I think this thread proves if nothing else that most programmers, myself included, could very much use an accountant :) We all know stuff, but not all of it is right or complete...
Money is just an abstraction for actual goods and services produced by the economy. If your wages go up, presumably so does the wages of those whose services you consume.
If less people worked, the economy would produce less and we would be worse off.
Can you explain a bit more about how these people can raise their standard of living by moving?
Money is just an abstraction for real goods and services produced by the economy. Presumably we need people to live in Philly since that's where our industry is. If people moved away to some remote place, wouldn't our economy take a hit? Not to mention the transportation costs of servicing a more remote, less dense area.
If Philly is where our industry is, then we only need as many people to live in Philly as the labor market demands. However, if unemployment is high or wages are too low (relative to the cost of living) in an area, then that suggests we have an oversupply of labor there, not a shortage. Basic goods (food, clothing, materials for housing) are grown/produced in many areas (even rural ones), not just in dense cities, so no, transportation costs don't really increase the cost of living in rural areas. To the contrary, in most cases it's far, far cheaper to live outside of dense cities.
Housing is, to a certain extent, a positional good. People want to live in safe, friendly neighborhoods, surrounded by well educated, middle to upper class people. Even if everyone got more money, it's not easy for more people to live in desirable neighborhoods (at least without changing the character of those neighborhoods).
If the inventor is a corporation, this would be gamed by simply transferring ownership of the corporation. If the inventor is a human, the person would have to organize as a sole proprietorship and forgo limited liability. Designing rules is hard!
It's fine for corporations to own patents, they should be however nontransferable so only that corporation can ever bring a lawsuit to enforce it. And if the corporations is bought or sold or dissolved or rearranged, it loses the patent. That sort of limits the scope of how the patent can be used. Which would still be an improvement than now.
That would mean that any IP-heavy company could not get any investment, as selling any significant stake would mean all of their patents would be invalidated.
I don't understand the hate against Walmart. It only has a profit margin of 3.12% [1] and return on assets of 7.69%. Now I suppose you could argue that all the profits are hidden away somewhere, but that sounds like an unfalsifiable statement. It certainly would be illegal to hide assets from shareholders.
You're talking to someone who has spent most of his life in the Fortune 50 - working with executives who routinely hide the bulk of their wealth from any accounting. These techniques have been widely discussed in the press (if you look). So I must assume that you have, for philosophical reasons, chosen to disbelieve that the rich hide their wealth.
Edit: Not sure why I was downvoted. But I was in the room as we reassigned profits to offshore entities for accounting purposes. And I was in meetings with our senior executives who were arranging to pay themselves in undervalued offshore stocks "off the books". Those offshores provided inflated services and inflated goods to the corporation and avoided taxation while making the executives rich. The value of those offshore stocks was "reinflated" with a phone call. And that is just one company - the Big 3 accounting firms provide these services routinely for both the corporation and its executives. (And when we reassigned profits that had the effect of lowering profits - and even making income disappear. I've seen these techniques used at more than one company.)
There is IRS accounting and GAAP accounting. You try to reduce profit for the former and maximize for the former.
Off shoring subsidiary profit shaving is a fairly common practice for IRS accounting. But all the profit stays on the corporate parents books in one way or another (they own the subsidiary). The point isn't to make the executives rich, but to make the shareholders richer by avoiding taxes.
Paying people in undervalued stock is common, but "off the books" sounds illegal. I don't know what that means.
Also most companies would never sell shares of it's subsidiaries. They like having total control of the subsidiary.
Big 4 firms wouldn't fuck over shareholders to get executives rich. Executives are small fish compared to the sorts of institutional investors who own F50 companies.
It's the Big 4 instead of the Big 5 because Arther Anderson got caught cooking Enron's books. It destroyed the firm. They aren't going to risk their entire business for some Walmart execs worth a couple million dollars.
F50 executives aren't the people who actually own the world. They are people who work for the people who own the world. If the executives are stealing, it's not something that is accepted. If found they'd be totally fucked.
Through tiny portions of the stock. For mature public companies, executives own very little of the company unless they are founders or heirs of founders.
He's not saying the rich don't hide their wealth: he's arguing that corporations do not report artificially lower profits and then proceed to deny returns to their wealthy owners.
