(Just an objective comment, I'm not positioning here) this honestly puts the "tax the rich more" in perspective. A tiny tax increment to the rightmost column would provide more money than 100 years of all the other pitiful contributions together.
The vast, vast majority of wealth (to the wealthy) are in form of company ownership, stocks.
So let's say you start taxing the ultra-wealthy based on their assets. They then have the option of:
1) Make the company pay out dividends, so that owners can afford to pay their wealth tax. Not ideal, because what happens during bad years where there's no dividends to be paid out? Or if companies want to re-invest in the company?
2) Sell stocks. Again, not ideal. This would mean that you lose some ownership year by year.
3) Take up personal loans to cover taxes.
etc.
Note, I'm NOT saying that we shouldn't do anything. But this is just the consequence of such assets (stocks) being the dominant asset among the wealthy.
Why is 2 a direction to be avoided? Is it really so bad to prevent an individual from having majority voting rights over a corporation which has power on par with most nation states? I’m not sure a billion dollar cap is the answer here but surely there must be some kind of reasonable ceiling. Is it so bad to think that one individual shouldn’t have majority ownership over a company dominant for the US space program? Or control over major international internet access that’s useful during conflicts? Or major social media platforms which provide algorithmic dials to tweak what information is visible?
I think there’s really only a few solutions to it which all involve some kind of divestiture, it just depends on if you want to target corporations or individuals:
1) a new wave of anti-trust ala Lina Khan and breaking up most major tech companies.
2) passing laws limiting the behavior of, and allowing for the punishment of corporations and group agents as a whole. There’s a lot of philosophical work about how to hold a group accountable for their actions, try searching List and Pettit Group Agency. There’s been a lot of development since then but I’m less aware of it.
3. Caps on decision making power (potentially measured via some weighted stock ownership, or wealth more generally) like suggested above. I agree there would be a lot of second order effects here which are beyond the scope of this comment but I think we’ve clearly gone too far in one direction where single individuals are now essentially funding national party midterms, have increasing power over real world conflicts, and any other of the myriad of corruption issues you can find out in the wild.
Maybe it's just me, but I don't see much wrong with any of the options above. Most of my assets aren't liquid either, yet I'm still taxed at a much much higher rate (when compared to total assets) than the top. I have to make decisions like "how much will I need good health care coverage next year?", which I shouldn't have to say isn't "ideal" either.
Wealth tax is not on Assets. It's on Stocks. The top pay the same tax on their personal income. Wealth tax is different. It taxes Ownership of Stocks not Assets.
Is this concerning? Can you explain your point a bit more clearly, for the benefit of people like me that don't want individuals to have more power (whether its in "stocks" or "assets") than entire nations?
It is concerning for the simple reason that you have a stake in a company based on a future bet that the company will succeed. There is no guarantee for success. It's because owner has a stake will he/she work towards building a vision for his/her idea that is put into execution. Asset is not tied to any idea whatsoever nor is there any vision to strive towards. Infact the investment itself exchanges stock for introduction of asset (capital infusion). So money is being put into the company by owners or investors in exchange for stake. Beneficiaries of this capital investment will be employees first typically. Only once the company takes off and finds success can owners/investors cash in on their investment that too if they sell their stock. So in effect the rich have their money locked-in.
If you tax stocks, the rich will have no incentive to keep their money locked-in. They will encash and exit to a jurisdiction that allows them to invest their proceeds into stocks again. Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.
What you are asking for won't work in a capitalist society (which is pretty much every society on Earth). The only way out is UBI.
UBI would mean forever locking in autocratic control by the few owners, reducing the rest of us to depend on the graciousness of those who have time and time again shown they have none. An allowance is not a solution to the power distribution system.
There's many other solutions you skip, from capital controls for the more near-term issue to moving past capitalism for the more long-term systemic fix.
A nice idea I heard is to introduce a minimum tax rate based on wealth. Let’s say the magic number is 0.5%. Then you say, every individual (over some threshold etc) needs to pay max(normal tax calculation, 0.5% of wealth) .
What I like about it is that it doesn’t penalize people who already pay taxes. It’s a lower bound, not an extra.
What makes me weary about any such tax is that in practice, it seems to target the broad middle class - people who have enough assets to be interesting to the tax man, but who don’t have enough to hide it or avoid taxes.
You didn't really highlight how any of this is a problem? Yes, if you sell some of your assets, whatever kind, to pay for taxes then you'll have less assets in the end. That's literally how taxes work.
The phrase "your success" is doing a lot of heavy lifting here.
You understand that billionaires don't make money from labor right? They get their money from rents and the return on capital. Roughly 5-7% per year, compounding, risk free, for perpetuity.
Isn't that exactly what we are trying to achieve by re-distributing the wealth, and avoiding that few people have such huge ownership that they have more power than governments ?
We are still living in a middle-age system, where the lords don't own lands but stocks and companies, but they still dictate the laws.
> This would mean that you lose some ownership year by year.
What's the problem? It's not like you'll have to sell over 50%. Even then the are schemes for non-voting shares. But when close to 1% of population works for Amazon, maybe forced sharing of ownership isn't a bad idea.
Besides any argument about fairness, wealth inequality is highly destabilizing and historically has only been corrected by revolutions, wars, crises etc.
If a few billionaires need to sell stocks to avoid such an outcome, that seems quite desirable to me.
Um, tough, if you want to be a billionaire, you get to sell a tiny fraction of your assets to pay taxes. If they don't want to sell assets, they can pay themselves a larger salary or something. Or, like you said, take loans which is literally what they do to afford their lifestyles, just use that for taxes. I don't really care which.
"Taxing the rich" is literally solving the thing that is a problem today.
The thing is: You cannot eat, or live inside, or get medical treatment from, stocks.
Wealth taxation cannot redistribute the kind of wealth we care about most. At least not by itself.
You need someone to buy the stocks in exchange for labor. So you need to keep the stocks themselves valuable.
As an extreme example, if you'd just take away all the SpaceX and Tesla stock from all shareholders and redistribute them, they would probably be near worthless because you just demonstrated that their value is more or less random.
I think that wealth taxation will only work if you give ironclad guarantees that people that are merely rich or middle-class will never be subject to it. If you can show that a stock is more valuable to, say, a medical doctor, then to the CEO of a hyperscaler, you might have a working system.
There is a certain tautology to "tax the rich" - a country can't exactly tax the poor. The poor have no money. Taxes on poor people are more about the principles of fairness and to some extent transparency than because they have the financial resources to contribute meaningfully.
It'd be interesting to do the same graph by real consumption. I bet it'd be much more equal - most of the wealth is tied up in systems that keep the country ticking over and are only providing paper benefits to the owner. Which is why I say "transparency" - once you track what happens in real terms, "taxing the rich" almost certainly becomes "everyone ends up with less". If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream. The person getting the money wasn't consuming anything real.
The primary benefit of massive wealth is power. It's an intangible, but it's very real. It can't be dismissed as paper wealth.
And it's not like taxes destroy wealth. Distributing from the person who owns the ice cream machine to the person buying ice cream puts the money in the hands of the person far more likely to spend it quickly. On ice cream, making the business case for owning ice cream machines better, not worse.
> If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream.
What you're describing is called "Trickle Down Economics", and has led to 50 years of economic failure.
Norway has a wealth tax (1.1% nominal, but there are tricks), but we also have almost as bad wealth inequality as the US (by Gini). Wealthy people are furious to the point of fleeing the country because it really is the one tax they can’t (entirely) escape. But it certainly doesn’t “fix” wealth inequality.
Why couldn't there a wealth ceiling? Let's take $1B per person, everything above that is taxed at 100%. Would it destroy the capitalist dream and people would lose motivation to grow their wealth, or would it stimulate cooperation and wealth distribution?
You'd probably want to have it be dynamic in some way, as most monetary systems that mostly work tend to have some level of inflation to keep things moving.
Definitely there are many problems to this solution, such as what to do with existing billionaires. If it was up to me, I would say to them "figure it out, the late payment interest will start to accumulate soon". But realistically it could be done over multiple years and in stages to limit the negative effects.
The only thing that might genuinely be hard here is strategic leadership of a company.
Because while some can be transferred into something that is partially worker-owned, not all workers are suited to be given that sort of leverage.
So that might be worth pondering to come up with a solution that makes stuff not collapse. Because the reality of human resources is that the quality is underwhelming.
The total income from tax increases is relative to the gross income. The gross income of the 1th percentile of earners in the US is ~$3.3 trillion, whereas the gross income of the top 25% is ~$10.3 Trillion. Levying a tax against only the top 25% sans the top 1% would yield more taxes than the inverse. Small increases on large brackets tend to generate significantly more tax revenue than large increases to small brackets.
Or educate, promote or even mandate that a share of a company must be given to the employees of said company.
If you "fool" a hundred thousand individuals to work for a company on a wage and through their work the company ends up been valued at a billion, you become a billionaire. Wouldn't they deserve a bigger cut of the fruit of their labor?
