation. At least they recently shrank the chargable area.

So what has it done, exactly, except raise income for the city and raise prices for businesses on the border and those who need vehicles to function?

ams61105• 15 years ago

How is the London "congestion charge" not a tax?

WiseWeasel2• 15 years ago

A low-hanging fruit would be to retool Social Security to be relevant to the needs of more affluent contributors; they might feel better about paying in if they are assured a payout that might actually support what they would consider to be a reasonably comfortable retirement. As it stands, Social Security is pretty much a total loss for higher income brackets.

As for a power incentive, the only one I might envision is to create a public forum where the public and their representatives can debate how their tax money is being spent, and a user's "karma" or default visibility bonus on the site would be based on their tax contribution.

jbooth2• 15 years ago

You only pay SS on your first 105k or so of income (indexed to inflation).

WiseWeasel2• 15 years ago

A cap which would presumably be raised along with the payouts.

richcollins• 15 years ago

In reality, fairness is not so much about the actual distribution of loot as it is about the psychology of how you feel about it. That's important to understand because the rich won't give up their cash unless they feel they are getting something in return.

I appreciate his attempt at a nuanced view of the subject, but I can't see taking your possessions under threat of violence as anything other than reprehensible.

axod7• 15 years ago

Taxing the rich (even more than they are already which IMHO is a lot) is just punishing success and rewarding failure.

benohear8• 15 years ago

It depends a wee bit on how you got rich. Taxing the financial industries close to 100% wouldn't strike me as punishing success.

axod7• 15 years ago

Why? Are you saying it's easy to make money if you're just providing financial services? :/

davorak• 15 years ago

With out the community and the government those opportunities to get rich would not exist.

If the perfect world the rational rich person might realize this and protect and improve the system that allow people like himself to be possible.

javert4• 15 years ago

The government only helps the rich to the degree that it provides courts, police, and military. Beyond that, it's looting them.

nickpp• 15 years ago

But those opportunities are available to everybody. Why should the reach be the ones paying more for them?

nitrogen3• 15 years ago

Without the entrepreneurs and executives organizing companies and the engineers designing products, there'd be nothing for everyone else to work on but subsistence farming. Should providing something for the rest of us to do go unrewarded?

scythe• 15 years ago

The rich are taxed a lot? They're taxed at a lower level than any other time in the past twenty years -- that's not a lot. The richest people around today -- Gates, Jobs, Ellison, Buffett -- made a significant portion of their money during a time (the '90s) when the top marginal rate was higher than today's. Clearly, that didn't stop them!

pistoriusp• 15 years ago

Exactly, this kind of thinking freaks me out.

They want to take property from people who have earned it precisely for having earned it! It's theft, it's looting, and it's slavery!

You cannot take one man's property and give it to another based on need.

Pinckney• 15 years ago

By living and working in a country such is America, you are accepting a social contract: if you do well, you will be taxed, if you do poorly, you will at least receive some services to support you. This strikes me as an entirely reasonable contract, though there are others that are different. In Abu Dubai, you can do well, and keep all your money, or do poorly and wind up in debtor's prison.

To complain that you're taxed too heavily after you have already become wealthy and secure strikes me as akin to looking back on your healthy, illness free life and complain that you should get a refund on your insurance payments, since they didn't do anything for you.

The above is not to argue that one system is superior to the other, but rather that you're in one, and very probably complaining about it now that you know you're well prepared enough that it's clear that you'll probably never be destitute.

In a perfect world, we might ask everyone how much risk they want. Unfortunately, so much is determined in your youth. You (I assume) grew up in a family that raised you well, and left you with reasonable earning potential. If we just asked everyone at 18, we would wind up with an upper class that would rarely suffer financial failures, and would accept risk, and those who know they won't get rich on their own, and accept no risk, and so for the most part, this system would be unfundable. As a compromise, and as many of us feel quite strongly that it's simply not acceptable to have people destroyed when they suffer financial ruin, we have some basic social services.

benohear8• 15 years ago

I have a theory:

In the good ole days, taxation consisted of the lord owning the land (the means of production) and taxing the peasents.