Whenever I have a chance to learn some of these legal means of avoiding excessive taxation, I do in earnest. I see very wealthy people and it only drives me to emulate their business and investment strategies more. There are more than enough legal means of structuring your businesses, transactions and investments in ways that drastically reduce taxation. I made it about 4 years without paying any state or federal income tax. True it took a lot of work and planning, but the income retained was more than worth the effort.
I think people are uncomfortable with the fact that despite of razor thin margins, multiple members of Walton family are in top 20 most wealthiest people on planet while majority of their workers lives on conditions that borderlines poverty. So somehow mass accumulation of wealth was possible at all but the top. Logically, this argument is weak because even if you redistribute all wealth from top, each employee would gain barely a one time payment of $10,000 just due to massive size of Walmart and would not significantly improve their condition over long term. So wealth re-distribution is not the cause of poverty of Walmart condition.
Perhaps you should read up on it's labor practices. Two cases in point: They encourage their employees to sign up for food stamps, which results in a $6.2B government subsidy[1]. Also, the workers are intentionally paid so little (via only part-time employment) the company asks customers to donate food to their employees.
You clearly have not thought though the consequences of your proposal. Here are just a few of the problems:
* What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman?
* What if the ultra-wealthy buy property and then mark it down? I.e. they buy paintings, then "accidentally" "damage" them. Whoops, a billion dollars in artwork gone, sorry IRS. Later, it is miraculously repaired. Will the IRS have to start sending undercover agents to inspect people's art collections?
* A 3% wealth tax is still less than the growth rate of many financial assets. I.e. the stock market grows at ~7%. So the rich will still get richer. And if you increase the tax to say, 8%, congrats, you just destroyed the financial markets.
* What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman?
- You do that now. Property taxes.
* What if the ultra-wealthy buy property and then mark it down?
- People lie to the IRS now, system still functions.
* A 3% wealth tax is still less than the growth rate of many financial assets.
- Not necessarily. Safe stores of huge amounts of money yield very little. I don't know all the implications on interest rates, etc.. but it's an interestng idea.
I don't understand your response. The primary purpose of the proposal was to illustrate what "hoarding" is. Did it accomplish that goal? If not, why?
To address your concerns generally -- every tax policy has a variety of impacts on behavior. Multiple countries already have a wealth tax, so they are definitely workable. There are behavioral and policy methods of addressing potential negative consequences.
To respond more specifically:
> What if I own a house but have no cash? Will I have to sell it and live on the street to pay the taxman?
That's a straw man argument for a host of reasons. We already carve out exemptions for primary dwellings, and there's no reason why this wouldn't similarly apply, up to some limit. But even absent that, real assets are real assets, and there are multiple ways of extracting liquidity from them (and moreover doing so generates wealth for society). You can take on a "reverse mortgage", or rent out one of your rooms, or sell it and rent, or take out an annuity that's secured against your home, among other possibilities.
> What if the ultra-wealthy buy property and then mark it down? I.e. they buy paintings, then "accidentally" "damage" them. Whoops, a billion dollars in artwork gone, sorry IRS. Later, it is miraculously repaired. Will the IRS have to start sending undercover agents to inspect people's art collections?
That's fraud/non-compliance/tax evasion, and it's already a massive problem in the current tax system, except now it's cloaked in things like a "double dutch with an irish sandwich". In any case, this is a problem that is dealt with every day, in business, by insurance companies, and there's no reason why the same techniques couldn't be used by tax officials.
> A 3% wealth tax is still less than the growth rate of many financial assets. I.e. the stock market grows at ~7%. So the rich will still get richer. And if you increase the tax to say, 8%, congrats, you just destroyed the financial markets.
Yes, and a 95% income tax rate will destroy the labor market. So? And yes, at 7% CAGR on the S+P the wealthy continue to get wealthier (assuming all their assets are in equities, a big assumption). But note that, in the process, we've eliminated income taxes, so everyone else will be getting richer faster. A win-win.
What's the problem with hoarding? There's no difference between a billion dollars stuffed under the mattress, never to be spent, and a billion dollars burned up in a fire. If the rich aren't spending, they are not consuming resources or causing pollution, so it's as if their money never existed. And if they do one day decide to draw down their accounts, then it wasn't being hoarded.
>> If this were a card game, the millionaire could go piss himself.
Thankfully the economy is not in fact a card game, and no billionaire can force you to piss yourself.
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