The fastest way to distribute wealth isn't taxes on wealth, it's a better distribution of the wealth generated by labor on the contract that the employee signs.
Existing taxes are mostly on income, not wealth, and the US has one of the most progressive income tax systems in the world. Confiscating some fraction of Tesla and SpaceX will destroy lots of economic productivity for a one-time bump; it's a worse trade-off than just printing however much money and taking the value through inflation.
Taking a bit more money from the ultra wealthy is not going to stop Tesla and SpaceX. That's just ridiculous. Particularly for those two who only exist due to government subsidies.
At this point, it will probably not stop them, just slow them down, but it will strangle other companies in the crib. How much do you plan to tax the new multimillionaire janitors at those companies?
If government subsidies are the only reason Tesla exists, why did Aptera (v1) and Fisker fail? If SpaceX only exists because of government subsidies, why are Boeing and Lockheed Martin (owners of ULA) worth so much less than SoaceX?
We've seen what happens when people decide to confiscate wealth with promises of good living standards for everyone. It has never delivered on those promises, always lowered median living standards, and usually led to lots of deaths. I can't think of a single example where recovery from a confiscatory regime has taken less than 40 years, except arguably Cambodia, and most of them are still ongoing. Do you want Democratic Kampuchea as a best-case outcome?
It's not confiscating a fraction of Tesla, it's forcing Elon to give up some of his share of Tesla. He doesn't give it to the government, he sells it. To whoever wants to buy.
Could also take dividends, that would be more of a tax on the company itself which is what people usually object to in this discussion. Now the company basically can't grow as fast because it has to satisfy the tax burden for the owner. But that's a choice the owner makes.
Kind of makes a point to have a wealth tax. As the top 1% of w2 earners are paying a disproportionate amount of tax relative to too 1% of wealth holders.
That or just raise interest rates to force these people to sell more equity
Top salary earners, who do manage to save somewhat for retirement end up getting punished by these wealth taxes as well, especially since, generally, you need money in order to be able to move money around, in order to be able to save money on these sorts of taxes.
They get punished by wealth tax because the crooks who implement wealth tax put the limit at some ridiculous point that ends up impacting "normal people". The whole point of wealth tax is to tax the ultra rich, so you could put the limit extremely high like $5M or even $20M and it wouldn't affect anyone except those who can easily afford it. But they don't do that, I assume because they want people to hate it so they can remove it later.
Is it though? Those same unrealized gains are used by those same alleged paper-billionaires to borrow money and live lavish lifestyles ("Buy, Borrow, Die").
They literally get to eat their cake and have it too.
Yeah but every time anyone actually does implement a wealth tax they start it at like $500k or some similarly stupidly low amount and then everyone starts (somewhat rightfully) complaining that granny has to sell her house because she can't afford the tax.
It seems to obvious to me, like just start it at something like $5M. Nobody will be affected who can't afford it. It's like they're trying to implement it in a way that makes people hate it.
Such a wealth tax surely should be progressive. If I have $500k I'm not necessarily wealthy-wealthy but I'm heck of a lot more wealthy than someone who only has $5k, or even $50k. I could afford to pay something for the sake of being lucky enough to have a have half a million. Someone with $50M could afford to pay much more.
However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth. It seems that wealth tax is often used as an easy fix to "we can't somehow tax the income of high-earning wealthy people because they arrange the legal ownership of their wealth so that it's hard so let's tax their wealth". What should be fixed instead is profits slipping out of the taxable base. In general, a lower but wider tax base is always better than higher spot taxes that encourage people to optimize. Wealth tax is just a slap-on solution that mostly just encourages tax planning.
The inequality of the distribution is the true issue, and indeed not taxing the wealthy enough does accumulates that. A country should be proud to tax widely and moderately, even the highest earning people and businesses. A country can't compete with a tax haven but a tax haven can't compete with a functioning state and society. Working to tax wealthy people more in par to what ordinary people are taxed would work towards a more equal society. Some of the wealthy people would move away but the country should recognize and maintain that it has other factors of appeal than the tax rate.
Netherlands is €60,000 single / €120,000 married before it kicks in; implemented as a 36% yearly tax on assumed 6% returns (e.g. married; have €200k in investments; you owe something like [200-120] * .36 * .06 = €1728). I think there's some nuance for bad years.
In practice its basically an additional 2% "drag" on market returns as its a yearly tax; not capital gains on sale.
Sole reason we turned down a job there. I don't hate the idea of a wealth tax, but having it kick in at €120,000 is nuts. IMO it's not even functioning as a wealth tax, its a barrier to the middle class accumulating even meager non-property wealth.
(I'm sure I have some details wrong, but broad-strokes this is what I remember from when we turned it down a few months ago)
At $5MM farmers are affected. Land is expensive, and it takes a lot of land to farm. At $5k/acre, the old standard 1k acres farm is $5MM, and nowadays that’s probably not enough land to raise a family (only $65k profit), so you really need more land. Estate tax means the kids can’t inherit all the land.
What is the point against wealth tax? That the rich will flee, leaving us.... better off in every possible way?? This is like that episode of futurama where fry befriends the parasites he found at a gas stop
>That the rich will flee, leaving us.... better off in every possible way??
Can you explain why would we be better off when the rich flee?
I see this "we gonna be better off without them" sentiment quite often, but never an explanation how would we be better off? What metrics have you used?
They won't flee. The tax would have to astronomical to offset the advantages of doing business in the US. If that wasn't true, they would have all disclaimed their US citizenship and moved to Monaco already.
USSR had no rich and everyone one was poor (except for the party’s apparatus).
So, how would it work here? Why eliminating the rich (whatever is the definition) would achieve a different outcome than that of communist regimes of the past?
There is not one discussion without this "argument".
But, let's say, they do. And they also have to stay out.
Wouldn't that be.. kinda nice actually?
Your taxes would stay the same either way.
Yes, of course, there would be less luxury spending, but the millions of normal people still exist. And they spend and they produce.
Why not let the ultra wealthy just leave and idk go to mars or something?
Kick them out, seize their assets, run society without them if they do not want to be part of it anyway.
This article is about American wealth inequality so I’ll assume you’re talking about the US. The US already taxes global income, so moving away is not enough. You could renounce citizenship, but then you lose all the benefits of citizenship and you must pay capital gains an all assets whether you sell them or not.
The “they’ll just leave” argument doesn’t really hold up in this case.
Hey so this isn't true. In places where they have researched this, a small number of people do move, but the additional tax of those who don't completely outstrips what was lost.
Where are they going to go? If they wanted to go live in a 3rd world country with no taxes, they already would. Everyone is getting tired of their BS and your lame, repetitive arguments.
They can personally move, but they can't move the source of their wealth. Bezos can move, Amazon can't. Bezos moving away will only reduce his taxes if we let it.
Part of the problem I have with graphs like this is that they don't differentiate between paper wealth, being able to get a loan against the paper wealth, and hard assets (real estate, vehicles, cash).
Let's take a personal anecdote for an example: I joined a startup when it was early-stage, stayed for a few years, and exercised my stock options when I left. The startup is now "successful", but still private; my shares have also surely been heavily diluted. I have no idea when I'll be able to sell those shares or how much they're really worth. I have no way of turning those shares into quality-of-life improvements for any foreseeable future. Do they make me "wealthy"?
I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff. I think the real problem is how much of the wealth is allowed to stay off public markets. Cargill is worth more than $50 billion and its stock is not available on public markets. The growth in wealth of most AI companies - Anthropic, OpenAI - happened off of public markets, and so none of it trickled into the American middle class by their retirement accounts. Venture capital is keeping companies private for longer because, quite simply, none of the investors need the cash to pay for their cost of living, so they're quite happy to let paper gains continue to live on paper.
If your company has revenues of $X million a year or more, you should be forced to make public financial reports (effectively forcing you to list stock on a public market). Period. I think economists will naturally disagree on how much X should be, and that's fine, but I have little doubt that there should be a line like that, somewhere. Concerns about public markets forcing short-term thinking are a different problem, one addressed by mission-lock implements (Eric Ries's recent book Incorruptible is great here). Public markets ensure that gains in wealth are shared more broadly across the economy and increase tax collection by incentivizing more frequent buying and selling of the underlying stock, since those are taxable events.
> I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff.
Think again. The demand from rich to park wealth in X, Y, Z makes prices go up. Just imagine that the RAM prices fueled by AI spending is a housing market. More money rich have, less affordable the life for the rest is.
And don't forget that speed of their wealth growth is way faster than anyone who sells their labour.
Ah. And we did not even talk about "hidden" wealth thingy... All these numbers are official ones.
I don't think most Americans are thinking about their 401Ks when it comes to corporate behavior. They're thinking about high prices, lower quality, poor service, externalities(pollution and such), low wages, poor working conditions. I don't think public markets will fix those things, and some argue they'd make them worse.