This is pretty much what happens when you're employed - someone else owns the means of production, and you are paid less than the value that you create (hopefully for the company, anyway). For me this is a form of taxation - The main difference is that insead of being paid the gross amount and being hit for x%, you get the net amount.

On a macro level, it's similar. The country IS the ultimate means of production, and you pay a tax to use it.

izendejas5• 15 years ago

Of all those that agree with such argument, I'd like to get an answer to these questions:

1) have you traveled to a developing|third-world country? 2) if you haven't, you should. if you have... 2a) what price tag do you put on first-class infrastructure that makes your business run smoothly, not to mention make it safer to deliver? 2b) what price tag do you pay to ensure that you have a well-nourished and healthy work-force that is more intelligent, stronger and efficient? 2c) what price tag do you pay to ensure that everyone has access to a world-class education (again, compare to a third-world country, I know ours sucks compared to others') that is again, more knowledgeable, more creative, etc and will one day help you boost margins, compete globally, etc?

And I could go on...

You see.. safety goes hand in hand with: 1) economic stability 2) health (ever wonder why some people risk their own lives to cross borders? their families are starving/dying!) 3) education 4) and much more than just a strong military, uncorrupt/just police/court system

And those things cost money. If you'd rather grow wealthy in another country, I dare you to try! And if you're already wealthy and you think taxing you more is unfair, I dare you to move to countries like Mexico where many business owners now have to pay "taxes" to drug gangs or else, they just don't go to prison, they get killed!

I'm not arguing that our tax system doesn't need reform or that current rates are fair, I'm arguing that if you want to be wealthy one day or are already, it's in your best interest to contribute more. Consider it an investment where you can. Yes, surely there is waste, but focus on that, don't whine about the fact that you're getting punished because YOU ARE NOT... you were rewarded with all these great opportunities and public goods and services you seem to take for granted, that's all (again, see my first question above).

sixtofour2• 15 years ago

2d) a workforce that is relatively well off enough that there's little incentive for them to steal your assets or time.

Edit: 2e) comfortable enough not to wage revolution against your ass.

benmccann• 15 years ago

You're arguing that education, infrastructure, and a non-corrupt court system is responsible for this country's success, which may well be true. However, only a tiny amount of spending is on those things. 85% of spending is on social security, the military, and medicaid. We could cut all of those things dramatically without a corresponding decrease in the country's economic output.

axod7• 15 years ago

> " I'm arguing that if you want to be wealthy one day or are already, it's in your best interest to contribute more."

The rich already contribute more. Where's the line? 90% tax rate? 99.9999%?

sixtofour2• 15 years ago

Then why does Warren Buffet famously say that his [effective?] rate is lower than his secretary's?

bermanoid• 15 years ago

A flat tax rate, by charging a higher dollar amount to the rich person than the poor person, is still punishing success and rewarding failure, because the rich person pays a hell of a lot more for the same services than the poor person.

I propose that we charge everyone an equal dollar amount, that's surely the only way to be fair - after all, if you go out to dinner with five people and rack up a $200 bill, everyone pays $40, that's "fair".

Right?

vlisivka2• 15 years ago

No. It depends on how much someone eat.

Imagine company, which has 10000 shareholders. You own 10% of company. Company needs some financial helps, e.g. $250M. How much you should pay? $100? $250M/10000?

benohear8• 15 years ago

How about land ownership being allocated according to the size of your tax bill?

ctdonath• 15 years ago

Recall that uber-rich Steve Jobs has an annual salary from Apple of $1, wears black turtlenecks and jeans (ever anything else?), and is building a modest 5000 square foot home on property he owns outright. What to tax?

tsycho• 15 years ago

In that case, also recall that the "net impact" that he has already had on the world economy in terms of jobs created, sales taxes on products sold etc. is probably much larger than whatever you would tax his income "fairly".

abrenzel5• 15 years ago

Scott Adams, like the politicians in Washington DC, is living in a dream world.

