# Do Capital Gains Screw the Poor? **URL:** \ **Category:** Great Debates\ **Created:** [July 5, 2023, 2:37pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644 "2023-07-05T14:37:13Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [July 6, 2023, 1:10pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/61 "2023-07-06T13:10:12Z")
And “create” is a generous term there. If you and I start trading MSFT back and forth at a dollar above yesterday’s price, that’s $7.4B more wealth than there was yesterday. You don’t need that explained, but other threads have proven that the notion that wealth is not summed production is mind-blowing to some readers. See also “I pay $500K, I get a house. Who gets the wealth created by that transaction?” ---
**Author:** ![Pleonast](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pleonast/32/1183_2.png) [@Pleonast](https://boards.straightdope.com/u/Pleonast)\ **Post date:** [July 6, 2023, 1:56pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/62 "2023-07-06T13:56:24Z")
> [@Crafter\_Man](#): > > > [@Pleonast](#): > > > > I am asserting that possessing extreme wealth (which I am calling a billion (that is, a thousand million, present-day, U.S.) dollars) is immoral, regardless of how it was obtained. > > Our economy is not based on a zero-sum game; if I make a dollar, it doesn’t necessarily mean someone else loses a dollar. > > Money can be - and often is - _ **created** _. Wealth is often _ **created** _. Creating wealth, in and of itself, doesn’t take anything away from anyone else. If anything, it makes those who are _not_ wealthy richer and more comfortable. With minor exceptions, it’s good for everyone. I agree with what I quoted above. But it’s side-stepping the issue that I am addressing: extreme wealth. What is the purpose of wealth? It is deferred consumption: do something of value now, while deferring the use of that value until later. Once a person has enough wealth that they cannot reasonably consume it within their own lifetime, they have an immorally large amount of wealth. A moral person will find moral ways to use their excess wealth, until they no longer have excess. I’m not sure there’s a precise threshold for which wealth becomes excessive, but billionaire seems clearly above it. ---
**Author:** ![Thudlow\_Boink](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thudlow_boink/32/320_2.png) [@Thudlow\_Boink](https://boards.straightdope.com/u/Thudlow_Boink)\ **Post date:** [July 6, 2023, 2:28pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/63 "2023-07-06T14:28:25Z")
> [@Pleonast](#): > > What is the purpose of wealth? It is deferred consumption: do something of value now, while deferring the use of that value until later. Once a person has enough wealth that they cannot reasonably consume it within their own lifetime, they have an immorally large amount of wealth. A moral person will find moral ways to use their excess wealth, until they no longer have excess. I too have an intuition that excess wealth is immoral, but I’m not sure it holds up to scrutiny. “Comsumption” makes me think of something being used up, but not all wealth can be consumed in that sense. If I am wealthy, it means I own things of value. What can I do with those things of value? It looks like my options are: 1. Keep them. 2. Sell them. 3. Give them away. 4. Use them up, ruin them, or otherwise make them so that they are no longer worth so much money. If they’re the kind of thing that can’t be divided up, selling them or giving them away just transfers the immorality to someone else who now owns them. If you’re just concerned with keeping any one individual from having excessive wealth, #4 looks like the most acceptable option; but it’s hard to justify something like running a company into the ground or throwing a rare painting on the fire as the morally correct option. ---
**Author:** ![Pleonast](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pleonast/32/1183_2.png) [@Pleonast](https://boards.straightdope.com/u/Pleonast)\ **Post date:** [July 6, 2023, 2:47pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/64 "2023-07-06T14:47:31Z")
> [@Thudlow\_Boink](#): > > If they’re the kind of thing that can’t be divided up, selling them or giving them away just transfers the immorality to someone else who now owns them. > > If you’re just concerned with keeping any one individual from having excessive wealth, #4 looks like the most acceptable option; but it’s hard to justify something like running a company into the ground or throwing a rare painting on the fire as the morally correct option. Not all consumption is moral. ---
**Author:** ![Thudlow\_Boink](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thudlow_boink/32/320_2.png) [@Thudlow\_Boink](https://boards.straightdope.com/u/Thudlow_Boink)\ **Post date:** [July 6, 2023, 2:48pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/65 "2023-07-06T14:48:56Z")
> [@Pleonast](#): > > Not all consumption is moral. Right—so what should the person who owns the wealth do with it? ---
**Author:** ![Pleonast](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pleonast/32/1183_2.png) [@Pleonast](https://boards.straightdope.com/u/Pleonast)\ **Post date:** [July 6, 2023, 3:02pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/66 "2023-07-06T15:02:50Z")
> [@Thudlow\_Boink](#): > > > [@Pleonast](#): > > > > Not all consumption is moral. > > Right—so what should the person who owns the wealth do with it?   It’s a burden. Conceptually, the easiest way is to give your excess wealth to those who will use it well. Practically, that’s difficult, but if you are a billionaire, you have access to resources and others who can help you. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 6, 2023, 3:28pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/67 "2023-07-06T15:28:28Z")