Paper wealth is a real problem (and the financialization of everything has made more paper wealth appear than imaginable) and your "illiquid" stock can cause all sorts of fun when various thing try to force you to mark-to-market something that basically doesn't have a market (I'm sure you'd sell your shares for $1 billion, and be insulted if I offered you $5 total, so they must have some value but good luck finding what that is AND realizing it).
You also have this with houses in California (and more and more, the entire country) - a family in a house that they pay $x per month on is not likely to really feel different if you tell them the house is worth $250k or $500k or $5m - because the price will likely be "in line" with those around them and so actually getting access to the "wealth" is difficult - the only real way is to move far away.
I feel a big part of the problem is we've made the world great for those who know how to navigate it, but horrible for those who don't (or can't). If you are disciplined from the beginning, always save 10% of what you make into retirement 410(k)s, 10% into rainy-day funds, spend less than 30% on housing, you're going to do quite well - but that's a small portion. Seventy years ago you could be a near literal moron, work at the factory, and live a good life - because the company handled your pension and healthcare without asking you to make decisions that frankly most people aren't capable of making - and it was difficult to leverage yourself to death.
Most people don't give a shit about wealth inequality if they can live a good if humble life without undue stress.
Elon Musk existing doesn't bother me as long as I can provide for my family and feel I'm getting a "decent deal". But if I'm overworked, underpaid, drowning in debt, and prices are rising, his existence is going to be a lot more annoying.
(One of the problems of publicly-traded companies is manager's capitalism - https://ia601506.us.archive.org/26/items/bogle-managerial-ca... - both really come down to nobody actually owning something in the meaning of taking responsibility to the thing, because ownership is so diluted it basically has no meaning.)
As a w2 earner, taxes make me feel shame and rage. Shame knowing how ineffectively my taxes will translate into helping my fellow Americans/my communities/my grandchildren. The rage is for the realization that the most valuable people in our society (our doctors, engineers, small-med business owners) are the ones mainly footing the bill for select greedy and power hungry politicians. I’ll admit I haven’t validated if this is empirically true based on the numbers. It’s just feelings that come up looking at my daughter and knowing some of my taxes probably bombed an entire school of little girls who aren’t much different than her.
But is wealth really material or is it mostly virtual? Musk may be one of the richest men on Earth but he doesn't have a Trillion in his bank account. He holds stock which is potentially worth that amount. But as soon as he were to sell it the price and value would sink and it would be worth much much less. How much less? I don't know exactly but I suspect at least half.
So maybe we should take into account the liquidity of the assets held by these Billionaires. Also, as we've seen with Steve Jobs that if you get cancer it doesn't really matter how much you have in the bank. You'll die the same just like everyone else. All that money won't buy you extra time.
Since most people’s income comes from salary, it is very easy to read this graph wrong and it is a bit misleading. Say you are some dev who makes $500k per year, but likes to rent, doesn’t drive and is not very bothered with stocks. Their Net Worth - unless I understand this wrong, if I do please correct me - the would around zero, maybe less with student loans, so they would be amongst the poor. Ok, they probably would have a lot of savings in this scenario, but maybe they like to ride on a horse with no name and spend most of their income. Still I would not call them poor.
Does it change the picture? Not really, because Musk et al. are so way beyond everyone else that the graph is extremely top heavy. It is a nice data visualisation regardless.
Does factor in the K shaped reality we're entering where if white and blue collar jobs become automated there will be only rent seekers and extreme unemployment?
> In 2011, Michael Norton and Dan Ariely asked more than 5,000 Americans how they thought wealth was split between the five fifths of households, and how they would ideally split it. The Companion spreads those five shares across all 100 percentiles of the 2026 wealth total in a smooth curve (Appendix 3). Many different curves fit five numbers, so these two shapes are only illustrations. The actual bars come from percentile-level data. These two curves do not.
Who is it to say what's the ideal wealth ratio between quintiles? I know who, a local communist!
Wealth inequality is a completely pointless metric that tells us nothing about individual quality of life, and is being pushed by the left wing ideologies to serve their agendas.
For example, you could propel yourself into the top quintile by just packing up and moving to Liberia, but that would not increase your quality of life now, would it?
This is shorthand for “the total wealth of the richest 0.1% of the population is greater than the total for the remaining 99.9%”, rather than the trivial “the individual wealth of each member of the richest 0.1% of the population is greater than that of each member of the remaining 99.9%”.
Would you rather have richer (in real terms) society (including richer lowest decile) with larger wealth inequality or poorer society with smaller inequalities? You might argue that these are not really the only two options and that's fair, but let's assume they are. Surprisingly many people would still opt for second option. Musk was trillionaire, now he no longer is (so inequality decreased) but did it really change anything that we no longer have any trillionaire?
It's not "poorer society with fewer inequalities." That's what they always say. It's never that. A society is not "richer" because the amount of financially backed power is one concentrated set of hands.
seems to be a general rule of life, some people are just born with the right combination to be really good at a certain game at a certain point in time. The only issue with wealth is that they can influence other games in which they have no ability just the same and that is dangerous for a democracy. Imagine if roger Federer was messing with the elections just because he was the best at tennis. Tech must be one of the few fields where someone believes that they are good at everything just because they made it.
This raises such an interesting question, how much of the wealthiest individuals wealth is due to skill, and how much is because in an unequal system there has to be someone at the most wealthiest point.
I think it's an interesting thought, I'm not sure I have a hot take here or anything. The likes of Jeff Bezos and Elon Musk are clearly good at amassing wealth (and interested in amassing wealth) but I suspect a lot less is attributable to skill than many would think.
So bezos’ parents were in a position to fund him to the tune of hundreds of thousands of dollars, Enron musks dad owns mines, bill gates mom was on the IBM board. It very much has little to do with skill.
"Closer" in what sense? Does Elon Musk have a markedly more lavish lifestyle than them? Is his retirement safer? How many politicians are campaigning on investigating, regulating and prosecuting the hundred-millionaires? Do media run scare stories about the drug use and sexual promiscuity of the hundred-millionaires, suggesting that they have children from too many partners?
If you’re saying he doesn’t, that’s a really strong argument for redistribution then, isn’t it? If he don’t need it, let’s spread the love around. And spare me the job creation story.
He doesn't have a markedly more lavish lifestyle than the hundred-millionaires, but I don't want to live in a country where the government takes stuff that it (or some majority) decides the current owners don't need, and you shouldn't want to either. I think the US and world are better off with Elon Musk in control of those companies, and with those companies having lots of capital to work with. A side effect of people agreeing with me (although I'm not invested in those companies directly) is that his paper wealth is huge.
So, no, I don't think "he doesn't act like he needs it" is at all a good argument for redistribution.
"Value creator"
..
You truly don't get it either. People like this are just aggregators. That's it. Magnet. They attract stupidity and power and money, and once they have it, the gravity takes over. That's all it ever was.
They're not "value creators". They're human beings that were given immense opportunities, disproportionately available avenues of luck, and happened to be able to find people to do their labor for them on the backs of the needs of the world.
What the ever living hell do you think the "90% of people" are doing? They're feeding each other and selling houses to each other and stocking shelves for each other because they have to because their labor and money is being stolen from them by this stupid abstraction that they are are "value creators".
You guys must not have a lot of years of experience? My friends groups have a few hundred million dollars each (the junior developers are in the lower hundreds)
We're older. We missed out on the AI boom and the really juicy stock grants. Throw in toys that depreciate in value, tuition for the kids, a couple divorces/trophy wives, etc. and the money goes fast. It's amazing we have anything left at all!
Even hearing from others on this forum helps! Sounds like most people haven’t been nearly as lucky-heavy fortunate as folks in irl circles. Very eye opening, and I appreciate everyone’s anecdotes.
> Most people here probably have around $5-10M in assets
There is no way this is true. FAANG pays well, but that is still an eye popping amount of wealth unless you're an executive or absolute top-echelon engineer.
> Most people here probably have around $5-10M in assets given we’re mostly in tech
Even in a SV world I'm trying to get my head around the logical leap that gets you to this number. Median comp in SV is <500k - that's 20 years in the business to earn $10m ignoring taxes & your actual living expenditure. Obviously we can jump that with equity, but that's still not moving the dial far enough for the "majority" to be up at those heights.
I don't see how we're getting anywhere near these figures without generational wealth (assume this is the answer).
That's ignoring taxes, too. Real take home for a single filer earning 500k in SF is ~$282k. Take out another $48k for median-ish SF rent ($4k*12) and that "$500k" is already south of 250 before most of your bills are accounted for.
Most people in the US would be delighted to have over $200k of gross income, much less after paying for taxes and housing. Your argument seems to suggest that those developers should also be very happy with their incomes.
Yes, salaries in the EU are generally pretty bad, and then you have high taxes on top. That's a good reason for why I left the place.
(Though to Singapore, not to the US. Salaries are higher than in the EU (though less than in SV), taxes are a lot lower than in either. Quality of life is higher than in the US for me.)
Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
(Or as more likely, you've been in SV since Apple was a twinkle in the garage and your house is worth north of $5m.)