Cut all discretionary and defense spending to 0, and we would still be running a deficit due to entitlements. Tax "the rich" at 100%, and we would still be running a deficit. Tax corporations at 100%, and we would still be running a deficit.

On the left, politicians make it sound as though we're just a few tax hikes and some defense cuts away from a sound federal budget. On the right, they make it sound as though all we need are some cuts to programs like the UN or foreign aid and some tax cuts to spur economic growth.

They are both in a DREAM WORLD. Some taxes will have to go up, but most importantly, Social Security and Medicare will have to be substantially reduced. Whether it means privatization, defined contribution, or some combination of solutions, no one in my generation (I am currently 24) will see either of these programs as our parents did. In fact, current retirees and soon-to-be-retirees will also probably need to have their benefits reduced. There is just no way around it.

ryanf2• 15 years ago

> Cut all discretionary and defense spending to 0, and we would still be running a deficit due to entitlements. Tax "the rich" at 100%, and we would still be running a deficit. Tax corporations at 100%, and we would still be running a deficit.

Do you have some numbers for this?

harryh• 15 years ago

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

In 2010 Total income was about 2.1T and total expenses were about 3.5T. Defense was about 23% of spending and discretionary spending was about 12%.

3.5T * (100% - 23% - 12%) = 2.275T

So thats still about a 175 Billion dollar deficit.

Admittedly 2010 was a below average year in terms of the US economy. In better years things might not look as bleak.

anorwell2• 15 years ago

It's not far off. The US deficit in 2010 was $1.42 trillion, while discretionary spending was $1.36 trillion [1]. The total household income in 2006 was ~$7 trillion [2], of which the top 1% ("rich") make over 20%, which would be around $1.4 trillion in 2006. Presumably the number is lower in 2010. Additionally, we couldn't really take 100% of that money in taxes, because they are already being taxed at 40% or so. It's not clear to me how to calculate total corporation income, but the deficit is about 10% of the GDP, so it's probably not true.

As far as I can tell, none of these numbers are exceptional (percentage-wise) compared to other countries.

[1] http://en.wikipedia.org/wiki/2010_United_States_federal_budg...

[2] http://en.wikipedia.org/wiki/Household_income_in_the_United_... - mean income*number of households

[3] http://www.huffingtonpost.com/2010/11/06/us-income-gap-rich-...

[4] http://en.wikipedia.org/wiki/List_of_sovereign_states_by_pub...

Vivtek3• 15 years ago

no one in my generation (I am currently 24) will see either of these programs as our parents did.

You're gonna laugh, but I thought the same thing when I was 24 (twenty years ago) and Social Security is still solvent for the next thirty.

That system ain't broke. It's just that they really, really, really want that money. If they manage to get us to break it for them, your pessimism is - quite literally - a self-fulfilling prophecy.

abrenzel5• 15 years ago

These things often take longer to unwind themselves than you'd expect. Still, the CBO projections are pretty clear, and we now know that Social Security is officially in deficit this year. Medicare has been so for a long time. In truth, Medicare is where the real troubles lie. I have only seen a handful of politicians try to address this honestly. Chris Christie and Paul Ryan are who come to mind. They are both Republicans, so if there are any Democrats out there talking about it, please excuse me for not remembering their names.

kenjackson• 15 years ago

"Cut all discretionary and defense spending to 0, and we would still be running a deficit due to entitlements."

That's not true. See: http://en.wikipedia.org/wiki/2010_United_States_federal_budg...

Our revenue is about $2.4T. Entitlements are $2.0T.

Taxing the rich at 100% would generate about $2T in additional revenue each year. Which would pretty much cover entitlements. Of course its absurd to do that -- and its not as if people will continue to generate revenue if all of it is taxed, but lets not spread myths, even in hyperbole.

abrenzel5• 15 years ago

Maybe not this year, but according to the CBO Social Security enters a deficit this year (originally projected to be 2016). And in any case, cutting discretionary and defense spending to 0 is an unobtainable watermark, as is taxing the rich at 100% as you point out. The deficits being run by Social Security and Medicare will only expand as the Baby Boomers retire. Can we agree there is no budget solution that does not include entitlement reform?