> [@Northern\_Piper](#): > > I don’t see how it’s possible to use the rationale for a war income tax, that was repealed after the war ended, as the rationale for a peacetime income tax passed half a century later. I would have thought it was obvious in a discussion of the enactment of income tax that we were talking about its original enactment. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [July 6, 2023, 4:50pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/68 "2023-07-06T16:50:55Z")
> [@Thudlow\_Boink](#): > > What can I do with those things of value? It looks like my options are: > > 1. Keep them. > 2. Sell them. > 3. Give them away. > 4. Use them up, ruin them, or otherwise make them so that they are no longer worth so much money. You forgot #5, use your wealth as a lever to get more wealth. It’s not like people earn enough money to provide for their families needs and then stop, they earn enough to provide for the next generation, then 5 generations, then 20 generations, and use their power and influence to make sure the tap never stops. People with generations of wealth stored away use that wealth to influence laws to ensure they have negotiating leverage over people who are trying to earn enough money to feed their kids next week. It has always been this way. ---
**Author:** ![snowthx](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowthx/32/10660_2.png) [@snowthx](https://boards.straightdope.com/u/snowthx)\ **Post date:** [July 6, 2023, 5:00pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/69 "2023-07-06T17:00:06Z")
> [@Cheesesteak](#): > > It’s not like people earn enough money to provide for their families needs and then stop, they earn enough to provide for the next generation, then 5 generations, then 20 generations, and use their power and influence to make sure the tap never stops. > > People with generations of wealth stored away use that wealth to influence laws to ensure they have negotiating leverage over people who are trying to earn enough money to feed their kids next week. It has always been this way. Agree with this. Wealth = security. If you are already secured for this lifetime, then you need more wealth for successive generations, right? So they wont have to work or worry, or ever have to confront insecurity. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 6, 2023, 7:35pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/70 "2023-07-06T19:35:30Z")
Some investments are a zero-sum game. If you make money someone else has lost money (Futures do this). But not all. E.G. Stocks can rise in value without anyone else losing money. ---
**Author:** ![Spice\_Weasel](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spice_weasel/32/5435_2.png) [@Spice\_Weasel](https://boards.straightdope.com/u/Spice_Weasel)\ **Post date:** [July 6, 2023, 8:21pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/71 "2023-07-06T20:21:39Z")
> [@msmith537](#): > > How so? If someone creates a company like Amazon that grows to $1.3 trillion in value, how much of that wealth should they be “allowed” to keep? They’re “allowed” to keep whatever they want. And I’m “allowed” to believe they are morally bankrupt for keeping it. In the specific case of Amazon I’ll add that they’re morally bankrupt for ever making it in the first place. That was wealth built on the backs of the working class, under unfair and dangerous labor conditions, using business practices that have made it increasingly difficult for creators to get paid what they’re worth. As far as I’m concerned, Amazon owes me money. At the least, they owe me free Prime shipping for all the shit I now can’t buy anywhere else. ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [July 6, 2023, 8:44pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/72 "2023-07-06T20:44:16Z")
Nothing immoral about making investments that go up in value, either because of luck or your own research. I think the capital gains tax should be abolished, but I won’t hijack the thread over it. ---
**Author:** ![Akaj](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/akaj/32/145_2.png) [@Akaj](https://boards.straightdope.com/u/Akaj)\ **Post date:** [July 6, 2023, 9:30pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/73 "2023-07-06T21:30:55Z")
> [@dalej42](#): > > I think the capital gains tax should be abolished Abolished as in “capital gains should be taxed as normal income,” or “capital gains should not be taxed”? ---
**Author:** ![snowthx](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowthx/32/10660_2.png) [@snowthx](https://boards.straightdope.com/u/snowthx)\ **Post date:** [July 6, 2023, 9:35pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/74 "2023-07-06T21:35:11Z")
I am wondering if the term “capital gains” in this thread has two meanings?: 1. A financial gain a business makes during successful times. 2. A tax on an individual investor who has profitable investments. Are we talking apples and oranges, or something, or maybe I am just missing something. It seems confusing that we are talking about how much money a company makes - isn’t that just profit? I guess I am not familiar enough with all the financial terms. ---
**Author:** ![Akaj](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/akaj/32/145_2.png) [@Akaj](https://boards.straightdope.com/u/Akaj)\ **Post date:** [July 6, 2023, 9:54pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/75 "2023-07-06T21:54:25Z")
> [@snowthx](#): > > I am wondering if the term “capital gains” in this thread has two meanings Yes, many people (starting with the OP) are equating “capital gains” with any sort of accumulated wealth. Since a 1% appreciation over more than one year on a modest family home is technically a capital gain, the answer to the OP’s question is clearly (IMO) no – capital gains do not screw the poor. Perhaps the thread title should have been **Do vast accumulations of personal wealth screw the poor?** ISTM the more pertinent question is “Does a lower tax on capital gains screw the poor?” ---
