[tankenmate]

Isn't it just so much easier to make sure that wealth isn't concentrated in so few hands? Tax wealth, not work.

And before everyone gets upset, tax serves two purposes; 1) control inflation (it in effect burns money that was issued when the govt previously paid for things), 2) disincentivises selected behaviours. and one side effect, when the govt runs a tax deficit it increases inflation, and of course the contrapositive is also true.

[jlhawn]

> control inflation

I think you are confusing cost inflation with an increase in the money supply. The way the US government funds deficit spending is not by increasing money supply (though it could) but by issuing debt in the form of US Treasury bonds. That is a transfer of money from bond investors to the government. No new money is made. This is distinct from the way that banks issue loans which is by creating new money in the form of credit (but that credit money gets "burned" as loan principal is paid back). So federal taxes do not actually control inflation in the way you are describing. Since federal deficit spending is not financed by increasing the money supply, it can only cause price inflation if it increases aggregate demand over the current productive capacity of the economy. An example would be paying more for healthcare subsidies when there's a shortage of doctors. Or subsidizing demand for housing with more mortgage subsidies when there's a housing shortage. Taxes could also increase inflation if they have the effect of reducing supply of some goods or services (like tariffs do).

Edit: I want to mention that the Federal Reserve can and does increase money supply by buying US Treasury Bonds from banks (converting the asset into cash reserves). There are various reasons why they do this but overall it's done with their dual mandate in mind: control inflation and minimize unemployment.

[titzer]

> That is a transfer of money from bond investors to the government. No new money is made.

All forms of debt are money creation. All loans are money creation. Fractional reserve banking is money creation. It doesn't have to be "oh now we are making dollar bills" to count.

[state_less]

> The way the US government funds deficit spending is not by increasing money supply (though it could) but by issuing debt in the form of US Treasury bonds.

Sure it does. That Treasury debt is often bought up by the FED in huge tranches by increasing the money supply, they call it things like "unlimited QE (quantative easing)". For example, the FED announced unlimited QE on March 23rd, 2020 causing the stock market and real estate market to bounce. Trillions of new dollars were created in these last 5-6 years, and that's why everything costs more. The USG continues to overspend, and too often on dumb shit too (e.g. tax breaks for the ultra wealthy).

[adventured]

> I want to mention that the Federal Reserve can and does increase money supply by buying US Treasury Bonds from banks (converting the asset into cash reserves).

Fun small print. As though that's not the exact mechanism of the brutal inflation the US has suffered the past 5-6 years. The US money supply says it all. There are no other serious buyers for $20 trillion in new garbage paper debt every ten years. It's inflation by currency destruction plain and simple and there are no other paths. It's also why gold is $5,000 instead of $500.

[direwolf20]

Taxation reduces the money supply. Government spending increases the money supply.

[carshodev]

The debt cycle causes short term upward and downward inflation spirals, but overall the inflation is caused by total money supply multiplied by the ratio that the debt is allowed to be compounded to. the ratio is determined by both current regulations regarding loaning practices and the interest rate.

Given that these were constant then then inflation is just a ratio of Productivity(how much things cost) to total money supply (money printing).

So if the government just prints a similar amount of cash relative to the supply as the percentage productivity increase then we get a constant value of for the dollar.

In practice though a small amount of inflation is good in a currency as it encourages spending, if you have deflation this can cause people to speculate on holding cash and not engage in commerce which lowers productivity and thus can cause even more inflation itself.

The real problem is that wages are not growing at the same rate as inflation meaning wealth is being transferred from the working class to the owing class as their businesses get more efficient from the cheapened relative labor costs.

[Terr_]

> Isn't it just so much easier to make sure that wealth isn't concentrated in so few hands? Tax wealth, not work.

1. No, it's not "easier" because it's hard-if-not-impossible to accurately and objectively judge the present-value of many types of assets. Even the case most-familiar to working-class folks, property taxes, nobody really likes/trusts the outcome.

2. We don't tax work, we tax income, because actual transactions between people with "skin in the game" are harder to fake. The extent to which wages are preferred as a subset of income is separate from the wealth-vs-income split.

[cogman10]

> No, it's not "easier" because it's hard-if-not-impossible to accurately and objectively judge the present-value of many types of assets. Even the case most-familiar to working-class folks, property taxes, nobody really likes/trusts the outcome.

You can easily get within 10% of the "real" value on most assets. And, in particular, assets like stock have a built in ticker to tell you their exact current value.

This sort of evaluation happens all the time privately. For example, car insurance companies have gotten extremely good at evaluating the value of a car to determine when to simply total it.

The only thing that really makes it tricky is hidden assets or assets with no market value.