Quarrelsome• 15 years ago

Wait, wha? I thought the US was one of the nations that paid the least in social benefits in the western world. I mean France _really_ need to look at their social spending, but the US? I figured they barely bothered (relatively speaking).

abrenzel5• 15 years ago

The US certainly pays out fewer of the sort of benefits we would call "welfare" (unemployment, food stamps, EITCs, etc.) than most nations in the Western world. Our pension systems are as generous as anyone's though, particularly Medicare. That is the real source of the trouble.

derleth• 15 years ago

> Cut all discretionary and defense spending to 0, and we would still be running a deficit due to entitlements.

Defense spending is an entitlement program for weapons makers.

ars• 15 years ago

Defense spending is a jobs program: There are about 1.5 million people in the armed forces! (Down from over 2 million 15 years ago.) And an even large number are employed indirectly.

law2• 15 years ago

There's certainly a lot of merit to this article. I think it's important to remember that the "rich" aren't necessarily people as wealthy as Warren Buffet and Bill Gates. Moreover, while there are many people born into wealth, there are many who make their own wealth through earnest work and frugal investments. They're the ones who are likely more outraged than "taxes on the rich," and it's a very valid argument.

If we look to how the private sector handles this, we see that airlines have their own VIP status system. You might have "Elite Access" status on Continental Airlines, you might have an American Express Platinum card, you might be an HHonors member at Hilton. These companies offer loyalty incentives to hold onto customers, and I think it's a model that the government could eventually adopt.

lmkg• 15 years ago

I think several of Scott Adam's proposals would be more palatable if we avoid the T-word. Giving high tax payers an express lane at the DMV smacks of elitism and pandering. But, giving an "express process" option for $1k doesn't sound so bad to me. Someone else mentioned auctioning off carpool-lane passes, it's a similar principle.

More importantly, it directly ties the cost to the reward. The biggest problem with Adam's system is that if you don't directly tie revenue to entitlements, then the rich would still push for lower taxes, while also wanting to keep the corresponding entitlements. The connection between the two has to be strong enough to resist politics.

BlazingFrog• 15 years ago

I think most of the rich people as described in the article (top 2%) already get most, if not all, of the perks he lists. It may not be in the law, but make no mistake. These people don't go to the DMV (who cares about the express lane), don't read their own mail (so much for gratitude letters), often don't drive their own car (carpool eligible in most places), don't care about social services and how much they cost and already have a large influence on the election process.

Scott feels as if he's "on a path toward certain doom" when paying attention to news. In my case it's when I think about how little hope there is to radically change the system considering that the people in charge are the ones who profit the most from that system, by a long shot.

sambeau2• 15 years ago

If I could, I would link tax paying to the National Lottery. The more tax you pay the bigger your chance of winning big.

It would make a refreshing change to see people queueing up on a Saturday night, desperate to pay their tax.

pzxc2• 15 years ago

I would have an emotional reaction from seeing that sight but I wouldn't call it "refreshing".

rick8884• 15 years ago

"It would make a refreshing change to see people queueing up on a Saturday night, desperate to pay their tax."

The poor would be giving all of their income and the rich would just keep theirs.

motters• 15 years ago

The rich and their tax situation is really only part of the wider picture of how to govern an economy in a sustainable manner. It's my opinion that we need to take more of a systems approach, making use of lessons from cybernetics.