For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
> For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
This is all getting more annoying with capital gains taxes (and inflation, since capital gains taxes are usually levied on nominal gains).
I moved to a place with simpler taxes, including no capital gains taxes.
> If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Depends on how much you want to live off.
> Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
I don't think the original commenter was talking about juniors who just started?
Although looking at Levels.fyi, salaries in London are significantly more than Singapore, and that's with the CoL apparently being higher in Singapore.
You need to look at net salaries after taxes. And for CoL it depends on what your consumption basket is. My cost of living would be higher in London. (I lived in both places.) I don't drive, I don't smoke, I use public transport a lot, and I pay for household help. I do drink beer, which is expensive in Singapore, but it's a small part of my overall budget.
I save a lot of money on 0% capital gains taxes here.
I regularly check London jobs and interview for them, but the numbers haven't made sense so far.
I think your comment strikes at an issue that everyone feels but is hard to articulate - there's true poverty (Appalachia, say) and then there's "working-class poor" which you can try to define but nearly everyone puts themselves into it. Perhaps a better term is "paycheck to paycheck" - by almost any measure, anyone gainfully employed in the USA is rich beyond the world's wildest dreams - but telling a family making $40k a year that they make more than 90% of the world doesn't help.
"by almost any measure, anyone gainfully employed in the USA is rich beyond the world's wildest dreams"
I'm not sure your mental model holds. A lot of Europe has higher standards of living than the USA. And a lot of Asian countries have made huge strides in the last few decades. Also consider the difference between Mississippi and Massachusetts. I wouldn't say that anyone gainfully employed in Mississippi is "rich beyond the world's wildest dreams".
An awful take from someone who clearly hasn’t studied California itself.
Around 17% of CA residents live below the poverty line, which means MILLIONS of adults that are not students. Elderly are a significant chunk of that number.
> Most people here probably have around $5-10M in assets given we’re mostly in tech.
You would be surprised. Not only because, as you point out, recent graduates often have a negative net worth, but also because people tend to increase their spending in lockstep with their income.
Saving millions takes the intersection of multiple factors: sufficient disposable income, prioritizing investing over lifestyle, long-term discipline to stick to the plan, and luck to keep it all going smoothly.
Well, this was discovered long time ago, by Vilfredo Pareto, this is exemplification of his 90/10 rule. Having said that... We should be more honest here when we talk about wealth.
If one asks "how much, say, Elon Musk, is worth" we see some crazy numbers with kirjillions of zeros. But those are not "his" money, this is how much his companies are estimated to have. Yes, he has large personal fortune, but it is nowhere near those huge billions of billions amounts.
Second, staying with Elon example, his companies are paying people and other companies that pay people, so there is huge army of people who have food in the fridge because of Elon Musk (I've seen some estimates around ~1 million people overall). Again, they are nowhere near to be as wealthy as Elon, but still, they have a decent live thanks to his companies.
It’s not about “cash at hand”, it’s about who owns “stuff”. In days past people knew that the aristocracy owned them, their families, the land they work, and the output of their work by a God given right flowing from the anointed King. It was easy to see too - those people living in palaces up the hill owned everything, you owned nothing.
It’s more hidden now. We all have rights and freedoms and whatnot. But there are still people who “own stuff”, and people who don’t. With shades of gray in between those two extremes. It’s good to be cognizant of the system you inhabit relative to what has existed throughout history so you can make good decisions and position yourself accordingly.
I used to buy this sort of arguments, but then saw him fork $45B to buy Twitter, on demand, so...
> his companies are paying people and other companies that pay people
Yes, his companies, not him. He's not doing much, except distracting part of his workforce to work on vanity projects such as flying cars or mile-long vaccuum tubes, or spending some of his vast wealth to buy politicians that will further the cause of wealth inequality. Get rid of him, and the system works much better for everyone. Him and others like him.
> this is how much his companies are estimated to have
Not even ‘to have’, just ‘to be worth, if all of their shares could be sold at the price of the recent ones’. It’s a number only loosely (albeit obviously positively) correlated with actual spending power.
Elons ownership of those companies is not what puts food in people's fridges, nor is that amount of power concentration a natural, good or even defensible thing.
The whole point is that he shouldn't be able to exert autocratic control over large swathes of the economy and control that many people's lives.
But millionaires only but nice houses and maybe a nice car or two, and send their kids to a nice college. Billionaires invest in companies that create many jobs. Maybe you can argue the houses and colleges create even more jobs, idk.
We've never had this many billionaires, and they've never been this rich. So following your logic, the country should be more prosperous than ever, right?
If you don't accept this particular argument then there are plenty more. This one is just quick and easy to convey.
There are very solid arguments backing up the same general points that require time to communicate and require good faith attempts to understand from the other party. But you probably don't want those either.
I would flatly reject the idea that a just-graduated neurologist with a negative net worth due to loans is “poor”.
Wealth being the integration of gains - consumption over time makes it a poor metric for looking at society as a whole.
Something like 50% of Americans will be millionaires at some point in their lives—upper quintile per this chart, typically later in their earnings years. Almost all of them started “poor” as young adults, per this chart’s definition.
I don't disagree with you. Obviously a doctor can bring in a lot of money. In the same a stock can be valued as the sum all future cash flows w/ a discounted cash flow analysis, a doctor's future income can have a quite high valuation.
That being said, one accident or illness that strips away that doctor's ability to earn, leaving them in a soul crushing amount of debt that can't be discharged via bankruptcy. Their debt obligations are real.
I have, and will always have, a simple rule when evaluating job offers: can I pay my mortgage with that today? No one is feeding your broke neurologist based on future returns.
With this kind of wealth distribution, there's no point doing any job which services regular people. Everyone should become an informant, bodyguard, lobbyist or propagandist for a rich person. That's going to be the only kind of job that pays in the future.
Look at that last bar; consider just the annual yield or interest payment on that wealth; soon, it's going to be more than all other bars combined. If people understood the situation, they would all stop working and start making lists of who these people are and work for them. That's the only logical (legal) thing to do. Every other job or career is a waste of time.
Yes but I'm thinking about just the yield on that last bar.
Given that the Shiller P/E ratio is now 40 (under 3% of the value of the assets), the yield is actually a pretty small fraction of that last bar... but even then, I'm saying one year's yield could exceed the worth of all the others if things continue.
But IMO, it's already the case that the economy is centered around the free money/proceeds received by top 0.1%. This is why we saw all that nonsense with COVID, DEI, Wokeism, etc... This is what happens when a small number of elites decide to spend a bit of 'spare change' on politics and social activism. Imagine how bad it's going to get after that wealth has compounded in 10 years...
- Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets.
- Even the LHS of that chart Americans are some of the wealthiest in the world. A lot of the middle class from many other countries would love to be on the LHS of that chart.
- No one is expected to build wealth on a 40 hour minimum wage job. It is the bare minimum and most people get paid more.
- Americans don't want wealth. Our spending habits are abysmal. I suspect if you gave every American $500K the chart would revert back to this in like 12 months
> Most of that wealth is tied up in assets offering services for americans
Yeah. Like renting a house for a mother of 2 children who will never get her own by selling her labour, while the renter uses her money to buy more units.
> Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets.
Why would that be worse? What online services are so important that it's better to have them than to lift some people above the poverty line? Rich people spending is the next best thing after taxing them - it distributes their money and provides jobs. It would strictly improve the society if Bezos spent lots of money and folded his servers and warehouses - in so many different ways...
A large portion of billionaire wealth isn't reinvested in productive assets. It comes from holding onto assets like corporate shares and land that grows in value based on the asset's ability to extract profit or rent. Or from distorted (speculative) demand for that asset that is completely detached from its productive output.
Someone like Bernard Arnault is worth around $160B (wealth from luxury brands like Louis Vuitton, Dior, and Tiffany). That paper valuation exceeds the total national wealth of many entire countries:
https://en.wikipedia.org/wiki/List_of_countries_by_total_pri...
I’m not a one-percenter and my life is great. I don’t even understand why anyone cares about equality. The point is a rising standard of life. Equality isn’t anywhere near my top objectives. Pareto-optimal trades are good. Adding an implicit objective to minimize abs(w_i - w_j) makes many win-win things impossible.
The coordination win that came from “thou shalt not covet” is substantial and we forget it at our own peril.
You should care about equality because inequality tends to make places worse for everybody. Yes that includes those rich people. You can't go to the beach because it's all built full with private resorts. Those rich people can't walk the street and have to live in walled villa's for fear of crime. They also can't easily get married to who they want because they have to hold their assets. Vietnam is poorer than South Africa per capita, but significantly safer and more pleasurable to live. Would you rather be top 10% in South Africa or Vietnam?
What is interesting is that this was true centuries ago too. Life as a noble in the middle ages was stressful as hell and you couldn't even decide on your own lovelife. Read Seneca and the first thing he writes is that Augustus (whom he knew personally) was constantly complaining about his busy life and dreaming of a retirement that never arrived.
