Business Week article on A Global Tax on the Superrich

jnpy!$4g3cwk

macrumors 65816
Original poster
Feb 11, 2010
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The growth of inequality can sometimes feel as inexorable as the subterranean shifting of tectonic plates. It may be driven by powerful forces, but ultimately it’s a choice, not a fact of nature. What allows Gates to keep getting richer in spite of himself is a web of human-designed institutions and practices, from the tax system to patent law. So the question is not whether society can reduce inequality, but whether it wants to. If the answer to that is yes, the next question is how.

Thomas Piketty, a 42-year-old professor at the Paris School of Economics, has scored a surprise publishing hit, Capital in the Twenty-First Century, that proposes an unusual, possibly impractical, yet intriguing response to what he calls “the central contradiction of capitalism”: the tendency of wealth to grow faster than the gross domestic product, creating inequality that undermines democracy and social justice.

In a review last year, World Bank economist Branko Milanovic wrote that “we are in the presence of one of the watershed books in economic thinking.”
Most of the coverage of Piketty’s book has focused on his diagnosis, but the most interesting part is the cure. He proposes a global tax on capital—by which he means real assets such as land, natural resources, houses, office buildings, factories, machines, software, and patents, as well as pieces of paper, such as stocks and bonds, that represent a financial interest in those assets. In his terminology, capital is essentially the same as wealth. So taxing capital is taking a chunk of rich people’s money. His tax would start small but rise to as high as 5 percent to 10 percent annually for fortunes in the billions. The proceeds in Piketty’s view should not fund an expansion of government: “The state’s great leap forward has already taken place: there will be no second leap—not like the first one, in any event,” he writes.

http://www.businessweek.com/articles/2014-04-10/thomas-pikettys-global-tax-on-capital-may-not-be-a-crazy-idea#p1

I'm not sure I agree with the proposed cure, because, although I think the wealth is far too concentrated today, I would like to see a proposal that would encourage more investments of the job-creating type, and, I don't think this proposal would do that. But, I like the fact that at least this is being discussed openly now.
 

Technarchy

macrumors 604
May 21, 2012
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Tax enforced by whom?

Not necessarily opposed, but who is supposed to take point on this idea?
 

NukeIT

macrumors regular
Mar 20, 2013
233
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I always love the "Tax the rich, because we're not"

Penalize success always makes sense, right??
 

VulchR

macrumors 68020
Jun 8, 2009
2,329
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Scotland
A world tax on capital simply amounts to all countries agreeing to rationalise their tax codes so that there are no tax havens. It does not require a new world government. The question one might ask is why tax havens would give up there status and do this. The answer is because they are small and can get squashed like over-ripe mangos if they don't.

In any case, the issue is wealth, for which earned income is increasingly less relevant compared to capital gains and investments.
 
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Zombie Acorn

macrumors 65816
Feb 2, 2009
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I always love the "Tax the rich, because we're not"

Penalize success always makes sense, right??
Wealthy people aren't necessarily successful at anything. If my family had a few billion in the bank we could breed about a hundred generations of total losers and still be wealthy. Many people do nothing to obtain their wealth besides coming into the world with a golden diaper.
 

Technarchy

macrumors 604
May 21, 2012
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Wealthy people aren't necessarily successful at anything. If my family had a few billion in the bank we could breed about a hundred generations of total losers and still be wealthy. Many people do nothing to obtain their wealth besides coming into the world with a golden diaper.

Spot on.

And no, being rich does not make one a job creator either. It's ignorant as hell when people say this.

Lots of inherited wealth on wealth accumulation in the hands of people that have no sense whatsoever and certainly no capacity to generate wealth on their own.
 

jnpy!$4g3cwk

macrumors 65816
Original poster
Feb 11, 2010
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Tax enforced by whom?

Not necessarily opposed, but who is supposed to take point on this idea?
Good question. If a significant number of countries did agree on what to do, it probably could be done through the WTO. After all, the wealthy have been using the WTO in recent years to twist countries arms about all kinds of (big) business-friendly trade measures.
 

Huntn

macrumors demi-god
May 5, 2008
17,078
16,605
The Misty Mountains
Wealthy people aren't necessarily successful at anything. If my family had a few billion in the bank we could breed about a hundred generations of total losers and still be wealthy. Many people do nothing to obtain their wealth besides coming into the world with a golden diaper.
And it's proven repeatedly that family fortunes are easily squandered.
 