The likes of the richest people, who I think most of the "tax wealth" people are thinking of, have the majority of their wealth in equity. It's easy to tax the majority of their wealth.

This does not need to be a perfect system to be very effective at generating revenue and redistributing wealth.

[astrange]

> 2. We don't tax work, we tax income, because actual transactions between people with "skin in the game" are harder to fake.

Also because taxing income (or other cash) is disinflationary. Taxing assets is inflationary because it forces sales.

[redleader55]

It would be so nice of that tax was actually "burned"(similar to proof of stake), instead of being used to fund even greater inflation. This comes in the form of a huge administration, which gets payed for providing, many times, negative value. Alternatively, it is used to pay social benefits for the sole purpose of keeping the current political party in power.

[swiftcoder]

> Alternatively, it is used to pay social benefits for the sole purpose of keeping the current political party in power

This sounds like a 2-party government problem, not a tax problem. Plenty of countries do just fine spending that money to provide healthcare, unemployment, etc to their citizenry. Only really seems to be the US that views this as a negative

[worik]

I am amazed. What an incredible statement!

The USA is very corrupt, true. But getting rid of the "huge administration" and burning tax receipts is not going to solve that. How could it?

One of the roles of the state in a modern society should be to ensure no one is left behind to starve, wither and freeze amongst the incredible resources we (as a society) have accumulated.

That takes administration. That takes resources. That is what your taxes should be used for.

I agree that far too much is used to give aid to the powerful, but the solution to that should not be to condemn the weak.

Burning taxes and de-funding the administration is exactly that: condemning the weak.

[nine_k]

With wealth concentrated in so few hands, it's already not that easy to walk it back :-/

[ghurtado]

> Isn't it just so much easier to make sure that wealth isn't concentrated in so few hands?

Except for the fact that, without first solving the problem you responded to, yours is impossible to solve

[AlexandrB]

This is overly simplistic. Most economic activity is not related to the government at all. Taxation can slow economic growth and inflation, but the government running at a deficit or surplus is neither a cause or a solution for inflation but rather a byproduct of multiple aspects of government policy.

[chongli]

Isn't it just so much easier to make sure that wealth isn't concentrated in so few hands? Tax wealth, not work.

Those tax dollars just go back to the wealthy in the form of interest payments on government bonds, which they own.

[mcnnowak]

Wealth tax will just create an industry around hiding wealth for the rich

[PlatoIsADisease]

This wouldn't stop the AMA from controlling medicine.

[fud3748]

Sure, it’s easy to tax “wealth”. Except most wealth today is of the type where Alice owns 10 million Y and Bob decided to pay $1000 for one Y. Alice cannot possibly sell her Y for near that price, but now she will be taxed on “wealth” of $10 billion.

[AaronM]

If someone takes a loan out against an unrealized gain, that should immediately trigger a tax event.

The real solution though is for the legislative branch to not be beholden to those same people and be able to quickly and effectively close tax loopholes as they are discovered.

[vintermann]

There's a very simple solution to that problem. Tax Alice in Y rather than in $.

[flir]

So it would fix false valuation shenanigans too? I see that as a win/win.

[LadyCailin]

Many countries have figured out a wealth tax, so this isn't an impossible problem.

[croes]

Who says you need to tax the whole wealth if it in form of Ys?

We all know that 10 million Ys maybe not sold for $10 billion dollars but it gives you enough leverage to buy a social network and name it Y

[wat10000]

Oh well. Maybe if Alice doesn't want that problem she shouldn't accumulate so much of one asset that she'd crash the price trying to pay the taxes on it.

[__MatrixMan__]

Maybe we need a debt jubilee then.

[PunchyHamster]

you can tax stock without taxing inventory.

Also the term "asset" exists and is used in accounting

[antonyh]

Only in a system where the buyer sets the price.

[Saline9515]

Wealthy people own assets, not money. Stealing their assets doesn't reduce the money supply. Elon Musk is "rich" mainly in paper wealth.

Taxes raise inflation as they increase the production costs. If you tax too much wealthy people, they will leave, and take their capital away to invest it elsewhere. This as a result will lead to inflation due to lack of available capital for production.

[ghurtado]

> If you tax too much wealthy people, they will leave

Are we not tired yet of the various versions of the Reaganomics boogieman? When are we going to grow out of trickle down economics mentality?

[mulmen]

> If you tax too much wealthy people, they will leave

You say this like it’s a bad thing.

[simplify]

Since when has raising taxes actually solved any major problem? We have enough taxes, the issue is the corrupt politicians swindling it to themselves and their cronies.

[direwolf20]

You pay enough. Musk doesn't. Does he even pay any at all?