**Author:** ![Thudlow\_Boink](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thudlow_boink/32/320_2.png) [@Thudlow\_Boink](https://boards.straightdope.com/u/Thudlow_Boink)\ **Post date:** [July 6, 2023, 11:03pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/76 "2023-07-06T23:03:24Z")
> [@Akaj](#): > > Yes, many people (starting with the OP) are equating “capital gains” with any sort of accumulated wealth. No, I think the OP was specifically asking about wealth gained from investments. > [@Hypno-Toad](#): > > When I asked if it was immoral to have gained on my own investment of my own money, they just doubled down on “Billionaires are evil.” I can see how a person feels that not sharing your immense wealth is evil. But that’s not what I asked them. My question to the dopers is, what harm, if any, does it do the poor if my $10k becomes $2.2B while sitting in my IRA account? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 6, 2023, 11:28pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/77 "2023-07-06T23:28:10Z")
> [@snowthx](#): > > Wealth = security. If you are already secured for this lifetime, then you need more wealth for successive generations, right? So they wont have to work or worry, or ever have to confront insecurity. The issue is how you define security. It’s not just a matter of storing up enough wealth. Security often also means gaining political influence and ensuring that the government runs the country in a way that benefits you - even in situations where that doesn’t benefit the country as a whole. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 6, 2023, 11:31pm UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/78 "2023-07-06T23:31:03Z")
> [@snowthx](#): > > Are we talking apples and oranges, or something, or maybe I am just missing something. It seems confusing that we are talking about how much money a company makes - isn’t that just profit? I believe that’s generally referred to as a corporate income tax. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [July 7, 2023, 12:14am UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/79 "2023-07-07T00:14:16Z")
The error in all of this is thinking that, e.g. Bill Gates created all the value MSFT is worth. Nope. He had about 100,000 people doing that with him most years. And over the ~40 year total run, maybe 500K people have worked there. They _all_ contributed to producing the product that caused Wall street to bid up the stock price to where it is today. But by and large Bill was the only guy who got much of the fruit of that part of labor’s labor. If all forms of business had to pay their employees in not only wages but shares of ownership every year, there’d be less of an extreme inequality problem. Of all the fat cats in the world today, Bill Gates is probably the one with the most legitimate claim to having done good in the world both as an entrepreneur, as the creator of genuine economic value in the larger world, and as a later philanthropist. So don’t interpret my comments as directed at him specifically. He’s just an instantly recognizable exemplar of the business founder who kept the vast bulk of the stock price appreciation his company ever created. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [July 7, 2023, 12:49am UTC](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644/80 "2023-07-07T00:49:53Z")
> [@Pleonast](#): > > It’s a burden. Conceptually, the easiest way is to give your excess wealth to those who will use it well. Practically, that’s difficult, but if you are a billionaire, you have access to resources and others who can help you. Isn’t this literally exactly what [the wealthiest billionaires are doing today](https://en.wikipedia.org/wiki/The_Giving_Pledge)? > The Giving Pledge is a campaign, founded by Bill Gates and Warren Buffett, to encourage wealthy people to contribute a majority of their wealth to philanthropic causes. As of June 2022, the pledge has 236 signatories from 28 countries. Most of the signatories of the pledge are billionaires, and as of 2016, their pledges are estimated to a total of US$600 billion. It’s higher now. For one example: > **[Bill Gates pledges to donate ‘virtually all’ of $113bn fortune to his foundation](https://www.theguardian.com/us-news/2022/jul/15/bill-gates-billions-fotune-donate-foundation)** > > Microsoft co-founder says he wants to ‘eventually move off the list of the world’s richest people’ > “To help make this spending increase possible, I am transferring $20bn to the foundation’s endowment this month,” Gates announced on Twitter, later explaining, “As I look to the future, I plan to give virtually all of my wealth to the foundation. I will move down and eventually off of the list of the world’s richest people.” > > The foundation’s efforts include fighting disease and poverty across the globe, including by helping to support the Guardian’s Global Development series. > > “I have an obligation to return my resources to society in ways that have the greatest impact for reducing suffering and improving lives,” said Gates, whom Bloomberg reports is worth approximately $113bn. “And I hope others in positions of great wealth and privilege will step up in this moment too.” And please don’t say they should just dump all their money all at once today. That would create chaos and wind up hurting tens of millions of people the gradual and intelligent dispersion of money could otherwise help. [Previous page](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644.md?page=3) [Next page](https://boards.straightdope.com/t/do-capital-gains-screw-the-poor/986644.md?page=5)