It's pretty obvious now that the economy is not like an ecosystem with multiple more or less autonomous agents acting independently, but is instead more like a machine where information flows are centralised and significant components of the system can act in concert.

martinkallstrom3• 15 years ago

The best way of taxing the rich is producing luxury goods. The fact that you can buy food, transport, housing, clothing at a magnitude or two (or more) higher cost is a sort of volontary tax. When you buy a $1000 bottle of champagne instead of drinking water, a large part of that money takes a pretty short path to pay the wages of people that never would buy the same bottle themselves. And would maybe be out of a job if they didn't take a small part in producing that bottle of champagne. So the fact that luxury goods exist is a sort of tax that spreads the wealth of the people that choose to afford it.

martinkallstrom3• 15 years ago

It follows that whenever you see someone in driving a car you couldn't afford or eating in a restaurant that you would consider too expensive, don't think "ahole", think "thanks for distributing your wealth".

khafra6• 15 years ago

Yes, luxury goods amount to a tax on the status-conscious who can afford them--but the problem is that they send a price signal that more luxury goods are needed, when what we really need is investment in infrastructure, basic and applied research, etc.

martinkallstrom3• 15 years ago

That's a really good point. As always, balance is called for.

JeffL• 15 years ago

I reject the premise of the entire article that "The hole is too big to plug with cost cutting or economic growth alone." The hole was created by increasing spending, it can be closed by reducing spending.

grego• 15 years ago

How about just let the rich be rich and get richer, but making it very hard to pass on inheritance. So their kids would be on equal playing field with everybody else. That would make it their vested interest to improve conditions in that field for all.

orijing• 15 years ago

What would stop them from just giving their money away before they die?

ams61105• 15 years ago

Except why is it any business of anyone else's whether one wants to spend one's money or save it and pass it to one's children?

daimyoyo• 15 years ago

We live in a society that uses fiat currency so why does it matter how much we're in debt? Why can't we simply say "that $12,000,000,000,000 we owed? We just hit a triple word score and we have it in the bank now." The USA has carried a debt for the last 190 years and we haven't gone bankrupt yet.

josh33• 15 years ago

Because Fiat currency is a representation of a promise that is paid for with human life, rather than a precious resource. Our debt is a guarantee that american tax payers have to pay OR the government will need to declare bankruptcy of sorts.

joshwa• 15 years ago

1. Fix healthcare costs: single-payer.

Really. That's it.

$600B in administrative savings alone, which doesn't take into account the cost reductions that the system will achieve by negotiating rates downward.

hugh33• 15 years ago

My idea along these lines, which I may have explained in this forum before, is to replace one of the houses of parliament (or congress, or whatever you call your local bicameral legislature) with the "House of Taxpayers", where representatives are elected by taxpayers whose vote counts in proportion to how much tax they pay. The other house remains a "House of Commons" where the one man/one vote rule applies.

The point of this idea is that every new piece of legislation must be approved (in effect) by two groups: the people who are affected by it (everybody) and the people who have to pay for it (disproportionately the rich).

teyc• 15 years ago

Actually, every rich tax payer should be given a free trip to developing countries where poverty and crime is rampant, and the rich are forced to live in gilded prisons because it is so unsafe outside.

sayemm• 15 years ago

Here's a good video on the topic: "Warren Buffett's Tax Rate is Lower than His Secretary's" - http://www.youtube.com/watch?v=Cu5B-2LoC4s

nazgulnarsil• 15 years ago

The problems of the world summed up in a thread: the average IQ of hacker news is way above average and yet people feel the need to: comment on issues when they have no idea of the underlying numbers, use terms that they clearly haven't bothered to even look at on wikipedia or a dictionary, repeat fallacies that any undergraduate econ student knows is false, propose vast social engineering schemes with no regard as to their unintended effects.

I mean if we're the smart ones and we're pulling this bullshit what hope does the world have? engineers are supposed to know better. :(

jff• 15 years ago

A salient note about how government austerity works: the Department of Energy labs have decided that as a cost-cutting measure, they will enact a 2-year pay freeze for all employees (except the top-level managers who work for Lockheed, not DoE). Hail the great cost-cutting measures! Except the government will still be putting the same amount of money into the labs andyway; we've been getting emails talking about how they're now trying to come up with ways to spend this windfall of excess cash. So far it sounds like they're going to go for some pseudo-green initiative; maybe we'll just get a new Greenification Department, which inspects all of our workspaces and penalizes us when we're not green enough. (This particular pay freeze is because Dr. Chu wants to make Obama look good. Good policy for a Democrat, screw the researchers but keep the $2 million salary for the head of the lab... wait isn't that what Republicans are expected to do?)