Rank order of income inequality (and coincidentally wealth inequality): South Africa > US > Vietnam
Rank order of preference to be top 10% in for me: US > Vietnam > South Africa
So your method does not disabuse me of my belief. It’s quite clear that equality has not made Vietnam more desirable than the US. In fact, there are some 400k foreign born in Vietnam (<1%) vs the US having 15% foreign born (a stark enough difference made worse by forcing foreign-born to be from non-neighbors). So I must reasonably conclude that my rank order is likely shared by others and that others too are not, in fact, lured by equality.
There is an old immortal tweet: cars have windows and go; houses have windows and don’t go; so it’s not the windows that make things go.
If inequality were as critical we’d expect a perfect rank ordering of distant migrant population attempts matching it. The numbers are so vastly different that one cannot conclude equality is of great importance to most.
Inequality by itself doesn't cause bad safety. the following countries have a higher share of wealth controlled by the top 10% than vietnam and also a lower homicide rate: singapore, uae, switzerland, sweden, qatar. that's just off a very quick search i'm sure there are more. Certainly in none of those countries are people hunkering down in private fortified castles for fear of stepping out in public.
You or the farmer you buy food from competes for farmland with Bil Gates.
You or the one providing your house builder with wood competes for lumber forest with Alex Karp.
The list goes on and on.
It appears trough technological innovation the standards of life rise in many ways but trough innequality it can affect the standards/ affordability of our basic needs.
EMA food prices in number of hours of work required to sustain oneself and they have fallen for half a century. Bill Gates has not only been alive for the entirety of that period but he has been leading Microsoft for the majority of it. If this is how the list is (and I’m simply going to judge it by its first element) then it seems to provide stronger evidence against equality being a prime goal, considering wealth equality has dropped during that period.
I'm not going to point at bill gates buying and leasing out loads farmland and attribute to it new corn strains and higher feed conversion chicken breeds.
You may as well be calling for soviet style state controll the way consolidation, top down ownership is and competition mechanics are dismissed or praised depending on the standpoint.
You got it backwards. Bill Gates and Alex Karp don’t pay megamoney for lumber or farm land. They consume a bit more than the average person, but not by the same %age as they are richer.
But everyone else can’t afford basic necessities or furniture anymore. And so being a farmer or a woodworker or whatever becomes a less attractive job, less people will do it, and you will have a harder time finding someone fixing your plumbing. Or pay a premium.
Instead, the ultra-wealthy are demanding extreme luxury, and so a would-be farmer is now a hotel page boy carrying around some rich dudes’ luggage, hoping for a tip.
Bill Gates buys huge amounts of land precisely for ecology: Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils. All ecologists agree that beef/red meat should disappear from our plates if we want to overcrowd the Earth with more equal people, and along with erradicating a hugely deathly disease that is malaria during his lifetime, Bill Gates will also have accomplished that dream too.
I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself.
>Bill Gates buys huge amounts of land precisely for ecology
Yes and he was gonna give a vast share of his wealth away for the good of the many over 5 years and then tripled it. woops. Let us not pretend farmland has not been a good investment in those parts.
Let us be honest. Almost every such good thing he does is a tax credit which polishes his image and legacy. He was a pretty cutroath businessman and there's no reason for me to now paint him with some saintly image.
>Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils.
I can get behind the idea that beef has a bigger carbon footprint due to the fossil fuel fertilisers used to grow their feed as compared to the conversion ratio freaks that modern meat chicken breeds are.
The fact that the methane from their farts is somehow the long term issue I however reject.
And I'd like to point out that without much of both that excrement and fossil fuel based fertiliser we have a famine on our hands so 'overcrowd the Earth with more equal people' doesn't seem like such a fine goal.
>I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself
Explain to me why do you presume I am "his audience".
This is about wealth inequality, i.e. how far the scale is leaning. This has, as the website explains, some funny effects: looking from the top, you are effectively starving the people that pay you and your descendands. That might work for a few years, but if everyone's hungry it's gonna be heads on pikes no matter how many bunkers you build and how much you pay for personal protection.
Wealth imbalances are bad largely because many assets have upper limits on available quantity, ie. the amount of land in most countries is relatively stable. If those assets are hoarded by a relatively small number of people, it's much harder for less wealthy people to become more wealthy. Our entire socioeconomic system is based on the premise that one can work hard and change their lot, so making sure that's actually possible is important for societal stability even if you don't have any religous/moral/ethical qualms about hoarding wealth.
First the premise of our socioeconomic system. I disagree entirely. Our system is premised on the thesis that if you are useful to others, they are willing to reward you for the utility you bring them; and that it is advantageous for us collectively to preserve a rule of law whereby people might interact safely in this way.
One might work hard and fail or one might work lightly and succeed. Bulletball guy certainly worked a lot harder than many product managers I know.
Now the question of assets of limited supply. That’s sound. But that’s a distribution of assets of limited supply problem. It is entirely possible to have great wealth inequality with low land ownership concentration - in the US 67% of people live in owner-occupied housing. Scotland has much higher land ownership concentration - but lower wealth inequality.
So fixed supply asset concentration can exist without wealth inequality - which, to be clear, is the form of inequality I was talking about considering the original post is about it.
If you are trying to buy some place to live, it doesn't just matter how much money you have, it also matters if there are lots of people many times wealthier than you bidding for the same realestate.
More money doesn't create more things to buy or more people making things, its just means more money competing for the same things to buy. Other people having more does diminish your share, of the cake. Yes, we can make the cake larger, but the best way to do that is for more people to get more opportunity to fulfil their potential, by getting a reasonable share to do so.
Three good reasons to care about inequality itself:
1. Outsized political influence (in theory can be mitigated by laws controlling corporate spending, but obviously those laws themselves are subject to manipulation by the rich and powerful)
2. Distortion in who the economy serves. The beauty of capitalism is that it's a problem-detection and problem-solving system. If a narrow set of people have a huge portion of money, the economy becomes unduly optimized toward satisfying their wants and needs.
3. Despite best efforts, we ultimately must share a lot of the same commons. Even being a billionaire in NYC or San Francisco can't really give you a walk to work or your child's school that feels as safe as it does in a more equal society that takes better care of its unwell and poor.
All 3 points can be blamed on primarily on your govt, not on someone being rich. Even when the rich influence the govt, it's the govt to blame. Aren't they supposed to protect you? Govt, for the people, by the people etc...
The conversation about "why should I care about this" is a conversation about "should anything be done about this." The mechanism by which one would "do anything" about this is called government. So sure.
People care about equality because the absence of it is inequality, and that leads to political control. Even if you live a good life today, it is not guaranteed. Democracy, human rights, all can be eroded if everyone ignores politics and the economy.
You’re probably not one paycheck away from homelessness, and probably have the protection of the legal system provided you don’t upset the wrong people.
But you’re probably one health scare away from it, you just don’t realize it.
Do you care about concentration of power in a single person or single family? What happens when you have conflict with someone who has orders of magnitude more purchasing power than you? Do you think it's good or bad for the social order or democracy if one individual is able to exert more power than an entire city or state just based on inherited wealth?
All I want is that a rich person can't strongly direct the government to do things like idk start wars because they happen to own an intelligence/arms manufacturing company or control how food is regulated so their pocketbook grows bigger at the expense of the health of the country and the taxpayer.
I'm not sure why people push this false narrative around jealousy. Well, I could speculate, but that likely wouldn't be helpful.
I have no desire to be rich, certainly not as rich as the far right 1% column. I find that level of wealth nauseating and embarrassing. But regardless, "legitimately earned wealth" is doing a lot of work in that last sentence. Perhaps (doubtful) it's possible to earn that much while being legally legitimate, although that speaks more to how fucked up our system is than anything else, but certainly not possible to do so in a morally legitimate way.
Retirement age keeps increasing, public healthcare keep getting defunded. My tax money is getting used to enrich war mongers and my cost of life keeps increasing as a result of all of that.
Also my constitutional rights are ignored daily.
You understand why I might not be feeling very happy that YOU are doing great?
They’re inextricably linked. The ceiling is being raised by people at the top pillaging from people at the bottom. Sure, in a vacuum, raising the floor without regard for the ceiling might work but in the real world it does not. Capitalists choose to believe that the floor today is better than the floor 20 years ago because even poor people have iPhones but when you look at the actual life people lead, it is getting worse.
If anything, “raising the floor” is the Trojan horse.
So let's say you start taxing the ultra-wealthy based on their assets. They then have the option of:
1) Make the company pay out dividends, so that owners can afford to pay their wealth tax. Not ideal, because what happens during bad years where there's no dividends to be paid out? Or if companies want to re-invest in the company?
2) Sell stocks. Again, not ideal. This would mean that you lose some ownership year by year.
3) Take up personal loans to cover taxes.
etc.
Note, I'm NOT saying that we shouldn't do anything. But this is just the consequence of such assets (stocks) being the dominant asset among the wealthy.
I think there’s really only a few solutions to it which all involve some kind of divestiture, it just depends on if you want to target corporations or individuals:
1) a new wave of anti-trust ala Lina Khan and breaking up most major tech companies.