ElectronGuru

macrumors 65816
Sep 5, 2013
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Oregon, USA
Wealthy people aren't necessarily successful at anything. If my family had a few billion in the bank we could breed about a hundred generations of total losers and still be wealthy. Many people do nothing to obtain their wealth besides coming into the world with a golden diaper.
Spot on.

And no, being rich does not make one a job creator either. It's ignorant as hell when people say this.

Lots of inherited wealth on wealth accumulation in the hands of people that have no sense whatsoever and certainly no capacity to generate wealth on their own.
Quoted for awesomeness and to add a third piece...

New business is a triangle of three things:

Customers
New idea/Approach
Capital

To make a car analogy, the customers are the road, the idea is the car, and the capital is the fuel. What we often hear (that we need more capital and benefits for capital holders) is like saying we need more fuel when gas trucks are already struggling for a place to park, never mind sell and unload. We already have several life times worth of capital. What we've run out of is customers!

Without all three, there won't be any new jobs.
 

NukeIT

macrumors regular
Mar 20, 2013
233
0
Wealthy people aren't necessarily successful at anything. If my family had a few billion in the bank we could breed about a hundred generations of total losers and still be wealthy. Many people do nothing to obtain their wealth besides coming into the world with a golden diaper.
You have a valid point.

But so just because they were born into it we should take it away??

Life isn't fair, some people are dealt a better hand then others, some have money some have not, some have health others have disease. But that's life

The government should not have a right to take it away just because your ancestors bequeathed it to you.
 

thekev

macrumors 604
Aug 5, 2010
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The government should not have a right to take it away just because your ancestors bequeathed it to you.
It's either something like that or they'll print more. If currency becomes incredibly concentrated in specific places, it has a lot of strange economic effects. Even investment slows down if there aren't enough potential customers.
 

ElectronGuru

macrumors 65816
Sep 5, 2013
1,492
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You have a valid point.

But so just because they were born into it we should take it away??

Life isn't fair, some people are dealt a better hand then others, some have money some have not, some have health others have disease. But that's life

The government should not have a right to take it away just because your ancestors bequeathed it to you.
A number of threads cover (and fear) political systems that competed during the 20th century. But most of those were experiments to find the best replacement for the wide spread and long standing feudal systems that preceded them. Avoiding nepotism is about more than fairness, it's about preventing unsafe concentrations of power. Government, business or family, to much power in to few hands rarely ends well, however good the intentions or natural the imbalance.
 
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jnpy!$4g3cwk

macrumors 65816
Original poster
Feb 11, 2010
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You have a valid point.

But so just because they were born into it we should take it away??

Life isn't fair, some people are dealt a better hand then others, some have money some have not, some have health others have disease. But that's life

The government should not have a right to take it away just because your ancestors bequeathed it to you.
A general observation: if Charles and David Koch decided to sell all of their property, shares, and other business holdings, and buy gold, and, buy their own little sovereign island somewhere and put all their gold in a bunker, and sit on, I really could not care less. They and their dependents could sit there tax-free forever.

Think about it for a second-- the real wealth actually flows in the opposite direction from the gold. The companies, the know-how, the land, the buildings, the employees who are expert at what they do: that is the real wealth.

But, the companies owned by the Kochs, and all the other super-rich, are a part of the general economic fabric. And, yes, we all, who work as part of that fabric, do have a say in what the Kochs do. Their sovereign right to run things exactly as they see fit only exists on that desert island. Here, in the real world, they are buying from and selling from everybody else in the marketplace, and the smooth operation of that marketplace depends on laws and regulations, and all of us agreeing on what the rules are.
 

Menel

macrumors 603
Aug 4, 2011
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Wealthy people aren't necessarily successful at anything. If my family had a few billion in the bank we could breed about a hundred generations of total losers and still be wealthy. Many people do nothing to obtain their wealth besides coming into the world with a golden diaper.
There is nothing wrong with coming into the world with a "golden diaper". It is not immoral, there is nothing despicable, it just is what it is. And no one has a right to take that away.

Anyone born in the USA essentially has "golden diaper" status compared to someone born in the Congo.
 

lannister80

macrumors 6502
Apr 7, 2009
476
17
Chicagoland
There is nothing wrong with coming into the world with a "golden diaper". It is not immoral, there is nothing despicable, it just is what it is. And no one has a right to take that away.

Anyone born in the USA essentially has "golden diaper" status compared to someone born in the Congo.
Oh yeah?

http://www.economist.com/blogs/lexington/2010/10/estate_tax_and_founding_fathers

Thomas Jefferson said:
"A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural."