The talk about an across-the-board 10% cut made me think of that--unless it's specified that employee wages and benefits must not suffer, such a cut will probably just end up boning the minions.

Create• 15 years ago

The bad version is that anyone who pays taxes at a rate above some set amount gets to use the car pool lane without a passenger. Or perhaps the rich are allowed to park in handicapped-only spaces.

This is all over the place: e.g. London congestion fee (rich have no trouble paying, and it clears the lanes for them as an added bonus). Same for all other: parked in the wrong place? The secretary will send off the fine.

IKEA: Kamprad insists, that he and his family have no control over Ikea, which went entirely to Stichting Ingka Foundation and its subsidiary Inka Holdings, based in Liechtenstein. Billions are spread through Belgium, Luxembourg, Switzerland, Virgin Islands (travel Branson :) and Cyprus. When confronted, Kampard has declared, that Ikea respects the law and pays its taxes, but he added that it doesn't want to pay too much (GOOG comes to mind with Irish-Dutch-Bermuda triangle money laundering scheme).

It is just a structure optimisation, which gives the possibility and flexibility to use capital towards new markets to develop business without the burden of double taxation ...declared Kamprad. [src: SVT]

kree10• 15 years ago

Deliberately proposing bad solutions sounds fun, but wow could that backfire. Applied to software projects, the "bad" version will get the go-ahead, and we'll be stuck maintaining it forever.

You could argue that this is already happening, but the difference is I think the people proposing bad solutions are usually not aware their ideas are bad. I'm sure I've been guilty of proposing and implementing bad ideas in software myself.

known• 15 years ago

In India Govt is auctioning street names. You can grab one.

joshuagamen• 15 years ago

He(Pres Obama) said that it doesn't make any sense that people who have accountants and attorneys can get away with not paying taxes, while the rest of the ppl get stuck with the bill. This translates to, “bye bye middle class.” The Pres was put in offc by the richest men in the world, he is not going 2 make them pay more taxes, hell, they benefit from taxes, especially the biggest of all(inflation). The way to level the playing field is not by stopping tax cuts to the top 2% in income, the way to level the playing field would be to extend tax cuts to the bottom 98% in terms of income. Bigger government won't solve anything. If you look at world history, you will notice that any government that tries to do too much, does not do anything well enough..

Ntagg3• 15 years ago

Let's say there are ten people in a room and they each give five dollars to an "elected" member who gets to redistribute that money, after which all the members re-vote on the next elected member. A savvy elected member would redistribute the money to five members, plus himself, thus perpetually stay in power and continue to receive the majority of votes.

I use this illustration to show that as long as one official or group gets to continue in power, they don't have incentive to do right by everyone; rather, they are incentivized to do well to only a slim majority.

The short-term problem this article presents is that our country's budget crisis demands a surplus contribution from the wealthy. For argument's sake, I'll admit it does.

The understated, long-term problem is that elected officials are personally motivated to spend their political power on getting re-elected, which only requires making a little more than half of their constituents satisfied.

My suggestion would be to stop allowing anyone to be re-elected. Once they know that their decisions don't have to be popular, they're free to make decisions that help long-term, even at short-term discomfort or dissatisfaction. There are obvious problems (how this reflects on their party, for example), but I think that there's a solution embedded in this line of reasoning.

csbartus• 15 years ago

(after reading through that 340 comments)

So no hope for America! At least not from hackers. Thanks God!

Solving the tax problem by hackers has a probability like RIAA solving the ilegal file sharing problem.

Instead, as engineers and people thinking is systems and infrastructures hackers should reverse-engineer the problem. That would be a success!

Hint: Ask yourself: "How Rich Are Looking At Taxpayers?"

Scott Adams: How to Tax the Rich

Related Stories