2) passing laws limiting the behavior of, and allowing for the punishment of corporations and group agents as a whole. There’s a lot of philosophical work about how to hold a group accountable for their actions, try searching List and Pettit Group Agency. There’s been a lot of development since then but I’m less aware of it.
3. Caps on decision making power (potentially measured via some weighted stock ownership, or wealth more generally) like suggested above. I agree there would be a lot of second order effects here which are beyond the scope of this comment but I think we’ve clearly gone too far in one direction where single individuals are now essentially funding national party midterms, have increasing power over real world conflicts, and any other of the myriad of corruption issues you can find out in the wild.
If you tax stocks, the rich will have no incentive to keep their money locked-in. They will encash and exit to a jurisdiction that allows them to invest their proceeds into stocks again. Lets assume a hypothetical scenario where all jurisdictions impose a tax on stocks. Then they'll retire by investing in assets or heck just keep it in their banks.
What you are asking for won't work in a capitalist society (which is pretty much every society on Earth). The only way out is UBI.
There's many other solutions you skip, from capital controls for the more near-term issue to moving past capitalism for the more long-term systemic fix.
What I like about it is that it doesn’t penalize people who already pay taxes. It’s a lower bound, not an extra.
What makes me weary about any such tax is that in practice, it seems to target the broad middle class - people who have enough assets to be interesting to the tax man, but who don’t have enough to hide it or avoid taxes.
Edit: Again, stocks are not financial Assets.
Work hard, so that the government can redistribute your success?
Or you have the problem of businesses slowly losing their owners, who then stop caring about their clients or community.
What is the result of these taxes? Where does the money go? Does it lead to more economic activity or less?
You understand that billionaires don't make money from labor right? They get their money from rents and the return on capital. Roughly 5-7% per year, compounding, risk free, for perpetuity.
Isn't that exactly what we are trying to achieve by re-distributing the wealth, and avoiding that few people have such huge ownership that they have more power than governments ?
We are still living in a middle-age system, where the lords don't own lands but stocks and companies, but they still dictate the laws.
What's the problem? It's not like you'll have to sell over 50%. Even then the are schemes for non-voting shares. But when close to 1% of population works for Amazon, maybe forced sharing of ownership isn't a bad idea.
Besides any argument about fairness, wealth inequality is highly destabilizing and historically has only been corrected by revolutions, wars, crises etc.
If a few billionaires need to sell stocks to avoid such an outcome, that seems quite desirable to me.
Wealth concentration is a problem because wealth concentration is power concentration.
Why should a few dudes have autocratic control of entire industries?
If you force them to sell off their stakes over time through a wealth tax, you make the economy more democratic.
"Taxing the rich" is literally solving the thing that is a problem today.
Having hordes of people in poverty while we bend over backwards to not inconvenience the rich with "selling stocks" to pay taxes".
Wealth taxation cannot redistribute the kind of wealth we care about most. At least not by itself.
You need someone to buy the stocks in exchange for labor. So you need to keep the stocks themselves valuable.
As an extreme example, if you'd just take away all the SpaceX and Tesla stock from all shareholders and redistribute them, they would probably be near worthless because you just demonstrated that their value is more or less random.
I think that wealth taxation will only work if you give ironclad guarantees that people that are merely rich or middle-class will never be subject to it. If you can show that a stock is more valuable to, say, a medical doctor, then to the CEO of a hyperscaler, you might have a working system.
It'd be interesting to do the same graph by real consumption. I bet it'd be much more equal - most of the wealth is tied up in systems that keep the country ticking over and are only providing paper benefits to the owner. Which is why I say "transparency" - once you track what happens in real terms, "taxing the rich" almost certainly becomes "everyone ends up with less". If you take real resources away from the person who owns the McDonald's ice cream machine in real terms I have a hard time seeing how it won't come out of the lifestyle of the dude buying icecream. The person getting the money wasn't consuming anything real.
And it's not like taxes destroy wealth. Distributing from the person who owns the ice cream machine to the person buying ice cream puts the money in the hands of the person far more likely to spend it quickly. On ice cream, making the business case for owning ice cream machines better, not worse.
What you're describing is called "Trickle Down Economics", and has led to 50 years of economic failure.
Reality would like a word with you...
Tell me you've never met a modern Republican without telling me you've met a Republican.
Why couldn't there a wealth ceiling? Let's take $1B per person, everything above that is taxed at 100%. Would it destroy the capitalist dream and people would lose motivation to grow their wealth, or would it stimulate cooperation and wealth distribution?
But yes. Something like that.
Because while some can be transferred into something that is partially worker-owned, not all workers are suited to be given that sort of leverage.
So that might be worth pondering to come up with a solution that makes stuff not collapse. Because the reality of human resources is that the quality is underwhelming.
Increase wages.
If you "fool" a hundred thousand individuals to work for a company on a wage and through their work the company ends up been valued at a billion, you become a billionaire. Wouldn't they deserve a bigger cut of the fruit of their labor?
The fastest way to distribute wealth isn't taxes on wealth, it's a better distribution of the wealth generated by labor on the contract that the employee signs.
A rich person can afford to split their wealth 10-ways, meaning they get a 20% ROI every year.
9/10 workers don't get shit, while one does.
What we want instead is everyone benefiting.
If government subsidies are the only reason Tesla exists, why did Aptera (v1) and Fisker fail? If SpaceX only exists because of government subsidies, why are Boeing and Lockheed Martin (owners of ULA) worth so much less than SoaceX?
Could also take dividends, that would be more of a tax on the company itself which is what people usually object to in this discussion. Now the company basically can't grow as fast because it has to satisfy the tax burden for the owner. But that's a choice the owner makes.
That probably seemed more coherent before you put it into words.
That or just raise interest rates to force these people to sell more equity
Top salary earners, who do manage to save somewhat for retirement end up getting punished by these wealth taxes as well, especially since, generally, you need money in order to be able to move money around, in order to be able to save money on these sorts of taxes.
They literally get to eat their cake and have it too.
It seems to obvious to me, like just start it at something like $5M. Nobody will be affected who can't afford it. It's like they're trying to implement it in a way that makes people hate it.
However, I don't think wealth tax is a good tax. You'd be taxing something you want citizens to have: wealth. It seems that wealth tax is often used as an easy fix to "we can't somehow tax the income of high-earning wealthy people because they arrange the legal ownership of their wealth so that it's hard so let's tax their wealth". What should be fixed instead is profits slipping out of the taxable base. In general, a lower but wider tax base is always better than higher spot taxes that encourage people to optimize. Wealth tax is just a slap-on solution that mostly just encourages tax planning.
The inequality of the distribution is the true issue, and indeed not taxing the wealthy enough does accumulates that. A country should be proud to tax widely and moderately, even the highest earning people and businesses. A country can't compete with a tax haven but a tax haven can't compete with a functioning state and society. Working to tax wealthy people more in par to what ordinary people are taxed would work towards a more equal society. Some of the wealthy people would move away but the country should recognize and maintain that it has other factors of appeal than the tax rate.
That’s why it is extremely difficult to make even modest improvements in a dug-in system.
In practice its basically an additional 2% "drag" on market returns as its a yearly tax; not capital gains on sale.
Sole reason we turned down a job there. I don't hate the idea of a wealth tax, but having it kick in at €120,000 is nuts. IMO it's not even functioning as a wealth tax, its a barrier to the middle class accumulating even meager non-property wealth.
(I'm sure I have some details wrong, but broad-strokes this is what I remember from when we turned it down a few months ago)
Can you explain why would we be better off when the rich flee? I see this "we gonna be better off without them" sentiment quite often, but never an explanation how would we be better off? What metrics have you used?
So, how would it work here? Why eliminating the rich (whatever is the definition) would achieve a different outcome than that of communist regimes of the past?
But, let's say, they do. And they also have to stay out. Wouldn't that be.. kinda nice actually?
Your taxes would stay the same either way. Yes, of course, there would be less luxury spending, but the millions of normal people still exist. And they spend and they produce.
Why not let the ultra wealthy just leave and idk go to mars or something? Kick them out, seize their assets, run society without them if they do not want to be part of it anyway.
The “they’ll just leave” argument doesn’t really hold up in this case.
I found a study saying the effect was minuscule in Norway, Sweden and Denmark https://taxjustice.net/wp-content/uploads/2024/08/Taxing-ext...
Let's take a personal anecdote for an example: I joined a startup when it was early-stage, stayed for a few years, and exercised my stock options when I left. The startup is now "successful", but still private; my shares have also surely been heavily diluted. I have no idea when I'll be able to sell those shares or how much they're really worth. I have no way of turning those shares into quality-of-life improvements for any foreseeable future. Do they make me "wealthy"?
