Maybe doing away with inherited wealth would even things up
I don’t have any real facts about this, but there is the idea that inherited wealth usually gets dispersed into the economy quickly by lazy kids who didn’t have to work for what they have.
But I think a substantial inheritance tax is a good idea above a certain level of wealth. But outright wealth taxes are tricky when they go beyond things like real estate and stock holdings. It can be a bad idea to burden businesses with a wealth tax. Businesses should be taxed on a profit basis.
It’s helpful to look at at what we’re lacking that prevents such a scenario from being realized. I’ve already mentioned benevolent billionaires, but the question arises as to how those billions would be spent. The OP mentions a lack of homelessness, quality education, quality healthcare, and a healthy environment. There’s two sides to solving these issues, and both the supply and demand would have to be worked on.
First, to achieve these things, we would need more supply. More teachers and quality schools for them to teach in, more doctors and nurses and quality hospitals and clinics for them to staff, safe housing and the people to build that housing, supermarkets to make available healthy food in all areas, and so on.
Then we would have to address access to all these resources. Do we make things free, give people vouchers, or some other method so that people who don’t have the money to pay for these things can access them?
From what I figure, the only solutions are to have a more benevolent wealthy class (good luck to all of us with that, human nature being what it is) or to force the wealthy to fund such things with higher taxes. The alternative is to muddle along as we currently are.
Nothing inherently, but the fact remains that if you’ve got a dime in your pocket some billionaire is already figuring out how to separate you from it.
I can see a wealth tax easily being misapplied and ending up destroying the wealth it was meant to redistribute. As you say, stocks and cash are one thing. But how does one redistribute a mega yacht, a Picasso painting, or a signed Mickey Mantle rookie baseball card? If we tax the ownership of such items, then the incentive to own them and thus their value will decrease. And if their value decreases, you end up destroying the wealth you were trying to redistribute.
Yes. Even when I mentioned real estate I meant something like a building that could be sold. And even then not substantially the entirety of the inheritance. Outright wealth taxes are not a good thing, not sure how to categorize what I do think is sensible. Clearly some portion of liquid assets in an inheritance could be reasonably taxed.
There’s already such a tax.
I realize that, but as I discussed above, it’s kind of indiscriminate, and too easily avoidable.
As others have stated, income and wealth are not the same thing.
In addition, it is worth pointing out that great wealth is measured in somewhat illiquid assets. It’s not bags of gold sitting around that could be handed out to other (poorer) people. It’s stocks, and buildings, and companies, and yes art and cars and “stuff”. So, in order for someone to turn an asset into distributable cash, they need to sell it. Who would be buying it? Another rich person? (Turtles all the way down).
What’s left? Wealth tax and money redistribution from the government? Are you talking about state ownership, yah? I think we’ve seen that movie before…
Not all the points in the OP, no. For one thing, I would not call any of those societies “safe”
I’ve been in companies, tech companies, where everyone could easily be considered privileged elites, and that didn’t keep lower paid people from being jealous of higher paid ones. Not everyone, but many.
The point of the OP is that even these people would be “happy,” so this kind of contradicts your earlier point. However, I agree. People see their current status as the baseline, and compare themselves to those with more. That’s exactly why the familiar conservative argument is that the poor are doing great because they have TVs, refrigerators and smartphones and Henry VIII had none of these is such bullshit.
Does the depreciation on the mega-yacht destroy its value? The other two things can fluctuate in value. So, if any rich person put a large amount of their holdings in such things, they’d be asking for trouble.
Many of these assets spin off cash. If the wealth tax was low enough, it could be paid without selling a lot. And the value of these assets usually increase, especially for those with access to high return investments. Sure some of the increase is paid in capital gains taxes when it is sold, but why not get some of this gain back for the rest of us?
It will hurt the yacht industry for sure (well, maybe) but in return a bunch of children don’t go hungry. Sounds like a good tradeoff to me.
IMHO, it’s not a matter of some kind of happiness index, it’s about what people need to have a decent living. Being able to attend a quality school, not living in fear of being mugged on the way home, having nutritious food available, and having access to care provided by a capable doctor should be things afforded to to everyone. An 80 inch plasma screen and the latest iPhone not so much. If someone needs to work harder to afford this things, then they should work harder.
The people buying those things probably aren’t doing so with the idea of them appreciating in value to sell them later. They’re buying them because owning those objects give them pleasure. Sure, maybe Daddy Warbux could hit a rough patch and have to sell his collection of art, but if he does, it’s probably some other rich guy buying that stuff. Rinse and repeat enough times, and those things no longer have the value they once did, and whatever wealth inherent in the object is now gone.