Adam Smith (yes said:
"There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death."
 

ElectronGuru

macrumors 65816
Sep 5, 2013
1,492
361
Oregon, USA
There is nothing wrong with coming into the world with a "golden diaper". It is not immoral, there is nothing despicable, it just is what it is. And no one has a right to take that away.

Anyone born in the USA essentially has "golden diaper" status compared to someone born in the Congo.
Ah, the classic 'is what it is' gambit. Yes, and the advantages of living in the USA (including the ability to make a golden diaper) are largely a result of the investments we made in the past. The same kind of investments we have to reduce when the beneficiaries of previous investments are unwilling to make future investments. The USA then becomes 'is what it was', and we start looking back to eras of prosperity and wondering what happened. Sound familiar?
 

alent1234

macrumors 603
Jun 19, 2009
5,654
122
Ah, the classic 'is what it is' gambit. Yes, and the advantages of living in the USA (including the ability to make a golden diaper) are largely a result of the investments we made in the past. The same kind of investments we have to reduce when the beneficiaries of previous investments are unwilling to make future investments. The USA then becomes 'is what it was', and we start looking back to eras of prosperity and wondering what happened. Sound familiar?

of course it hasn't happened yet and doesn't seem to be happening either

the banks are probably the ones complaining since a golden diaper means a lot of people have inherited housing and don't need a mortgage
 

NT1440

macrumors G5
May 18, 2008
12,141
13,999
If the banks hate people with "golden diapers" why do they offer things like HSBC Premier and HSBC Private Bank?
The banks love the wealthy. CitiBank even came up with a new term, plutonomy, because in their analysis the only actual growth or movement in the markets of a significant measure is that of the exceedingly wealthy and large corporations.

Here is their internal document outlying their observations (and therefore business strategy) circa 2006. Now, compound that observation with the fact that 95% of the economic recovery since the recession has gone to the top 1% and you've got a very compelling argument, from the bankers themselves, that the economy really only exists for and by the wealthy. It's a fascinating read, original document attached but here are some great nuggets from the intro:

"Plutonomy and the Great Conundrums of our age
We think the balance sheets of the rich are in great shape, and will get much better. Their behavior overwhelms that of the “average” consumer. A -10% savings rate for the rich has a trivial impact on even the growth in their net worth – don’t be shocked if the savings rate worsens as equities do well.

What could go wrong?
Globalization, productivity, a rising profit share and dis-inflation have helped plutonomy. Beyond war, inflation, the end of the technology/productivity wave and/or financial collapse, which have killed previous plutonomies, we think the most potent and short-term threat would be societies demanding a more ‘equitable’ share of wealth."

Pages 7-19 cover the "plutonomy"
 

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Zombie Acorn

macrumors 65816
Feb 2, 2009
1,301
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Toronto, Ontario
You have a valid point.

But so just because they were born into it we should take it away??

Life isn't fair, some people are dealt a better hand then others, some have money some have not, some have health others have disease. But that's life

The government should not have a right to take it away just because your ancestors bequeathed it to you.
I don't think it should be "taken away" but you either provide everyone with an equal chance for success or you admit that the game is rigged and do nothing about it. At some point the system will correct itself, but its going to be at the end of an angry mob revolting against the status quo. Keep in mind all you really have is paper.

Paying to educate your populace is probably the easiest way to deter them from cold blooded murdering you as a 1%er (not directed at you).
 

citizenzen

macrumors 65816
Mar 22, 2010
1,433
11,628
I don't think it should be "taken away" but you either provide everyone with an equal chance for success or you admit that the game is rigged and do nothing about it. ...
I just see that as a false dichotomy.

You can't give everyone an equal chance ... it's an impossibility.

You're alternative to that is to do nothing.

But IMO, somewhere between achieving the impossible and doing nothing, there is something that can actually be done.

I'd prefer to search for that solution.
 

MacNut

macrumors Core
Jan 4, 2002
21,547
7,802
CT
There is nothing wrong with coming into the world with a "golden diaper". It is not immoral, there is nothing despicable, it just is what it is. And no one has a right to take that away.

Anyone born in the USA essentially has "golden diaper" status compared to someone born in the Congo.
But when those with the golden diapers can find the loopholes or actually influence congress to create the loopholes not to pay taxes is where the problem happens.

It's fine if you want to be a stuck up rich kid who would never think of talking to the normal people. Just pay your share into society.