I don't think most Americans have a problem with rich people buying nice houses and nice cars, and using their wealth to pay for private staff. I think the real problem is how much of the wealth is allowed to stay off public markets. Cargill is worth more than $50 billion and its stock is not available on public markets. The growth in wealth of most AI companies - Anthropic, OpenAI - happened off of public markets, and so none of it trickled into the American middle class by their retirement accounts. Venture capital is keeping companies private for longer because, quite simply, none of the investors need the cash to pay for their cost of living, so they're quite happy to let paper gains continue to live on paper.
If your company has revenues of $X million a year or more, you should be forced to make public financial reports (effectively forcing you to list stock on a public market). Period. I think economists will naturally disagree on how much X should be, and that's fine, but I have little doubt that there should be a line like that, somewhere. Concerns about public markets forcing short-term thinking are a different problem, one addressed by mission-lock implements (Eric Ries's recent book Incorruptible is great here). Public markets ensure that gains in wealth are shared more broadly across the economy and increase tax collection by incentivizing more frequent buying and selling of the underlying stock, since those are taxable events.
Think again. The demand from rich to park wealth in X, Y, Z makes prices go up. Just imagine that the RAM prices fueled by AI spending is a housing market. More money rich have, less affordable the life for the rest is.
And don't forget that speed of their wealth growth is way faster than anyone who sells their labour.
Ah. And we did not even talk about "hidden" wealth thingy... All these numbers are official ones.
You also have this with houses in California (and more and more, the entire country) - a family in a house that they pay $x per month on is not likely to really feel different if you tell them the house is worth $250k or $500k or $5m - because the price will likely be "in line" with those around them and so actually getting access to the "wealth" is difficult - the only real way is to move far away.
I feel a big part of the problem is we've made the world great for those who know how to navigate it, but horrible for those who don't (or can't). If you are disciplined from the beginning, always save 10% of what you make into retirement 410(k)s, 10% into rainy-day funds, spend less than 30% on housing, you're going to do quite well - but that's a small portion. Seventy years ago you could be a near literal moron, work at the factory, and live a good life - because the company handled your pension and healthcare without asking you to make decisions that frankly most people aren't capable of making - and it was difficult to leverage yourself to death.
Most people don't give a shit about wealth inequality if they can live a good if humble life without undue stress.
Elon Musk existing doesn't bother me as long as I can provide for my family and feel I'm getting a "decent deal". But if I'm overworked, underpaid, drowning in debt, and prices are rising, his existence is going to be a lot more annoying.
(One of the problems of publicly-traded companies is manager's capitalism - https://ia601506.us.archive.org/26/items/bogle-managerial-ca... - both really come down to nobody actually owning something in the meaning of taking responsibility to the thing, because ownership is so diluted it basically has no meaning.)
So maybe we should take into account the liquidity of the assets held by these Billionaires. Also, as we've seen with Steve Jobs that if you get cancer it doesn't really matter how much you have in the bank. You'll die the same just like everyone else. All that money won't buy you extra time.
Must have interfered with SV reality distortion field.
Every year there are fewer povvos in the world, and we're just getting started.
Fix the money, fix the world. IYKYK
So the median household in the US has 3 working adults? Is $211k household according to that page.
Since most people’s income comes from salary, it is very easy to read this graph wrong and it is a bit misleading. Say you are some dev who makes $500k per year, but likes to rent, doesn’t drive and is not very bothered with stocks. Their Net Worth - unless I understand this wrong, if I do please correct me - the would around zero, maybe less with student loans, so they would be amongst the poor. Ok, they probably would have a lot of savings in this scenario, but maybe they like to ride on a horse with no name and spend most of their income. Still I would not call them poor.
Does it change the picture? Not really, because Musk et al. are so way beyond everyone else that the graph is extremely top heavy. It is a nice data visualisation regardless.
> “What we think” and “Ideal”
> In 2011, Michael Norton and Dan Ariely asked more than 5,000 Americans how they thought wealth was split between the five fifths of households, and how they would ideally split it. The Companion spreads those five shares across all 100 percentiles of the 2026 wealth total in a smooth curve (Appendix 3). Many different curves fit five numbers, so these two shapes are only illustrations. The actual bars come from percentile-level data. These two curves do not.
Wealth inequality is a completely pointless metric that tells us nothing about individual quality of life, and is being pushed by the left wing ideologies to serve their agendas.
For example, you could propel yourself into the top quintile by just packing up and moving to Liberia, but that would not increase your quality of life now, would it?
Outstanding observation.
It's not "poorer society with fewer inequalities." That's what they always say. It's never that. A society is not "richer" because the amount of financially backed power is one concentrated set of hands.
That's it. That's the tweet.
I think it's an interesting thought, I'm not sure I have a hot take here or anything. The likes of Jeff Bezos and Elon Musk are clearly good at amassing wealth (and interested in amassing wealth) but I suspect a lot less is attributable to skill than many would think.
So, no, I don't think "he doesn't act like he needs it" is at all a good argument for redistribution.
They're not "value creators". They're human beings that were given immense opportunities, disproportionately available avenues of luck, and happened to be able to find people to do their labor for them on the backs of the needs of the world.
What the ever living hell do you think the "90% of people" are doing? They're feeding each other and selling houses to each other and stocking shelves for each other because they have to because their labor and money is being stolen from them by this stupid abstraction that they are are "value creators".
Ugh.
Nothing against you OP but this the perfect highlight how out of touch HN can be from the reality.
Except for one guy, but he's 16 and will probably be the richest on paper once his AI agent startup's pre-Seed Series Z closes.
There is no way this is true. FAANG pays well, but that is still an eye popping amount of wealth unless you're an executive or absolute top-echelon engineer.
You're doing it wrong!
Even in a SV world I'm trying to get my head around the logical leap that gets you to this number. Median comp in SV is <500k - that's 20 years in the business to earn $10m ignoring taxes & your actual living expenditure. Obviously we can jump that with equity, but that's still not moving the dial far enough for the "majority" to be up at those heights.
I don't see how we're getting anywhere near these figures without generational wealth (assume this is the answer).
Obviously even in SV "most people" have not already finished doing this.
Maybe if you are in SV. I know this post is about the US but tech in EU definitely doesn’t put you in the 10m€ bracket
(Though to Singapore, not to the US. Salaries are higher than in the EU (though less than in SV), taxes are a lot lower than in either. Quality of life is higher than in the US for me.)
(Or as more likely, you've been in SV since Apple was a twinkle in the garage and your house is worth north of $5m.)
For comparison purposes, $5m invested well should be about $150k a year forever (3% safe withdrawal rate). If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Anyway, off to buy some $10 bananas.
This is all getting more annoying with capital gains taxes (and inflation, since capital gains taxes are usually levied on nominal gains).
I moved to a place with simpler taxes, including no capital gains taxes.
> If you have a net worth of $5m you should be able to live without working - if you want to (median US household income is $87k).
Depends on how much you want to live off.
> Even in the USA you're not getting to $5m net worth on salary alone, not without decades of it.
I don't think the original commenter was talking about juniors who just started?
I save a lot of money on 0% capital gains taxes here.
I regularly check London jobs and interview for them, but the numbers haven't made sense so far.
I dont think that's in the books for everyone
Some European making 3k/month net probably wept reading this.
I'm not sure your mental model holds. A lot of Europe has higher standards of living than the USA. And a lot of Asian countries have made huge strides in the last few decades. Also consider the difference between Mississippi and Massachusetts. I wouldn't say that anyone gainfully employed in Mississippi is "rich beyond the world's wildest dreams".
Around 17% of CA residents live below the poverty line, which means MILLIONS of adults that are not students. Elderly are a significant chunk of that number.
https://www.ppic.org/publication/poverty-in-california/
https://calbudgetcenter.org/resources/young-californians-fac...
If he manages to not spend anything, like on housing, or food.
If I were to liquidate my whole existence, I'd probably end up at maybe 300k€? Maybe? And that is already rather high up here in Germany.
The ratio of getting shit done per dollar seems a bit low. Even with Germany continuing to be.. uh.. not exactly on top of its game.
I expect most people here to certainly be nowhere near that.
You would be surprised. Not only because, as you point out, recent graduates often have a negative net worth, but also because people tend to increase their spending in lockstep with their income.
Saving millions takes the intersection of multiple factors: sufficient disposable income, prioritizing investing over lifestyle, long-term discipline to stick to the plan, and luck to keep it all going smoothly.
In yen perhaps.
You're looking at the tower above but maybe you should look at the valley below.
If one asks "how much, say, Elon Musk, is worth" we see some crazy numbers with kirjillions of zeros. But those are not "his" money, this is how much his companies are estimated to have. Yes, he has large personal fortune, but it is nowhere near those huge billions of billions amounts.
Second, staying with Elon example, his companies are paying people and other companies that pay people, so there is huge army of people who have food in the fridge because of Elon Musk (I've seen some estimates around ~1 million people overall). Again, they are nowhere near to be as wealthy as Elon, but still, they have a decent live thanks to his companies.
It’s more hidden now. We all have rights and freedoms and whatnot. But there are still people who “own stuff”, and people who don’t. With shades of gray in between those two extremes. It’s good to be cognizant of the system you inhabit relative to what has existed throughout history so you can make good decisions and position yourself accordingly.