Without price controls, wouldn’t there be inflationary pressure? I would think if everyone is doing well, then prices should rise, as more people can afford stuff, no?
In theory yes. I think even in practice we would have some increase in prices, even for luxury goods. But we would also be seeing an increase in production as the people producing goods compete for this newly generated wealth. This should limit inflation. The direct providers of the necessary goods wouldn’t even necessarily have to be paid directly by the consumers. We could use a system similar to public school teachers to pay other providers if the essential services. Of course we would need more tax dollars to fund such programs, and I’m in favor of taxing the wealthy at higher levels. Just not in a non-productive way like taxing artwork or diamond necklaces or yachts.
The issue is that money is power. Too much unchecked power is generally a bad thing.
Rich people don’t just use their money to buy ferraris and truffles. They use it to bribe politicians, fund think tanks that manipulate the public into supporting the agenda of the rich, break down the welfare state and labor movement to increase their wealth, bribe politicians to cut their taxes for them, and in some countries bribe the police and military. In the US the Rich fund think tanks to manipulate the public into thinking estate taxes and capital gains taxes are bad. In Columbia when Escobar was alive, Rich people (like escobar) bribed the military to try to overthrow the government or destroy legal documents.
The problem isn’t just how objectively wealthy people are. In a society 300 years into the future, poor people may be millionaires and rich people may be quadrillionaires. But the issue is also whether a small group of people have outsized, and unchecked power in the form of wealth that they can use to remake society in their image.
Yeah, but for people who aren’t Michael Jackson the amount of money they have in such things is a trivial fraction of their wealth. Stock market crashes hurt the wealth of the rich, art market crashes not so much.
They don’t even need to bribe politicians or manipulate the public. If you are that much wealthier than everyone else, you can effectively isolate yourself through gated communities, private security, private health care, private education. You control the capital which serve as potential sources of investment for others to become wealthy, basically becoming a closed ecosystem.
And that system doesn’t just exist in isolation. The 2008 financial crisis demonstrated that when it breaks (because it is largely unchecked), it can break everything else around it.
The OP asked what’s wrong with inequality if everyone is well off. I would say the answer is “nothing”. In fact, some level of inequality is good. Why should Derek Jeter earn the same amount as the guy who sells hot dogs at Yankee Stadium? People who contribute more or generate more value should reap more of the benefit.
The problem is when you have a system where too much wealth is concentrated in the top, it becomes closed off to others being able to contribute in a meaningful way. It’s effectively a class system. Another thread the OP asked why highly educated people would subject themselves to working 100 hour weeks. Because our current system has evolved to where the wealth and power is controlled by those who run investment banks, hedge funds, Amlaw 100 law firms, Big-4 accountancies, FAANG tech companies (lets stop calling them “startups”), white-shoe consulting firms like Mckinsey, Bain and BCG, Silicon Valley venture capital and other entities that don’t really produce anything of value and serve a dubious benefit to society. Well they aren’t just looking to just give that wealth away. So to “earn it”, they require you spend years of your life dedicated to the single-minded purpose of pursuing wealth (after you have already invested hundreds of thousands in obtaining the necessary education and have more or less proved yourself to be the right “sort” who probably came from that background already).
Wouldn’t society be better off if you had those people with that level of dedication to work spending those hours being schoolteachers, civil rights lawyers, running a small local business, pretty much anything other than working for a giant machine that serves no purpose other than to accumulate more wealth?
IMHO this hits at the heart of the problem. Wealth should be tied to what one produces, not just the manipulation of money. Derek Jeter, due to the multiplying effect of media, can produce something of value for millions of people while playing just one baseball game while the guy selling hot dogs in the stand can only sell one hot dog at a time. That’s what makes it fair that Jeter earns more money than the guy selling hot dogs. The people at the top of those big companies, however, don’t really generate wealth for society as a whole, they just manipulate the money that is used to keep track of that wealth. How we as a society can rectify that situation is a difficult question, and different than dealing with objects of very high value. A huge yacht that cost tens of millions benefits the people who built it and the supply line all the way down and the rich guy buying it is thus contributing to a redistribution of wealth just by purchasing it. Some hedge fund guy doing day trading, however, doesn’t produce anything of value, they just essentially manipulate the scorekeeping system. IMHO that’s why those are things we should go after when we talk about taxing wealth, and not people who got lucky in terms of their talents enabling them to make millions, such as top athletes and entertainers.