Scott Adams: How to Tax the Rich(online.wsj.com)
online.wsj.com
Scott Adams: How to Tax the Rich
http://online.wsj.com/article/SB10001424052748703293204576106164123424314.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsForth
343 comments
"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.
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.
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...)
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...)
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.
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.
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.
Soon the rich will have special privileges just like the old days.
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.
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.
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.
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.
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.
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.
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. :(
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. :(
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).
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).
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.
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.
Taxing the rich (even more than they are already which IMHO is a lot) is just punishing success and rewarding failure.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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]
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]
The US Government could give out badges for every $1m in taxes you pay... then the rich could level up every April 15th.
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.
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.
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.
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.
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.
The world would be a much better place if there was less quibbling overall.
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.
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.
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.
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.
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.