> his companies are paying people and other companies that pay people
Yes, his companies, not him. He's not doing much, except distracting part of his workforce to work on vanity projects such as flying cars or mile-long vaccuum tubes, or spending some of his vast wealth to buy politicians that will further the cause of wealth inequality. Get rid of him, and the system works much better for everyone. Him and others like him.
Not even ‘to have’, just ‘to be worth, if all of their shares could be sold at the price of the recent ones’. It’s a number only loosely (albeit obviously positively) correlated with actual spending power.
The whole point is that he shouldn't be able to exert autocratic control over large swathes of the economy and control that many people's lives.
There are very solid arguments backing up the same general points that require time to communicate and require good faith attempts to understand from the other party. But you probably don't want those either.
Wealth being the integration of gains - consumption over time makes it a poor metric for looking at society as a whole.
Something like 50% of Americans will be millionaires at some point in their lives—upper quintile per this chart, typically later in their earnings years. Almost all of them started “poor” as young adults, per this chart’s definition.
That being said, one accident or illness that strips away that doctor's ability to earn, leaving them in a soul crushing amount of debt that can't be discharged via bankruptcy. Their debt obligations are real.
Look at that last bar; consider just the annual yield or interest payment on that wealth; soon, it's going to be more than all other bars combined. If people understood the situation, they would all stop working and start making lists of who these people are and work for them. That's the only logical (legal) thing to do. Every other job or career is a waste of time.
Given that the Shiller P/E ratio is now 40 (under 3% of the value of the assets), the yield is actually a pretty small fraction of that last bar... but even then, I'm saying one year's yield could exceed the worth of all the others if things continue.
But IMO, it's already the case that the economy is centered around the free money/proceeds received by top 0.1%. This is why we saw all that nonsense with COVID, DEI, Wokeism, etc... This is what happens when a small number of elites decide to spend a bit of 'spare change' on politics and social activism. Imagine how bad it's going to get after that wealth has compounded in 10 years...
Those are your choices. Choose freely!
- Most of that wealth is tied up in assets offering services for americans (servers / warehouses). It would be much worse if the rich decided to spend all of that on consumption rather than keep reinvesting it in assets. - Even the LHS of that chart Americans are some of the wealthiest in the world. A lot of the middle class from many other countries would love to be on the LHS of that chart. - No one is expected to build wealth on a 40 hour minimum wage job. It is the bare minimum and most people get paid more. - Americans don't want wealth. Our spending habits are abysmal. I suspect if you gave every American $500K the chart would revert back to this in like 12 months
Yeah. Like renting a house for a mother of 2 children who will never get her own by selling her labour, while the renter uses her money to buy more units.
Services that have an incentive to serve said americans, because it is them who own them.
You are completely right that this capital is super useful for society. It would just be infinitely more useful if it was in the hands of society.
Why would that be worse? What online services are so important that it's better to have them than to lift some people above the poverty line? Rich people spending is the next best thing after taxing them - it distributes their money and provides jobs. It would strictly improve the society if Bezos spent lots of money and folded his servers and warehouses - in so many different ways...
A large portion of billionaire wealth isn't reinvested in productive assets. It comes from holding onto assets like corporate shares and land that grows in value based on the asset's ability to extract profit or rent. Or from distorted (speculative) demand for that asset that is completely detached from its productive output.
Someone like Bernard Arnault is worth around $160B (wealth from luxury brands like Louis Vuitton, Dior, and Tiffany). That paper valuation exceeds the total national wealth of many entire countries: https://en.wikipedia.org/wiki/List_of_countries_by_total_pri...
The coordination win that came from “thou shalt not covet” is substantial and we forget it at our own peril.
What is interesting is that this was true centuries ago too. Life as a noble in the middle ages was stressful as hell and you couldn't even decide on your own lovelife. Read Seneca and the first thing he writes is that Augustus (whom he knew personally) was constantly complaining about his busy life and dreaming of a retirement that never arrived.
Rank order of preference to be top 10% in for me: US > Vietnam > South Africa
So your method does not disabuse me of my belief. It’s quite clear that equality has not made Vietnam more desirable than the US. In fact, there are some 400k foreign born in Vietnam (<1%) vs the US having 15% foreign born (a stark enough difference made worse by forcing foreign-born to be from non-neighbors). So I must reasonably conclude that my rank order is likely shared by others and that others too are not, in fact, lured by equality.
There is an old immortal tweet: cars have windows and go; houses have windows and don’t go; so it’s not the windows that make things go.
If inequality were as critical we’d expect a perfect rank ordering of distant migrant population attempts matching it. The numbers are so vastly different that one cannot conclude equality is of great importance to most.
You or the farmer you buy food from competes for farmland with Bil Gates. You or the one providing your house builder with wood competes for lumber forest with Alex Karp.
The list goes on and on.
It appears trough technological innovation the standards of life rise in many ways but trough innequality it can affect the standards/ affordability of our basic needs.
I'm not going to point at bill gates buying and leasing out loads farmland and attribute to it new corn strains and higher feed conversion chicken breeds.
You may as well be calling for soviet style state controll the way consolidation, top down ownership is and competition mechanics are dismissed or praised depending on the standpoint.
But everyone else can’t afford basic necessities or furniture anymore. And so being a farmer or a woodworker or whatever becomes a less attractive job, less people will do it, and you will have a harder time finding someone fixing your plumbing. Or pay a premium.
Instead, the ultra-wealthy are demanding extreme luxury, and so a would-be farmer is now a hotel page boy carrying around some rich dudes’ luggage, hoping for a tip.
I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself.
Yes and he was gonna give a vast share of his wealth away for the good of the many over 5 years and then tripled it. woops. Let us not pretend farmland has not been a good investment in those parts. Let us be honest. Almost every such good thing he does is a tax credit which polishes his image and legacy. He was a pretty cutroath businessman and there's no reason for me to now paint him with some saintly image.
>Beef meat causes global warming in a disproportionate way compared to chicken or even disproportionate per euros or per gram of protein compared to lentils.
I can get behind the idea that beef has a bigger carbon footprint due to the fossil fuel fertilisers used to grow their feed as compared to the conversion ratio freaks that modern meat chicken breeds are. The fact that the methane from their farts is somehow the long term issue I however reject. And I'd like to point out that without much of both that excrement and fossil fuel based fertiliser we have a famine on our hands so 'overcrowd the Earth with more equal people' doesn't seem like such a fine goal.
>I find a lot of consistency of his audience in hating him for the very reason that he implements his audience's wishes. To this audience, there is no redeeming oneself
Explain to me why do you presume I am "his audience".
One might work hard and fail or one might work lightly and succeed. Bulletball guy certainly worked a lot harder than many product managers I know.
Now the question of assets of limited supply. That’s sound. But that’s a distribution of assets of limited supply problem. It is entirely possible to have great wealth inequality with low land ownership concentration - in the US 67% of people live in owner-occupied housing. Scotland has much higher land ownership concentration - but lower wealth inequality.
So fixed supply asset concentration can exist without wealth inequality - which, to be clear, is the form of inequality I was talking about considering the original post is about it.
More money doesn't create more things to buy or more people making things, its just means more money competing for the same things to buy. Other people having more does diminish your share, of the cake. Yes, we can make the cake larger, but the best way to do that is for more people to get more opportunity to fulfil their potential, by getting a reasonable share to do so.
Who do you want to educate from that position? You or others?
1. Outsized political influence (in theory can be mitigated by laws controlling corporate spending, but obviously those laws themselves are subject to manipulation by the rich and powerful)
2. Distortion in who the economy serves. The beauty of capitalism is that it's a problem-detection and problem-solving system. If a narrow set of people have a huge portion of money, the economy becomes unduly optimized toward satisfying their wants and needs.
3. Despite best efforts, we ultimately must share a lot of the same commons. Even being a billionaire in NYC or San Francisco can't really give you a walk to work or your child's school that feels as safe as it does in a more equal society that takes better care of its unwell and poor.
Thank you for sharing your insight.
But you’re probably one health scare away from it, you just don’t realize it.
Because most people are (IMO wrongfully) jealous of the rich. They have a problem with the rich even if it's legitimately earned wealth.
I have no desire to be rich, certainly not as rich as the far right 1% column. I find that level of wealth nauseating and embarrassing. But regardless, "legitimately earned wealth" is doing a lot of work in that last sentence. Perhaps (doubtful) it's possible to earn that much while being legally legitimate, although that speaks more to how fucked up our system is than anything else, but certainly not possible to do so in a morally legitimate way.
Retirement age keeps increasing, public healthcare keep getting defunded. My tax money is getting used to enrich war mongers and my cost of life keeps increasing as a result of all of that.
Also my constitutional rights are ignored daily.
You understand why I might not be feeling very happy that YOU are doing great?
The point should be to raise the floor, not put in place a ceiling.
If anything, “raising the floor” is the Trojan horse.